Alan Fisher Pastoral Company Pty Ltd
[2013] VSC 405
•3 June 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST
SCI 2013 01093
IN THE MATTER OF Alan Fisher Pastoral Company Pty Ltd Administrators Appointed) (ACN 005 857 081)
| DANIEL PETER JURATOWITCH AND BRUNO ANTHONY ROBERT SECATORE IN THER CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF ALAN FISHER PASTORAL COMPANY PTY LTD (ADMINISTRATORS APPOINTED) (ACN 005 857 081) | Plaintiffs |
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JUDGE: | Gardiner AsJ Melbourne 3 June 2013 3 June 2013 (ex tempore) Alan Fisher Pastoral Company Pty Ltd | |
WHERE HELD: | ||
DATE OF HEARING: | ||
DATE OF RULING: | ||
CASE MAY BE CITED AS: | ||
MEDIUM NEUTRAL CITATION: | [2013] VSC 405 | Revised 26 June 2013 |
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CORPORATIONS – External administration under Part 5.3A of the Corporations Act2001 (Cth) – Application for further extension of convening period pursuant to section 439A(6) of the Act and certain ancillary orders in relation to application – Application granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr C. R. Brown | Mills Oakley Lawyers |
HIS HONOUR:
The plaintiffs, who are the administrators of Alan Fisher Pastoral Company Pty Ltd, administrators appointed, make application by interlocutory process filed 31 May 2013 for orders pursuant to s 439A(6) and s 447A(1) of the Corporations Act2001 (“the Act”) that the convening period in which the plaintiffs must convene the second meeting of creditors of the company be further extended to and including 7 August 2013.
The interlocutory process also seeks additional orders pursuant to s 447A of the Act that the second meeting of creditors of the company required to be convened by s 439A of the Act be held at any time during or within the 5 business days after the end of the convening period as extended, notwithstanding the provisions of s 439A(2) of the Act.
The interlocutory process also seeks certain ancillary orders in regard to provision of notice to persons affected by the order including liberty to apply to them in respect of any orders that might be made on the interlocutory process.
The application is supported by affidavits of Daniel Peter Juratowitch sworn 6 March 2013 (which was filed in support of an earlier application of the same character) and of 30 May 2013.
On 11 February 2013 the plaintiffs were appointed to act as the joint and several administrators of the company pursuant to s 436A of the Act. On 7 March 2013 the plaintiffs made application by originating process for an extension of the convening period under s 439A(6) of the Act. I granted an extension to and including 7 June 2013, as well as making orders in respect of provision of notice, liberty to apply and other ancillary orders.
The plaintiffs now make application for a further extension of the convening period to and including 7 August 2013. There is no doubt that the court may grant more than one extension of the convening period under s 447A(1) of the Act.[1]
[1]See Re ABC Learning Centres (No. 8) [2009] FCA 994; Lombe, Re; Australian Discount Retail Pty Ltd [2009] NSWSC 110.
The company carries on a dairy farming business from 6 different farms in and around Colac in Victoria. Its directors and shareholders are Olive Katherine Fisher and Stephen Alan Fisher. Its operations are detailed in Mr Juratowitch’s affidavit of 6 March 2013.
In his affidavit of 30 May 2013, Mr Juratowitch outlines the administrators’ activity since the last occasion the matter was before the Court. The administrators have continued to trade on the business with a view to completing a sale of it and thereby maximising the return to creditors of the company. In order to do this, they have continued to liaise with the directors and the farm managers by regular onsite meetings. They have documented orally agreed terms of farm manager agreements, agistment agreements, leases and key agreements with suppliers, creditors and service providers. They have also continued discussions with consultants assisting the farm managers with farm business management and any other activities required to trade the business on. The administrators have confirmed arrangements with its major customer, Murray Goulburn, concerning the future supply of milk to Murray Goulburn. They have arranged the supply of goods and services to the business and made payment to suppliers for those goods and services. They have continued to manage individual reporting procedures for each farm including record keeping.
The administrators consider that the income derived from the trading on of the company is sufficient to cover the running costs of the business and as trading the business on will achieve the best result for creditors the administrators have determined to continue to do this.
Since the last occasion the matter was before the court the administrators have carried out tasks involved in the sale of the company’s real property livestock and other assets as detailed in paragraph 9 of Mr Juratowitch’s later affidavit.
In addition, the administrators have undertaken tasks in connection with the sale of the company’s business and assets which have included obtaining valuations of the farms, have entered into agency agreements to be executed by the directors of the company to enable them to sell the home farms that are described in the affidavits and the director owned paddocks. They have appointed an agent, Charles Stuart, as agent to offer the company’s farm, properties, livestock, plant and equipment and business for sale. The sale process commenced on 22 April 2013 and consists of internet and print media advertising campaigns and direct marketing to potential investors. A campaign is being conducted by way of expressions of interest.
Mr Stuart indicates that he has fielded enquiries from 46 interested parties a number of whom have inspected the farms. Submissions of expressions of interest are due by today.
Mr Juratowitch believes that the interested parties who submit non-binding offers are then likely to want to undertake a period of due diligence before making final binding offers. Once final binding offers are accepted by the administrators, contracts of sale will need to be prepared and executed.
Mr Juratowitch considers, assuming there are no undue delays for the sale process, that completion of the sale could be up to 45 to 70 days from the last day of the current convening period, that is, 7 June 2013.
