NSW Can We Report to ASIC?

Discussion in 'Commercial Law Forum' started by firsttimefounder, 6 December 2018.

  1. firsttimefounder

    firsttimefounder Active Member

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    Hi there,

    I was a shareholder and creditor in a company that went into voluntary administration. The entire VA process smells of a phoenix deal. The directors bought back the company for a steal wiping out all shareholders and creditors after putting forward a DOCA.

    A majority of creditors voted in favour of the DOCA but the votes were close...

    Except for a new development in that the creditors have now received a new notice that the terms of the DOCA are very different and we all have to prove out debt position again.

    I believed that the DOCA ultimately executed should, under s 439C, be in terms of the deed “specified in the resolution” that was approved at the creditors meeting.

    What happens if the terms of the executed document are different to those approved at the meeting?

    How on earth can the Administrators permit such action? Can we report them to ASIC?

    What action can creditors take if the terms of DOCA change after they were voted on?
     
  2. DMLegal

    DMLegal Well-Known Member

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    This is probably one of the most interesting questions I have seen on this forum.

    I realise your question is not really referring to the Phoenix aspect, but out of interest, have the Directors started trading in the same type of business again?

    If I tried to answer this question in detail it would take quite a while, however since you referred to s 439C I presume you are familiar with the Corps Act. If you haven't already I suggest you have a look at s 444G and s 445A-H. Those provisions deal with variations and termination of a DOCA. Let me know if you have any questions after checking out those provisions.

    It kind of goes without saying but given the complexity of the matter I suggest you obtain independent legal advice.
     
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  3. firsttimefounder

    firsttimefounder Active Member

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    Thanks so much DM Legal.

    This has been quiet a cliff hanger to watch this chain of events unfold over the past year or so. The VA was almost certainly a move to sideline minority shareholders and get control back to a select group. Add to the mix a host of other fascinating corporate manoeuvres like vote stacking to related parties.

    The administrators have handed control back to the Directors and the company is still trading, I know because someone I know just placed an order on their website so they are taking cash under the same name.

    I'm just getting my head around the Corps Act. I just came across an article on 444G and will look it plus 445-H now. Thanks so much for directing me to this specific area.

    Much appreciated.

    cheers
     
  4. DMLegal

    DMLegal Well-Known Member

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    It just got more interesting with your point regarding minority shareholders. Unfortunately that is quite a known tactic, there are a few articles you could have a look at, one of which that sounds similar to your situation - Resolute Lawyers | News Updates: Insolvency Laws Used To Eliminate Minority Shareholders

    Again, unsure if your knowledge of the Corps Act, but this conduct is known as 'Oppression' and is provided for in s 232-4 (and many other) sections of the Corporations Act.

    The Corps Act is a beast of a Statute, probably the hardest Act to comprehend in my view. Indeed after 'dealing' with it almost daily since it was enacted I still struggle from time to time. For what it is worth, if you are trying to explain or understanding something relating to it you should use a diagram, makes it much easier to comprehend.

    Again, good luck, don't hesitate to post again if you have any questions and I'll do my best to help.
     
  5. firsttimefounder

    firsttimefounder Active Member

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    Thanks so much.

    I am not a lawyer but this entire experience as a creditor & shareholder has been a real eye opener.. one enormous deep dive immersion into the Corps Act and Insolvency Laws too. I think I've managed to get a good grasp of the key issues from my readings. But I sure have learnt the hard way about the dirty dog tactics by this crew.

    I'll start mapping this out on my big A3 pad now!

    cheers
     
  6. DMLegal

    DMLegal Well-Known Member

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    Very true, good luck!
     
  7. firsttimefounder

    firsttimefounder Active Member

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    @DMLegal, is there any part of the Corps Act that stipulates if creditors should

    a) Receive the minutes the first or second creditors meeting? The administrators upon request for a copy have told Creditors, it's been lodged with ASIC.

    b) A copy of the executed DOCA... The administrators have told Creditors that they can site this at their offices if we wish to see it.
     
  8. DMLegal

    DMLegal Well-Known Member

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    Hi mate,

    Just to be clear, do you mean ‘should’ as in ‘can they get a copy’ or ‘must receive a copy’.
     
  9. firsttimefounder

    firsttimefounder Active Member

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    I'd like to focus on what is required under their legal obligations as an administrator. They've been terrible with comms in general and creditors have been feeling like the've been purposefully kept in the dark.

    I guess I want to understand what comms are " a must" during a VA process?

    The fact they are making us go to lengthy efforts to site the DOCA document. And they are refusing to send minutes of any meetings to creditors upon request. Seems very suss to me!
     
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