[2016] NSWSC 1366
In the matter of BBY Limited (receivers and managers appointed) (in liquidation) (No 2) (2018) 363 ALR 492
[2008] HCA 4
Onefone Australia Pty Limited v One.Tel Pty Ltd (2010) 78 ACSR 163
[2010] NSWSC 498
Parker, in the matter of Dengi Pty Limited (in liq) [2018] FCA 444
QGC Pty Limited v Bygrave (2010) 186 FCR 376
Source
Original judgment source is linked above.
Catchwords
(1997) 24 ACSR 79
Deloughery v Weston (2010) 79 ACSR 180[2016] NSWSC 1366
In the matter of BBY Limited (receivers and managers appointed) (in liquidation) (No 2) (2018) 363 ALR 492[2008] HCA 4
Onefone Australia Pty Limited v One.Tel Pty Ltd (2010) 78 ACSR 163[2010] NSWSC 498
Parker, in the matter of Dengi Pty Limited (in liq) [2018] FCA 444
QGC Pty Limited v Bygrave (2010) 186 FCR 376[2010] FCA 659
Re Anglican Insurance Limited (2008) 26 ACLC 147[2008] NSWSC 41
Re Ansett Australia Limited and Korda (2002) 115 FCR 409[2002] FCA 90
Re Estate Late Chow Cho-PoonApplication for judicial advice (2013) 10 ASTLR 251[2013] NSWSC 844
Re Southern Cross Airlines Holdings Limited (in liq.) [2000] 1 Qd R 84
Judgment (7 paragraphs)
[1]
There was no appearance by any defendant.
File Number(s): 2015/237028
[2]
Judgment
HER HONOUR: This is an application by the liquidators of BBY Ltd (receivers and managers appointed) (in liquidation) for directions under the repealed sections 479 and 511 of the Corporations Act 2001 (Cth), as preserved by the transitional provisions in Part 10.25 of the Act. The liquidators were appointed in May 2015, initially as administrators but, in June 2015 as liquidators. These proceedings were commenced in August 2015 and the liquidators have sought a series of directions since then.
BBY was the operating company of a group of companies referred to as the BBY Group which provided a range of financial services including stockbroking, dealing in financial products, asset management, financial management and research. Put shortly, the liquidation revealed that client monies held in over a hundred bank accounts (Client Segregated Accounts or CSAs) had been intermingled, records were incomplete and there was a substantial deficiency in client monies of some $12 million. The directions sought over the course of these proceedings concern how the liquidators should deal with these monies and "Recoveries", being monies received, or to be received, by BBY since the appointment of administrators including under arrangements with clearing houses, hedge counterparties and other financial service providers.
Somewhat unusually in these proceedings, the defendants, by and large, are representatives of groups or classes of BBY's clients. Specifically:
1. The first defendant is a representative of all clients of BBY with an ETO Account, that is, an account established with BBY in connection with exchange traded options, with open positions as at 15 May 2015.
2. The second defendant is a representative of all clients of BBY with an Equities Account, and all BBY clients with an ETO account without an open position as at 15 May 2015.
3. The third defendant is a representative of all clients of BBY with a Futures Account, FX Account, SAXO Account (being an account in respect of products offered by Saxo Capital Markets) or Other Products Account.
4. The fifth defendant represents all clients with an account with BBY established in connection with financial products offered by Interactive Brokers LLC (IBL).
In a different category, the fourth defendant is Securities Exchange Guarantee Corporation Ltd.
