Sons of Gwalia and the High Court : Implications for Shareholders, Creditors and the Insolvency Framework

This article discusses the implications of the High Court of Australia's decision in Sons of Gwalia Ltd vs. Margaretic. That decision found that shareholders who claimed damages for misrepresentation under statutory misleading or deceptive conduct provisions were able to claim status as creditors in the company's insolvency. The claims of these shareholders were not postponed until all non-shareholder creditors had been fully satisfied. The decision raises numerous problems for the Australian corporate insolvenncy regime which we discuss