In the matter of Markenzo Pty Ltd (admins apptd) and Thorley Sand & Gravel Pty Ltd (admins apptd)

[2025] NSWSC 515

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Markenzo Pty Ltd (admins apptd) and Thorley Sand & Gravel Pty Ltd (admins apptd) [2025] NSWSC 515

Hearing dates:

9 May 2025

Date of orders:

9 May 2025

Decision date:

09 May 2025

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Orders made extending time for adjournment of second meeting of creditors and non-publication order made in respect of certain evidence

Catchwords:

CORPORATIONS – Insolvency – Administration – Extension of time for adjournment of second meeting of creditors

CIVIL PROCEDURE – Non-publication order – Where evidence tendered in application contains commercially sensitive information

Legislation Cited:

- Corporations Act 2001 (Cth) s 447A

- Court Suppression and Non-Publication Orders Act 2010 (NSW) ss 7, 8(1)(a)

- Insolvency Practice Rules (Corporations) 2016 (Cth) r 75.140

Cases Cited:

- Griffiths, in the matter of Armorgalv (Aust) Pty Ltd (admin apptd) [2023] FCA 752

- MXJ v Company X (admin apptd) [2023] VSC 42

Category:

Principal judgment

Parties:

Richard Albarran, Cameron Shaw and Kathleen Vouris in their capacity as joint and several administrators of the Second and Third Plaintiffs (First Plaintiffs)
Markenzo Pty Ltd (admins apptd) (Second Plaintiff)
Thorley Sand & Gravel Pty Ltd (admins apptd) (Third Plaintiff)

Representation:

Counsel:
F Tao (Plaintiff)

Solicitors:
Gadens (Plaintiff)

File Number(s):

2025/173231

JUDGMENT – ex tempore (Revised 15 May 2025)

Nature of the application

1. By Originating Process filed on 6 May 2025, Mr Albarran and others in their capacity as joint and several administrators of Markenzo Pty Ltd (admins apptd) ("Markenzo") and Thorley Sand and Gravel Pty Ltd (admins apptd) (“Thorley”) (together, “Companies”) apply, under s 447A of the Corporations Act 2001 (Cth) for, in effect, an extension of the time in which a second meeting of creditors can be adjourned, from the 45 business day period specified in r 75.140 of the Insolvency Practice Rules (Corporations) 2016 (Cth) (“Insolvency Practice Rules”), to permit that meeting to be held no later than 18 August 2025, about three months in the future. The application reflects commercial issues that commonly arise in applications to extend the convening period for a voluntary administration under s 447A of the Act. However, Mr Tao, who appears for the voluntary administrators, rightly points out that it is no longer possible to extend the convening period here, so that this application is properly brought in this manner.

Affidavit evidence

2. I will first address the evidence before turning to the applicable principles. The administrators read the affidavit dated 6 May 2025 of Ms Vouris, who is one of the administrators, who refers to the circumstances of their appointment and to the financial position of the State Road Group, of which the Companies form part. The State Road Group operated a civil contractor business providing earth moving equipment and heavy vehicle and machinery hire for large-scale projects in New South Wales and Queensland, typically in the nature of infrastructure projects in respect of road developments. Several companies within the State Road Group have now passed from voluntary administration to liquidation.

3. The Companies are each asset holding companies. Markenzo holds a quarry situated in Mount View in New South Wales and Thorley holds an EPA licence which permits the extraction of particular resources at the quarry. Ms Vouris notes that, since the voluntary administrators' appointment, they have attended to the matters necessary to ensure compliance with the EPA licence for the quarry, recognising that that licence is capable of being transferred to a third party, at least so long as the Companies do not pass into liquidation. Ms Vouris also addresses the position as to the Companies’ creditors. Secured creditors in respect of the Companies have not, to date, appointed receivers and managers, and appear to be content to permit the Companies’ assets to be realised in the voluntary administration. The Companies’ unsecured debts are owed to related entities within the State Road Group.

4. Ms Vouris also refers to the matters which support the application, including that the sale of business process for the assets of the Companies is ongoing. The administrators having advertised the business or the assets for sale by a confidential information memorandum, and are working towards completion of the sale process toward the end of May 2025. Ms Vouris expresses the view that the extension of the adjournment period for the second meeting of creditors, beyond the 45 day period which would otherwise be available under the Insolvency Practice Rules, would lead to a better outcome for creditors generally. She also notes her view that, notwithstanding the current timetable for the sale process, the nature of the Companies’ assets is such that any sale may require a longer period for due diligence by the purchasers and completion.

