Monday, March 19, 2012

Release from undertakings, third party access to documents, and litigation funding

In a recent decision, the Federal Court of Australia in Re ABC Learning Centres Limited (No. 11) [2012] FCA 40 dealt with the liquidators' application to be released from an undertaking previously given to the court not to provide certain documents to the litigation funder IMF, except in accordance with a confidentiality regime. The case also dealt with an application brought by several banks seeking to set aside certain orders for production of documents or alternatively, to be excused from further production.

Justice Cowdroy held that it was in the best interests of ABC Learning and its creditors that a variation of the existing undertaking be allowed, especially as IMF's involvement was crucial to the further investigation of the charge granted by ABC Learning to a syndicate of banks, which was alleged to be a voidable transaction and the subject of potential litigation.

This case is important because it demonstrates the weight the court places on the role litigation funders play in enabling insolvency litigation. The court considered that the role of IMF in funding future public examinations outweighed the interests of the banks in maintaining confidentiality over produced documents, especially as confidentiality could be maintained in accordance with a confidentiality regime.