Commonwealth Bank of Australia v Toma
[2009] FMCA 846
•27 August 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| COMMONWEALTH BANK OF AUSTRALIA v TOMA | [2009] FMCA 846 |
| BANKRUPTCY – Adjournment of creditor’s petition – debtor’s proposal for Pt.X insolvency agreement – creditors’ meeting adjourned without outcome – no real opportunity for creditors to attend and vote – considerations relevant to Court’s discretion – merits of proposal and likely voting outcomes – insolvency options available to creditors and debtor – one week adjournment of petition allowed. |
| Bankruptcy Act 1966 (Cth), ss.5, 33(1)(a), 63B, 64ZA(9), 115(2), 188, 189AAA, 189AAA(1), 204, 204(1), 206, 222, 222(1), Pt.X |
| Field v Commercial Banking Co of Sydney Ltd (1978) 37 FLR 341 For The Good Times Pty Ltd v Boyle & Anor [2009] FMCA 512 Munro & Anor v McLeod [2006] FMCA 388 |
| Applicant: | COMMONWEALTH BANK OF AUSTRALIA (ABN 48 123 123 124) |
| Respondent: | ALISTER SAM TOMA |
| File Number: | BRG 187 of 2009 |
| Judgment of: | Smith FM |
| Hearing date: | 27 August 2009 |
| Delivered at: | Sydney |
| Delivered on: | 27 August 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Lockhart |
| Solicitors for the Applicant: | Freehills |
| Counsel for the Respondent: | Mr P Beazley |
| Solicitors for the Respondent: | Beazley Singleton Lawyers |
ORDERS
The hearing is adjourned to 2 September 2009 at 10.15 am.
Any additional affidavit, written submission or list of authorities intended to be relied upon by any person at the hearing must be forwarded by facsimile to the Associate and served on all other parties no later than 3 pm on 1 September 2009. No other evidence will be admitted in chief without leave.
The parties must give notice no later than 3 pm on 1 September 2009 as to which witnesses are required for cross‑examination.
The applicant must serve a copy of this order on the controlling trustee within 2 days.
Costs reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
BRG 187 of 2009
| COMMONWEALTH BANK OF AUSTRALIA ABN 48 123 123 124 |
Applicant
And
| ALISTER SAM TOMA |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
This is a creditor’s petition filed on 19 March 2009. The applicant, the Commonwealth Bank of Australia (“the Bank”), relies upon Mr Toma’s indebtedness in the sum of $6,904,798.87 under a judgment entered in the Supreme Court of New South Wales on 15 October 2008, and an act of bankruptcy occurring when Mr Toma failed to comply before 17 March 2009 with the requirements of a bankruptcy notice in relation to that debt.
My present judgment addresses whether the hearing of the petition should be adjourned for one week from today.
Mr Toma’s relationship with the Bank has been the subject of investigation in several courts, including this court in relation to the bankruptcy notice. It is again the subject of extensive evidence filed in the present matter, relevant to Mr Toma’s notice of opposition which claims he has a cross‑claim against the Bank exceeding the amount of his indebtedness to it. His claims arise from his attempt to refurbish and run profitably a hotel in Potts Point through one of his companies and a trust, assisted by finance from the Bank. The Bank has taken possession of the hotel, and is attempting to realise the security, but meanwhile relies upon Mr Toma’s liability under a guarantee for the venture’s full indebtedness. Mr Toma claims that there will be no deficit if the Bank properly realises the security, and presents this as an alternative ground of opposition. The Bank has filed evidence disputing Mr Toma’s claims, and showing that he failed to raise them in the Supreme Court proceedings and consented to the Bank’s judgment against him.
The Bank’s petition was filed in the Brisbane registry of the Court. On its first court date on 15 April 2009, it was referred to Burnett FM. Mr Toma appeared in person, and applied for the petition to be adjourned to Sydney. This was contested by the Bank, but Burnett FM was persuaded by Mr Toma to transfer the matter to Sydney, based upon Mr Toma’s connections here, including his present solicitor.
The petition was then listed before me on 22 May 2009, when I directed a timetable for a hearing on 17 July 2009. Mr Toma’s legal representative appeared, and filed evidence in support of Mr Toma’s grounds of opposition.
