“This does not inspire confidence” – the appointment of special purpose liquidators

Special purpose liquidators (SPLs) are becoming increasingly common.

They are often appointed when a creditor prefers another liquidator to investigate certain matters, and when that creditor will only fund that liquidator. Conflicts of the appointed liquidator are another reason to appoint an SPL

In this case, while making no adverse findings against the incumbent liquidators, the Judge appointed SPLs sought by a creditor, for these reasons. 

Firstly, it was preferable that the investigations involving the creditor’s interests be properly and fully funded. The incumbents were proposing to continue on a self-funded basis, or perhaps to seek funding later to pursue any claims following the Investigations.  But the creditor was not prepared to fund them.

Secondly, the Judge was “a little concerned, and it is not insignificant so far as the appearance of impartiality is concerned” about the past engagement of the firm of the incumbents other creditors voluntary liquidations involving the same company officer holder.

Thirdly, it appeared from the work in progress reports that investigations only started after the application by the creditor was filed.  Indeed, the initial position taken by the incumbent liquidators was that the appointment of the SPLs was a matter for the Court and they indicated an intention to resign. A form 524 of November 2016 lodged with ASIC estimated the completion date of the administration to be March 2017, and the only delay would be caused by ‘ASIC Investigations’.

“This does not inspire confidence”.

State of Victoria v CTM Training Solutions Pty Ltd (In Liq) & Ors [2017] VSC 47


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