19. April 2011 14:02
The liquidators sought court approval for entering into deeds pursuant to s 477(2B) and directions they were justified in doing so under s 479(2B) of the Corporations Act. The deeds related to a proposed alternative dispute resolution process which may take up to 3 months to resolve claims. 204 proofs were lodged. 77 of these claimants are involved in separate class action proceedings. The Liquidator was in negotiations with the parent company to enter an arrangement allowing repayment of a significant proportion of claimant’s initial investment.
Determination of losses suffered was a problem as many claimants still held the products and the loss had not crystallised. The Liquidator’s issue was whether the loss alleged to have been suffered was one capable of being proved in the liquidation: . The Liquidators wished to ask each claimant to sign a deed providing that all parties be bound to participate in an alternative dispute resolution process and be bound by its rules including the need to negotiate and act in good faith and to provide the liquidators with all relevant and necessary information to support their claims .
The proposed alternative dispute resolution scheme was held to be a sensible and practical means by which creditors could establish their claims in an appropriate, potentially less burdensome manner than under a formal proof of debt procedure .
The liquidation involved a large number of claimants, complex financial products and the company was already party to a significant piece of litigation in relation to the products which had taken some time to be ready for hearing even with parties cooperating .
The Court approved the entry into the deeds and directed the liquidators were justified in entering into deeds .
Costs of the application were costs in the liquidation.
Paragraphs of Ford:
[25.112], [26.170], [26.193], [26.373], [26.404], [27.102], [27.170], [27.171], [27.172]. [27.180], [27.182], [27.620]