Synopsis
The Company, an Australian subsidiary of a global commercial real estate and investment business provided commercial property valuation services throughout Australia. Years after the global financial crisis the Company was required to respond to two separate claims from a large Australian and American Bank.
The Company’s insurers had declined to renew the Company’s run-off cover, and accordingly any new claims on the Company would be uninsured. Thus the Company was potentially insolvent and consequently the Board appointed Alan Hayes as Voluntary Administrator.
The Company had ceased trading some years prior.
Our work included
- Investigation into the business, property, affairs and financial circumstances of the Company
- Assessment of the two claims and accompanying litigation made on the Company including the available experts’ reports and the insurer’s responses
- Response to Court applications and attendance at their hearings – engagement of legal representation
- Discussion with the plaintiff’s legal representation
- Quantification of the funds available to meet claims, if successful.
Our work revealed the following issues prevailing
- Two motivated and well financed plaintiffs
- Litigation underway
- The Company was incapable of responding adequately to one or both plaintiffs’ litigation, should it be successful
- Replacement insurance was not available
Hayes Advisory philosophy is to provide solutions to benefit stakeholders, accordingly we:
- Facilitated separate settlements to both pieces of litigation, with the Australian and American Bank
- Reviewed, assessed and recommended creditors approve a mechanism (Deed of Company Arrangement “DoCA”) by which creditors were considered in 3 separate categories;
a) The general body of creditors who would receive a return of 100c in the $1.00
b) Australian Bank – whereby the current insurance available to this party was preserved
c) American Bank – whereby the current insurance available to this party was preserved
Outcome
- General body of creditors received 100c : $1.00 for their claim
- The Australian Bank’s claim was satisfied by the receipt of funds from the insurer and a contribution from the Company’s holding Company
- The American Bank’s claim was satisfied by the receipt of funds from the insurer and a contribution from the Company’s holding Company
- Accordingly, all the Company’s creditors were paid, they discharged their claims and the Company was returned to solvency and the director’s control
- Expensive, time consuming litigation was avoided, claims were satisfied and the Company returned to solvency
Team Leaders Alan Hayes and Matthew Nguyen
Year 2016
Period 3 Months