An application by a liquidator for directions "is not the occasion for the making of order affecting the rights of outsiders … its effect … is merely to sanction a course of conduct on the part of the liquidator so that he or she may adopt that course free from the risk of personal liability for breach of duty: Re Anglican Insurance Limited (2008) 26 ACLC 147; [2008] NSWSC 41 at [38] per Barrett J. A court confines itself, in giving directions, to administrative matters and has no authority to resolve substantive matters in dispute between the liquidator and a third party: ibid. It is ordinarily inappropriate for a direction to be given which will adversely affect identifiable legal rights or interests of other persons or will entitle the liquidator to do so with impunity: Re Southern Cross Airlines Holdings Limited (in liq.) [2000] 1 Qd R 84 at 93; (1998) 16 ACLC 1,393 at 1,400 per Fitzgerald P, with whom McPherson JA and Thomas J agreed. As Goldberg J explained in Re Ansett Australia Limited and Korda (2002) 115 FCR 409; [2002] FCA 90 at [44]:
When liquidators and administrators seek directions from the Court in relation to any decision they have made, or propose to make, or in relation to any conduct they have undertaken, or propose to undertake, they are not seeking to determine rights and liabilities arising out of particular transactions, but are rather seeking protection against claims that they have acted unreasonably or inappropriately or in breach of their duty in making the decision or undertaking the conduct. …
The Court may give directions where it will be "of advantage in the liquidation": Dean-Wilcox v Soluble Solution Hydroponics Pty Limited (1997) 42 NSWLR 209 at 212; (1997) 24 ACSR 79 at 81. The Court will not generally give a direction where the matter relates to the making or implementation of a business or commercial decision or when no legal issue is raised or there is no attack on the propriety or reasonableness of the liquidator's decision, but may do so where there is such an attack is in prospect: In the matter of 7 Steel Distribution Pty Limited (in liquidation) (receivers and managers appointed) [2013] NSWSC 669 at [20] per Black J; In the matter of Dungowan Manly Pty Limited (in liq) [2018] NSWSC 1083 at [17].
These proceedings have, since inception, been complex and hard fought as demonstrated by three judgments of Brereton J thus far: In the matter of BBY Limited (receivers and managers appointed) (in liquidation) (2016) 116 ACSR 154; [2016] NSWSC 1366; In the matter of BBY Limited (receivers and managers appointed) (in liquidation) (No 2) (2018) 363 ALR 492; [2018] NSWSC 346 and In the matter of BBY Limited (receivers and managers appointed) (in liquidation) (No 3) [2018] NSWSC 1718. In the balance of these reasons, I will refer to these decisions as "BBY (No 1)", "BBY (No 2)" and "BBY (No 3)" respectively. The directions which the liquidators have sought on this and previous occasions have the potential to affect a large number of clients of BBY. It is appropriate that the Court give directions in this case as it will be of advantage in the liquidation, in particular, to enable the liquidators to progress the distribution of the assets of BBY amongst its many clients.
The company in liquidation is a trustee. The liquidators, thus, also seek advice under section 63(1) of the Trustee Act 1925 (NSW), which provides:
A trustee may apply to the Court for an opinion advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument.
As Kiefel J observed in Macedonian Orthodox Community Church St Petka Inc. v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [196]:
The principal purpose of the section, and the opinion, advice or direction given under it, is the protection of the interests of the trust. Another purpose is the protection of a Trustee who is acting in that regard and upon advice. Securing the latter purpose may ensure the attainment of the principal purpose, by removing the concern of a Trustee about exposure beyond their usual indemnity.
As Lindsay J expressed it in Re Estate Late Chow Cho-Poon; Application for judicial advice (2013) 10 ASTLR 251; [2013] NSWSC 844 at [182]:
The application of s 63 and Part 54 must, in each case, be informed by the purposes they serve. Those purposes include both the protection of trust property and, as an incident of the obligations imposed on a Trustee, protection of a Trustee in the due administration of trust property … . Another way of putting this may be to say that the principal purpose of the Court is the protection of the interests of the trust and, incidentally, protection of a Trustee acting in those interests …
Essentially for the same reasons as already stated in respect of the application for a direction to the liquidators, I consider it appropriate to give directions to the liquidators as trustees.
[3]
Non-appearance and non-service of some defendants
It is common for such proceedings to be brought with notice to the parties affected by the direction, although there is no invariable rule that such an application cannot be brought on an ex parte basis, for example, in Onefone Australia Pty Limited v One.Tel Pty Ltd (2010) 78 ACSR 163; [2010] NSWSC 498, upheld by the Court of Appeal in Deloughery v Weston (2010) 79 ACSR 180; [2010] NSWCA 148.
A potential difficulty has presented itself as the legal representatives for the second and fifth defendants apparently consider themselves to have ceased to act for their clients but have not filed a notice of ceasing to act. Given the representative quality of the second and fifth defendants, their non-appearance at the hearing of this application meant that not only one but potentially many clients of BBY were not heard on this application.
Their non-appearance appears to have occurred in the following circumstances. On 2 May 2019, the solicitors for the fifth defendant sent an email to the liquidators:
Dear Colleagues
We would be grateful if you could please remove Jonathan Milner and me from this email chain and any further correspondence relating to the BBY liquidation.
Our client, Mr Nadin, was added as a representative defendant to the proceedings for the purposes of representing IB clients in respect of the directions and other relief sought by the liquidators.
