Declaring a special levy to customers and security holders in a liquidation

6 categories of stock (see photo below) worth approximately $470k, at least 97 affected retail customers, different classes of secured creditors, and MYOB data was not entered correctly … who gets what and how does the liquidator cover her/his costs and fees?

This was the scenario faced recently by a liquidator, which has been revealed in a recent case from the Chief Justice of the NSW Supreme Court: In the matter of Plantation Outdoor Kitchens Pty Ltd (In Liq) [2019] NSWSC 925. 

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There are some important lessons in this one:

1. the customers in categories A to C trumped the security interest holders (including any PMSI holders or AllPAAP holders) – but only if the stock item had a label or was allocated to a particular customer in the company’s system

2. category D and E stock remained the property of the respective security interest holders – as you’d expect

3. category A to F (not including D) must pay a proportional special levy to the liquidator to cover all reasonable costs and fees (pre-calculated in the court case). These costs included: rent, insurance, professional fees, moving costs, auctioneers, the court case

This is a really pragmatic resolution to what can be a difficult area for Liquidators to navigate.

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