[2015] NSWSC 2089

M&V International Pty Limited v Francis Hedley Horwood Junior; In the matter of M&V International Pty Limited

Notice of motion dismissed.

Catchwords

CORPORATIONS – winding up – stay of winding up proceedings – where stay sought to enable recovery of property which would return company to solvency – more appropriate to appoint administrators and execute deed of company arrangement – stay sought essentially to permit company to continue trading in insolvency – held, stay denied.

Legislation cited

(CTH) Corporations Act 2001, § 459G, s 459H

Judgment

[1]
HIS HONOUR: By notice of motion filed in Court today, the defendant seeks an order staying the winding up proceedings against it pending the outcome of proceedings which it has commenced in this Division against the plaintiffs for orders for delivery up of plant, stock and equipment which it alleges have been detained or converted by the present plaintiff, and damages in respect thereof. Those proceedings were instituted by statement of claim filed on 15 June 2015. Arguably, they identify a claim which might be quantified, if it succeeds in all respects, in the order of $360,000 or thereabouts. The time for filing a defence has not yet expired.
[2]
The claims are claims which would fall within the definition of an offsetting claim for the purposes of (CTH) Corporations Act 2001, s 459H. The present plaintiffs, who are substituted plaintiffs, served a statutory demand on the defendant which was not complied with within time or at all, and in respect of which no application was made under s 459G.
[3]
Essentially, the purpose of the stay sought is to enable the defendant to recover property to enable it to resume trading, and/or damages, in the hope that that course will put it in a position to pay its considerable outstanding debts. What is sought is for the Court to authorise the company to continue in a condition of what appears to be an inability to pay its creditors, in order to enable it to do so at some distant time, if the other proceedings come to hearing, are successful, and return the company to solvency.
[4]
In my view, an application for a stay of winding up proceedings to enable a trade-out of that kind over an indefinite period with ambivalent prospects of success is not a proper ground on which to stay winding up proceedings. If the company wished to embark on some such course, the appropriate course was for it to appoint administrators and potentially seek the approval of a deed of company arrangement. It has not done so.
[5]
The notice of motion is dismissed with costs.