In the Matter Of the University Child Care Club Inc (Administrators Appointed)

Case •

[2024] WASC 430

•

27 NOVEMBER 2024

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   IN THE MATTER OF THE UNIVERSITY CHILD CARE CLUB INC (ADMINISTRATORS APPOINTED) [2024] WASC 430

CORAM:   STRK J

HEARD:   ON THE PAPERS

DELIVERED          :   27 NOVEMBER 2024

PUBLISHED           :   27 NOVEMBER 2024

FILE NO/S:   COR 40 of 2024

MATTER:   IN THE MATTER OF THE UNIVERSITY CHILD CARE CLUB INC (ADMINISTRATORS APPOINTED)

EX PARTE

DAVID HURT as joint and several administrator of THE UNIVERSITY CHILD CARE CLUB INC. (ADMINISTRATORS APPOINTED) (ABN 68 171 657 053) (IARN A0720134X)

First Plaintiff

JIMMY TRPCEVSKI as joint and several administrator of THE UNIVERSITY CHILD CARE CLUB INC. (ADMINISTRATORS APPOINTED) (ABN 68 171 657 053) (IARN A0720134X)

Second Plaintiff


Catchwords:

Corporations law - Application to extend the period that the second meeting was adjourned beyond the permitted period prescribed by s 75‑140(3) of the Insolvency Practice Rules (Corporations) 2016 (Cth) - Turns on own facts

Legislation:

Corporations Act 2001 (Cth) s 439A, s 447A
Insolvency Practice Rules (Corporations) 2016 (Cth) s 75-140(3)

Result:

Application granted

Category:    B

Representation:

Counsel:

First Plaintiff : No appearance
Second Plaintiff : No appearance

Solicitors:

First Plaintiff : Mills Oakley
Second Plaintiff : Mills Oakley

Case(s) referred to in decision(s):

Adelaide Brighton Cement Ltd, in the matter of Concrete Supply Pty Ltd v Concrete Supply Pty Ltd (Subject to Deed of Company Arrangement) (No 4) [2019] FCA 1846

Australian Discount Retail Pty Ltd [2009] NSWSC 110

Cameron Shaw and Richard Albarran in their Capacity as Joint and Several Administrators of Home Art Building Group Pty Ltd (Administrators Appointed) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274

Deputy Commissioner of Taxation v Scottsdale Homes No Pty Ltd (No 2) [2009] FCA 190

Dixon, in the matter of Pearson Contracting Pty Ltd as Trustee for Pearson Family Trust (Administrators Appointed) [2020] FCA 1505

Fitzgerald, in the matter of Primebroker Securities Ltd (Administrator Appointed) (Receivers and Managers Appointed) [2008] FCA 1247

Flynn v Theobold [2008] WASC 263

Georges, in the matter of Vical NSW Pty Ltd (Administrators Appointed) [2018] FCA 1974

Holzman, Re Aus Confec Pty Ltd (Administrators Appointed) [2020] FCA 181

Lombe, Re Babcock and Brown Ltd (Administrators Appointed) [2009] FCA 349

Mighty River International Ltd v Hughes [2017] WASCA 152; (2017) 52 WAR 1

Re Reid Group Pty Ltd (Administrators Appointed); Ex parte Kirman & Bauer [2017] WASC 219

Re Riviera Group Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2009] NSWSC 585; (2009) 72 ACSR 352

Re Windimurra Vanadium Ltd & Midwest Vanadium Pty Ltd; Ex parte Weaver [2009] WASC 71

Silvia, in the matter of Austcorp Group Ltd [2009] FCA 636

Stewart, in the matter of Kleins Franchising Pty Ltd (Administrator Appointed) [2008] FCA 721

Uni-Aire Security Pty Ltd ACN 085 430 619, in the matter of Uni-Aire Security Pty Ltd (Administrator Appointed) [2006] FCA 1423

Vouris, in the matter of Marrickville Bowling and Recreation Club Ltd [2008] FCA 622

STRK J:

Introduction

  1. David Ashley Norman Hurt and Jimmy Trpcevski were appointed as the joint and several voluntary administrators of The University Child Care Club Inc (ABN 68 171 657 053) (I.A.R.N. A0720134X) (the Association) in December 2023. The administrators had convened the second meeting of creditors within the time required by s 439A(1) of the Corporations Act 2001 (Cth), and that meeting was held within the time required by s 439A(2). Consistent with the administrators' recommendation to creditors, the meeting was adjourned rather than closed for a period not exceeding 45 business days to provide time for the administrators to progress negotiations for the sale of the business of the Association while they continued to trade on the business. In broad outline, by this proceeding the administrators sought urgent orders extending the period that the second meeting was adjourned beyond the permitted period of 45 business days as prescribed by s 75‑140(3) of the Insolvency Practice Rules (Corporations) 2016 (Cth).

  2. As to the extension application, the administrators applied to the court for relief pursuant to s 447A(1) of the Corporations Act that pt 5.3A of the Corporations Act would operate in relation to the administration of the Association as if:

    (a)s 75-140(3) of the Insolvency Practice Rules (Corporations) omitted the words 'that is more than 45 business days after the first day on which the original meeting was held', and included instead of the omitted words the words 'later than 25 July 2024';

    (b)that Part allowed adjournment of the meeting convened under s 439A of the Corporations Act in relation to the Association to a day not later than 25 July 2024, despite the operation of s 75‑140(3) of the Insolvency Practice Rules (Corporations); and

    (c)the requirement to hold a meeting of creditors of the Association within the convening period specified in s 439A(2) of the Corporations Act was satisfied by holding the adjourned meeting no later than, but at any time before and up to, 25 July 2024,

    and provided that the requirements of r 75‑140 of the Insolvency Practice Rules (Corporations) were otherwise complied with, in respect of such meeting.

  3. The administrators also moved for an order permitting any party with a sufficient interest to apply to the court for an order discharging or varying such order if made.

  4. The administrators otherwise sought orders that were procedural or ancillary to the relief described above, and sought to reserve to the administrators' liberty to apply in relation to any further extension of the convening period or any other matter arising in the administration of the Association, including with respect to their remuneration.

  5. The application was determined on the papers, having been given urgent consideration. Relief was granted for the reasons set out below.

Evidence

  1. Three affidavits were read in support of the application.

  2. The first was sworn by Mr Hurt on 14 March 2024, to which he attached documents marked DH-01 to DH‑09. In his first affidavit, Mr Hurt deposed to his qualifications and the circumstances which gave rise to the application. Among other things, he deposed to the appointment of the administrators on 7 December 2023; the nature of the business operated by the Association and the licensing framework within which it operated; what the administrators understood was the estimated asset and liability position of the Association; the investigations that had been conducted by the administrators as to the liabilities of the Association; the tasks undertaken by the administrators since their appointment; the holding and outcome of the first meeting of creditors; the holding of the second meeting of creditors, and the administrators' recommendation that the meeting be adjourned for a period of not exceeding 45 days to provide further time for the administrators to progress negotiations regarding the sale of the Association's business while the administrators continued to trade on that business; the negotiations that had taken place in relation to an offer received to acquire the business of the Association; the status of the negotiations that had occurred in relation to a draft asset sale agreement; the risks to the sale process and the administration if this application was not successful; his belief as to the estimated additional time required and the basis for that estimate; his belief that the requested extension to the period of adjournment of the second creditors' meeting was necessary to improve the administrators' ability to maximise the value of the Association's assets available for the benefit of creditors; his belief that the requested extension to the period of adjournment of the second creditors' meeting would not unduly prejudice the creditors of the Association and the basis for that belief; notice of the application having been given to all creditors and employee creditors, the centre manager, the purchaser and the committee members; the basis for his belief that the orders sought by the administrators were in the best interests of all creditors; and the basis for the administrators seeking an order granting them liberty to apply with respect to their remuneration in this proceeding.

  3. The second was also sworn by Mr Hurt on 14 March 2024 and concerned the sale process, which affidavit Mr Hurt marked as confidential and to which he attached documents marked DH‑01 to DH‑03. By the application, the administrators moved for an order that Mr Hurt's confidential affidavit (including its annexures) be restricted as it contained commercially sensitive information, information that was confidential by its terms and/or was of such a confidential nature that it ought be kept confidential.

