Connelly, in the matter of Redback Technologies Holdings Pty Ltd (Administrators Appointed)
[2024] FCA 418
•11 April 2024
FEDERAL COURT OF AUSTRALIA
Connelly, in the matter of Redback Technologies Holdings Pty Ltd (Administrators Appointed) [2024] FCA 418
File number(s): QUD 181 of 2024 Judgment of: MEAGHER J Date of judgment: 11 April 2024 Catchwords: CORPORATIONS – Application pursuant to s 439A(6) of the Corporations Act 2001 (Cth) to extend the period in which the plaintiffs must convene the second meeting of the creditors under s439A of the Act – Whether appropriate case for extension of convening period – Orders granted Legislation: Corporation Act 2011 (Cth) ss 435A(b), 439, 447A
Federal Court of Australia Act 1976 (Cth) s37
Insolvency Practice Rules (Corporations) 2016 (Cth) r75-225
Insolvency Practice Schedule 90-15
Cases cited: Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2010] FCA 1082
Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (No 2) [2018] FCA 17
Re LED Builders Pty Ltd (admin apptd) [2008] NSWSC 633
Re Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717
Strawbridge, Re Virgin Australia Holdings Ltd (admins apptd) [2020] FCA 571
Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 35 Date of hearing: 11 April 2024 Counsel for the Plaintiffs: S L Philippou Solicitor for the Plaintiffs: Hamilton Locke ORDERS
QUD 181 of 2024 CONNELLY, IN THE MATTER OF REDBACK TECHNOLOGIES HOLDINGS PTY LTD (ADMINISTRATORS APPOINTED)
BETWEEN: ANTHONY NORMAN CONNELLY, WILLILAM JAMES HARRIS AND MARK ALFRED HOLLAND IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF REDBACK TECHNOLOGIES HOLDINGS PTY LTD
First Plaintiff
ANTHONY NORMAN CONNELLY, WILLIAMS JAMES HARRIS AND MARK ALFRED HOLLAND IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF REDBACK OPERATIONS PTY LTD
Second Plaintiff
REDBACK TECHNOLOGIES HOLDINGS PTY LTD (and another named in the Schedule)
Third Plaintiff
ORDER MADE BY:
MEAGHER J
DATE OF ORDER:
11 APRIL 2024
THE COURT ORDERS THAT:
Extension of the convening period
1.Pursuant to section 439A(6) of the Corporations Act 2001 (Cth) (Corporations Act), the date of the convening period for the second meeting of creditors (Second Meetings) for each of the Third Plaintiff and the Fourth Plaintiff (collectively, Companies), as required by section 439A of the Corporations Act, be extended up to and including 17 May 2024.
2.Pursuant to section 447A(1) of the Corporations Act, Part 5.3A of the Corporations Act is to operate in relation to each of the Companies as if the Second Meetings may be convened and held at any time during the convening period, or within 5 business days after the end of the convening period, as extended by the order in paragraph 1 above, notwithstanding the provisions of section 439A(2) of the Corporations Act.
Holding of concurrent meetings
3.Pursuant to section 447A(1) of the Corporations Act, Part 5.3A of the Corporations Act is to operate in relation to each of the Companies as if the Second Meetings may be convened and held concurrently.
Confidentiality
4.Pursuant to section 27AF of the Federal Court Act 1976 (Cth), on the ground that the order is necessary to prevent prejudice to the proper administration of justice as provided in s 37AG(1)(a) of the Federal Court Act 1976 (Cth), paragraphs 56(g), 56(i), 57(a), 59, 60(b), 60(c) and 60(d) of the Affidavit of Anthony Norman Connelly sworn 9 April 2024; pages 350 to 360 inclusive of Exhibit ANC-1; and the transcript of the 11 April 2024 hearing of the proceeding be suppressed and not be published to any person other than the Plaintiffs and their legal advisors until 17 May 2024 or until further order of the Court, whichever is earlier.
