A liquidator may be appointed voluntarily (as a CVL) after a court liquidation has already been filed, according to a very recent Federal Court decision.
Ordinarily, this is not possible without leave of the Court (Section 490(1) of the Corporation Act).
Otherwise, how could it be fair to a petitioning creditor who applies to court to wind-up a company, only for their application to be circumvented by the company’s members and a loss of any right to costs being recovered.
The facts in the case are kind of odd. If you face a similar instance, you should seek expert insolvency advice.
On Friday, 22 June a creditor applied to court to wind-up Tow.
On Saturday, 23 June a liquidator was appointed voluntarily by Tow.
They claim they had no knowledge of this issue until Monday, 25 June. Understandably so!
Tow also had a court order requiring it to destroy confidential State of Qld documents by Thursday, 28 June.
The Court, in balancing whether to ratify the liquidators appointment, considered, the:
- lack of prior notice by either party in appointing the liquidator;
- urgent record destruction order, which could possibly be best handled by a liquidator; and
- petitioning creditor had consented to the order, subject to costs being provable in the liquidation.
What’s your view?