Extensions of statutory time for VT – a receipt for disaster

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.

Link to case – http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VSC/2020/222.html

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?

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