Notices and other orders
5.Pursuant to section 447A (1) of the Corporations Act, Part 5.3A of the Corporations Act is to operate in relation to each of the Companies as if the requirements on the First Plaintiffs and the Second Plaintiffs (collectively, Administrators) to issue notices under the Insolvency Practice Rules (Corporations), 2016 (Cth) (Rules) are modified such that notice of the Second Meetings will be validly given to the creditors of each of the Companies (including the persons claiming to be creditors) by, not less than 5 business days prior to the date of the proposed meeting:
(a)sending such notice electronically to the email address of the creditors of each of the Companies for whom the Administrators have an email address;
(b)sending such notice to the postal address or facsimile number, or otherwise as provided for by the Act, the Schedule, or the Rules to any creditors of either of the Companies not being a creditor referred to in sub-paragraph 5 (a) above;
(c)causing such notice to be published on the website of the Administrators at “ and “ Administrators are to give notice of these orders to the creditors of each of the Companies by:
(a)sending a copy of those orders by:
(i)email to any creditor of the Companies for whom or which the Administrators have an email address; and
(ii)mail to all other creditors of the Companies for whom or which the Administrators do not have an email address;
(b)causing notice of those orders to be published on the website of the Administrators at “ ltd” and “ ltd.”
7.Liberty be granted to the Plaintiffs to apply to the Court for any further extension of the convening period for the Second Meetings or any other matter arising in the administration of the Companies generally.
8.Liberty be granted to any person who can demonstrate sufficient interest (including any creditor of any of the Companies) to apply to the Court, on giving 3 business days’ notice to the Plaintiffs, for the purpose of modifying or discharging any of the orders in paragraphs 1 to 6 above.
9.The Plaintiffs’ costs and expenses of and incidental to the Originating Process be costs and expenses in the administration of the Companies.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)MEAGHER J
INTRODUCTION
By an originating process filed on 10 April 2024, the plaintiffs, Anthony Norman Connelly, William James Harris, and Mark Alfred Holland in their capacity as joint and several administrators of the third and fourth plaintiffs, Redback Technologies Holdings Pty Ltd and Redback Operations Pty Ltd, seek an extension of the convening period for the second meeting of the creditors of the companies pursuant to s 439A(6) of the Corporation Act 2011 (Cth).
The plaintiffs also seek an order that pursuant to s 447A(1) of the Act, Part 5.3A of the Act is to operate in relation to each of the companies as if the second meetings may be convened and held at any time during the convening period, or within 5 business days after the end of the convening period. Further, the plaintiffs seek an order that pursuant to section 447A(1) of the Act and section 90-15 of the Insolvency Practice Schedule, forming Schedule 2 of the Act (IPS), Part 5.3A of the Act is to operate in relation to each of the companies as if the second meetings may be convened and held concurrently.
The plaintiffs also seek orders in relation to suppression of parts of affidavit material and the transcript pursuant to section 37AF of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) as well as ancillary orders and orders in relation to notice.
The Plaintiffs relied upon the affidavit of Mr Anthony Norman Connelly dated 9 April 2024, the affidavit of Ms Isabel Jane Schneider dated 11 April 2024 and written submissions dated 10 April 2024.
For the reasons that follow, I grant the orders sought by the plaintiffs.
BACKGROUND
On 5 March 2024, Anthony Norman Connelly, William James Harris, and Mark Alfred Holland were appointed as joint and several administrators of Redback Operations Pty Ltd. Thereafter, on 8 March 2024, they were appointed as joint and several administrators of Redback Technologies Holdings Pty Ltd (Redback Holdings).
Redback Holdings owns 100% of Redback Operations, as well as other companies which form part of the Redback group, some of which are incorporated in China and Hong Kong. Redback Operations is the main operating entity of the group. The companies import solar inverters and batteries and provide “renewable energy solutions” nationally.
