+ Special Purpose Liquidators

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Special purpose liquidators have been around since 1887! See Re Midland Land & Investment Corporation [1887] WN(Eng) 58 by way of example. In that case, the company was subject to a court ordered winding up. The Corporations Act now enshrines the subsequent body of case law under s473(8). But there is no similar provision for a voluntary winding up - whether a creditor's voluntary winding up or a member's voluntary winding up.

However, Justice Barrett in Lo -v- Neilsen & Moller (Autogalss) (NSW) Pty Ltd [[2008] NSWSC 407 has changed all that. In May 2008, using the powers under s511 of the CA, he appointed two registered liquidators as the additional liquidators of the company. There was no application before him to have the existing liquidator replaced (which you can only do in any event on the basis of there being an actual or potential conflict of interest).

Ms Lo contended that there had been a scheme to transfer the assets of the company ("the first company") to a second company owned and controlled by the first company’s director Mr Rankine. Steps in the scheme included placing the first company into administration, appointing the liquidator Mr Wykes, having his fees paid by an unidentified third party and then placing the first company into a creditors voluntary winding up under the control of Mr Wykes with no further funds available to enable any proper investigation of the company's affairs.

Ms Lo's submission was that Mr Wykes, having been selected for appointment in the first place by Mr Rankine, continued in office only because of the support of Mr Rankine, and she believed his conduct required scrutiny by an independently minded liquidator.

Because of this lack of confidence in Mr Wykes, Ms Lo has requested that he resign but he did not.

The court was influenced by the fact that Ms Lo indicated that she was willing to finance investigations by a liquidator only if that liquidator was not Mr Wykes.

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