Company Wound Up Due to Insolvency and Mismanagement

The court ordered the winding up of a company due to insolvency and the conduct of its affairs being contrary to the interests of its members. The company had ceased trading and owed significant debts. The decision was made under sections 461(1)(e) and (f) of the Corporations Act 2001.

Supreme Court New South Wales

Medium Neutral Citation: [NAME] -v- [COMPANY] [2012] NSWSC 173 Hearing dates: 21 February 2012 Decision date: 21 February 2012 Jurisdiction: Equity Division - Corporations List Before: Hammerschlag J Decision: An order for the winding up of the defendant Catchwords: CORPORATIONS - winding up - Corporations Act 2001 (Cth) ss 461(1)(e) and (f) - a vehicle established to operate a franchise has ceased to trade and is insolvent - winding up order made - no issue of principle Legislation Cited: Corporations Act 2001 (Cth) Category: Principal judgment Parties: [NAME] - Applicant [COMPANY] - Respondent Representation: Counsel: [redacted] Solicitors: [redacted] File Number(s): 2011/277624

EX TEMPORE Judgment 1HIS HONOUR: The plaintiff moves for an order that the defendant company (the company) be wound up on the grounds that: (a)the directors have acted in the affairs of the company in their own interests rather than the interests of the members as a whole or in a manner that appears to be unfair, unjust to the other members (s 461(1)(e) of the Corporations Act 2001 (Cth)); and (b)the affairs of the company are being conducted in a manner that is oppressive or unfairly prejudicial to or unfairly discriminatory against a member or members or in a manner that is contrary to the interests of the members as a whole (s 461(1)(f). 2The factual background appears from the plaintiff's affidavit, sworn 26 August 2011, and two affidavits of his solicitor [NAME] sworn 6 October 2011 and 16 February 2012. 3The company, is a vehicle through which the plaintiff and his co-shareholder, [NAME], purchased and operated a [NAME] franchise at Jerrabomberra, New South Wales. Since 3 February 2010 [NAME] has been the sole director of the company. 4During Mr [NAME]'s stewardship of the company, and on or about 16 January 2012, the franchisor terminated the franchise for breach by the company in failing or refusing to open for trade or otherwise operate in accordance with the franchise arrangements. The business is no longer operating under the [NAME] name or at all. The company has current debts of $45,617.77 and insufficient funds to meet them. The company's solicitors have withdrawn. 5The company was called out of Court but did not appear. 6I am satisfied that the affairs of the company are being conducted in a manner contrary to the interests of the members as a whole. Moreover, it is insolvent. It should accordingly be wound up. A consent by Mr [NAME], liquidator, has been filed. 7I make the following orders. 8Pursuant to s 233(1) of the Corporations Act 2001 (Cth) I order that [COMPANY] 36 [PHONE] be placed under winding up and that [NAME] of [NAME], Level 3, Engineering House, 11 National Circuit Barton, Australian Capital Territory, be appointed as liquidator. These orders are to be entered forthwith.

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