Those proceedings have been determined. The Court has made final orders, including in relation to costs, and our client's final costs approval application has been heard and determined.
Our retainer to act for Mr Nadin has been completed. We do not hold instructions to act for Mr Nadin, or any other IB client, in relation to any ongoing matters concerning the winding up of BBY.
The terms of the email were replicated in an email from the solicitors for the second defendant of 1 July 2019.
However, neither Arnold Bloch Leibler nor Mills Oakley have filed a notice of ceasing to act under rule 7.29 of the Uniform Civil Procedure Rules 2005 (NSW). Failure to do so has the consequence prescribed by rule 7.30:
A change for which notice is required or permitted to be given under this Division does not take effect:
(a) as regards the court, until the notice is filed, and
(b) as regards any person on whom it is required or permitted to be served, until a copy of the notice, as filed, is served on that person.
It also has the result that the liquidators' solicitors are not at liberty to contact the second and fifth defendants directly, notwithstanding the invitation of their legal representatives, as there is currently a solicitor on the record for those parties.
[4]
Directions sought
In the interests of making use of the time already taken to hear the application, I propose to set out the directions sought and whether they appear appropriate, but subject to hearing from the second and fifth defendants. As already mentioned, on 13 August 2015, the liquidators commenced these proceedings seeking directions as to how to deal with client monies and Recoveries and how to distribute those monies and Recoveries amongst the various groups or classes of BBY clients. On 21 October 2015, Brereton J made orders by consent establishing an interim regime in respect of the allocation of the liquidators and BBY's costs amongst the classes of BBY clients including:
10. Until further order, the Liquidators' remuneration, costs and expenses, and BBYL's costs and expenses, in connection with administering the Client Segregated Accounts and these proceedings, reasonably incurred, be paid out of the Client Segregated Accounts on a pro-rata basis having regard to the balance of the Client Segregated Accounts on the date of the payment, on an indemnity basis as determined in accordance with Order 12.
11. Until further order, the Liquidators' remuneration, costs and expenses, and BBYL's costs and expenses, in connection with recovering or attempting to recover and administering the Recoveries, reasonably incurred, be paid out of the Recoveries (to the extent they have been received) to which the relevant remuneration, costs and expenses are attributable on an indemnity basis in accordance with Order 12.
12. For the purposes of Orders 10 and 11, the matter be referred to a Registrar for examination and approval of the Liquidators' remuneration, costs and expenses and BBYL's costs and expenses, and the Registrar's decision be subject to review in the same manner as a Registrar's decision approving the remuneration of a liquidator.
By the liquidators' Interlocutory Process, this interim regime, save for Order 12, is sought to be revived as a temporary measure.
The orders of 21 October 2015 were amended on 23 February 2016 after the fifth defendant had been joined to the proceedings. As later explained by Brereton J in BBY (No 3) at [33]:
… it was a pragmatic interim arrangement, not founded on principle, to meet the necessity for funds to be released to the parties and the Liquidators to enable the prosecution of the proceedings. It was always amenable to later variation to meet the justice of the case. It was always open - and some of the parties envisaged from an early date - that having regard to inter alia the outcome of the proceedings, some other allocation of the costs of the proceedings might ultimately be appropriate.
[5]
ORDERS
For these reasons, I made the following orders:
1. Order the plaintiff to serve the Amended Interlocutory Process and affidavits in support together with a copy of this judgment on the solicitors for the second and fifth defendants by 5.00pm on Friday, 9 August 2019.
2. Pursuant to the supervisory jurisdiction of the Court, order the solicitors for the second and fifth defendants to file and serve an affidavit explaining their apparent non-compliance with rule 7.29 of the Uniform Civil Procedure Rules 2005 (NSW) by 5.00pm on Friday, 16 August 2019, the cost of which is not to be charged to their clients without further order of the Court.
3. Vacate the listing of the Interlocutory Process and the Amended Interlocutory Process on 12 August 2019.
4. Stand the matter over to 2.00pm before Rees J on 19 August 2019.
5. Grant liberty to the parties to apply on one day's notice exercisable by email to the chambers of Rees J, copied to all other parties.
[6]
Addendum
On 19 August 2019, this matter came before the Court for the making of final orders on the plaintiffs' Amended Interlocutory Process. I was satisfied, having read the further evidence filed in accordance with the directions made on 7 Augusts 2019, that the second and fifth defendants had been properly served and did not wish to be heard on this application. I therefore made orders in the form sought by the plaintiffs, as set out in [30] above.
