Opinion ID: 764897
Heading Depth: 2
Heading Rank: 3

Heading: The Australian Liquidation and Litigation

Text: 55 KKL went into liquidation in January 1986 in New South Wales when it lacked funds to pay its creditors. A liquidator appointed by the Australian courts assumed control and discontinued KKL's operations. The liquidator agreed to repay $6 million to Wah Kwong as a priority creditor. This agreement was incorporated in a confidential settlement with various Wah Kwong companies dated May 14, 1986, which indicated that Wah Kwong was owed $20 million in past-due charterhire and that Wah Kwong was a creditor and not a partner. The plaintiffs allege that Wah Kwong submitted show documents to the liquidator to prove its creditor status and persuaded the liquidator to forgo suing Wah Kwong in exchange for Wah Kwong's agreement to finance certain collateral litigation. Southern Cross and TIP were KKL creditors in this liquidation. 56 In 1994, the liquidator petitioned Justice Bryson of the Supreme Court of New South Wales for direction to close the proceedings in Australia, because KKL had been wound down. Vangsnes and TIP filed an application for leave to intervene and argued that Wah Kwong had misrepresented itself as a creditor. Justice Bryson rejected this argument, finding no evidence of fraud and expressing concerns about the statute of limitations, and refused to reopen the liquidator's 1986 decision. In 1996, Vangsnes filed an application to inspect correspondence and other documents in the possession of the liquidator relating to the KKL liquidation. An Australian master rejected the application in light of Justice Bryson's decision. 57