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New Scaff Pty Ltd v SAR Constructions Pty Ltd[2005] QSC 130

New Scaff Pty Ltd v SAR Constructions Pty Ltd[2005] QSC 130




No BS2800 of 2005

NEW SCAFF PTY LTD (ACN 084 904 405)

First Plaintiff






DATE 28/04/2005


HIS HONOUR: This is the return date of an application to wind up the respondent company. On the evidence, it is clearly insolvent.

The application was resisted by administrators who were appointed yesterday. They argue that the application should be adjourned to allow them to pursue a proposed deed of company arrangement. The proposal is at a very early stage and the administrators are not yet in a position to say anything about it other than from what they have been told by the directors in the course of the last 24 hours.

The proposal however would have some potential benefit for creditors in two respects. Firstly, it involves the contribution by a third party of $40,000 although that third party is not identified. Secondly, it involves an agreement by a director of the company Mr Ferentino that he would not prove in the proposed arrangement and he claims that his debt is of the order of $168,000.

It is said that the total creditors of the company are about $400,000 and the existing assets are about $90,000. The administrators seek an adjournment of the application for winding up until the 2nd June which is a day after a period of 35 days from their appointment.

In other words, it is to a date following that by which the second meeting of creditors would have to be held under what is proposed.

The company is no longer trading. If it is under administration rather than liquidation for the next month or so, much of the work done by the administrators would be useful for the ultimate winding up of the company should the proposed arrangement not proceed.

The solicitor for the applicant rightly points out that the administrators have not been in a position to form any reliable view of their own as to the prospects for this proposed deed of company arrangement and that they have had to act upon information provided by the directors of a company which, on the face of things, has been traded whilst insolvent.

It is also rightly submitted that the weight of the evidence is affected by the non-disclosure of the source of the $40,000. Allowing for those matters, however, there seems to me to be a prospect, putting it no higher than that, that the continuation of the administration would be beneficial for creditors.

No harm should come to the assets or the interests of creditors whilst the administrators pursue this proposal. If it comes to nothing then the likely outcome is that the company would then go into liquidation either through the actions of creditors or upon the return of this application.

I am satisfied that it is in the interests of the company's creditors, at least at this point, for the company to continue under administration rather than be wound up. Accordingly, it will be ordered that the winding-up application filed 6th April 2005 be adjourned until 2 June 2005 or in the event that the administration comes to an end before then to such earlier date as is fixed by one day's notice given by the applicant.

HIS HONOUR: The remaining matter is one of costs. The concern is that if the deed of company arrangement is approved the applicant would not be able through that regime to recover its costs as the applicant creditor as it would in the event of a winding up.

The appropriate order, in my view, is that the respondent pay to the applicant its costs of the adjournment to be assessed on a standard basis.


Editorial Notes

  • Published Case Name:

    New Scaff Pty Ltd v SAR Constructions Pty Ltd

  • Shortened Case Name:

    New Scaff Pty Ltd v SAR Constructions Pty Ltd

  • MNC:

    [2005] QSC 130

  • Court:


  • Judge(s):

    McMurdo J

  • Date:

    28 Apr 2005

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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