Mr Juratowitch considers that prospective purchasers will require that the administrators continue to trade on the business to a completion of any sale because continued trading will preserve the value of the assets which will decrease swiftly if trading ceases.
For those reasons an extension of the convening period is sought. This will enable the continuation and completion of the sale campaign for the business, to enable receipt and exploration of all expressions of interest and indicative non-binding offers. It will allow a period for due diligence prior to final binding offers, the acceptance of those final offers and their documentation. It will enable the trading of the business to continue so as to preserve the value of the assets and the company’s relationships with its suppliers, landlords and farm managers for the purpose of the sale of the business. It will also enable the administrators to prepare a report which refers to each of these three options referred to in s 439A(4) as to the company’s future and make a recommendation as to whether it would be in the interests of the company’s creditors for it to execute a deed of company arrangement, for the administration to end, or for the company be wound up.
As the company is trading on, it is continuing to use leased equipment and to use and occupy the leased land, home farm and director owned outer paddocks by reason of the protection given by s 440B of the Act. Mr Juratowitch considers that in the event that the administration of the company comes to an end and the company is put into liquidation, it would be difficult for the administrators to secure the company’s continued use and occupation of the leased land and equipment without that protection. He considers that if the protection of s 440B is lost, then the loss of potential purchasers of the business which is likely to result in a corresponding reduction of the commercial pressure in the negotiations for the sale of the business, the value of the business being significantly diminished and a reduced return to creditors of the company.
Mr Juratowitch has ascertained the attitude of the interested parties. To this end he has informed the company’s main secured creditor, National Australia Bank, the committee of creditors elected in the administration, the directors of the company and lessees of the leased land and equipment.
National Australia Bank has confirmed in writing that it supports an extension of the convening period. The committee of creditors and the directors of the company have confirmed verbally that they support an extension of the convening period to that date. The lessees of the leased land do not object to the application for an extension of the time for the convening period to 7 August 2013. The lessees of the leased equipment have been approached asking if they object to an extension of the convening period but as at this time their attitude has not been expressed. None of them have come forth however to voice dissent about the extension.. Other persons such as the farm managers are in Mr Juratowitch’s view properly classified as independent contractors rather than employees. They will not be disadvantaged by an extension of the convening period as their contracts with the company will have a corresponding extension.
The function of the Court in determining applications of this type was described in Re Diamond Press Australia Pty Ltd[2] as being to strike an appropriate balance between on the one hand the expectation that administration will be a relatively speedy and summary matter and, on the other, the requirement that undue speed should not be allowed to prejudice sensible and constructive actions directed towards maximising the return to creditors and any return for shareholders. In ABC Learning Centres Ltd (No. 7)[3] Emmett J granted an extension of the convening period of companies in the ABC Learning Group for a further period of 6 months in circumstances where the receivers, who were in possession of the property of the company, were of the view that the further extension of the convening period was in the best interests of all creditors as it would allow them adequate time to achieve the best possible price for the sale of the group’s business.
[2][2001] NSWSC 313 at [10].
[3][2009] FCA 454.
In Re Riviera Group Pty Ltd,[4] Austin J collected authorities dealing with cases in which it was considered appropriate to order an extension of the convening period. These included, citing from paragraph 14 of His Honour's judgment, ones which are particularly apposite in these circumstances where time is needed to implement an orderly process of disposal of assets, where an extension would allow the sale of the business as a going concern and more generally, that additional time is likely to enhance the return for unsecured creditors
[4](2009) 72 ACSR 352.
I consider it is appropriate to award an extension of the convening period to the date sought. The plaintiffs, who are experienced administrators, are conscientiously applying themselves to achieving the best result for the creditors of the company. The extension were it not to be awarded it would merely result in the convening of a meeting of creditors at which an incomplete report under s 439A may be provided resulting in an adjournment of the meeting for no good reason. Those affected by the extension of the convening period are agreeable to it or at least have been informed of the making of this application and have not dissented from the making of these orders. Their interests can be protected by the provision of an order giving them liberty to apply in the event that they consider the extension, on reflection, is not warranted.
I will make orders further extending the convening period to a 7 August 2013. I order as follows:
1. Pursuant to s 439A(6) of the Corporations Act 2001 that the convening period within which the plaintiffs must convene the second meeting of creditors of Alan Fisher Pastoral Company Pty Limited Administrators appointed ACN 005 857 081 be extended to and including 7 August 2013.
2. Pursuant to s 447A of the Act that the second meeting of creditors of the company required by s 439A of the Act may be held at any time during or within five business days after the end of the convening period as extended by paragraph 1 of these orders notwithstanding the provisions of s 439A(2) of the Act.
3. The plaintiffs are to give notice of these orders to the company's creditors by (a) uploading a copy of these orders onto the Cor Cordis Website within seven days after the making of these orders; and (b) sending a circular letter to the creditors of the company (by email in respect of those creditors who have informed the plaintiffs that email is their preferred method of communication) and by post in respect of all other known creditors (within 7 days after the making of these orders informing the creditors of the substance of these orders and attaching a copy of these orders).
4. Liberty to apply is granted to any person who can demonstrate sufficient interest to modify or discharge orders (1) or (2) on not less than 48 hours written notice to the plaintiffs.
5. The plaintiffs' costs of this application are costs in the administration of the company.
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