In the matter of Auswide Projects Limited (Administrator Appointed) and Auswide Services Limited (Administrator Appointed)
[2014] NSWSC 1905
•7 October 2014
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New South Wales |
Case Name: | In the matter of Auswide Projects Limited (Administrator Appointed) and Auswide Services Limited (Administrator Appointed) |
Medium Neutral Citation: | [2014] NSWSC 1905 |
Hearing Date(s): | Tuesday, 7 October 2014 |
Date of Orders: | 7 October 2014 |
Decision Date: | 7 October 2014 |
Jurisdiction: | Equity Division - Corporations List |
Before: | Brereton J |
Decision: | Convening period extended. |
Catchwords: | CORPORATIONS – voluntary administration – creditor's meeting – extending convening period under s 439A – complex valuation issues – potential for a deed of company arrangement – no apparent prejudice to creditors or contributories. |
Legislation Cited: | Cth) Corporations Act 2001, s 439A, 447A |
Category: | Procedural and other rulings |
Parties: | David Ian Mansfield and Neil Robert Cussen in their capacity as Administrators of Auswide Projects Ltd (ACN 153 924 031) (administrators appointed) (first plaintiff) |
Representation: | Counsel: |
File Number(s): | 2014/293345 |
JUDGMENT (EX TEMPORE)
HIS HONOUR: By the originating process, the plaintiffs seek an order pursuant to (Cth) Corporations Act 2001, s 439A(6), extending the period within which they must convene the second meeting of creditors of the defendant companies, of which they are the voluntary administrators, for a period of 45 days, up to and including 16 December 2014.
In essence, the administrators say that they consider that they are not yet in a position to make a meaningful and useful recommendation to the creditors for the purposes of the section 439A meeting, but that if given the additional time sought, various parameters and information currently unknown to them will be available and they will then be in a position to provide a more extensive report, which can explain each available option.
Essentially, the unknown parameters and information relate to the value of two properties, one owned by one of the companies and the other of which the other company is a tenant. I accept that the interests in these properties are unusual and that determination of their value is not a straightforward matter and will be influenced by a number of considerations.
What concerns me, however, is that it is not apparent to me that this will be any different in a liquidation scenario, as distinct from an administration scenario. The same difficulties will affect the question of valuation and, for that matter, the valuation may, upon sale, turn out to be inaccurate. As in terms of the likely return to creditors it does not seem that administration as opposed to liquidation is likely to realise a better value for the properties, it is difficult to see why this is a matter that affects the administrator's ability to make a recommendation to creditors.
That said, it is conceivable that the moratorium imposed by the administration has the possibility of preserving the value of the leasehold interest in the ACT property, of which Services is a tenant, which, in the event of liquidation, might otherwise be lost.
The evidence also reveals, albeit in a less than satisfactory way, that there is some prospect of a proposal for a deed of company arrangement, which would involve the pooling of assets and creditors of the two companies and which, at least on some scenarios, might produce a superior result for the creditors of at least one of the companies than a liquidation.
There is no pending litigated claim against either company, nor any outstanding statutory demand. The first ranking secured creditor is said to have confirmed that it has no objection to the extension of the convening period and the second ranking secured creditor has not, at this stage, responded to notification of the application. In any event, it is proposed that leave be reserved to any creditor or other person affected to apply to set aside the order if it be made.
While the application is a marginal one, there does not appear to be any prejudice to creditors or contributories from acceding to it, especially in circumstances where leave to apply to set aside the order will be reserved, and there appears to be some, if vague, prospect that an administration might produce a superior result, in the event that a DOCA proposal of the type mentioned is forthcoming, and by preserving the leasehold interest which might otherwise be in jeopardy.
It is of some concern that the attitude of the lessor to the application has not been ascertained. Nor is there any indication as to whether the administrators propose to pay the rent during the administration, which if the lessor did oppose the application, would be a highly relevant consideration. But, as the lessor will be able to apply to set aside the order, there will be no irremediable prejudice to it from granting the extension sought.
Although one course would be to grant a shorter extension, there seems to me little utility in doing that, as that will not place the administrators in a position to make the more informed report they seek to make, nor will it significantly avoid detriment to creditors as their right to apply to set aside the order will be preserved.
The Court orders that:
(1)Pursuant to Corporations Act, s439A(6), the period within which the plaintiffs must convene a second meeting of creditors of the defendant companies within the meaning of s 439A(1) be extended up to and including 16 December 2014.
(2)Pursuant to Corporations Act, s 447A(1), the meetings of the creditors of the defendant companies required to be held, by s439A of the Act, may be held at any time during or within five business days after the end of the convening period as extended by order 1, notwithstanding the provisions of s439A(2) of the Act.
(3)Leave be granted to any person affected by these orders including any creditors of either of the defendant companies to make any such application as he or she or it may be advised to vary or set aside these orders on forty-eight hours’ notice to the plaintiffs and to the Court. Any such notice to specify the order to be sought.
(4)The plaintiffs provide a copy of these orders to each of the creditors of the companies and the Australian Securities and Investments Commission.
These orders are to be entered forthwith.
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