Shortly before 17 July 2009, Mr Toma executed an authority under s.188 of the Bankruptcy Act 1966 (Cth), appointing a controlling trustee to take control of his estate on an interim basis, and to put to his creditors a proposal for a personal insolvency agreement under Pt.X. The trustee, Mr Wily, accepted the appointment on 13 July 2009. Mr Wily duly served on creditors on or around 7 August 2009 a notice of a meeting to be held on 17 August 2009, together with copies of the proposed personal insolvency agreement, an agenda for the meeting, and a report by himself.
At the listing of the petition on 17 July 2009, the Bank did not contest that I was bound to adjourn the petition in accordance with s.189AAA(1). This directs a statutory stay of proceedings on a petition until the conclusion of a creditors’ meeting or the adjournment of that meeting, “whichever is the earlier”. If the meeting is adjourned before resolutions are put to creditors under s.204, then the court regains its general discretion under s.33(1)(a) in relation to any further adjournment of the petition.
Mr Wily’s meeting agenda reflected the possible substantive resolutions permissible under s.204, in its item 13:
Proposal of a special resolution pursuant to Part X of the Bankruptcy Act, that creditors accept the Debtor’s proposal for Personal Insolvency Agreement; or
A special resolution pursuant to Part X of the Bankruptcy Act, for the Debtor to lodge a Debtor’s petition within 7 days or that the Debtor’s property be no longer subject to control.
Mr Wily’s report to creditors was based on Mr Toma’s statement of affairs. It reported that Mr Toma did not own any real property, did not have any other property divisible among creditors, was currently unemployed, and was a director of entities of which the majority had been placed in liquidation. He advised that Mr Toma would not become liable to make income contributions as he was unemployed, and that if the solvency agreement was accepted he would be released from all provable debts and would not be liable to make any future acquired property available to creditors. He referred to the provisions of the Bankruptcy Act allowing the voiding of “antecedent transactions”, and noted that this would be available both to a trustee in bankruptcy or a trustee under an insolvency agreement, but he advised that he was aware of no such transactions.
Mr Wily listed 51 creditors disclosed by Mr Toma in his statement of affairs, with debts totalling $20,729,070.39. He explained the provisions of the proposed Pt.X agreement, which he summarised:
Debtor’s Property Available under Personal Insolvency Agreement
The Debtor proposes to pay an amount of $230,000.00 into an account held and maintained by the proposed Trustee in the name of “Estate of Alister Sam Toma” payable as follows:
i.An amount of $100,000.00 payable within twelve (12) months from the date on which the special resolution is passed by creditors;
ii.A further amount of $130,000.00 payable within twenty‑four (24) months from the date on which the special resolution was passed by creditors; and
In addition, the Debtor agrees to pay creditors 20% (not exceeding $500,000.00) from any funds received with respect to a personal damages claim against the Commonwealth Bank of Australia.
The debtor has advised the cash contribution of $230,000 will be made available from a third party.
The report did not explain the sources or conditions upon which Mr Toma was hoping to be able to contribute $230,000 over two years. In relation to the damages claim against the Bank, Mr Wily reported that:
Damages Claim
The Debtor has advised that he considers that he has a potential damages claim against the Commonwealth Bank (“CBA”), not limited to:
·misleading and deceptive conduct by the CBA;
·damages for loss of profits;
·cancellation of the Debtor’s personal credit cards held with the CBA without notice;
·their conduct with respect to the finance facility provided by them with respect to the Barclay Hotel.
The Debtor has advised that he will pay into the Deed Fund an amount 20% (limited to $500,000) of any recoveries made with respect to this potential action against the CBA.
I have not investigated as to whether this claim has any merits and accordingly, I am not in a position to determine whether any action would be successful nor am I able to make any further comment in this regard.
However, Mr Wily reported:
Statement by Controlling Trustee as to whether the interests of creditors would be better served by Bankruptcy or acceptance of the debtor’s proposal
I consider that it would be in the creditors’ interests for the creditors to accept the proposal for Personal Insolvency Agreement in that it provides an immediate return to creditors.
My reasons for so stating are set out in this report and that it is estimated that the proposed Personal Insolvency Agreement that creditors would receive a greater return to creditors than what could be expected from a bankruptcy of the Debtor.
An attachment to his report, suggested that there was an estimated return to unsecured creditors of two cents in the dollar if the Pt.X insolvency agreement proceeded, and of no cents in the dollar if Mr Toma’s insolvency was administered by a trustee in bankruptcy.
There is an amount of evidence before me today as to what happened in relation to the meeting held on 17 August 2009. Due to the rushed circumstances in which these affidavits were presented, and the limited time available in today’s contested adjournment application, it was addressed somewhat cursorily in the parties’ submissions. It contains some unresolved conflicts, and no official minutes are in evidence.
