Sons of Gwalia Limited (Gwalia) is currently the subject of a deed of company arrangement. An investor, Mr Margaretic had purchased Gwalia shares on the market some 11 days prior to Gwalia going into administration. He claimed he was misled by that company, and that as a consequence he had claims against the company in damages.
The Court ruled that, if the allegation was established, Mr Margaretic was to be regarded as a creditor in the administration of Gwalia, that his claim was not to be postponed to other ordinary creditors of the company, and that even if he were to be postponed, he could still attend and vote at meetings of creditors of Gwalia.
The case confirms that purchasers of shares have been given extra rights where the company in which they invest engages in misleading conduct, and that those rights have elevated their status from shareholder to creditor in the insolvent administration of a company.
