Dunn, in the matter Evolution Traffic Management Pty Ltd

[2022] FCA 411

FEDERAL COURT OF AUSTRALIA

Dunn, in the matter Evolution Traffic Management Pty Ltd  [2022] FCA 411

File number(s):	QUD 121 of 2022
Judgment of:	GREENWOOD J
Date of judgment:	19 April 2022
Catchwords:	CORPORATIONS – consideration of an application under s 439A(6) and s 447A(1) of the Corporations Act 2001 (Cth)
Legislation:	Corporations Act 2001 (Cth), ss 439A(6), 447A(1)
Division:	General Division
Registry:	Queensland
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	10
Date of hearing:	19 April 2022
Counsel for the Applicants:	Mr Paul O’Brien
Solicitor for the Applicants:	Hamilton Locke Lawyers

ORDERS

QUD 121 of 2022

IN THE MATTER OF EVOLUTION TRAFFIC MANAGEMENT PTY LTD ACN 638 495 691 (ADMINISTRATORS APPOINTED)

BETWEEN:

JOANNE EMILY DUNN, JOHN RICHARD PARK AND KELLY-ANNE LAVINA TRENFIELD IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF EVOLUTION TRAFFIC MANAGEMENT PTY LTD ACN 638 495 691 (ADMINISTRATORS APPOINTED)

First Applicant

EVOLUTION TRAFFIC MANAGEMENT PTY LTD ACN 638 495 691 (ADMINISTRATORS APPOINTED)

Second Applicant

ORDER MADE BY:	GREENWOOD J
DATE OF ORDER:	19 APRIL 2022

THE COURT ORDERS THAT:

1.Pursuant to section 439A(6) of the Corporations Act 2001 (Cth) (“the Act”), the period within which the applicant must convene the second meeting of the creditors of the second applicant is extended up to and includes 24 May 2022.

2.Pursuant to section 447A(1) of the Act, Part 5.3A of the Act is to operate in relation to the second applicant so that the second meeting of the creditors of the second applicant required by section 439A(1) of the Act may be held at any time during the period as extended under order 1 above, and the period of five business days thereafter, notwithstanding the provisions of section 439A(2) of the Act.

3.Pursuant to section 447A(1) of the Act and section 90–15 of the Insolvency Practice Schedule (Corporations) (“IPSC”) that if, pursuant to any provision in any of Part 5.3A of the Act, the IPSC, or the Insolvency Practice Rules 2016 (Cth) (“IPR”), the applicants are required to provide any other notification to creditors during the administration of the Companies, the applicable notice requirements will be satisfied if the applicants give such notice by taking the following steps:

(a)where the applicants:

(i)have an email address for a creditor, by notifying each such creditor of the relevant matter by an email sent to that email address;

(ii)do not have an email address for a creditor, but have a postal address for that creditor (or have received notification of non-delivery of a notice sent by email in accordance with (a)(i) above), by notifying each such creditor in writing of the relevant matter via ordinary pre-paid post;

(b)by publishing notice of the relevant matter to creditors through the online creditor portal maintained by the applicants; and

(c)to the extent that the matter relates to a meeting that is the subject of section 75-40(4) of the IPR, by causing notice of the meeting to be published on the ASIC published notices website at 2 business days of these orders, the first applicants take all reasonable steps to cause notice of this originating process, and the orders made, to be given to:

(a)creditors of the second applicant in accordance with order 3 above; and

(b)ASIC, by its street address or email address.

5.Liberty to apply be granted to any person who can demonstrate sufficient interest to modify or discharge orders 1, 2 or 3 above on not less than 48 hours’ written notice to the first applicant.

