Provisional Liquidation Ordered Due to Management Breakdown

The court granted an order for provisional liquidation of a company due to a breakdown in management, appointing a provisional liquidator under section 461(k) of the Corporations Act 2001.

New South Wales Supreme Court

CITATION : [NAME] v [COMPANY] [2004] NSWSC 1267 HEARING DATE(S) : Wednesday 29 December 2004 JUDGMENT DATE : 29 December 2004

JUDGMENT OF : Simpson J DECISION : (i) [NAME] appointed provisional liquidator of the 1st Defendant; (ii) costs of this application costs in the provisional liquidation.

CATCHWORDS : interlocutory process - provisional liquidation LEGISLATION CITED : Corporations Act 2001 (Cth), s461(k) [NAME] - Plaintiff/Applicant PARTIES : [COMPANY] Defendant [NAME] - 2nd Defendant FILE NUMBER(S) : SC 6917/04 COUNSEL : [redacted] SOLICITORS : [redacted] 2nd Defendant - in person

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

SIMPSON J

Wednesday 29 December 2004

6917/04 [NAME] v [COMPANY] & Anor

JUDGMENT 1 SIMPSON J: By originating process filed 22 December 2004 the applicant, [NAME], sought an order that the first defendant [COMPANY] be wound up pursuant to s461 1(k) of the Corporations Act. 2 By interlocutory process filed the same day the applicant sought the appointment of a provisional liquidator of the first respondent. 3 Notice of each application was served upon the company and [NAME], identified as a respondent in each application and who the evidence shows was, with the applicant, a director of the company. 4 Evidence in affidavit form was tendered showing conclusively in my opinion that the relationship between the two directors of the company has broken down to a point where whatever business is conducted by the company can no longer be conducted by it. 5 When the interlocutory application came before me Mr [NAME] appeared unrepresented. However, he gave evidence and in doing do he accepted the fundamental proposition that the company can no longer operate. The difficulty is, on the one hand, on behalf of the applicant it is contended the company operates a business of conducting a kiosk which is in its busy period at the moment and that there are grave concerns about the financial stability and the financial conduct of that business. Mr [NAME]'s evidence was to the effect that the business was not the business of the company. In my opinion that is not a dispute that is raised for resolution in the present proceedings although it is obviously of serious concern in the inevitable winding up of the company. 6 Mr [NAME] accepts the company will have to be wound up and I consider that to be a very realistic concession. 7 Accordingly, I make the following orders: (i) That [NAME] be appointed the provisional liquidator of the first defendant. (ii) The costs of this application be costs in the provisional liquidation. 8 I order that the orders I have made be entered forthwith, and I stand the originating process over to the Equity Registrar's list on 25 February 2005.

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