Superdraft Australia Pty Ltd Placed Into Liquidation

Update: 5 December 2022

We have become aware of a letter from Superdraft’s liquidators dated 30 November 2022 addressed ‘To the Recipient as Addressed’. From the context of the letter, it appears that it was intended to go to all of Superdraft’s partners. If you believe you should have received this letter, but have not, we suggest that you contact the liquidators to seek a copy.

The letter contains what is essentially an invitation for Superdraft’s partners and the respective homeowners to contact each-other with a view to making arrangements to complete their projects.

It would have been useful if more clear language had been used to indicate a waiver of the liquidators’ rights under the non-solicitation clauses, but it looks like that was the intention. If construed this way, we believe it would be very difficult for the liquidators to succeed in any subsequent claim against the background of their invitation, however you may wish to seek your own legal advice in this respect.

Here are a few extra things for Superdraft partners to consider:

• The letter does not address the ownership of copyright or any other intellectual property.
• The invitation likely only applies to the relevant Superdraft partner who was involved in the project and is unlikely to allow poaching.
• If a Superdraft partner has not directly received a copy of the letter from the liquidators, it would be prudent to approach them to clarify whether they were an intended recipient.
• The letter also includes a ‘proof of debt’ form, with an invitation for it to be completed with the details of any amounts owed by Superdraft.
• The liquidators expressly disclaim any warranties in relation to, or responsibility for, any future commitments or work undertaken by agreement between Superdraft’s former customers, suppliers and partners.
• This is intended to be general advice only, and as always, we encourage you to seek your own legal advice in relation to your specific circumstances.

Initial Notification: 15 November 2022

Superdraft Australia Pty Ltd (now called Archix Pty Ltd) (Superdraft) was placed into liquidation on 31 October 2022 and Cameron Crichton and Michael McCann of Grant Thornton Australia Limited were appointed as joint liquidators.

We are aware that this has had an immediate impact on many clients while they deal with issues of outstanding invoices and ongoing work. 

We also acknowledge the following:

1. You may be approached by Superdraft’s former clients, seeking completion of their projects.
2. You may be tempted to reach out directly to continue work.
3. Your contracts with Superdraft may contain ‘non-compete’ or ‘non-solicitation’ clauses which means you cannot approach the clients direct.
4. These contracts will not all be the same and they should be carefully reviewed by your solicitor.
5. As far as we’re aware, Superdraft’s contractual rights are presently held by the liquidator.
6. You may be able to approach the liquidator and they may be prepared to waive their rights, but that is not guaranteed and may take some time.
7. If Superdraft is purchased, the intellectual property will be owned and controlled by the purchaser.
8. If Superdraft is wound up, the non-solicitation periods may not apply but you would need to obtain your own legal advice.

Our advice is very clear and we strongly recommend that you do NOT breach your contractual obligations and you should seek independent legal advice on your contracts.

From a Professional Indemnity point of view, we need to highlight typical exclusions and coverage concerns;

Out of pocket claims

As you are probably aware, a traditional professional indemnity insurance policy responds only to claims against policyholders and does not respond to claims by policyholders. For example, policyholders will not be able to seek indemnity for any fees owed to them by Superdraft.

Intellectual property

Some insurance policies provide cover for unintentional infringement of intellectual property obligations (e.g., below). The key word here is ‘unintentional’. That means if the breach is deliberate, then cover is unlikely to be available for any resulting claim.

Contractual liability

Most professional indemnity policies include a ‘Contractual Liability’ exclusion, like the one below.

Any ‘non-compete’ or ‘non-solicitation’ obligations held by you is likely to be a ‘duty or obligation assumed by an Insured by way of contract…’ and would not exist without that contract. As such, you should be careful to avoid breaching any such obligations, because any resulting claims are unlikely to be covered by insurance.

Wilful breach

Many insurance policies have exclusions that apply in relation to ‘wilful breach’ of statutes, contracts and duties. In circumstances where you are likely aware of your ‘non-compete’ and ‘non-solicitation’ obligations, if you choose to wilfully breach those obligations, then their insurers may seek to rely on a ‘wilful breach’ exclusion to limit cover.

Insolvency

Some policies have ‘Insolvency’ exclusions, like the one below.

It is difficult to anticipate what kind of claim against you might arise in consequence of Superdraft’s insolvency, so the application of such exclusions will need to be determined on a case-by-case basis. In the meantime, you should be vigilant and notify any circumstances that could potentially give rise to a claim.

Finally, if you have any concerns about the implications of Superdraft’s insolvency, enforcement of any outstanding debts, or your contractual obligations, you should consult your legal and professional advisors for advice and assistance.

*This information is of a general nature and does not take personal circumstance into consideration.