This case concerned an application to terminate or set aside a Deed of Company Arrangement (DOCA) under s.445D of the Corporations Act 2001 (Cth), or ss.75-41 and 75-42 of the Insolvency Practice Schedule.
A joint venture company was incorporated for the purpose of engaging in residential, commercial and infrastructure construction projects in Queensland. It involved a joint venture between two shareholders: China Rail Construction Group (a Chinese domiciled company) and Rimfire Construction Pty Ltd. The company was placed into administration on 16 November 2017. At the second meeting of creditors, a majority of creditors by value voted in favour of a DOCA proposed by China Rail, but a majority of creditors by number did not. The Chairperson, one of the joint and several administrators, exercised his casting vote in favour of the DOCA. The DOCA compromised a potentially substantial claim against China Rail in return for China Rail arranging a DOCA fund of $8 million for creditors.
Nine months after the DOCA was executed, three creditors applied to set aside the DOCA, arguing that it was not in the best interests of creditors, because creditors would be better served by seeking to enforce rights against China Rail in the Courts.
The Federal Court of Australia (Reeves J) found that the plaintiffs failed to establish any of the grounds for the Court to terminate the DOCA.
Stewart Webster appeared for the joint and several administrators of the company, instructed by Clayton Utz.