Acquiring Distressed Companies

An administrator of a deed of company arrangement has been allowed to sell the company over a shareholder's objections.

The GFC has seen a significant rise in the number of corporate insolvencies.¹

Many of those insolvencies have been the result of tighter credit, rather than a collapse of the company's business. It's no surprise, therefore, that there is a major appetite for the acquisition of distressed businesses and companies.

This market may benefit from a change made to the Corporations Act just before the GFC hit. The amendment allows an administrator to transfer ownership of a company to a buyer, without having to obtain the agreement of the shareholders.

The WA Supreme Court recently handed down the first ruling on the extent of this power.