AMI -a tale of two court orders

In AMI (administrators appointed) blog we pointed out that the ACCC obtained orders against the company and its administrators requiring it to inform creditors and potential customers that the company was in administration, that it was in their opinion insolvent, and to put this fact on the AMI website. This order was obtained in Melbourne on 10 June.

Meanwhile. across in Sydney, on 10 June,  AJ Windeyer [2011] NSWSC 574, was making an ex parte order confirming that the administrators could sell the business to a company controlled by related parties, prior to the second creditors’ meeting.The administrators stated that the choice was between the offer of sale to related party, which would only benefit employee creditors, an unacceptable offer by another party, or liquidation. Part of the reason for the urgency of the Sydney court order was said to be that across in Melbourne later that day, the ACCC’s application if successful, would effectively mean the business would have to cease trading. Windeyer AJ confirmed that judges don’t like making commercial decisions for administrators, but ordered that the administrators would be justified in taking either of the options.

So with the imprimatur of the NSW ex parte court order, the business (and its website) passed into the hands of the new purchaser (see SMH 21 June) , and thus the requirement to inform creditors that AMI was in administration, and to inform potential customers prior to the creditors meeting in mid-July, was no longer  possible for the administrators to comply with, as the administrators subsequently informed the court. It is understood that ACCC is still pursuing its original action in relation to company conduct, that was commenced the day before the directors put AMI into VA.

In recent weeks we have seen the ACCC pursue disclosure obligations in relation to a number of other press-worthy businesses dealing daily with consumers. The AMI case serves as a reminder that companies and their insolvency officeholders must comply with consumer laws in this respect, and also with their obligation to notify that a company is in insolvency procedure, on its official documents and correspondence.

We at BILS will be pressing the Government to clarify that this should, in this day and age, extend to company websites, as these are the main (or sometimes the only) source of contact with the public in many retail businesses. The case also raises issues as to oversight of consumer and competition law in relation to insolvent companies.

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