A sleeping asset saved
'Our clients had an unusual situation in a members’ voluntary liquidation. Shortly after lodging the necessary reports with ASIC to trigger deregistration of the entity, a sleeping asset (of unknown and contingent value) was discovered by their client, the company’s holding entity. We met the client within a day, filed and served the application and supporting affidavit the following week, and two weeks later achieved the desired outcome with commendation by the court.'
Adrian Lasky, Partner, Reconstruction & Insolvency
Our client
Our client was a liquidator for a
leading international accounting and insolvency firm. The company
our client was liquidating was a subsidiary in a large group of
entities.
Their ambition
Our client wanted a swift and
commercial solution that would both achieve the desired outcome and
enable them to retain a sleeping asset for their ultimate client.
The process required two stages: first, obtaining the required
extension of time from the court; and second, determining a
commercial strategy for distributing the asset to the holding
company.
The first task (extending the timeframe
for deregistration) was subject to strict time restrictions. This
meant that if the court application was not successful on the first
return, there was limited time to address any concerns the court
might have. There was no room for error. This stage was
successfully achieved with the court granting the application at
the first return date, with a commendation on the quality of
submissions provided to the court.
The second task (distributing the
asset) was complicated by clauses in the primary agreement, which
imposed preconditions on an assignment by the company of its
interest. Included in these preconditions were significant
notice periods, which time would have significantly delayed the
disposition of the asset. It was further complicated by the fact
that since the primary agreement (dated in the 1990s prior to the
holding company's acquisition of the company), multiple assignments
had occurred of various rights and duties between the parties. We
structured a commercial outcome that facilitated the assignment of
the asset as desired within 4 weeks of the date of the successful
court application. This was many months faster than the timeframe
provided in the assignment preconditions.
Enhancing their success
We were able to provide a swift resolution to a matter that
concerned both our client and its ultimate client. The resolution
saved an asset from being ultimately transferred to ASIC, and
instead enabled the asset to be transferred to the holding company
and remain to the benefit of the group. This enabled our client to
achieve both its own objectives and those of one of its largest
clients in a swift and commercial manner.
Behind the headlines
This matter included two facets: a court application and an
asset transfer. Accordingly, the litigation and 'front-end'
commercial members of our Reconstruction & Insolvency team
worked together, focusing on their speciality, to achieve the
outcome within a short timeframe. In this way, we were able to
access the broad range of skills and experience available
throughout the firm to achieve the desired result.