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ARTICLE · 29 JULY 2024

In admitting proofs of debts, liquidators do not create new liabilities

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Admission of a proof of debt by a liquidator was not akin to a judgment or settlement

AustraliaInsolvency/Bankruptcy/Re-Structuring
Mark Wilks
Mark Wilks
Brooke Egan
Brooke Egan
Varun Rao
Varun Rao
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This week's TGIF considers a recent decision of the Supreme Court of New South Wales ( Forex Capital Trading Pty Ltd (in liquidation) v Invesus Group Limited [2024] NSWSC 867). Justice Ball determined that admission of a proof of debt by a liquidator was not akin to a judgment or settlement, and that such an admission did not create a new liability of the company.

Key Takeaways

  • Liquidators are given broad powers to realise assets of the company and distribute them in accordance with the scheme in Div 6, Pt 5.6 of the Corporations Act. However, a liquidator is not determining the liabilities of the company when administering the scheme.

  • When dealing with proofs of debts, a liquidator is acting in a quasi-judicial capacity, undertaking a statutory task as an officer of the court, and is not acting as an agent of the company.

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