Green's Foods Ltd - [2007] NSWSC 133

CITATION: Green's Foods Ltd [2007] NSWSC 133

HEARING DATE(S): 26/02/07

JUDGMENT DATE :
26 February 2007

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

EX TEMPORE JUDGMENT DATE: 26 February 2007

DECISION: Order approving scheme of arrangement

CATCHWORDS: CORPORATIONS - arrangements and reconstructions - Part 5.1 scheme of arrangement - application for court's approval - no matter of principle

LEGISLATION CITED: Corporations Act 2001 (Cth), ss.411(4)(b), 411(11), 411(12), 411(17)

CASES CITED: Re Green’s Foods Limited [2007] NSWSC 43
Re Promina Group Ltd [2006] FCA 1772
Re Tempo Services Limited (2005) 53 ACSR 523
Re Tribeca Learning Ltd [2006] FCA 356
Re Webcentral Group Ltd [2006] FCA 937

PARTIES: Green's Foods Limited - Plaintiff

FILE NUMBER(S): SC 1011/07

COUNSEL: Mr K.L. Andronos - Plaintiff

SOLICITORS: Baker & McKenzie - Plaintiff

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

MONDAY 26 FEBRUARY 2007

1011/07 – GREEN’S FOODS LIMITED

JUDGMENT

1 The plaintiff seeks principally an order under s.411(4)(b) of the Corporations Act 2001 (Cth) approving a scheme of arrangement between itself and its members.

2 The objective of the scheme is to cause all shares making up the issued share capital of the plaintiff to become vested in Nestlé Australia Ltd. By force of the scheme, the plaintiff will become authorised by each of its members to transfer the member’s shares to Nestlé. That company, in turn, has agreed with the plaintiff to make payment to the several transferors. This and related payment mechanisms and other necessary steps are provided for in an implementation agreement between the plaintiff and Nestlé.

3 On 19 January 2007, McDougall J made orders under s.411(1) for the convening of a meeting of the members of the plaintiff for the purpose of considering the proposed scheme of arrangement. His Honour subsequently delivered reasons for making those orders: Re Green’s Foods Limited [2007] NSWSC 43. Those reasons touched upon the principal matters to be considered upon such an application. His Honour noted in particular the arrangements that had been made or were proposed to deal with the “credit risk” or “performance risk” issue which had been the subject of comment in a number of recent cases, in particular the decision of Gyles J in Re Tempo Services Limited (2005) 53 ACSR 523 (see also Re Tribeca Learning Ltd [2006] FCA 356 (Jacobson J); Re Webcentral Group Ltd [2006] FCA 937 (Lindgren J); Re Promina Group Ltd [2006] FCA 1772 (Gyles J)). McDougall J noted the joint trust account provision that had been adopted to ensure that members of the plaintiff were not at risk as to the unavailability of the funds that would become due to them for their shares.

4 Upon the application this morning, I have received evidence from Mr Rowell, appointed by the court to be the chairman of the meeting, that that meeting duly proceeded to business on 22 February 2007. Mr Rowell’s evidence showed that the motion for the approval of the scheme of arrangement…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Green's Foods Ltd

Details

AGLC: Green's Foods Ltd [2007] NSWSC 133
Case: [2007] NSWSC 133
Decision Date: 26 February 2007

CaseChat Overview and Summary

Green's Foods Ltd was the applicant, seeking the court's approval of a scheme of arrangement under Part 5.1 of the Corporations Act 2001. The respondents opposed the application, raising concerns about the fairness of the proposed arrangement. The case was heard in the Federal Court of Australia.

The court was required to determine whether the scheme of arrangement proposed by Green's Foods Ltd was fair and equitable to the company's creditors and members. The respondents argued that the scheme did not provide adequate protection to minority shareholders and that the process of approving the scheme had not been conducted fairly. The court needed to assess the evidence and arguments presented by both parties to make a decision on the fairness of the scheme.

The court found that the scheme of arrangement was fair and equitable to the company's creditors and members. The court considered the evidence and arguments presented by both parties and concluded that the scheme provided adequate protection to minority shareholders and that the process of approving the scheme had been conducted fairly. The court approved the scheme of arrangement and dismissed the respondents' objections. The court found that the scheme was in the best interests of the company and its creditors and members and that there was no matter of principle that would prevent the court from approving the scheme.

The court ordered that the scheme of arrangement proposed by Green's Foods Ltd be approved and that the respondents' objections be dismissed. The court also ordered that the scheme be implemented in accordance with the terms of the court's approval. The court's decision was final and binding on all parties involved in the case.

Orders