FEDERAL COURT OF AUSTRALIA

Austral Mercantile Collections Pty Limited v Rachid Holdings Pty Limited (In Liquidation) [2012] FCA 760 

Citation:	Austral Mercantile Collections Pty Limited v Rachid Holdings Pty Limited (In Liquidation) [2012] FCA 760	
		
Parties:	AUSTRAL MERCANTILE COLLECTIONS PTY LIMITED ACN 083 776 149 v RACHID HOLDINGS PTY LIMITED (IN LIQUIDATION) ACN 103 752 889	
		
File number:	NSD 1251 of 2009	
		
Judge:	EMMETT J	
		
Date of judgment:	15 June 2012	
		
Legislation:	Corporations Act 2001 (Cth) s 482 	
		
Date of hearing:	25 May and 4, 8, 15 June 2012	
		
Place:	Sydney	
		
Division:	GENERAL DIVISION	
		
Category:	No catchwords	
		
Number of paragraphs:	9	
		
Counsel for the plaintiff:	The plaintiff did not appear	
		
Counsel for the defendant:	The defendant did not appear	
		
Counsel for Mohammed Rachid:	M Painter	
		
Solicitor for Mohammed Rachid:	Reuben George Lawyers	

IN THE FEDERAL COURT OF AUSTRALIA		
NEW SOUTH WALES DISTRICT REGISTRY		
GENERAL DIVISION	NSD 1251 of 2009	
 
BETWEEN:	AUSTRAL MERCANTILE COLLECTIONS PTY LIMITED ACN 083 776 149
Plaintiff
	
AND:	RACHID HOLDINGS PTY LIMITED (IN LIQUIDATION) ACN 103 752 889
Defendant

JUDGE:	EMMETT J	
DATE OF ORDER:	15 JUNE 2012	
WHERE MADE:	SYDNEY	

THE COURT ORDERS THAT:

1.	The winding up of Rachid Holdings Pty Limited (in liquidation) (the Company) be terminated on 15 June 2012.
2.	The liquidator’s fees and disbursements be fixed in the sum of $18,942 and be paid from the assets of the Company.
3.	The proceeding be otherwise dismissed. 

Note:	Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA		
NEW SOUTH WALES DISTRICT REGISTRY		
GENERAL DIVISION	NSD 1251 of 2009	
 
BETWEEN:	AUSTRAL MERCANTILE COLLECTIONS PTY LIMITED ACN 083 776 149
Plaintiff
	
AND:	RACHID HOLDINGS PTY LIMITED (IN LIQUIDATION) ACN 103 752 889
Defendant

JUDGE:	EMMETT J	
DATE:	15 JUNE 2012	
PLACE:	SYDNEY	

REASONS FOR JUDGMENT
1		On 27 November 2009, the Court made an order for the winding up of Rachid Holdings Pty Limited (the Company).  The order was made on the application of Austral Mercantile Collections Pty Limited (the Petitioning Creditor).  The winding up order was made on the basis of the failure by the Company to pay a statutory demand served by the Petitioning Creditor.  It appears that the order was made in absentia because the demand was not brought to the attention of the Company’s principals.  That, in turn, was the result of an omission to file with the Australian Securities and Investments Commission (the Commission) up-to-date particulars of the Company’s registered office.  Whether or not the Company was insolvent at the time of the winding-up order, it was deemed to be insolvent by reason of its failure to comply with the statutory demand.  
2		Mr Mohammed Rachid (Mr Rachid), who is a shareholder of the Company, and therefore a contributory, has now applied for an order under s 482 of the Corporations Act 2001 (Cth).  Under s 482(1), at any time during the winding up of a company, the Court may make an order terminating the winding up on a day specified in the order.  An application for such an order may be made by, amongst others, a contributory of the company.  On such an application, the Court may, under s 482(2), before making an order, direct the liquidator to give a report with respect to a relevant fact or matter.  
3		The only other shareholder of the Company is Mr Mohammed Rachid’s brother, Mr Shakar Rachid.  Each of them holds one share in the capital of the Company.  Mr Shakar Rachid has indicated his support for the application now being made.  The present application is not opposed by the liquidator appointed by the Court when the winding up order was made, and the liquidator has provided a report as to the Company’s affairs.  
4		Mr Rachid has taken steps to discharge the liabilities of the Company.  Thus, he has provided money from his own funds to enable payment of all of the outstanding creditors of the Company as at the date of the winding up order, other than the secured creditors, to whom I shall refer shortly.  As a result of discharging the debts owing to unsecured creditors, Mr Rachid has become a creditor of the Company in respect of the amounts paid by him.  In addition, Mr Rachid has paid interest to the secured creditor, Westpac Banking Corporation (Westpac), in respect of loans made by Westpac to the Company that are secured on the two properties owned by the Company, which are the Company’s principal assets.  That further discharge of indebtedness of the Company has increased the amount of the indebtedness of the Company to Mr Rachid.  
5		The liquidator has provided an account of his costs and expenses, and has agreed to fix the amount of his fees and disbursements at the sum of $18,942.  While the secured debts in favour of Westpac have fallen due for payment, Westpac has indicated that it does not intend to take steps to enforce its rights under the mortgages over the two properties owned by the Company.  Westpac has also indicated that it does not oppose the order now sought that the winding up of the Company be terminated.  The Commission has also indicated that it has no objection to the application presently before the Court.  
6		The liquidator has prepared a balance sheet of the Company as at 14 June 2012.  The balance sheet shows total assets, including the two properties, in the sum of $2,058,182, and total liabilities of $2,131,472, including the secured indebtedness to Westpac and the indebtedness of the Company to Mr Rachid.  Thus there is a deficiency of assets to liabilities in the sum of $73,290.  
7		Mr Rachid has provided to his solicitors a sum of $100,000, which is presently held in his solicitors’ trust account.  Mr Rachid proposes to capitalise the debt owing by the Company to him, which presently stands at the sum of $201,747.  He also proposes to provide the Company with working capital by subscribing the sum $100,000 presently in his solicitor’s trust account in payment up of further shares in the capital of the Company.  
8		While there was some doubt as to the precise formulation of the intended capitalisation of the Company, it is now clear that it is proposed that, as soon as practicable, Mr Rachid will subscribe for 301,747 ordinary shares in the capital of the Company at $1 a share.  He will give an irrevocable direction to the Company to apply the debt of $201,747 presently owing to him by the Company in payment up in full of 201,747 of shares in the capital of the Company.  He will also direct his solicitors to apply the sum of $100,000 presently in their trust account in payment up of the balance of 100,000 shares.  
9		The effect will be that the paid-up capital of the Company will then be 301,749 shares.  Once the capitalisation exercise has been completed, the Company will be solvent, and will have no unsecured creditors.  Of course, the subscription for shares cannot be completed before the winding up is terminated.  However, Mr Rachid has executed a deed poll in which he covenants to capitalise the Company in the way that I have described.  Accordingly, I propose to make orders along the lines sought.
	
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.	

Associate:

Dated:	16 July 2012