The decision in Robit Nominees Pty Ltd v Oceanlinx Ltd (in liq) (rec and man apptd)  FCA 225 (11 March 2016) provides a good example of how courts handle challenges to decisions by administrators to sell company assets.
In this case, the company’s assets were sufficient to discharge the senior secured debt but not enough to discharge junior secured debt or unsecured debt. Two of the company’s directors were unsecured creditors and one of the directors’ family companies had entered into a $3m loan facility but had failed to provide all of the promised funds. The company entered receivership and administration when its prototypes malfunctioned and had to be salvaged.
Two of the directors submitted purchase proposals to acquire the company’s IP, with one of the proposals from the director whose company had repeatedly failed to provide funding under the loan facility. Although this purchase proposal was substantially higher it was not successful and the other director’s proposal was accepted by the administrators.
One of the key findings of the case was that administrators are not under a duty to achieve the best possible price when selling assets and may take into account a variety of considerations (at ). The challenge to the administrators’ sale decision was rejected by the court.
Good summary Jason. I acted for the successful directors in this matter and the administrators were separately (and very ably) represented throughout by their own highly experienced lawyers. It was really a textbook example of how to manage a very difficult administration, with diametrically opposed interests, in an objective and dispassionate manner, without losing sight of the core objectives of Part 5.3A – something that was not lost on his Honour. One of the most interesting matters I’ve been involved in recently.
Thanks Thomas, I saw your name in the case so I’m pleased you’ve commented. I have also done a casenote on this for the Insolvency Law Bulletin which will be coming out in 2 issues time (by the way if you ever want to write for INSLB please let me know, we’d love to publish some of your insightful commentaries).