5. It is plain enough, and Ms Vouris' affidavit indicates, that a sale of the Companies’ assets, so as to maximise the return to creditors or at least secured creditors, will be more readily achieved within the voluntary administration that in a liquidation, and there appears to be a risk that the EPA licence would no longer be transferable in a liquidation and its value would thereby be reduced or lost. Ms Vouris also expresses the view that there would be no prejudice to creditors from the extension of the adjournment period which is sought, where the Companies have no employees and creditors generally, or at least those who would share in a distribution of surplus, will benefit from maximising the sale proceeds of the Companies’ assets. Ms Vouris also indicates, sensibly enough, that the administrators would reconvene and hold the second meeting of creditors as soon as practicable, if the sale of the business and assets of the Companies ultimately completes earlier.

6. The administrators in turn read a confidential affidavit of Ms Vouris dated 9 May 2025, to which I will refer only in general terms, given the commercial sensitivity of its content. That affidavit provides more detail as to the value of the Companies’ assets, the status of the marketing and sale campaign, and the matters which lead Ms Vouris to consider that there is a real prospect that that marketing campaign will be successfully completed in a manner which will create a return for creditors in the administration. I am satisfied that, in the relevant circumstances, an order is properly made under ss 7 and 8(1)(a) of the Court Suppression and Non-Publication Orders Act 2010 (NSW) in respect of that confidential affidavit and the exhibit to it, where those documents comprise commercially sensitive information, the disclosure of which may adversely impact the sale process. That order is warranted to support the administration of justice, where an application of this kind could not otherwise be made without prejudicing the confidentiality of that information.

7. By a third affidavit dated 8 May 2025, Ms Vouris deals with notification of this application to creditors and service of documents relating to the application on the Australian Securities and Investments Commission (“ASIC”). Mr Tao rightly acknowledges that creditors and ASIC have been given limited notice of the application, at least partly by reason of its urgency. However, an order is sought in common form that will preserve the ability of any interested person to apply to seek to vary these orders and that substantially protects the interest of creditors and ASIC in that regard.

Submissions and determination

8. Mr Tao, in submissions, addresses the factual background of the application, to which I have referred above, and the position in respect of the Companies’ creditors and the marketing and sale of their assets. He draws attention to the nature of the relief that is sought, and to the fact that orders of the kind sought in this case have previously been made, on the basis that an order that modifies the operation of r 75-140 of the Insolvency Practice Rules in respect of the length of adjournment of a second meeting of creditors is an order that relates to the conduct of the administration, at least so far as the process by which that second meeting of creditors would be held: MXJ v Company X (admin apptd) [2023] VSC 42; Griffiths, in the matter of Armorgalv (Aust) Pty Ltd (admin apptd) [2023] FCA 752 (“Armorgalv”). I am satisfied that that approach is properly followed here, so that the Court should approach this application in substantially the same way as it would approach an application for extension of the convening period, balancing of the desirability of expedition in a voluntary administration on the one hand and the importance of allowing an opportunity to maximise the proceeds of sale of assets and the return to creditors in that voluntary administration on the other, in the manner noted by Cheeseman J in Armorgalv at [17].

9. I recognise that the administrators have here formed the view that it is in the best interest of creditors to seek to complete the sale process within the Companies’ voluntary administration, and it is apparent that that view has a rational basis, having regard to the progress of the sale process to date and the adverse impact of a liquidation upon the Companies’ ability to realise value for the EPA licence that is used in respect of the quarry. I am also satisfied that, as Ms Vouris' evidence indicates, the prospect of realising value for those assets will be maximised by permitting the adjournment of the second meeting of creditors that is sought, by contrast with the position in a liquidation. I am satisfied that there is no apparent prejudice to creditors in that course, and the approach taken by secured creditors to date suggest that they are supportive of that course. The case law also indicates, in the analogous situation of an extension of the convening period, that the Court will give significant weight to the commercial view which is formed by the administrators as to matters of this kind.

Orders

10. For these reasons, I will make the confidentiality and substantive orders which are sought in the Originating Process. I make orders in accordance with the short minutes of order initialled by me and placed in the file which include an order that the exhibits be returned and that the orders be entered forthwith.

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Decision last updated: 23 May 2025