Liquidators´ Duties Clarified

Article by David Goldman and Michael Rose

Relief has arrived for insolvency practitioners keen to learn the extent of the court's discretion to order enquiries into their conduct, following the NSW Court of Appeal's decision in Hall v Poolman [2009] NSWCA 64, which overturned the trial judge's order.

While the Court of Appeal held that there was jurisdiction for the trial judge to order an enquiry, the trial judge's discretion miscarried because he:

• failed to take into account the public interest in bringing insolvent trading proceedings; and

• incorrectly found that the liquidators were required to seek judicial directions before accepting litigation funding.

This article sets out the issues raised by this decision that can affect the conduct of liquidations. We also list a series of tips for liquidators to be aware of.