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ARTICLE · 10 FEBRUARY 2009

Shareholder Claims Against Insolvent Companies

DLA Piper Australia
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Corporations and Markets Advisory Committee (CAMAC) upholds decision ranking shareholder claims equally with unsecured creditors.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Catherine Merity
Catherine Merity

Corporations and Markets Advisory Committee (CAMAC) upholds decision ranking shareholder claims equally with unsecured creditors.

A further potential obstacle has been thrown in the path of distressed companies looking to restructure or re-finance, following the release of CAMAC's much anticipated report last week supporting the High Court decision in Sons of Gwalia v Margaretic [2007] (Sons of Gwalia).

The High Court in the case held that shareholder claims against a company for misleading conduct would rank equally with claims by unsecured creditors in an external administration; a decision which has attracted significant controversy. The Federal Government responded to submissions from financiers and insolvency practitioners for a change in the law by commissioning its independent adviser, CAMAC, to review the issue.

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