Liquidators preparing their own insolvency reports

Can a Liquidator prepare their own insolvency report for court proceedings? Yes (in theory) … but I think there are two hurdles you need to overcome before you can say for certain.

One of which, I am saving for an article I am writing for the ARITA journal. Spoiler: some professional body members may be excluded from preparing their own (due to by-laws) … but more on that soon!

The second of which, has been confirmed by numerous: cases, courts and jurisdictions.

The Court in Foyster v Foyster Holdings Pty Ltd [2002] NSWSC 722 put it best:

[I]t was contended … that the liquidator was a partisan expert, whose opinion should be rejected, but Anderson J disposed of this objection in the following terms: Even if bias is shown in the expert it remains a matter of weight to be attached to the report and his evidence.

Therefore, it is not whether the insolvency report is admissible (cases say it is!), but how much weight the Court should give it.

If a Liquidator’s remuneration and costs are solely dependant on the outcome of the case, then of course the Court will lend it less weight (but only if there are countervailing circumstances).

Even Justice Edelman in the famous FPJ Group case allows as admissible a liquidators own solvency report (although, for other reasons, cold water is poured on that report).

To name a few other cases that favour the same view:

  • Davies & Nicol as joint and several Liquidators of Harris Scarfe Ltd v Chicago Boot Co Pty Ltd [2011] SASC 27, 28-31;
  • Pearce v Gulmohar Pty Ltd [2017] FCA 660, 155;
  • Sheahan v Hertz Australia Pty Ltd (1994) 14 ACSR 209, 213;
  • Pegulan Floor Coverings Pty Ltd v Carter (1997) 24 ACSR 651; and
  • In the matter of Bias Boating Pty Limited (receivers and managers appointed) (in liquidation) [2018] NSWSC 1977.

#Insolvency #Expertreports #SVVoidables

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