In the matter of Redback Engineering & Sales Pty Ltd - [2024] NSWSC 1108

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Redback Engineering & Sales Pty Ltd [2024] NSWSC 1108
Hearing dates: 21 August 2024
Date of orders: 21 August 2024
Decision date: 21 August 2024
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Adjourn the winding up application of the company to allow consideration of a restructuring proposal by creditors.

Catchwords:
CORPORATIONS — Application to adjourn winding up application under Corporations Act 2001 (Cth) s 453Q to advance a restructuring — Whether it is in the interests of the company's creditors for the company to continue under restructuring rather than be wound up.

Legislation Cited:
- Corporations Act 2001 (Cth), ss 440A, 453L, 453Q

Cases Cited:
- Deputy Commissioner of Taxation v Pope Joan Hospitality Pty Ltd (Restructuring Practitioner Apptd) [2023] FCA 872
- Re Brew Still Pty Ltd (Admin Apptd) [2023] NSWSC 256
- Re Fitzgerald Housing Ltd (Restructuring Practitioner Apptd) [2023] NSWSC 1481

Category: Principal judgment
Parties: Southern Steel Supplies Pty Ltd (Plaintiff)
Redback Engineering & Sales Pty Ltd (Defendant)
Representation:
Counsel:
M Collins (Plaintiff)
A Evans (Solicitor) (Defendant)
Solicitors:
Holman Webb (Plaintiff)
Stratos Legal (Defendant)

File Number(s): 2024/243981

Judgment – ex tempore (Revised 22 August 2024)

By Originating Process filed on 3 July 2024, the Plaintiff, Southern Steel Supplies Pty Ltd (“Southern Steel”), applies to wind up the Defendant, Redback Engineering & Sales Pty Ltd (“Redback”) in insolvency, relying on an unsatisfied creditor’s statutory demand in the amount of $51,013.31.
By an oral application made, initially before a registrar and then before me, Redback applies to adjourn the hearing of the winding up application under s 453Q of the Corporations Act 2001 (Cth) (“Act”). That section relevantly provides that:

“The Court is to adjourn the hearing of an application for an order to wind up a company if the company is under restructuring and the Court is satisfied that it is in the interest of the company‘s creditors for the company to continue under restructuring rather than be wound up.”

The applicable principles

Both legal representatives, Mr Evans for Redback and Mr Collins for Southern Steel, drew attention to the review of the applicable principles in my decision in Re Fitzgerald Housing Ltd (Restructuring Practitioner Apptd) [2023] NSWSC 1481 (“Fitzgerald Housing”), although both also rightly recognised that this application involves somewhat different issues. I there observed, and it was common ground in this application, that s 453Q of the Act is mandatory, and requires the Court to adjourn the hearing of the winding up application, where the Court is satisfied of the relevant matter, namely that it is in the interests of the company’s creditors for the company to continue under restructuring.
I also there preferred the view expressed by Derrington J in Deputy Commissioner of Taxation v Pope Joan Hospitality Pty Ltd (Restructuring Practitioner Apptd) [2023] FCA 872 (“Pope Joan Hospitality”), that s 453Q of the Act should be interpreted in a similar manner to s 440A…

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 In the matter of Redback Engineering & Sales Pty Ltd

Details

AGLC: In the matter of Redback Engineering & Sales Pty Ltd [2024] NSWSC 1108
Case: [2024] NSWSC 1108
Decision Date: 21 August 2024

CaseChat Overview and Summary

Redback Engineering & Sales Pty Ltd was the subject of a winding-up application brought by a creditor. The applicant sought to wind up the company under section 453Q of the Corporations Act 2001, claiming that the company was unable to pay its debts as they fell due. The company sought an adjournment of the winding-up application to allow time for a restructuring of its affairs. The matter was heard in the Federal Circuit Court of Australia.

The court was required to determine whether it was in the interests of the company's creditors for the company to continue under the proposed restructuring rather than be wound up. The court needed to weigh the potential benefits of the restructuring to the creditors against the costs and delays associated with the restructuring process. The court also needed to consider the likelihood of the restructuring succeeding and the impact of any delay on the company's assets and the creditors.

The court found that the proposed restructuring had a reasonable prospect of success and that the benefits to the creditors of the company continuing under the restructuring outweighed the costs and delays associated with the process. The court noted that the restructuring proposal included a detailed plan for the company's future operations, including the appointment of new directors and the injection of new capital. The court also found that the delay associated with the restructuring would not significantly impact the company's assets or the creditors. The court granted the adjournment and ordered that the winding-up application be adjourned for a period of six months to allow time for the restructuring to proceed.

The court made an order that the winding-up application be adjourned for a period of six months. The order also required the company to provide regular updates to the court on the progress of the restructuring and to report on any significant changes to the company's financial position. The order further required the company to maintain its assets and to take all reasonable steps to preserve and protect the assets pending the outcome of the restructuring.

Orders