It does appear, however, that prior to the meeting some, if not all, creditors were informed that Mr Wily would be unavailable to attend the meeting for personal reasons, and that some, possibly many, of the creditors were led to believe that the meeting would be adjourned without any substantive resolutions being put to creditors. On the evidence before me, only seven creditors were represented at the meeting, and five of them were supporters of the Bank’s position of hostility to the Pt.X proposal.
The meeting was conducted by a colleague of Mr Wily, who presented several reasons for the need to adjourn. These included uncertainty in the mind of Mr Wily and his colleagues whether it was essential for the creditors’ meeting to be attended by the controlling trustee in person, notwithstanding the provisions of s.63B. There were also late proofs of debt lodged by claimed creditors of Mr Toma, which the trustee had not yet had time to address in relation to voting rights. In that respect, I note that s.64ZA(9) requires a meeting to be adjourned for no more than 14 days, if the trustee “needs a period in which to determine a question” as to the entitlement of a person to vote.
On the material before me, there were clearly several good reasons for the creditors’ meeting being adjourned without substantive resolutions being put to a vote. I also note that, although the representatives of the Bank had expressed unhappiness about the whole Pt.X proceeding, according to its representative’s affidavit:
27Next, Mr Galler told the meeting that he needed to adjourn the meeting to further examine proofs of debts. As that was the reason for the adjournment I said to Mr Galler that I would not be proposing a motion to revoke the decision to adjourn.
On or about 24 August 2009, the trustee sent to creditors a notice appointing 31 August 2009 at 3 pm in his offices for the resumed meeting, and enclosed a supplementary report to creditors. This addressed some matters of concern raised with him by the Bank, and contained some further disclosures to creditors. This included new information as to the possible future reduction in the Bank’s claims against Mr Toma from $6.9m to $1.6m, if it was able to realise securities for debts which he had guaranteed. In particular, Mr Wily said that he had been advised that the Bank had entered into a conditional contract for the sale of the Potts Point hotel for an amount not exceeding $5m. An expurgated version of the contract is in evidence before me. It requires settlement in late September 2009, but there appears to be some uncertainty whether completion will be achieved.
Mr Wily’s supplementary report also gave creditors more information in relation to Mr Toma’s source for the funds being offered under the proposed insolvency agreement. He said:
Capacity of Third Party to Pay the Deed Contribution
The Trustee has been advised by the Debtor that should he enter into a commercial arrangement with a third party whereby the third party acquires the Barclay Hotel from the Commonwealth Bank of Australia (“CBA”), the arrangement with the third party would include the third party providing such funds as are required to meet the Debtors obligation for the Deed Contribution.
At this point in time the Debtor has not been able to secure such an arrangement, however, he anticipates being in a position to do so, within weeks.
In relation to the anticipated proceedings against the Commonwealth Bank the Solicitor for the Debtor, has provided an oral advice to the Controlling Trustee including the strengths and weaknesses of the case and the quantum of damages which may be obtained from the CBA.
The Controlling Trustee has considered the advice and subject to the merits below consider that should the anticipated litigation be embarked upon the return to creditors foreshadowed in the Personal Insolvency Agreement is within the capacity of the Debtor.
Mr Wily referred to receiving information from Mr Toma’s solicitor in confidence about his claims of misrepresentations and actionable delays by the Bank, and said:
The claim will be complex and expensive to run, however the estimate of damages is substantial. The Debtor estimates his damages in the tens of millions of dollars.
We understand that the Debtor has spoken with a litigation funder who may fund the litigation. Much of the evidence required for this case will be the evidence of the Debtor, creditors could be assured that in the proposed Personal Insolvency Agreement the Debtor’s co‑operation in providing the evidence would be forthcoming. No such assurance of co‑operation by the Debtor could be given to creditors if the Debtor was made bankrupt.
Mr Wily’s supplementary report repeated the previous list of creditors, and his opinion that it would be in the creditors’ interests for the creditors to accept the proposal of a personal insolvency agreement. The annexed calculations of estimated returns now suggested a return of five cents in the dollar under the proposed Pt.X agreement, and no cents in the dollar under administration in bankruptcy. The difference plainly relies upon an assumption that there would be no prospects of any return on litigation against the Commonwealth Bank except if the Pt.X agreement proceeded and brought Mr Toma’s co‑operation. If this assumption is not accepted, a greater dividend would flow to creditors if a trustee in bankruptcy successfully sued the Bank, since he would not be constrained by the cap on distribution to creditors proposed in the Pt.X agreement.