Also on that occasion, counsel for the plaintiffs informed the Court that the Amended Interlocutory Process moved upon had cited the incorrect power for giving directions to the liquidators in these proceedings commenced in 2015, in light of the transitional provisions in Part 10.25 of the Corporations Act enacted in conjunction with the Insolvency Practice Schedule. I am satisfied, however, in light of the authorities cited in the judgment that the result of the judgment would be identical under either the repealed sections 479 and 511 or the Schedule: see, for example, In the matter of Dungowan Manly Pty Limited (in liq) [2018] NSWSC 1083 at [16]. I have amended [1] and [4] of these reasons accordingly.
[7]
Amendments
07 August 2019 - Amendment to case title
20 August 2019 - Amendments made to: coversheet, [1], [4].
20 August 2019 - Further amendment to [1]; inclusion of Addendum [32]-[33]
20 August 2019 - Fix paragraph numbering
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 20 August 2019
As Reeves J noted in QGC Pty Limited v Bygrave (2010) 186 FCR 376; [2010] FCA 659, the solicitor on the record represents an essential component of the court's ability to maintain control over the litigation before it; the role of the solicitor on the record is critical to the court's ability to ensure that the cases before it are managed efficiently, promptly and inexpensively: at [53], [57]. In a busy Corporations List, the ability of the court to get through its volume of work in a timely manner is heavily dependent on the legal representatives of the parties promptly filing notices of ceasing to act. Whether this has been done affects whether notice of the application has been brought, or is deemed to have been brought, to the attention of the party in question and thus whether the Court can proceed to determine the application in the event of non-appearance of that party, being a common occurrence in this and all other lists in this Court.
The problem is compounded because the liquidators have not taken step of serving the Interlocutory Process on the solicitors for the second and fifth defendants, notwithstanding their emails. The liquidator has advised the second defendant's solicitor of the substance of their proposal. The fifth defendant has not had the benefit of such and advice, although Stephen Vaughan, one of the liquidators, says that the fifth defendant "is the least affected by the proposal as there will be no transfers from the IB product line assets until IB product line tracing claims have been ascertained". That may be so, but in circumstances where two classes of BBY clients do not appear to be aware of this application, it leaves the Court with some disquiet.
I am not prepared to make the directions sought in the absence of service of the Interlocutory Process and supporting affidavits on the legal representatives for the second and fifth defendants. Further, although the liquidators' counsel did not seek such an order, pursuant to the inherent supervisory jurisdiction of the Court over its officers, I require the solicitors on the record for those defendants to provide an affidavit explaining their apparent non-compliance with rule 7.29 of the Uniform Civil Procedure Rules.
One consequence of the interim regime was that costs were borne according to the cash balances in the various CSAs from time to time. As some classes of customers had cash balances, whilst other classes of customers (such as the fifth defendant) had Recoveries, the former class of BBY clients bore a disproportionate share of the costs.
On 27 September 2016, Brereton J delivered his first judgment in these proceedings which, inter alia, determined the rights of the fifth defendant. On 5 December 2016, his Honour made orders giving effect to his first judgment, including, in relation to the fifth defendant:
The Liquidators would be justified in distributing the cash proceeds of realisation of those assets to BBY's IBL clients, subject to those clients being afforded an opportunity to assert and prove an in specie claim to particular assets held by IBL.
The fifth defendant was excused from participating in the final hearing, following which BBY (No 2) was delivered on 19 March 2018.
The liquidators then sought approval of a process to enable the liquidators to verify, adjudicate and process client claims to CSAs and Recoveries in accordance with BBY (No 1) and BBY (No 2), so that distributions could be made to clients. The proposed process would utilise a bespoke online portal specifically designed, constructed and managed by Link Market Services (Link). Link's estimated fees for attending to this task were some $420,000 plus GST. Unsurprisingly, Link was not prepared to undertake the work unless assured of payment of its fees nor were the liquidators prepared to fund these fees. In BBY (No 3), delivered in November 2018, Brereton J approved the proposed distribution process. At [79]:
Approval of the Distribution Process, which I have indicated I will give, necessarily imports that it is reasonable for the Liquidators to engage Link, and that their reasonable out-of-pocket costs of doing so are a proper disbursement for which they are entitled to be indemnified out of the trust property, namely the CSAs and Recoveries. Such disbursements fall within the order that provides that the Liquidators' costs and expenses (and the costs and expenses of BBY to the extent that they are distinguishable), in connection with administering the CSAs, reasonably incurred, be paid out of the assets of the product lines on a pro rata basis, according to the value of assets in each product line as a proportion of the total assets of all product lines.
