ABSTRACT
There have been 8,043 aggrieved shareholder1 claims made to the administrator in the corporate insolvency of Sons of Gwalia Ltd, with a gross value exceeding AUD 565 million.2 These figures are a graphic demonstration of the impact on the claims of unsecured creditors in corporate insolvencies and of the administrative burden placed on external administrators to deal with these new claimants. The treatment of securities claims in insolvency proceedings on par with creditor claims, arising from the pivotal decision in Sons of Gwalia Ltd v Margaretic3 by the High Court of Australia, represents an unmapped coordinate in the cartography of Australian insolvency law with enormous implications, in particular, for the efficiency and expediency goals of corporate rescue laws.4 Australia’s insolvency framework is not designed to cater for such mass aggrieved shareholder claims, nor is it predicated on the prospect of such claims as it falls outside of the traditional risk profiles of shareholders and creditors where equity claims in corporate insolvencies are subordinated to the claims of other creditors.5