As I noted above, the hearing of the petition was adjourned on 17 July 2009 to today. Mr Toma sought a further adjournment of one week, to allow the adjourned creditors’ meeting to take place next Monday, 31 August 2009.
I had given an order for any evidence in support of a further adjournment to be filed before the hearing, but that was disregarded, and all of Mr Toma’s evidence in support of an adjournment was presented at the commencement of today’s hearing. The Bank had filed some evidence shortly prior to the hearing. The written submissions of both parties had not reached my chambers in time for me to read them.
As I indicated to the parties, next Wednesday, 2 September 2009 is available for a further hearing on the matter. The Bank, however, submitted that I should refuse an adjournment, commence to hear the petition and, if possible, decide it today. Whether that would be possible appears to me doubtful, since I am now delivering this judgment on the adjournment at 3.15 pm, and the petition throws up a number of issues upon which I may well have had to reserve, even if its hearing could be completed today.
However, putting this concern aside, I propose to address the adjournment application on its merits in accordance with principles relating to the adjournment of petitions when there are pending Pt.X proceedings.
Both representatives relied on the judgment of C.A.Sweeney J, in the Full Court, in Field v Commercial Banking Co of Sydney Ltd (1978) 37 FLR 341. In particular, I was referred to the list of considerations which his Honour set out, and which have been extracted in other cases, including by me in Munro & Anor v McLeod [2006] FMCA 388 at [23]. Sweeney J also rejected the proposition that it was the practice of bankruptcy courts to “almost invariably” adjourn petitions to allow creditors’ meetings to be held pursuant to Pt.X provisions. He said at 411:
In my experience, the court has adopted no such practice. It has regarded the execution of an authority as one relevant circumstance, amongst many, but it has not sought to give it any decisive effect or to regard it as casting any burden upon a petitioning creditor to show cause why the hearing of its petition should not be adjourned.
Both representatives accepted that this remained good authority, and also did not challenge what I described as a “foundation proposition” in Munro (supra) at [25] that “the Court should not adjourn a petition to allow consideration of a Part X agreement unless it considers such an adjournment would be for the general benefit of the creditors, and that the considerations in favour of the adjournment outweigh the prima facie entitlement of the petitioning creditor to proceed on its petition”.
Submissions before me canvassed very thoroughly the seven matters listed by Sweeney J, and their possible application to the circumstances of the present case. I do not have time in the course of my present judgment to discuss each of them separately, but I have taken into account all of those considerations. At the end of the day, they remain only, in his Honour’s words, “illustrations” of the sort of considerations which might become determinative of an adjournment application.
The circumstances in Field were different to the present, since the adjournment application was made before the enactment of the statutory stay which takes automatic effect upon the filing of an authority to call a creditors’ meeting. The debtor in that case had executed a Pt.X authority on the day before the hearing of the petition. All of their Honours on appeal and at first instance had no hesitation in thinking that, under the previous law, an adjournment of the petition was properly refused in the absence of better evidence from the debtor explaining his delay in calling a creditors’ meeting and exposing his proposed creditors’ arrangement and its prospects.
In the present case, Mr Toma has had the benefit of the statutory stay up to the adjournment of the first creditors’ meeting, and the Pt.X proceedings have now appointed a controlling trustee. There has been an investigation by the trustee of Mr Toma’s financial position. Two considered reports from the trustee identify numerous creditors and give them notice of an opportunity to meet and discuss the various options in relation to Mr Toma’s now admitted substantial insolvency.
However, the Bank has strong arguments in favour of refusing an adjournment, and for the Court proceeding immediately with its hearing of the bankruptcy petition. It submissions gave emphasis to the prima facie right of a creditor to that procedure. It was pointed out that the statutory stay is deliberately limited to the first meeting of creditors, and does not extend to an adjourned meeting of creditors, and that the Court has its full discretion to refuse further adjournments of the petition.
I accept that the Bank does not need to point to particular prejudice arising from a one week’s adjournment of the petition. However, I note that it has not identified any such prejudice apart from the added costs of an adjournment of the petition. The extent of those added costs is unclear and will depend upon what happens at the foreshadowed creditors’ meeting and how the parties present their cases in the future.
