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ARTICLE · 21 FEBRUARY 2014

Independence of liquidators & taking referrals from potential targets

Holding Redlich
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True independence and impartiality are central to the roles of administrators and liquidators in a corporate insolvency.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Chris Brodrick
Chris Brodrick
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The recent Federal Court decision of ASIC & Franklin & Ors [2014] FCA 68 represents, respectfully, a noteworthy exercise by the Court in applying the law in a commercial common sense manner.

Justice Davies was asked to consider ASIC's application for disqualification of the Liquidators of Walton Construction Pty Ltd (in liq) and Walton Construction (Qld) Pty Ltd (in liq) (the Companies). The Liquidators were appointed the Administrators of the company having been referred to the directors of the Companies by Mawson Group.

Mawson Group had provided business advisory and restructuring services to the Companies prior to the appointment. It became apparent that transactions involving the Companies and Mawson Group personnel required investigation by the Liquidators. The Liquidators' firm had an ongoing commercial relationship with Mawson Group which generated significant fees. As Davies J summarised:

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