DON’T MAKE VT EXTENSION REQUESTS THE DAY BEFORE‼️ I am rarely flummoxed by a voidable transaction (VT) case, but Friday’s one has got me.
On appeal, the VSC has quashed an earlier decision to extend the period in which a Liquidator has to commence a VT proceeding.
The claim now falls outside its statutory time period and is lost forever.
I offer this for those not so familiar with VT law:
- once a liquidator is appointed, they generally have 3 years to bring VT proceedings (s588FF(3)(a) Corporations Act)
- during this period, a court can extend it (s588FF(3)(b))
- courts usually grants the extension, especially for mitigating factors
Why no extension?
1. liquidator A was replaced by liquidator B, about 17 months in. Liquidator B took about 19 months to apply for the extension – this delay was supposedly “too long, unreasonable … and not sufficiently explained”
2. liquidator A was under no duty to assist liquidator B
3. the liquidation is not complex and the proposed cause of action is straightforward
4. “the failure to obtain funding is not … a sufficient reason for delay”
5. Cause of action not sufficiently strong
6. presumptive prejudice to the defendant was not adequately assessed
Do you agree or disagree?