Grand Court asked to choose one liquidator over another
In the recent decision of Re Adamas Heracles Multi Strategy Fund, FSD No 133 of 2021, the Grand Court was asked to rule as to the identity of proposed liquidators; not on the ground of alleged suitability, but because of an alleged undesirability of having the same liquidators appointed over affiliated companies – by reason of conflict.
It was argued by the former management of the companies that the risk of claims between the companies, in principle, made it undesirable to have the same liquidators adjudicating on, and proceeding with, such claims. The case is mildly redolent of another recent case concerning objections to the appointment of a liquidator due to alleged lack of independence, also recently reported in this blog.
Following the granting of an unopposed winding up petition, the Court proceeded to appoint the same liquidator over two affiliated companies whilst rejecting the argument that different liquidators should be appointed. It was held that it was sensible and cost-effective to have the same liquidators appointed over group companies, on the understanding that any conflicts that should arise in relation to inter-group claims could be dealt with by the appointment of additional liquidators.
In the event that the views of the stakeholders and management differed, the views of the former are generally accorded considerable weight, and in this case, the Court expressed that it had formed the impression that the management wished to subtly obstruct, rather than facilitate, an efficient litigation process - presumably because of anxieties as to where that process would lead.
The Court also rejected the contention that prospective creditors have no standing to seek to influence the Courts’ decision on the identity of the liquidators to be appointed.