“Get us out, and get a prov liq in!”
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P, A director and 70% shareholder of a Co sought to have it wound up and a provisional liquidator appointed: [1] - [3]
P brought this application shortly after D1 (P’s former spouse, a Dir, and a 20% shareholder) commenced family law litigation: [20]
D2, D1’s sibling who owned the remaining 10% of the Co’s issued shares, commenced their own shareholder oppression proceedings: [4], [5]
The Co sold car parts, both wholesale and retail: [6]
Appointing a prov liq is a drastic step. It requires the Court to consider the prospects of P getting a final winding up order, and whether the balance of convenience favours appointment of a prov liq (including if the Co’s assets are in jeopardy): [12] and [13]
Relations between the parties had broken down leaving the Co in deadlock, with police having been called to the Co’s premises a number of times: [16], [18]
The Co’s financial position was contested. It appeared to be profitable, though was heavily indebted to its landlord with “precarious” tenure. The Co had very little cash, but it appears P directed the Co’s money into one of its accounts: [20] - [25]
The two Ds (in the P’s absence) purported to resolve to increase their salaries slightly. There were also payments of bonuses of $10K per 6 months. The parties were in dispute about the appropriateness of these payments: [26] - [50]
Allegations were made of all parties mishandling cash which was properly the Co’s: [51] - [57]
The P caused money earned from one of the Co’s eBay stores to be paid into an account under his control, alleging the Ds had previously taken funds without a proper basis, pointing in favour of placing the hands of an independent party: [58] - [69]
Further evidence showed P using an account in his own name to pay Co expenses; removing Ds’ oversight from this aspect of the Co’s business: [74]
Neither D opposed the winding up of the Co: [83]
The Court was satisfied a prov liq should be appointed: [88]
The Co was in deadlock, with insecure premises, no sensible basis upon which it might continue to trade, and a real prospect that the Co will be wound up on a final basis pursuant to s461: [89]
All this formed a basis for the P’s application succeeding and a prov liq being appointed.
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