In BBY (No 3), his Honour also considered a range of submissions from the defendants to vary the interim regime for allocation of costs amongst the defendants. His Honour also noted on that occasion that the liquidators were yet to hear from clients in the class represented by the fifth defendant as to whether they wished to pursue an in specie distribution. At [101]:
… in correspondence with other parties, the Liquidators have explained that they have not yet received a direction to realise the Recoveries in the Saxo and IB product lines (noting that the current orders permit IB clients to propound a tracing claim), and are hopeful that upon receiving such a direction, a large proportion of the positions will be able to be liquidated in a short time frame. The applications presently before the Court do not include an application for such a direction, and if one is considered necessary it seems desirable that it be made in a manner which will incur as little additional cost as practicable. For that reason, I will permit such an application to be made returnable, if the Liquidators so desire, when short minutes to give effect to this judgment are brought in, with a view to its being disposed of on that occasion if possible.
On 26 November 2018, Brereton J made orders to give effect to his reasons in BBY (No 3), including reallocating the liquidators' remuneration costs and expenses among product lines as follows:
Costs re-allocation among product lines
4. The Liquidators' remuneration, costs and expenses (and the costs and expenses of BBY to the extent that they are distinguishable) in connection with administering the CSAs and the proceedings, reasonably incurred, be paid out of the assets of the product lines on a pro rata basis according to the value of assets in each product line as at the Reference Date as a proportion of the total value of the assets of all product lines as at the Reference Date, save that:
a. the Fifth Defendant, and the assets in the IB product line, should not bear any of the legal costs and disbursements of the Liquidators in connection with the proceedings referable to the period after 5 December 2016 up to (but excluding) 19 March 2018;
b. the Liquidators' remuneration, costs and expenses (and the costs and expenses of BBY to the extent that they are distinguishable) in connection with recovering or attempting to recover and administering the Recoveries, reasonably incurred, should be paid out of the assets of the product lines to which the relevant remuneration, costs and expenses of the recovery are attributable.
5. The legal expenses of the First Defendant, Second Defendant, the Third Defendant and the Fifth Defendant in connection with the proceedings, reasonably incurred, be paid out of the assets of the product lines on a pro rata basis according to the value of assets in each product line as at the Reference Date as a proportion of the total value of the assets of all product lines as at the Reference Date, save that the assets in the IB product line should not bear any of the legal costs and disbursements of the First Defendant, the Second Defendant or the Third Defendant referable to the period after 5 December 2016 up to (but excluding) 19 March 2018.
6. For the purposes of:
a. Order 4, the procedures established by Order 12; and
b. Order 5, the procedures established by Order 7,
of the Orders made on 19 October 2015, and any approvals given under them, continue to apply and, accordingly, as soon as reasonably practicable the Liquidators transfer any amounts necessary between:
c. the combined assets of the Saxo, Futures, FX and Other product lines; and
d. the assets of the IB product line; and
e. the assets of the ETO product line; and
f. the assets of the Equities product line,
so as to give effect to Orders 2, 4 and 5 with respect to the approvals given as at the date of transfer.
Client monies distribution
7. The Liquidators are justified in adopting the Distribution Process to verify and adjudicate Client claims and to make any Distributions of Client entitlements including with respect to any Unclaimed Money.
Distribution Process costs and disbursements
8. The Liquidators and BBY need not, prior to paying costs, expenses and disbursements from, or reimbursing themselves out of, the CSAs or Recoveries in respect of the Distribution Process, obtain the approval of the Court pursuant to the orders made on 19 October 2015 and, to the extent necessary, Orders 10 to 13 of the orders made on 19 October 2015 and varied accordingly.
The Distribution Process was extensively defined in the orders and included an opportunity for the fifth defendant to notify whether the IB clients sought to trace an asset or receive a cash distribution only. So far, 39 claimants in the IB product lines have notified the liquidators that they wish to make a tracing claim.
On 25 April 2019, the liquidators apparently wrote to the parties (I say apparently because I do not have the letter) proposing a temporary payment method which would enable partial payment of approved costs going forward so that costs approved would be paid out of the product lines in accordance with Orders 4 and 5 of 26 November 2018, save that the amount that would otherwise be payable out of the IB product line be held back until that payment could be made. It may have been this letter, or a follow-up of it, which prompted the email from the fifth defendant's solicitor of 2 May 2019.
