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ARTICLE · 25 MAY 2015

Contingent claims maturing after termination of DOCA extinguished

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A DOCA may extinguish contingent claims under a guarantee, even where those claims arose after termination of the DOCA.

AustraliaInsolvency/Bankruptcy/Re-Structuring
David Abernethy
David Abernethy
Jason Salman
Jason Salman
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BACKGROUND

The Appellants supplied building products and services on credit to Newglen Nominees Pty Ltd (Newglen). Dalesun Holdings Pty Ltd (Dalesun) guaranteed Newglen's obligations. This guarantee was supported by an equitable charge over Dalesun's land. Dalesun went into administration and subsequently entered into a deed of company arrangement (DOCA). The DOCA released all claims against Dalesun, including contingent claims. The Appellants did not vote in favour of the DOCA. The DOCA was terminated after its purpose was achieved.

The Appellants supplied further goods on credit to Newglen. Newglen defaulted and the Appellants sought to recover the unpaid sums under the guarantee, including by enforcing the charge.

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