Allstate It Pty Limited (Administrators Appointed), in the matter of Allstate It Pty Limited (Administrators Appointed)

Case [2011] FCA 788

FEDERAL COURT OF AUSTRALIA

Allstate IT Pty Limited (Administrators Appointed), in the matter of Allstate IT Pty Limited (Administrators Appointed) [2011] FCA 788

Citation: Allstate IT Pty Limited (Administrators Appointed), in the matter of Allstate IT Pty Limited (Administrators Appointed) [2011] FCA 788
Parties: ALLSTATE IT PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 050 041 837)
File number: NSD 1102 of 2011
Judge: EMMETT J
Date of judgment: 6 July 2011
Legislation: Corporations Act 2001 (Cth) s 439A
Date of hearing: 6 July 2011
Place: Sydney
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 5
Solicitor for the plaintiff: L Roccisano of William Roberts Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1102 of 2011

IN THE MATTER OF ALLSTATE IT PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 050 041 837)

ALLSTATE IT PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 050 041 837)

JUDGE:

EMMETT J

DATE OF ORDER:

6 JULY 2011

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Pursuant to section 439A(6) of the Corporations Act 2001 (Cth), the end of the convening period in respect of Allstate IT Pty Ltd (Administrator Appointed) (ACN 050 041 837) be extended from 7 July 2011 to 13 July 2011.

2.The costs of the originating process be paid out of the assets of Allstate IT Pty Ltd (Administrator Appointed) (ACN 050 041 837).

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1102 of 2011

IN THE MATTER OF ALLSTATE IT PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 050 041 837)

ALLSTATE IT PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 050 041 837)

JUDGE:

EMMETT J

DATE:

6 JULY 2011

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. The plaintiff, Mr Robert Whitton, was appointed administrator of Allstate IT Pty Ltd (the Company) on 8 June 2011 under s 436A of the Corporations Act 2001 (Cth) (the Act). The convening period under s 439A(5)(b) of the Act for the second meeting of creditors of the Company will expire on 7 July 2011. Mr Whitton now seeks an extension of the convening period.

  2. Mr Whitton was informed by the directors of the Company that a proposal for entry into of a deed of company arrangement would be submitted to him immediately after his appointment on 8 June 2011. Mr Whitton will be absent from Australia from today until Friday, 15 July 2011 on annual leave. That absence was arranged some nine months ago, well in advance of his appointment as administrator of the Company. He would have had sufficient time to consider a possible proposal for a deed of company arrangement to be propounded by the directors of the Company, to prepare his report and statements to the creditors under s 439A(4), and to give notice of and convene the second meeting of creditors prior to his departure on leave, if he had received the proposal immediately after his appointment. Hence, it was his expectation that the second meeting of creditors would be held within the convening period prescribed by the s 439A of the Act.

  3. However, Mr Whitton did not receive a proposal from the directors until 1 July 2011. As a consequence, he has not had sufficient time to attend to all of his obligations under s 439A prior to his departure on leave. He has had the opportunity of considering the proposal and has formed the opinions required under s 439A(4) of the Act. He has drafted a report and statements accordingly. Those documents will, pursuant to s 439(4), be sent to the Company’s creditors no later than the close of business on 7 July 2011.

  4. Mr Whitton has given notice to the Company’s creditors of his intention to make this application. That notice was sent on 5 July 2011. To date, no response has been received. The application presently before me is to extend the convening period so that it will expire on 13 July 2011. Mr Whitton’s intention is that the second meeting of creditors will then be convened upon his return from absence on 18 July 2011. He will then be able to preside at the meeting, as the Act requires.

  5. The extension of the convening period is not to be given as a matter of course. There must be some valid reason for departure from the strict time frame specified by the Act. In all the circumstances, I consider that it is appropriate to accede to Mr Whitton’s application.

I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:  18 July 2011

Details
AGLC
Allstate It Pty Limited (Administrators Appointed), in the matter of Allstate It Pty Limited (Administrators Appointed) [2011] FCA 788
Case
[2011] FCA 788
Decision Date

CaseChat Overview and Summary

The case before the court involved Allstate IT Pty Limited, a company that had been placed under administration, with the administrators seeking an extension of the convening period under the Corporations Act 2001 (Cth). The administrators applied for an extension of the convening period to allow for the necessary arrangements to be made for the convening of a meeting of the company's creditors. This application was contested by a creditor of the company, who opposed the extension on the basis that it would prejudice the creditor's rights. The matter was heard in the Federal Circuit Court of Australia.

The legal issues before the court centred on whether the administrators had demonstrated sufficient cause for the extension of the convening period, as required by section 439A(6) of the Corporations Act. The court had to consider the potential prejudice to creditors if the convening period was extended and whether any such prejudice could be mitigated by the administrators. Additionally, the court had to determine the appropriate costs order in relation to the originating process.

In determining the matter, the court considered the evidence and submissions provided by the administrators and the creditor. The court found that the administrators had demonstrated sufficient cause for the extension of the convening period, as they had acted reasonably and in good faith in seeking the extension. The court was satisfied that the administrators had taken steps to mitigate any potential prejudice to creditors and that the extension would not unfairly disadvantage any creditor. The court also considered the costs of the originating process, determining that they should be paid out of the company's assets, as the administrators had acted appropriately in initiating the proceedings.

In light of the above, the court granted the application for an extension of the convening period and ordered that the costs of the originating process be paid from the company's assets. This decision reflects the court's recognition of the need to balance the interests of the company, its administrators, and its creditors in the administration process.

Orders

Orders of the court

1. Pursuant to section 439A(6) of the Corporations Act 2001 (Cth), the end of the convening period in respect of Allstate IT Pty Ltd (Administrator Appointed) (ACN 050 041 837) be extended from 7 July 2011 to 13 July 2011.

2. The costs of the originating process be paid out of the assets of Allstate IT Pty Ltd (Administrator Appointed) (ACN 050 041 837).

Note:

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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