Race to recover dough in bakeries’ sudden collapse

Liquidators have been granted an urgent application in order to sell off perishable assets after the collapse of a Brisbane hospitality group.

The five companies, whose operations included seven bakeries, closed suddenly on May 28. Each company in liquidation was a trustee of a trust, leading to the Federal Court application on May 30 by the three liquidators to be immediately appointed receivers and managers of the trust assets.

“The liquidators’ initial investigations have revealed that a significant portion – or potentially the majority – of the assets of the companies, or at least some of the companies, are perishable and need to be realised,” Justice Derrington said in their decision published yesterday.

“Those assets are held on trust, and there are some difficulties with that, not in the least because the companies in liquidation are no longer trustees of the trusts and cannot exercise powers under the relevant trust deed, but also because the assets subject to the trusts are likely subject to certain security interests.”

The liquidators identified 35 security interests registered against one or more of each of the companies as trustees.

“There is, undoubtedly, a real risk that one or more of the secured creditors will have security interests over the perishable assets,” Justice Derrington said.


”The liquidators’ solicitors and counsel have, very properly, highlighted these facts to the court because any order the court makes will ultimately affect those interests.

“The difficulty is that there is insufficient time to notify all of the potential claimants on the property in the liquidators’ hands or to work out the nature of any interests – the assets of the companies are perishable and will soon deteriorate.

“In effect, the liquidators seek to undertake the task of salvors. That is, to protect the interests of all parties in the assets by turning them into cash or money and then to subsequently ascertain the rights and interests of the secured parties.”

Justice Derrington said the liquidators had been unable to match the stock to particular interests, and because the stock was perishable, there was insufficient time to do a stocktake with the help of secured creditors.

“To add to the confusion, it appears that, as a result of some of the perishable goods being cooked or part cooked and frozen, the original ingredients have been commingled into new items, and that makes the identification issue rather more difficult.”

Justice Derrington said the resolution sought by the liquidators was to urgently liquidate the perishable assets, then arrange to preserve the proceeds of sale so all parties with an interest could be identified and paid.


“(I)f the liquidators took those steps in the absence of a court order, they could be exposed to a claim for damages for having improperly disposed of the property,” they said.

It was “undoubtably appropriate to make the orders sought”.

“They are necessary to realise the trust assets and to enable that to be done urgently because of their perishable nature. It is necessary to appoint the liquidators as receivers because the ability to exercise any powers under the existing trust deeds was removed as a consequence of the companies’ removal from office as trustees of the trusts such that the companies in liquidation now hold the assets only as bare trustees.

“The companies in liquidation have rights of indemnity against the trust assets, and the liquidators are the natural and logical choice to be appointed as the receivers.

“They consent to their appointment in that capacity. Indeed, they are the only parties who consent, and the court can have confidence that they will carry out their duties appropriately as officers of the court.”

Read the decision here.

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