Mamounia Pty Ltd (in liq) was the trustee of a family trust that conducted a restaurant and pizzeria in Balwyn. The restaurant was run by five Kurban brothers who were also the beneficiaries of the trust (by themselves or related entities). The business has been sold. The brothers have fallen out. The company was put into a voluntary liquidation. The company now holds the trust assets as a bare trustee.
The liquidators have realised some $1.3 million in the liquidation and have identified a number of unsecured creditors, unrelated to the family, that are owed some $800,000. The brothers and their related entities have made claims in the liquidation as unsecured creditors. On one account, the claims of the brothers could total some $9 million.
The liquidators sought undertakings from the brothers that they would not seek to prove in the liquidation to enable the unrelated creditors to be paid and to allow the disputes between the brothers to be resolved. The brothers have not given the undertaking sought.
The liquidators are unable to determine the validity of the brothers' claims and seek directions under s 511 of the Corporations Act 2001 (Cth) that they are justified in being reimbursed, out of the trust assets, for reasonable cost and expenses in conducting investigations and examinations into claims by the brothers and possible claims that the company may have against the brothers, and any insolvent trading claims or for recovery of preferential payments.
The Court finds that the liquidators are so entitled as of right as those activities fall within the principles in Universal Distributing Co Ltd (in liq) (1933) 48 CLR 171, and are justified in doing so in the circumstances of this case.