As at the date of Mr Connelly’s affidavit:
(a)Redback Operations has leased premises in Indooroopilly from which “Redback Technologies” and “Luceo” trades;
(b)Neither Redback Operations nor Redback Holdings own any real property;
(c)Redback Operations has 38 employees and has engaged 3 contractors, to whom wages and entitlements have been paid by the administrators;
(d)Since the calendar year of 2021, Redback Holdings has suffered a net loss; and
(e)Redback Operations owes 36 creditors the amount of $1,792,918.06 and Redback Holdings owes 2 creditors the amount of $32,045.87.
The first creditors’ meeting of Redback Operations was conducted on 15 March 2024. At that meeting, Mr Connelly noted that the second meeting of Redback Operations may require an extension to consider sale options. A committee was also formed for the inspection for Redback Operations (Committee) at that meeting. The creditors were informed that confidentiality agreements were received from 8 interested parties in relation to the purchase of the business (Interested Parties).
The first creditors’ meeting of Redback Holdings was conducted on 20 March 2024.
Without an extension, the convening period is due to expire on 11 April 2024 for Redback Operations and 16 April 2024 for Redback Holdings.
On 4 April 2024, the Committee voted unanimously in favour of an application for an extension of the convening period for the second meeting.
EXTENSION OF CONVENING PERIOD
Sections 439A and 447A are contained in Part 5.3A of the Act. Section 435A(b) of the Act provides that the object of Part 5.3A includes to provide for the affairs of insolvent companies in a way that results in better returns for the company’s creditors and members than would result from an immediate winding up.
Section 439A(5)(a) of the Act provides that the convening period for the second meeting of creditors is to be within 25 days from the date upon which the administration began. The meeting is to be held within 5 business days before or within 5 days after the end of the convening period; s 439A(2).
Section 447A empowers the Court to make any such orders as it thinks appropriate about how Part 5.3A is to operate. Particularly, section 439A(6) empowers the Court to extend the convening period if an application is made. Pursuant to s 439A(7), the Court may only extend the convening period if it is satisfied that it would be in the best interests of the creditors to extend the convening period in accordance with the application.
As set out in section 439C, the purpose of the second meeting under s 439A is for the creditors to resolve whether (1) the company should execute a Deed of Company Arrangement (DOCA) or (2) the administration should end or (3) that the company be wound up. Rule 75-225(3) of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR) provides that, in relation to meetings convened under section 439A, the administrator is to provide a report about the company’s business, property, affairs and financial circumstances and recommendations to assist the creditors in making their decision.
The principles in relation to the extension of the convening period of the second meeting are well-established. As noted by Austin J in Re LED Builders Pty Ltd (admin apptd) [2008] NSWSC 633 at [2], the process of extending the convening period of the second meeting is “sensible and now almost routine”.
The applicable principles were summarised by Middleton J in Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717; 144 ACSR 347. At [64] – [68], his Honour stated:
The circumstances in which the Court will extend a convening period are well established. In making such an order, the Court must reach an appropriate balance between an expectation that the administration will be relatively speedy and summary, and the countervailing factor that undue speed should not be allowed to prejudice sensible and constructive actions directed to maximising a return for creditors: Mann v Abruzzi Sports Club Ltd (1994) 12 ACSR 611 (Young J); Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10] (Barrett J).
