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An analysis by Corrs Chambers Westgarth, Taxand Australia
The Federal Court of Australia has recently ruled that potential tax fraud and evasion did not justify terminating a Deed of Company Arrangement (DOCA) on public interest grounds in the case of Commissioner of State Revenue v McCabe (No 2) [2024] FCA 662.
The judge’s decision clarified that a DOCA should only be terminated if there is substantial evidence showing significant wrongdoing by the directors or if creditors would be worse off under the DOCA compared to a liquidation scenario. The ruling reflects the principle that the public interest is better served by allowing a viable DOCA to continue rather than pursuing a liquidation, which could incur high costs and result in job losses.
Michelle Dean and Bridget Rumball from our Australian member firm Corrs Chambers Westgarth have published an analysis of this case and its implications in more detail which can be read here.
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