FEDERAL COURT OF AUSTRALIA

Purchas, in the matter of Worldwide Workers Pty Limited (in liq) [2006] FCA 1223

CORPORATIONS LAW – whether funds held pursuant to terminated deed of company arrangement are held for the benefit of deed creditors or property of the company in liquidation – direction that the funds be administered as the property of the company in liquidation

Corporations Act 2001 (Cth), s 511

Purchas, in the matter of Estore Pty Limited (in liq) [2006] FCA 1222 applied

IN THE MATTER of WORLDWIDE WORKERS PTY LIMITED (IN LIQUIDATION) ACN 091 484 025 AND THE CORPORATIONS ACT 2001 (CTH)

IAN JAMES PURCHAS AND NICHOLAS CRAIG MALANOS v worldwide workers pty limited (in liquidation) acn 091 484 025

NSD 1481 OF 2006

GYLES J

8 SEPTEMBER 2006

SYDNEY

IN THE MATTER of WORLDWIDE WORKERS PTY LIMITED (IN LIQUIDATION) ACN 091 484 025 AND THE CORPORATIONS ACT 2001 (CTH)

THE COURT:

1.                  Directs that the plaintiffs as liquidators of Worldwide Workers Pty Limited (in liquidation) are justified in applying and distributing the monies consisting of the Administration Fund identified in paragraphs 15 to 26 (inclusive) of the affidavit of Ian James Purchas sworn 4 August 2006 as property of Worldwide Workers Pty Limited (in liquidation) in the due course of winding up.

2.                  Orders that the costs of the application be paid out of the assets of Worldwide Workers Pty Limited (in liquidation) as an expense of the winding up on the basis that this application has been heard together with proceedings NSD 1364 of 2006 (In the matter of Estore Pty Limited (in liquidation) ACN 075 051 295 and the Corporations Act 2001 (Cth); Ian James Purchas and Ronald John Dean-Willcocks v Estore Pty Limited (in liquidation) ACN 075 051 295) and NSD 1467 of 2006 (In the matter of RSP Group Pty Limited (in liquidation) ACN 085 978 552 and the Corporations Act 2001 (Cth); Ian James Purchas and Ronald John Dean-Willcocks v RSP Group Pty Limited (in liquidation) ACN 085 978 552).

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE MATTER OF WORLDWIDE WORKERS PTY LIMITED (IN LIQUIDATION) ACN 091 484 025 AND THE CORPORATIONS ACT 2001 (CTH)

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.

Relief sought

11                  The substantive relief sought is as follows:

(1)               Directions pursuant to s 447D(2) and/or s 511 of the Act on the application and distribution of the Deed Fund as referred to in [23] of the affidavit of Ian James Purchas pursuant to the Deed of Company Arrangement entered into by the defendant dated 9 May 2005.

(2)               A declaration, pursuant to s 447D(2) and/or s 511(2) of the Act, that the Deed Fund is to be distributed to the Participating Creditors on the terms set out in the Deed of Company Arrangement entered into by the defendant dated 9 May 2005.

(3)               Alternatively, a declaration, pursuant to s 447D(2) and/or s 511(2) of the Act, that the Deed Fund is available for distribution as part of the property of the defendant in the due course of the winding up of the defendant in accordance with the relevant provisions of Pt 5.6 of the Act.

Decision

12                  The material facts in Purchas, in the matter of Estore Pty Limited (in liq) [2006] FCA 1222, which has just been handed down, are indistinguishable in substance from this case. Directions will be given and an order for costs made for reasons given in that decision.

Associate:

Dated: 8 September 2006