The approach to be adopted was recently set out by Thawley J in Farnsworth v About Life Pty Limited (Administrator Appointed), in the matter of About Life Pty Limited [2019] FCA 11 at [3]-[8], where his Honour endorsed the comments of Austin J in In the matter of Riviera Group Pty Ltd (admins apptd) (recrs & mgrs. apptd) [2009] NSWSC 585 (‘Re Riviera’) at [13] as to the categories of cases in which an extension is granted including, relevantly:
“(1) where the size and scope of the business in administration is substantial (citing Lombe, in the matter of Babcock & Brown Limited (Administrators Appointed) [2009] FCA 349; Worrell; In the matter of Storm Financial Ltd (Receivers and Managers Appointed) (Administrators Appointed) [2009] FCA 70; and ABC Learning Centres Limited, in the matter of ABC Learning Centres Limited; application by Walker (No 5) [2008] FCA 1947);
(2) where the extension will allow sale of the business as a going concern, citing Lombe re Australian Discount Retail Pty Ltd [2009] NSWSC 110; Stewart, in the matter of Kleins Franchising Pty Ltd (administrators appointed) (ACN 007 348 236) [2008] FCA 721; Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619, in the matter of Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619 [2006] FCA 1423; and
(3) more generally, where additional time is likely to enhance the return for unsecured creditors: Deputy Commissioner of Taxation v Scottsdale Homes No 3 Pty Ltd (No 2) [2009] FCA 190; Fitzgerald, In the matter of Primebroker Securities Limited (Administrator Appointed) (Receivers and Managers Appointed) [2008] FCA 1247; Ex parte Vouris; in the matter of Marrickville Bowling & Recreation Club Ltd (under Administration) [2008] FCA 622.”
An extension of the administration period to facilitate either (or both) of: (a) the sale of the business of the company as a going concern, so as to maximise the value of the company’s assets; or (b) the progression and assessment of a DOCA proposal that may provide a better return to creditors than a winding up, are well-recognised examples of situations where the Court has extended the convening period: Mentha, in the matter of Hans Continental Smallgoods Pty Ltd (Administrators Appointed) [2008] FCA 1933 (Jacobson J); Re Riviera (Austin J); Silvia, in the matter of Austcorp Group Ltd (Administrators Appointed) [2009] FCA 636 (Lindgren J) (‘Re Austcorp’); and In the matter of Kavia Holdings Pty Limited (administrators appointed) (receivers and managers appointed) [2013] NSWSC 737 (Black J).
In Mighty River International Ltd v Hughes (as deed administrators of Mesa Minerals Ltd) (2018) 359 ALR 181 at 201-202, [73], Nettle and Gordon JJ (in dissent, but not relevantly in this respect) referred to a number of cases including Re Riviera and concluded:
… Generally speaking, courts have been disposed to grant substantial extensions in cases where the administration has been complicated by, for example, the size and scope of the business, substantial offshore activities, large numbers of employees with complex entitlements, complex corporate structures and intercompany loans, and complex recovery proceedings, and, more generally, where the additional time is likely to enhance the return to unsecured creditors. Provided the evidentiary case for extension has been properly prepared, there has been no evidence of material prejudice to those affected by the moratorium imposed by the administration, and the administrator’s estimate of time has had a reasonable basis, the courts have tended to grant extensions for the periods sought by administrators. …
Finally, the administrator’s own opinion as to the need for an extension will be given weight in an application of this kind: Owen and Others in their capacity as joint and several administrators of Rivercity Motorway Pty Ltd (ACN 116 665 304) (admins apptd) (recs and mgrs. Apptd)) v Madden (No 4) (2012) 92 ACSR 255 at [26] (Logan J); In the matter of Belmont Sportsmans Club Co-Operative Limited (Administrators Appointed) [2015] NSWSC 543 at [9] (Black J); Jahani, in the matter of Northern Energy Corporation Ltd (Administrators Appointed) (No 2) [2019] FCA 382 at [67] (Farrell J); Bumbak (Administrator), in the matter of Duro Felguera Australia Pty Limited (Administrators Appointed) [2020] FCA 422 at [32] (Gleeson J).
The plaintiffs submitted that the extension of the convening period for 1 month is in the interests of the companies’ creditors. The matters which the plaintiffs referred to in that regard were set out at [23] in their written submissions as follows:
(a) the sale of the business as a going concern is likely to maximise the return to creditors;
(b) to preserve employment for as many employees as possible;
(c) to avoid the crystallisation of debts upon the Companies entering liquidation;
(d) permitting the sale process to be completed is likely (if successful) to produce a better price for the sale of the Business than a sale through a liquidation;
(e) to avoid the costs of the second meeting of creditors being adjourned;
(f) to allow the Administrator to assess the potential return to creditors, which is dependant [sic] upon the proposed sale.
