Strawbridge, in the matter of Animal Supplies (Wholesale) Pty Ltd (in liq) [2021] FCA 566

CHEESEMAN J: 1 These proceedings concern the replacement of the First Plaintiff, Mr Strawbridge, as the court appointed liquidator to seven companies, each the subject of a creditors' voluntary liquidation, in circumstances where Mr Strawbridge's retirement is imminent and the application is for the Court to appoint the Second and Third Plaintiffs, Messrs Tracy and Marsden, as joint and several liquidators upon Mr Strawbridge's resignation taking effect. The application is made pursuant to s. 499(3) of the Corporations Act 2001 (Cth) (Corporations Act), or alternatively section 90-15(1) of the Insolvency Practice Schedule (Corporations). 2 Each of the plaintiffs is a partner of Deloitte. Deloitte have outstanding claims for remuneration and disbursements against each of the relevant companies in respect of the conduct of the various liquidations to date. Messrs Tracy and Marsden seek leave, so far as it is necessary, pursuant to s. 532(2) of the Corporations Act, to act as joint and several liquidators in these circumstances. 3 For the reasons which follow, I make orders substantially in accordance the plaintiffs' proposed short minutes of order. 4 The application is supported by four affidavits, namely that of Mr Strawbridge of 21 May 2021, Mr Tracy of 21 May 2021, Mr Marsden of 21 May 2021 and Ms Smith, solicitor, of 25 May 2021, which demonstrate the following matters. 5 The Australian Securities and Investments Commission (ASIC) has been informed of the present application. By email dated 24 May 2021, ASIC informed the plaintiffs' solicitors that it does not propose to intervene and expressed the view that the matter is one properly left for the determination by the Court. 6 The seven companies that will be impacted by the resignation of Mr Strawbridge are identified in the opening paragraph of the Originating Process dated 21 May 2021 and filed 24 May 2021. I will refer to them collectively as the Companies. 7 The winding up of each of the Companies is at an advanced stage. All realisations have been completed and final dividends to creditors have been made or will be made shortly. Mr Strawbridge, an experienced liquidator, whose curriculum vitae is in evidence, estimates that the further time required to complete the winding up of each of the Companies, is between one to nine months. 8 In November 2020, Mr Strawbridge tendered his resignation from Deloitte, however, the effective date of his departure of 31 May 2021 was only agreed on 28 April 2021. It is a contractual condition of Mr Strawbridge's departure from Deloitte that he resign as a liquidator of each of the Companies by no later than 31 May 2021. As a registered liquidator, Mr Strawbridge is required to maintain adequate professional indemnity and fidelity insurance, which he has held through Deloitte. After 31 May 2021, Mr Strawbridge will not be covered by Deloitte's insurance. Thus the need to replace Mr Strawbridge as liquidator of the Companies prior to that date. 9 Mr Tracy and Mr Marsden, each a chartered accountant and registered liquidator, have consented to their proposed appointment as joint and several liquidators of the Companies upon Mr Strawbridge's resignation. Their written consents to act and declarations of independence, relevant relationships and indemnities are in evidence. Those confirmations indicate that no independence issues prevent Mr Tracy and Mr Strawbridge's acceptance of the proposed appointments. 10 The Deloitte employees with the day-to-day conduct of the relevant liquidations will continue to work on the liquidations under the supervision of Mr Tracy or Mr Marsden, thereby achieving a cost-effective transition of liquidators. 11 Since tendering his resignation, significant steps have been taken by Mr Strawbridge's staff to minimise the number of companies affected by the present application for replacement of liquidators. As a result of that work, this proceeding concerns only seven companies, rather than a larger number of insolvency appointments involving Mr Strawbridge. 12 In the event that the orders appointing Messrs Tracy and Marsden are not made, the alternative course would require each of the Companies to convene a meeting of creditors at an estimated cost of between $7,500 to $10,000 for each of the Companies in circumstances where three of the Companies have limited funds to meet such costs. By way of contrast, Deloitte agree to bear the costs and expenses associated with the present proceeding. 13 I am satisfied that it is appropriate and in the interests of the creditors of each company to make the order sought under s. 499(3) of the Corporations Act having regard to the following: (1) the desirability, for reasons of continuity and efficiency, of retaining the appointments within the same firm, upon the resignation of Mr Strawbridge, particularly when Mr Tracy has had some previous involvement in the winding up of the Companies, and there will be some overlap between the staff working on the individual liquidations and Mr Strawbridge will facilitate an efficient transfer: Re Auscabs Payment Solutions Pty Ltd [2017] FCA 1626 at [7] (Yates J). (2) the advantage going forward of a joint and several appointment in terms of logistics and continuity: Re Equiticorp Australia Ltd (in liq) [2017] NSWSC 1456 at [6] (Black J); (3) the convenience and cost-effectiveness of the Court making the order to obviate the time and costs associated with arranging for and convening creditors' meetings, particularly when Deloitte will bear the costs of the present application: Re FGM Print Pty Ltd [2018] NSWSC 1478 at [10] (Black J); and (4) the Companies' liquidations are at an advanced stage and the remaining tasks are generally of an administrative nature. 14 I am also satisfied that it is appropriate, if required, to grant Mr Tracy and Mr Marsden leave, pursuant to s. 532(2) of the Corporations Act, to be appointed as liquidators. Notwithstanding that Deloitte have outstanding claims for remuneration and disbursements exceeding $5,000 against the relevant Companies those claims are due to Deloitte in respect of work done in the various liquidations. Such leave is commonly granted in applications for replacement of liquidators for the reasons cogently expressed by Ward CJ in Equity in Re Arresso Consulting Pty Ltd [2019] NSWSC 997 at [6]-[11]. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman .

At a glance

Court

Decision date

Before

Source

Judgment (3 paragraphs)

Legislation Cited (1)

Cases Cited (4)