The Bank could not point to any particular prejudice to the general body of Mr Toma’s creditors from a one week adjournment of the petition, and no prima facie concern arises on the evidence before me. There is no evidence that Mr Toma is currently trading or incurring debts in a manner which would bring great urgency to the Court addressing his insolvency before the creditors can address his Pt.X proposal.
Mr Toma has pointed to some reasons why the Bank might have a special interest in proceeding immediately with its petition today. These are not clear and I give no particular weight to those considerations against the Bank.
The Bank’s principal attack on an adjournment was that the prospects of the proposed agreement are so poor, that the Court should not contemplate allowing it to be addressed at a creditors’ meeting. Its submissions challenged both the proposal itself, and the likelihood that it would be adopted at the creditors’ meeting.
As was pointed out by the Bank, there are reasons for doubting whether Mr Toma will have the requisite votes on a special resolution pursuant to s.204(1) and s.5 of the Bankruptcy Act. I was taken to calculations based upon proofs of debt which have so far been lodged with Mr Wily in relation to the 51 creditors listed in his reports, and which may have already been admitted for the purposes of voting rights. Uncertainties as to the voting rights at a future meeting are compounded by ten further proofs of debt in an amount of $13m which have been lodged recently. It was submitted that ‘the rule against double proofing’ would require Mr Wily to refuse to admit these, at least, in an amount exceeding $1.3m. In effect, the Court was invited itself to rule upon all the proofs of debt, and to arrive at a conclusion as to the likely outcome of a vote to be taken next Monday.
However, I have decided that it would not be appropriate for the Court today to engage in that exercise, even if it were possible for me to arrive confidently at conclusions on the various issues which arise in relation to the admission of proofs of debt and likely voting patterns. The identification of voting rights involves issues which the Bankruptcy Act requires the trustee to address. He has particular expertise in this area, and has more time to consider his decision than I have today. His decisions in relation to the admission of voting rights at a creditors’ meeting can be the subject of review in subsequent proceedings in a court, should that become necessary. In my opinion, it would be more appropriate in the present case for any such issues, should they remain outstanding after Monday, to be addressed in subsequent proceedings which focus upon voting rights, not in the course of the present adjournment application.
The other attack on the prospects of the proposal attacked the attractiveness to creditors of the terms of Mr Toma’s proposed Pt.X agreement. The long period before the payment of any dividend to creditors could accrue, and the uncertainty of any of the promised benefits ever coming into fruition were pointed out.
Obvious weaknesses in the proposal are readily apparent from the passages in Mr Wily’s reports which I have extracted above. There are strong doubts in my mind, based at this stage only upon an impression of the material on the Court’s file concerning Mr Toma’s alleged claims against the Commonwealth Bank, which leaves me at present unpersuaded that they have any substance. Similarly, the statement in Mr Wily’s supplementary report as to the basis upon which $230,000 would become available from the supporting third party now leaves the prospects of that money accruing to creditors highly speculative. It is also, as the Bank points out, dependent upon the Bank’s current contract for the sale of the hotel not being completed.
I therefore accept that there is considerable force to the Bank’s submissions that the Pt.X proposal holds little, if any, real attraction to creditors of Mr Toma who are not partisans of either Mr Toma or of the Bank. However, all the points of weakness which were made to the Court may also be made by the Bank to the creditors prior to, and at, the creditors’ meeting next Monday. If the creditors then make an inappropriate decision in relation to the proposal, then its merits could be better addressed more thoroughly in later proceedings under ss.206 or 222 of the Act, in a situation where the Court would have more time to consider the evidence and arguments. Under the recent amendments, the Court now has power to set aside a Pt.X agreement purely because its terms “are unreasonable or are not calculated to benefit the creditors generally” (see s.222(1) and For The Good Times Pty Ltd v Boyle & Anor [2009] FMCA 512 at [46] and following).
I accept that there are cases where a bankruptcy court has arrived at firm conclusions that the proposed insolvency agreement is so devoid of any real prospect or merit that an adjournment to allow creditors to vote upon it should be refused. In effect, these cases proceed in anticipation of an inevitable outcome of any proceedings under ss.206 or 222. However, I consider that the Court should move cautiously before being so persuaded. On balance in the circumstances of the present case, I have not been persuaded on the basis of today’s hearing that this is such a case.
Further considerations point in my mind to allowing the adjournment, so as to allow creditors to listen to the Bank’s arguments and to address for themselves what should happen in relation to Mr Toma’s insolvency.
