Wentworth Metals Group Pty Ltd (Wentworth) applied under the Corporations Act 2001 (Cth) (Act), for a review by the Federal Court of Australia of a decision by the liquidators of Bonython Metals Group Pty Ltd to sell Bonython's interest in a joint venture mining project to Pure Metals Pty Ltd.
Although its bid was the highest, Wentworth was an unsuccessful bidder for the interest. In its application, Wentworth argued that the duty of controllers under section 420 of the Act to achieve the best possible price in asset sales was applicable to liquidators, and therefore the liquidators had breached this duty.
The Court found that the duty to achieve the best possible price in section 420 did not apply to liquidators and commented that generally Courts will be reluctant to interfere with liquidator's decisions based on business judgment. The Court found that, before intervening in a liquidator's decision, an applicant has the onus of satisfying the Court that the decision is of real significance, the alleged defect arose out of a lack of good faith or erroneous approach in law or principle, and that there are real and substantial grounds for questioning the correctness of the decision.
Wentworth's application failed because it had not satisfied that onus. The liquidators had conducted a robust sale process including advertising and extensive negotiations with a number of bidders. They had sound business reasons for accepting Pure Metal's bid as Wentworth's bid was not as commercially favourable. Therefore, the Court found that the liquidators' conduct was not unreasonable or defective.
See Court decision here.