(footnotes omitted)
Further, Mr Connelly deposed that the administrators are not aware of any creditors or stakeholders which will be prejudiced by the granting of an extension of the convening periods. To that end, Mr Connelly deposed that the administrators will continue to pay the wages of the employees and contractors as and when they fall due, to be reconsidered on an ongoing basis contingent upon the administrators being satisfied a business sale remains viable and it is in the creditors’ best interests. Mr Connelly also deposed that the rent for March 2024 has been paid, noting that the receivers’ obligation to pay same commenced on 12 March 2024. Additionally, as previously stated, the committee voted unanimously in favour of extending the convening period for the second meeting.
Ms Schneider deposed that the creditors have been notified of this application and that the administrators are seeking to extend the convening period. As at the date of Ms Schneider’s affidavit, it appears that the creditors have acknowledged receipt of the notice but have not otherwise provided a meaningful response. Similarly, as evidenced by exhibit 1, ASIC has acknowledged receipt of the notice.
The plaintiffs therefore submitted that no prejudice would be suffered by the creditors or stakeholders of the companies. Indeed, they submitted that the extension of the convening period is to the benefit of the creditors. In that regard, Mr Connolly deposed that the administrators are of the view that the companies are, or will imminently become, insolvent. If no extension is granted, Mr Connolly deposed that the administrators would likely recommend that the companies be placed into liquidation. Further, Mr Connelly deposed that if no extension is granted, the administrators may recommend that the second meeting be adjourned for 45 business days pursuant to rule 75-140(3) of the IPR, whereby there are estimated costs to be incurred of $10,000.00 to $15,000.00 due to further meetings being required.
On the basis of the aforementioned matters and upon undertaking a balancing exercise, I am satisfied that such matters establish that the Court ought to exercise its discretion to grant the extension of time for the convening period. It is evident that the extension of time may allow for the sale of the business as a going concern and therefore maximise the return to creditors. Further, the extension of one month is very reasonable and it does not appear that it will result in any significant prejudice to the creditors of the companies.
As to the orders sought in relation to section 447A(1) of the Act and section 90-15 of the IPS, Mr Connolly’s evidence makes it clear that there is good reason for such orders. Mr Connolley deposed at paragraph 62 as to the benefits of convening and holding the second meeting for both companies concurrently as follows:
(a) the Companies are likely to be party to the same transaction documents (or at least documents that are interdependent) in the event the Proposed Sale goes ahead;
(b) it will reduce the costs to the creditors of the Companies because there would otherwise be multiple meetings which would ultimately concern the same subject matters; and
(c) this will ultimately result in a better return to the creditors of the Companies.
In these circumstances, it is appropriate for the Court to allow for the second meetings of the companies to be convened and held concurrently. I am satisfied that such a course is likely to facilitate a more beneficial outcome to the creditors.
SUPPRESSION
Pursuant to s 37AF(1)(b)(i) and (ii) of the Federal Court Act, the Court may make orders suppressing information that relates to a proceeding before the Court which comprises evidence or has been obtained by the process of discovery. The Court may make such orders on at least one of the grounds set out in s 37AG of the Federal Court Act, including to prevent prejudice to the proper administration of justice.