As I have pointed out, the creditors will have the opportunity under s.204 not only to vote upon whether a Pt.X agreement should be accepted, but also whether they should push Mr Toma into some alternative basis of insolvency, including by his filing a debtor’s petition. There may be real benefits to creditors generally, to Mr Toma, and to the Bank, if Mr Toma’s bankruptcy occurs in this manner rather than a sequestration order on the Bank’s petition. The commencing date of the bankruptcy would not be affected (see s.115(2)), and the estate would be spared, at least, the expenses of further litigation in relation to the petition.
Considering the history of his litigation with the Bank, Mr Toma has not been prompt in conceding his insolvency and in making his appointment under Pt.X. However, in the circumstances, I would not characterise his delay in taking the Pt.X pathway as being unreasonable, in particular, where he has claims which in his mind are substantial claims against the Bank, and where he had raised these claims in opposition to the petition. In the circumstances, I think it would be reasonable to have allowed him and his legal advisers some time to consider all his options in relation to his insolvency, including the Pt.X pathway provided under the Bankruptcy Act. However, it is now necessary for Mr Toma and his creditors to address how his insolvency, including his liability to the Bank, should be administered.
In my mind, the determining consideration in relation to the present adjournment application, and the consideration which addresses the general interest of creditors, is the policy reflected in s.189AAA, that creditors of an insolvent person such as Mr Toma should be allowed at least one real opportunity to vote upon the various alternatives that are opened up to them under s.204. I accept that the statutory policy is intended to be satisfied at the first appointed meeting, and that the statutory stay does not operate beyond that time, whatever the reasons for an adjournment. However, in my mind it would be fully consistent with the policies of the Act to allow a further adjournment, where the debtor and the creditors were denied at the first appointed meeting a real opportunity to address a proposed Pt.X agreement, where this was the result of circumstances beyond the control of the debtor and his trustee, and where no prejudice to creditors generally is apparent from the Court holding its hand until a satisfactorily convened meeting has been held.
This has not occurred in the present case. For reasons which I accept are not the responsibility of Mr Toma, the creditors did not have any real opportunity to vote on the Pt.X proposal at the first meeting. The trustee was absent for reasons whose bona fides are not challenged. Most creditors had been told that it would be adjourned without any substantive resolution, and they stayed away. The trustee also required an adjournment to complete his examination of voting rights. The Bank did not seriously challenge the adjournment of the meeting, by disputing the Chairman’s decision to adjourn.
The adjourned meeting next Monday will have been properly convened, all creditors will have had the opportunity to attend and vote on the substantive resolutions, and they will have had the benefit of being further informed by Mr Wily’s supplementary report. They will have the opportunity to discuss the various points made before me today, and to hear the arguments of Mr Toma, the Bank and Mr Wily. I have no reason not to expect that they will be able to arrive at a clear outcome in relation to one of the options available to them under s.204.
In my opinion it would be in the general interests of Mr Toma’s creditors for them to have the opportunity to form their opinions and discuss Mr Toma’s now admitted serious insolvency, and to do so in the context of the Pt.X proposal and before the making of a sequestration order. It is in the interests of all creditors that the possibility of a consensual outcome to Mr Toma’s now admitted insolvency can be arrived at, so as to minimise future litigation and other expenses of an insolvency administration.
I am therefore persuaded that this petition should be adjourned for one week to allow the meeting to occur next Monday. There is no evidence before me suggesting it will not be possible for Mr Wily then to attend, to make his rulings upon voting rights, and to explain his opinions and address any queries of creditors. There is no evidence before me suggesting that any further adjournment of the meeting would be necessary or reasonable, and I am assuming that it will produce a substantive outcome.
As I have indicated, it will be open to the creditors to exercise their voting powers either to accept the Pt.X proposal or to reject it. If they reject it, they have the power to require Mr Toma to file a debtor’s petition. If they do not so require, Mr Toma will himself have an opportunity to weigh up the outcome of the meeting, and decide for himself whether he should file a debtor’s petition prior to the resumption of the hearing of the petition.
It should be apparent from what I have said that Mr Toma cannot expect that he will succeed in another adjournment application on the next occasion. I also propose to repeat a timetable requiring any additional evidence and submissions by either party to be filed and served in advance of the hearing. I shall refuse to receive any additional evidence which was not served, unless it is apparent that it was not reasonably available to Mr Toma or the Bank, whether or not to their solicitors.
I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Lilian Khaw
Date: 1 September 2009
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