High Court confirms “holding” Deed of Company Arrangement valid

By |2022-06-29T11:50:18+10:0014-9-18|

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’ Deed of Company Arrangement’s 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 Deed of Company Arrangement (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 [2018] HCA 38 

This decision by the High Court confirms that ‘holding’ Deed of Company Arrangement’s remain available as one of the tools in the toolbox available to insolvency practitioners.

Stephen can be contacted at sjr@nicholsons.com.au or call him on (07) 3226 3944.

Sign up to receive our latest articles straight to your inbox button

Related articles

Leave A Comment

Go to Top