The plaintiffs helpfully set out the relevant principles applicable to the making of suppression orders. Particularly, the plaintiffs referred to Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (No 2) [2018] FCA 17 at [6], where Perram J summarised, the applicable principles as follows:
This Court has recently set out the principles to be applied when it is considering whether or not to make a suppression or non-publication order: Chief Executive Officer of Australian Transaction Reports and Analysis Centre v TAB Limited (No 4) [2017] FCA 1532 (‘CEO of Austrac v TAB (No 4)’) at [9]-[12]. The present application does not call for any greater elaboration of those principles, but they may be distilled as follows:
(1) the FCAA contains Part VAA which relates to suppression and non-publication orders;
(2) the power of the Court to make such orders is contained in s 37AF and the grounds for making them are to be found in s 37AG which includes within it that ‘the order is necessary to prevent prejudice to the proper administration of justice’: s 37AG(1)(a);
(3) such an order is not lightly to be made. It must be necessary to prevent prejudice to the proper administration of justice and not merely desirable: see Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 at 666 [39]; Australian Competition and Consumer Commission v Valve Corporation (No 5) [2016] FCA 741 at [8] per Edelman J;
(4) the Court may make any other order necessary to give effect to the primary order: s 37AF(2) of the FCAA.
(5) the order, once made, must remain in place no longer than is reasonably necessary to achieve its purpose: s 37AJ(2); and
(6) the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice (s 37AE), but no balancing exercise need be carried out between the utility of the order and the interest which open justice assumes under the FCAA: Australian Competition and Consumer Commission v Air New Zealand (No 12) [2013] FCA 533 at [21].
It is well-established that caution ought to be exercised when making suppression orders. As referred to by the plaintiffs, in Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2010] FCA 1082 at [13], it was considered that it is not in the interests of justice for the proceedings to “become a vehicle for advantaging or prejudicing trade rivals”. However, as noted by Perram J in Motorola Solutions at [8], commercial sensitivity has repeatedly been held to be an appropriate basis for the making of a suppression or non-publication order.
In this case, the plaintiffs submitted that certain paragraphs of Mr Connelly’s affidavit should be suppressed as the information contained therein may impact upon the decisions of the Interested Parties in relation to the sale of the business. Similar submissions were made with respect to one of the exhibits comprising pages 350 to 360 of the bundle of documents annexed to Mr Connelly’s affidavit. The plaintiffs also sought that the transcript of the hearing be suppressed.
I am satisfied that the relevant paragraphs and documents should be suppressed. As noted by Greenwood J in Cement Australia at [13], “[t]he administration of justice is concerned with quelling controversies between parties and the public has an interest in courts doing justice, according to law, in the disposition of each controversy.” It is evident that the relevant parts of Mr Connolley’s affidavit contain information which may be utilised by the Interested Persons in negotiations. This could impact upon the sale process and result in less beneficial returns for the creditors. In this case, the suppression of the relevant paragraphs, the associated exhibit and transcript would ensure that the controversies between the parties can be addressed.
For the same reasons, I am satisfied that the transcript of the proceedings should be suppressed.
ANCILLIARY ORDERS
At paragraphs 5 to 9 of the originating process, the plaintiffs sought ancillary orders in relation to the electronic delivery of orders, notices, procedural matters, and costs.
As to electronic delivery to the creditors, the plaintiffs referred to Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571; (2020) 144 ACSR 310 at [27] – [29] wherein Middleton J observed that such orders are “common-place”. I am satisfied that such orders are appropriate and will facilitate the delivery of such notices in a cost-effective and efficient manner.
The plaintiffs also sought that the costs of the originating process be costs in the administration of the companies. They referred to section 90-15(3)(a), (d) and (f), and 90-15(4)(a) of the IPS and submitted that the Court should make such orders in the circumstances where the administrators are seeking to maximise returns to creditors. I agree with the plaintiff’s submissions and find that such a costs order would be appropriate in these circumstances.
CONCLUSION
For the aforementioned reasons, I am satisfied that the orders which the plaintiffs seek should be made.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Meagher. Associate:
Dated: 11 April 2024
SCHEDULE OF PARTIES
QUD 181 of 2024 Plaintiffs
Fourth Plaintiff:
REDBACK OPERATIONS PTY LTD
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