In the matter of The Retail Group (Darlinghurst) Pty Limited
& Cohort D Pty Limited (the Companies), a
director of the Companies brought an application to have the
Companies wound up on just and equitable grounds.
The application was not opposed by the other director of the
Companies and an interested party who were joined as defendants.
Kemp Strang acted for these parties (Kemp Strang
The only significant issue between the parties after some
discussion, was the appropriate liquidator.
The plaintiff provided a consent for an insolvency practitioner
from a large firm with rates of $580 per hour at partner level.
The Companies were small proprietary companies. Accordingly the
Kemp Strang Clients considered that an insolvency practitioner from
a smaller firm with more economic rates was more appropriate. This
course was opposed by the plaintiff. The Kemp Strang Clients
provided two alternative consents to the Court, the more cost
effective consent of the two was from a practitioner from a small
firm with rates of $480 per hour at partner level.
During argument on the issue of the appropriate appointee,
Counsel for the plaintiff made submissions to the Court that:
the Court should adopt the usual course that a plaintiff's
nominee should be appointed; and
the difference in hourly rates was negligible and not an
important consideration when considering the appointment.
Brereton J stated that the difference in hourly rates was
actually one of the most important considerations when appointing
insolvency practitioners. His Honour considered the difference
between the hourly rates as a percentage that could be returned to
His Honour, accordingly appointed the Kemp Strang Clients'
nominee with the lesser hourly rate.
In delivering judgment his Honour held that there were
significant public policy considerations in liquidations being
conducted in an economic way. Having reference to that
consideration, his Honour held that practitioners who provide lower
estimates should be preferred.
The case is important for all practitioners and particularly
petitioning creditors, as it demonstrates that the Court:
will not simply appoint a petitioning creditor's proposed
appointee in circumstances where a defendant provides a consent
from a more cost effective insolvency practitioner;
will consider the appropriate appointment having reference to,
among other things, the hourly rates of the practitioner and the
size of the company; and
is inclined to appoint a practitioner with more economic hourly
rates as this may mean a greater return to creditors.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Kemp Strang has received acknowledgements for the quality of
our work in the most recent editions of Chambers & Partners,
Best Lawyers and IFLR1000.
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A recent NSW decision has implications for liquidators of trustee companies dealing with trust funds and priority debts.
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