BCD Resources NL (Subject to Deed of Company Arrangement)  NSWSC 1605
The NSW Supreme Court has handed down a decision approving an application by a deed administrator to transfer shares in BCD Resources NL (Subject to Deed of Company Arrangement) (the Company) to a third party despite the absence of consent from the owners of the shares.
The third party in question, Moina Gold Pty Ltd, had proposed a deed of company arrangement (DOCA) that would see Moina Gold contributing $2 million in funds towards the Company (such funds to be paid to a secured creditor of the company) in return for the transfer of all issued shares in the Company to Moina Gold (the Company thus becoming a wholly owned subsidiary of Moina Gold). The deed administrator did not have the written consent of the shareholders and so sought the Court’s approval pursuant to s444GA for the transfer of those shares.
The Court found that the Company was in a dire financial position, and that a liquidation of the Company would not result in a return to shareholders. The Court also found that whilst the shareholders were frustrated by the circumstances, they had either no appetite or ability to recapitalise the Company and would be no better off if the proposal did not proceed. The Court approved the transfer, stating that in the circumstances, there was no reason to deny the deed administrator the opportunity to transfer the shares in the interests of raising monies for the benefit of the creditors of the Company.
This decision highlights the powers of a deed administrator under a DOCA, and illustrates the breadth of options that can be put forward to keep a company out of liquidation for the benefit of creditors, including in the absence of support from the members of that company.