Holzman, in the matter of Frigrite Limited
[2011] FCA 900
•8 July 2011
FEDERAL COURT OF AUSTRALIA
Holzman, in the matter of Frigrite Limited [2011] FCA 900
Citation: Holzman, in the matter of Frigrite Limited [2011] FCA 900 Parties: MANFRED HOLZMAN (IN HIS CAPACITY AS VOLUNTARY ADMINISTRATOR OF FRIGRITE LIMITED (ADMINISTRATOR APPOINTED) ACN 112 452 436) and FRIGRITE LIMITED (ADMINISTRATOR APPOINTED) ACN 112 452 436 File number(s): NSD 1109 of 2011 Judge: EMMETT J Date of judgment: 8 July 2011 Date of hearing: 8 July 2011 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 7 Counsel for the plaintiffs: J M White Solicitor for the plaintiffs: Kemp Strang
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1109 of 2011
IN THE MATTER OF FRIGRITE LIMITED (ADMINISTRATOR APPOINTED) ACN 112 452 436
MANFRED HOLZMAN (IN HIS CAPACITY AS VOLUNTARY ADMINISTRATOR OF FRIGRITE LIMITED (ADMINISTRATOR APPOINTED) ACN 112 452 436)
First PlaintiffFRIGRITE LIMITED (ADMINISTRATOR APPOINTED) ACN 112 452 436
Second PlaintiffJUDGE:
EMMETT J
DATE OF ORDER:
8 JULY 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to section 439A(6) of the Corporations Act 2001 (Cth) (the Act), the period within which the first plaintiff must convene the meeting of creditors of the second plaintiff pursuant to section 439A of the Act be extended up to and including 3 August 2011.
2.Pursuant to section 447A(1) of the Act, Part 5.3A of the Act have effect in relation to the second plaintiff such that the meeting of creditors that is required by section 439A of the Act may be held at any time during the period up to or within 5 business days after 3 August 2011, notwithstanding the provisions of section 439(2) of the Act.
3.Liberty be granted to the first plaintiff to apply to the Court for any further extensions of the convening period referred to in Order 1 at any time prior to 3 August 2011.
4.Liberty to apply be granted to any person who can demonstrate sufficient interest to modify or discharge these Orders, upon 48 hours’ notice being given to the first plaintiff and to the Court.
5.The costs and expenses of this application be costs and expenses of the administration of the Second Plaintiff.
6.Confidential Exhibit “MH-1” to the affidavit of Mr Manfred Holzman sworn on 8 July 2011 be kept in the Court file in this proceeding in a sealed envelope marked “Confidential – Not to be opened by any person without further order of a Judge of this Court” and giving the first plaintiff, care of his solicitor, Kemp Strang, at least 48 hours’ prior notice of any application seeking an order, or alternatively, the exhibits returned.
7.The proceeding be listed before the Corporations Judge for directions on 26 August 2011.
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 1109 of 2011
IN THE MATTER OF FRIGRITE LIMITED (ADMINISTRATOR APPOINTED) ACN 112 452 436
MANFRED HOLZMAN (IN HIS CAPACITY AS VOLUNTARY ADMINISTRATOR OF FRIGRITE LIMITED (ADMINISTRATOR APPOINTED) ACN 112 452 436)
First PlaintiffFRIGRITE LIMITED (ADMINISTRATOR APPOINTED) ACN 112 452 436
Second PlaintiffJUDGE:
EMMETT J
DATE:
8 JULY 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The first plaintiff, Mr Manfred Holzman (the Administrator), is the administrator of the second plaintiff, Frigrite Limited (the Company). The Company was incorporated on 13 January 2005, and was listed on the Australian Stock Exchange on 17 March 2005. The Administrator was appointed as voluntary administrator to the Company, by resolution of the board of directors under s 436A of the Corporations Act 2001 (Cth) (the Act), on 16 June 2011. On 28 June 2011, the first meeting of creditors of the Company was held, pursuant to s 436E of the Act. During the course of the administration, the Administrator has held discussions with representatives of the Company’s secured creditor, directors and management, and has communicated with representatives of various persons who have an interest in the Company, including ordinary unsecured creditors.
The securities of the Company were suspended from quotation on the Australian Securities Exchange on 17 December 2010. There are limited funds available in the administration of the Company. The funds presently available in the administration of the Company are approximately $17,000. The Company has assets to the value of approximately $30,000, which include plant and equipment, tools, stock, and intellectual property.
The Company is the reporting company of a group that includes itself, Frigrite Refrigeration Pty Limited (Frigrite Refrigeration) and a third company. Those three companies have entered into a deed of cross-guarantee under a class order of the Australian Securities and Investments Commission, the effect of which is that the Company guarantees, to each creditor of itself and Frigrite Refrigeration, payment in full of any debt that remains outstanding after six months of either being wound up. The estimated unsecured creditors’ claims that are likely to be made against the Company, under the terms of the deed, are in excess of $21 million.
Clearly, the Company’s liabilities exceed the assets presently available in the administration. On 21 June 2011, the Administrator caused an advertisement seeking expressions of interest in relation to the Company to be placed in the Australian Financial Review. After a number of enquiries were received, the Administrator entered into further negotiations with five parties and is currently involved in advanced negotiations with four of those interested parties. Each of the four has put forward a proposal for the recapitalisation of the Company, which would include the execution of a deed of company arrangement and the creation of a creditors’ trust. All of the proposals that the Administrator has received will provide for a greater return to creditors than would be expected if the Company went into liquidation.
The second meeting of creditors of the Company must be convened, under s 439A of the Act, by 14 July 2011. It is highly unlikely that any of the proposals presently being discussed will have reached finality in time for such a meeting, and it would therefore likely be necessary to adjourn the meeting to enable completion of the discussions. However, that would involve additional costs. The Administrator expended approximately $4,546 in relation to the convening of the first meeting. A second meeting and an adjourned meeting would involve expenditure of in excess of $16,000, quite apart from the Administrator’s remuneration. The Administrator therefore seeks an extension of the convening period to enable him to continue to communicate with creditors, including the secured creditor, and to pursue negotiations with the interested parties with a view to being able to finalise negotiations concerning a deed of company arrangement.
The Administrator is of the opinion that it is in the interests of all creditors to permit him to have a period of time in which to continue to negotiate with interested parties, and that a successful recapitalisation will maximise the potential return to the creditors of the Company. The Administrator has informed the Company’s directors and major shareholders, who hold approximately 25 per cent of the issued share capital, of his proposal to make the present application. No opposition has been expressed to the proposal. The Administrator considers that the extension of the convening period would not unduly prejudice any creditors, and will save the costs that would be incurred if the meeting were to be convened and then adjourned.
In all of the circumstances, while an extension of the convening period is not given as a matter of course, I consider that this is an appropriate case in which to extend the period.
I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 8 August 2011
0
0
0