IAN JAMES PURCHAS AND NICHOLAS CRAIG MALANOS v worldwide workers pty limited

REASONS FOR JUDGMENT 1 This is one of three cases, heard together, which raise the same question for determination - whether certain funds form assets of a company in liquidation for distribution in the liquidation of that company or whether those funds constitute an asset held pursuant to a terminated deed of company arrangement for the benefit of deed creditors. This case concerns Worldwide Workers Pty Limited (in liquidation).

Facts 2 I adopt in substance the summary by counsel for the plaintiffs of the material facts appearing from the evidence. 3 On 16 March 2005, Mr Purchas and Mr Malanos were appointed as the administrators of Worldwide Workers pursuant to s 436A of the Corporations Act 2001 (Cth) (the Act). 4 On 9 May 2005, a Deed of Company Arrangement (the DOCA) was executed pursuant to a resolution of the creditors in accordance with s 439C(a) of the Act at the meeting convened under s 439A of the Act . 5 The Deed Fund under the DOCA was constituted by cl 4 and cl 5 of the DOCA which provided for, inter alia, Worldwide Workers to pay certain funds to the administrators at certain times. The Deed Fund also included the trading surplus from trading during the administration. Pursuant to cl 5 of the DOCA, the Retained Cash in the administration account as at the date of execution of the DOCA also formed part of the Deed Fund. 6 Clause 4.7(a) of the DOCA provided that: 'The Administrators shall hold the Deed Fund, upon trust, for the benefit of the Administrators and for those creditors who become Participating Creditors in accordance with the terms of this Deed.' Pursuant to cl 4.7(b) of the DOCA, the monies paid by Worldwide Workers to the administrators were not refundable. 7 The administrators received certain amounts (including the sum of $220 932.00 by way of contribution from Worldwide Workers) in partial compliance with the DOCA. 8 The administrators did not make any payments by way of dividend to Participating Creditors under the DOCA. 9 On 29 June 2006, the creditors passed a resolution at a meeting convened pursuant to s 445F of the Actthat the DOCA be terminated and Worldwide Workers be wound up. The administrators were appointed as liquidators. 10 The current balance of the Deed Fund is the sum of $144 249.00. The likely dividend to participating deed creditors, if the Deed Fund is distributed to them on the terms set out in the DOCA, is estimated at approximately 5.9 cents in the dollar. If the Deed Fund is included as an asset available for distribution to all creditors of Worldwide Workers, the anticipated dividend to ordinary creditors is estimated at approximately 18 cents in the dollar.