By Stephen Mullette a Principal of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.
In a not unsurprising decision, a liquidator has been unable to protect the balance of the funds available to him in winding up (described as the “Litigation Fund”) from potentially being made available as security for the defendants’ costs.
In Nucros (WA) Pty Ltd (In Liquidation) v Ultra Plast Pty Ltd (2017) WASC 1, the liquidator was not personally a party to the proceeding, which meant the company was susceptible to a security for costs application, pursuant to section 1335 of the Corporations Act 2001. The liquidator had recovered a preference claim from the ATO and established a Litigation Fund for the purpose of continuing certain proceedings commenced prior to his appointment. The balance of the litigation fund at the time of the security for costs application was approximately $135,000. The defendants sought an order for the provision of $90,000 security.