On 17 June 2019, the liquidators wrote to the defendants, apart from the fifth defendant, with the following proposal:
In circumstances where the Distribution Process cannot be completed without the involvement of Link, the Liquidators proposed temporary (partial) payment method is not workable with respect to Link. Accordingly, until the completion of the Distribution Process, the Liquidators propose to calculate the amount to be paid out of each product line account in the manner contemplated by the Old Costs Regime to pay all current and future invoices of Link in full. Subsequent transfers can then be made between product lines at the completion of the Distribution Process to give effect to Orders 2, 4 and 5 of the 26 November Orders, in circumstances where remaining IB assets are liquidated.
The liquidators' solicitor sought the consent of the remaining active defendants to this proposal, noting that continuing uncertainty as to payment of Link's invoices would risk that company ceasing work, which would have a major impact on the distribution process.
The first, third and fourth defendants consent to a temporary return to the interim regime of 21 October 2015 whilst the second and fifth defendants are silent and, as far as I can tell, unaware of this application.
In support of the application, Mr Vaughan explained that the practical outcome of the ability of the fifth defendant to opt to trace their entitlement into assets held in the IB product line is that, until the IB product line clients have gone through the claim, proving and adjudication process and elected to make a tracing claim (or not) and have it determined (possibly with an appeal to the Court), not all assets in the IB product line can be liquidated. This means it is not practically possible to make payments of the parties' remuneration, costs and expenses as the 26 November 2018 orders require those costs to be borne in a roughly pro rata basis from the CSAs and Recoveries of each product line. That is, there would be a payment shortfall equivalent to the IB product line share until sufficient IB product line assets can safely be liquidated.
Accordingly, Mr Vaughan says it is not practically possible for the liquidators to make payments strictly in accordance with the orders made on 26 November 2018 as there are certain assets, predominantly those in the IB product line, that are not in the form of funds in a bank account. The difficulty for the liquidators is that the distribution process cannot commence in any substantive way until Link Market Services has been paid. For the same reasons, Mr Vaughan says it is not practically possible to transfer funds from the IB product line in accordance with Order 6 made on 26 November 2018. Those orders do not permit the liquidators to pay Link Market Services in full or on time and a practical solution to progress the Distribution Process and to pay Link Market Services is required.
The liquidators propose, on a temporary basis, to revert to the interim regime of 19 October 2015 in respect of the payment of the costs and expenses of Link in order to continue the Distribution Process. Once the Distribution Process is complete and all remaining assets of the product lines are converted to liquid funds within the control of the liquidators, the liquidators will carry out Orders 2, 4 and 5 made on 26 November 2018 with transfers of funds between CSAs being made to reflect the appropriate sharing of remuneration, costs and expenses as required by those orders. That is to say, it is only the timing of the application of the 26 November 2018 orders which is affected, not the ultimate effect. Mr Vaughan says that there remain assets of sufficient value in each product line to make any necessary transfers between product line CSAs as soon as reasonably practicable. For the IB product line, this will require some assets to be liquidated. On this basis, the liquidators seek the following directions:
1. The costs and expenses of the First Plaintiffs (the Liquidators) and the Second Plaintiff (BBYL) in respect of the engagement of Link Market Services (Link) (Link Costs) be paid in accordance with orders 10 and 11 of the 19 October Orders, without the requirement to comply with order 12 of the 19 October Orders, in place of orders 4 and 5 of the 26 November Orders, until the earlier of (the Distribution Process Completion Time):
a. the time when the Distribution Process is complete; and
b. the time when all of the assets in each BBYL product line have been converted to liquid funds under the control of the Liquidators, save for any Tracing Assets,
whereupon orders 4 and 5 of the 26 November Orders will apply to any Link Costs which have not been paid as at that time and any future Link Costs.
It seems to me that the directions sought by the liquidators are appropriate, as proceeding in this manner will enable the liquidators to progress the approved Distribution Process now, which is in the interests of all clients of BBY, in whatever class. This is an administrative matter. It appears to me to be of advantage in the liquidation to endorse the liquidators reverting to the interim regime of 19 October 2015 on a temporary basis, and then make the necessary adjustments so that the orders made by Brereton J on 26 November 2018 are, in the final result, adhered to. However, for the reasons already given, I am not prepared to make these directions until the second and fifth defendants have been properly served and, if they wish, have been heard.