Going concern liquidation sale: pre-acquisition liabilities and encumbrances were kept from burdening the acquired corporate debtor.

A corporate debtor sold as a going concern in liquidation was treated as transferable free from pre-acquisition liabilities, charges, encumbrances, and pending claims not preserved in the sale notice. On the basis that the sale consideration had been fully paid and a sale certificate issued, consequential reliefs were granted for extinguishment of old share capital, discharge of former directors, release of charges, continuity of licences and approvals, and protection from past claims, subject to compliance with applicable law, procedure, and prescribed fees. The reliefs were substantially allowed as follow-up measures to complete the takeover and give effect to the completed liquidation sale.

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Issues: Whether, after completion of the sale of the corporate debtor as a going concern in liquidation, the successful bidder was entitled to have the sale taken on record and to obtain consequential reliefs and concessions ensuring that pre-acquisition liabilities, charges, encumbrances, and pending claims do not burden the acquired entity.

Analysis: The application proceeded on the basis that the liquidation sale had been completed, the entire sale consideration had been paid, and a sale certificate had been issued. The reliefs sought were considered in the context of the legal position that a corporate debtor sold as a going concern in liquidation should not be burdened with past unpaid liabilities not preserved in the sale notice, and that sale proceeds distributed in accordance with the priority framework cannot be followed by claims contrary to that scheme. The requested directions covered extinguishment of existing share capital, discharge of old directors, release of charges, continuation of licences and approvals, protection against past claims, and cooperation for completion of takeover formalities, all of which were examined as consequential to the completed going concern sale.

Conclusion: The requested reliefs and concessions were substantially allowed, subject in several instances to compliance with applicable law, procedure, and prescribed fees, and the application was disposed of in those terms.

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