buzzle
Buzzle case summary
Facts: This case concerned the collapse of a company that operated a number of retail stores that sold predominantly Apple products (authorised Apple resellers). The company (Buzzle) had been created as a result of numerous earlier companies merging their Apple reselling businesses into the new company. In order to achieve this Buzzle needed the approval of Apple to swap its existing supply contracts and credit contracts with the companies to new contracts with the merged entity Buzzle. At the time of the merger Buzzle represented a large percentage of Apple’s sales in Australia. Apple was therefore concerned about the viability of new merged entity’s business and made detailed requests to Buzzle before it would give approval. Apple’s Australian finance director (Likidis) had detailed negotiations with Buzzle management and maintained an office in Buzzle’s headquarters. When Buzzle collapsed into liquidation, the liquidator took action against Apple and Likidis on the basis that they were shadow directors and/or otherwise officers of Buzzle. If they were directors of Buzzle then it may have been possible for them to be liable for insolvent trading (s588G). If they were officers it would have been possible to avoid security that Apple had taken over Buzzle and its property (under prior s267-see now s588FP). The liquidator also sought to argue that Apple was party to uncommercial transactions under s588FB (this is outside the scope of this topic). The trial judge found that neither Apple nor Likidis were directors or officers of Buzzle.
Issues: Was Apple and/or Likidis a shadow director of Buzzle? – NO (it acted to protect its own interests rather than making decisions for Buzzle; the directors of Buzzle had not been show to have been ‘accustomed’ to act in accordance with Apple’s wishes as the directors always had a discretion as to what decisions they could make)
Key points:
Young JA agreed with the trial judge’s findings on the pattern of
Facts: This case concerned the collapse of a company that operated a number of retail stores that sold predominantly Apple products (authorised Apple resellers). The company (Buzzle) had been created as a result of numerous earlier companies merging their Apple reselling businesses into the new company. In order to achieve this Buzzle needed the approval of Apple to swap its existing supply contracts and credit contracts with the companies to new contracts with the merged entity Buzzle. At the time of the merger Buzzle represented a large percentage of Apple’s sales in Australia. Apple was therefore concerned about the viability of new merged entity’s business and made detailed requests to Buzzle before it would give approval. Apple’s Australian finance director (Likidis) had detailed negotiations with Buzzle management and maintained an office in Buzzle’s headquarters. When Buzzle collapsed into liquidation, the liquidator took action against Apple and Likidis on the basis that they were shadow directors and/or otherwise officers of Buzzle. If they were directors of Buzzle then it may have been possible for them to be liable for insolvent trading (s588G). If they were officers it would have been possible to avoid security that Apple had taken over Buzzle and its property (under prior s267-see now s588FP). The liquidator also sought to argue that Apple was party to uncommercial transactions under s588FB (this is outside the scope of this topic). The trial judge found that neither Apple nor Likidis were directors or officers of Buzzle.
Issues: Was Apple and/or Likidis a shadow director of Buzzle? – NO (it acted to protect its own interests rather than making decisions for Buzzle; the directors of Buzzle had not been show to have been ‘accustomed’ to act in accordance with Apple’s wishes as the directors always had a discretion as to what decisions they could make)
Key points:
Young JA agreed with the trial judge’s findings on the pattern of