The High Court released its reasons yesterday, explaining why it upheld the “holding” Deed of Company Arrangement for Mesa Minerals.
Mesa Minerals had been placed into voluntary administration, and at the second creditors’ meeting, a majority of creditors voted to support a Deed which had some unusual features. The Deed prevented creditors from pursuing claims for at least 6 months, in order to let the administrators do some further investigation – but it didn’t make any of Mesa’s property available to begin to repay creditors.
One of the creditors – Mighty River – was not happy about that outcome and claimed, in the WA Supreme Court, that the Deed was void. Essentially, Mighty River claimed that the Deed allowed the administration period to be artificially extended, in a way that wasn’t proper. Though ‘holding’ DoCAs have been used fairly regularly, some experienced lawyers and insolvency practitioners thought that Mighty River had a point!
The High Court agreed to hear the matter and on Wednesday, they released their full reasons for confirming the validity of the DoCA.
Full reasons are available here: Mighty River International Limited V Bryan Hughes & Daniel Bredenkamp As Deed Administrators Of Mesa Minerals Limited & Anor; Mighty River International Limited V Mineral Resources Limited & Ors  HCA 38
This decision by the High Court confirms that 'holding' DoCAs remain available as one of the tools in the toolbox available to insolvency practitioners.
Stephen is a commercial lawyer with extensive experience in advising businesses in areas of acquisitions and divestments, commercial agreements, structuring, legal risk and revenue issues. He also advises on property law, with a focus on commercial and industrial property. Follow @SJR_Nicholsons