In the Federal Court case of Wentworth Metal Group Pty Ltd v Leigh and Owen (as liquidators of Bonython Metals Group Pty Ltd) the Liquidators of Bonython undertook a sale process of an interest in a mining tenement. This asset was also the company’s most significant asset. The unsuccessful bidder, initiated proceedings against the Liquidators alleging that they had breached their duty to achieve the “best possible price”. In finding in favour of the Liquidators, the Court held that Liquidators’ have a wide discretion under s477 of the Act (in contrast to a receiver under s420A) to use considerable business or commercial judgment in determining whether or not to sell an asset and on what terms.
This case is interesting in that it clearly makes a defining line between the actions of a liquidator in allowing them to excercise their own (business) judgement in selling assets versus those duties imposed upon a Receiver & Manager under s420A. Accordingly it looks like it would take liquidator to not act in good faith or make an error at law in order for the Court to rule against them.
This freedom in selling assets at less than market value where underpinning that decisison to sell is a compeling business case is something that should be explored more often… brave but worth considering 😉