In the matter of Palace Memories Pty Limited (Administrator Appointed)
[2015] NSWSC 2030
•04 May 2015
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Canberra Eye Hospital Pty Ltd (Administrator Appointed) [2015] NSWSC 2030 Hearing dates: 4 May 2015 Date of orders: 04 May 2015 Decision date: 04 May 2015 Jurisdiction: Equity - Corporations List Before: Brereton J Decision: Administrators permitted to adjourn second meeting of creditors, whether or not quorum at meeting achieved.
Catchwords: CORPORATIONS – voluntary administration – jurisdiction and powers of court – orders modifying operation of (Cth) Corporations Act 2001, Pt 5.3A under s 447A – order to permit adjournment of second creditors’ meeting – where purpose of adjournment to enable sale of company’s business – utility of sale to shareholders and creditors – where preferable not to interfere with creditors’ right to decide upon further adjournment – risk that quorum at second creditors’ meeting will not be achieved – conferral of power on administrator to adjourn meeting in event that quorum not achieved. Legislation Cited: (Cth) Corporations Act 2001, s 439A, s 439B(2), s 447A
(Cth) Corporations Regulations 2001, reg 5.6.18(1), reg 5.6.18(2)Cases Cited: Collective Olive Groves Limited, in the matter of Collective Olive Groves Limited; application by Reidy [2009] FCA 177
Godfrey, in the matter of Drummoyne Sports Club Limited (Administrator Appointed) [2012] FCA 1210Category: Procedural and other rulings Parties: Jamieson Louttit in his capacity as administrator of
Canberra Eye Hospital Pty Ltd ACN 087 417 918
(Plaintiff)Representation: Counsel:
Solicitors:
A G Martin (plaintiff)
Aitken Lawyers (plaintiff)
File Number(s): 2015/128240
Judgment (ex tempore)
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HIS HONOUR: By originating process filed on 30 April 2015, the administrator of Canberra Eye Hospital Pty Limited applies for an order pursuant to (Cth) Corporations Act 2001, s 447A, modifying the operation of s 439B(2) to permit the second meeting of creditors of the company to be adjourned to a time later than 45 business days after that meeting was earlier adjourned on 3 March 2015.
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The purpose of the contemplated extended period is to enable completion of a contract for sale of the company's business. If the contract, which is due to complete on 15 May, proceeds to completion, then it appears clear that there will be sufficient funds to pay all creditors and the costs of the administration, and enable a substantial return to shareholders.
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Completion, however, is contingent inter alia upon the ongoing viability of the business, including its occupation of leasehold premises, in respect of which its protection would cease if the administration ceases. Thus there is substantial utility, from the perspective of creditors and shareholders, in permitting the negotiated sale to proceed to completion. In fact, most of the creditors have been paid, although some remain outstanding, and it is likely that those with the chief interest will be the shareholders. The representatives of each of the majority and minority shareholders have been notified of the application and none appears to oppose it.
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The extension sought is not a particularly lengthy one, it being proposed that the meeting be required to be held by 30 May 2015. Although this is not an application for extension of a convening period under s 439A, a number of authorities – in particular Collective Olive Groves Limited, in the matter of Collective Olive Groves Limited; application by Reidy [2009] FCA 177 and Godfrey, in the matter of Drummoyne Sports Club Limited (Administrator Appointed) [2012] FCA 1210 – indicate that the time for adjournment of a s 439A meeting may be extended by resort to Corporations Act, s 447A.
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At the original s 439A meeting on 3 March 2015, the creditors resolved that the meeting be adjourned for a period up to 45 business days. The administrator has convened the adjourned meeting to be held on 7 May 2015 upon which date that 45 day period will expire.
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As it seems to me, it would be inappropriate to interfere with the creditors' resolution, which was effectively for a 45 day adjournment. The effect of the order I would make would be simply to permit the creditors to adjourn the meeting further, up to the end of May. Some concern has been expressed, however, that in the light of the small amounts owed to creditors, there is a risk that a quorum will not be achieved on 7 May, in which case the administration might well be in jeopardy of coming to an end before completion of the contract.
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As I have said, I do not think I should interfere with the creditors' right to decide on 7 May whether or not there should be a further adjournment, while enabling them to agree to one if they wish. The potential absence of a quorum can be addressed by conferring on the administrator the power to adjourn the meeting in the event that there is no quorum.
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The Court therefore orders that:
Pursuant to Corporations Act, s 447A(1), Part 5.3A of that Act operate in relation to Canberra Eye Hospital Pty Limited (Administrator Appointed) ACN 087417918 ("the company") as if s 439B(2) omitted the phrase "exceed 45 business days" and included instead of those words the matter "occur later than 30 May 2015", and as if (Cth) Corporations Regulations 2001, reg 5.6.18(2), permitted adjournment to a day not later than 30 May 2015 and as if reg 5.6.18(1) included subparagraph (c) “if there is no quorum at such meeting – may”;
The administrator give notice of these orders to all known creditors of the company and to ASIC by circular by no later than 5pm on 5 May 2015.
Any person affected by these orders, including any creditors of the company, have leave to apply to vary or set aside these orders on 24 hours' notice to the plaintiff and to the court.
The costs of this application be costs in the administration
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These orders are to be entered forthwith.
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The exhibit may be returned.
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Decision last updated: 18 February 2016
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