6.The first applicant’s costs of and incidental to the originating application be treated as costs and expenses in the administration of the second applicant.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

EX TEMPORE REASONS FOR JUDGMENT

GREENWOOD J:

1. This is an application by Joanne Emily Dunn, John Richard Park and Kelly‑Anne Lavina Trenfield in their capacity as joint and several administrators of Evolution Traffic Management Pty Ltd (administrators appointed) and also by Evolution Traffic Management Pty Ltd (administrators appointed) as the second applicant. I will refer to Evolution Traffic Management Pty Ltd as the “company”. The application is made under s 439A(6) of the Corporations Act 2001 (Cth) (the “Act”) for orders that the period within which the first applicant must convene the second meeting of creditors of the second applicant be extended up to and including 24 May 2022.

2. There is also an application pursuant to s 447A(1) of the Act that Part 5.3A of the Act is to operate in relation to the second applicant as if the second meeting of the creditors of the second applicant required by s 439A(1) of the Act be held at any time during the period as extended under Order 1 above and a period of five business days thereafter notwithstanding the provisions of s 439A(2) of the Act. Section 439A(6) and s 447A(1) are well‑known and well understood and it is not necessary in these brief reasons to set out the text of the provisions or their effective operation. It is enough to mention these things.

3. The application is supported by an affidavit of Joanne Emily Dunn sworn 14 April 2022. 

4. On 17 March 2022, Mr Park, Ms Trenfield and the deponent, Ms Dunn, were appointed as joint and several administrators of the company. Unless extended, the convening period under s 439A(5)(a) of the Act will expire on 26 April 2022. Since the appointment of the administrators, they have continued to trade the company to conserve its value for sale and allow for recapitalisation while undertaking investigations. The administrators are of the view that it would be in the best interests of the creditors of the company for the convening period to be extended for a period of four weeks for the reasons set out in the affidavit.

5. Given the fact that the application involves suspension of aspects of the corporations law it is necessary to say some brief things about the company’s operations.  The company provides complete traffic management services to various entities, including local councils, road maintenance and construction contractors and others and has over 400 public and private sector clients.  The company is a 100% owned subsidiary of Evolution Group Holdings Limited and the subsidiary contributes about 82% of the annual revenue of the holding company which is approximately $102.3 million.

6. In her affidavit, Ms Dunn sets out the key functions of the group of companies and it is not necessary to say things about that in these reasons.  As to the financial position of the company Ms Dunn says that the administrators’ initial inquiries have established that the secured creditors of the company are owed approximately $20.6 million, priority creditors are owed approximately $2 million, and unsecured creditors are owed in the vicinity of $14.6 million. 

7. Ms Dunn explains that on 29 March 2022, the administrators conducted the first meeting of the company’s creditors.  As at the date of her affidavit in support of the application, the administrators have identified that the company’s financial difficulties arose due to its financial management, especially the management of the company’s accounts receivables.  At para 27 of her affidavit, Ms Dunn sets out approximately 14 significant steps that have been undertaken by the administrators in conducting their investigations.  It is not necessary to set out all those steps here.  They are, indeed, comprehensive. 

8. At para 28 of her affidavit, Ms Dunn sets out other steps taken in addition to the investigations by the administrators and they, too, involve such things as producing and lodging the relevant documents with ASIC, notifying the Australian Taxation Office and other such matters.  There are 12 of those steps set out at para 28 and, again, it is not necessary to set the detail of those matters out here. 

9. At para 29, Ms Dunn sets out seven further steps that the administrators would wish to take in order to best protect the interests of the creditors.  They include such matters as the completion of the sale of the business campaign currently being undertaken; reviewing offers in relation to the sale of the company’s business and negotiating with interested parties; looking at aspects of a possible recapitalisation of the business of the company; and aspects of whether or not a deed of company arrangement might be forthcoming.  The steps also include continuing discussions with National Australia Bank in relation to securities held by the bank and whether they can be refinanced or not. 

10. There is a further affidavit filed by Ms Dunn sworn 19 April 2022 which goes to aspects of the matter of the negotiations with National Australia Bank and, the further affidavit of Ms Dunn says there is no objection from any of the creditors to the proposal now before the Court.  I am entirely satisfied that the best interests of the creditors are served by making the orders sought by the applicants, and accordingly the Court will make those orders. 

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Greenwood.

Associate:

Dated:       19 April 2022