  4. Having read Mr Hurt's second affidavit, I was satisfied that it contained confidential information and that it was appropriate to restrict access to it. An order was made to that effect. These reasons have been prepared so as to not disclose the substance of the confidential information before the court.

  5. Also filed on behalf of the administrators in support of the application was a certificate of urgency; a minute of proposed orders; a written outline of submissions; and a list of authorities. I was assisted by these documents in the disposition of the application.

The context in which the application was made

  1. The application was made in the circumstances deposed to by Mr Hurt, which included the following.

  2. The Association is a non-for profit organisation of long standing. The Association was involved in the ongoing provision of childcare services for approximately 73 children from leased premises within the grounds of the University of Western Australia, and it employed 24 employees (reduced from the 34 that were employed as at the date of the appointment of the administrators).

  3. The Management Committee of the Association consisted of volunteer parents who had no financial interest in the business of the Association. The administrators were appointed voluntary administrators of the Association by a resolution of the Management Committee. At the first meeting of the creditors of the Association, the appointment of the administrators was ratified. A committee of inspection was not formed.

  4. Following their appointment, the administrators undertook various tasks as part of the administration. They included liaising with interested parties regarding the sale of the business of the Association, preparing information for interested parties and attending to queries. As discussed below, the administrators also engaged in negotiations with respect to the sale of the business and/or assets of the Association with the preferred bidder and substantially advanced the terms of an asset sale agreement with that bidder.

  5. The administrators issued a report to creditors as required by s 75‑225(3) of the Insolvency Practice Rules (Corporations) about the Association's business, property, affairs and financial circumstances to enable creditors to make an informed decision about the future of the business of the Association.

  6. On 22 January 2024 the administrators held a second meeting of creditors. At that time, the administrators were continuing to liaise with interested parties regarding the sale of the business. A total of 30 parties had expressed interest, and 21 had signed a confidentiality agreement. Further discussions were being held with a number of the parties and two offers had been received by the date of the second creditors meeting.

  7. Rule 75-140 of the Insolvency Practice Rules (Corporations) concerns the adjournment of meetings, and s 75‑140(3) provides that a meeting convened under s 439A of the Corporations Act must not be adjourned to a day that is more than 45 business days after the first day on which the original meeting was held. At the second meeting of creditors the administrators recommended an adjournment of that meeting for a period not exceeding 45 business days to allow the administrators additional time to progress negotiations regarding the sale of the business of the Association while they continued to trade on the business.[1] At the second meeting of creditors, the following resolution was passed:[2]

    The meeting be adjourned pursuant to Division 75-140 of the Insolvency Practice Rules (Corporations) for up to fourty-five business days.

    [1] First affidavit of D Hurt sworn on 14 March 2024, annexure DH-05 pages 38 (clause 1.7), 57, 73.

    [2] First affidavit of D Hurt sworn on 14 March 2024, annexure DH-08.

  8. By virtue of that motion, the administrators were required to reconvene the second meeting of creditors by no later than 27 March 2024.

  9. As to their progress, Mr Hurt deposed that on around 25 January 2024 the administrators received a further offer for the purchase of the business of the Association, which offer was subject to certain conditions precedent. Among other things, the conditions president included the purchaser being granted a licence from the Education and Care Regulatory Unit of the Department of Communities, which licence was necessary to operate the childcare centre. The settlement date proposed under that offer was within three business days of the conditions precedent being satisfied, or earlier by mutual agreement.

  10. The administrators then proceeded to substantially advance an agreement with the potential purchaser for the sale of the business of the Association and its assets, which was subject to agreement on the final terms of an asset sale agreement and the satisfaction of the proposed conditions precedent to that agreement. They did so cognisant that in order for the potential purchaser to take over the operations of the Association without interruption to the childcare services being offered, the potential purchaser would be required to obtain certain regulatory approvals to operate the childcare centre.

  11. By a notice to creditors dated 11 March 2024, creditors were informed that in order to allow that negotiation to be finalised and for any conditions precedent to the proposed sale to be completed, the administrators intended to make an application to the court to extend the period of adjournment of the second meeting of creditors. Creditors were also informed that the proposed extension period was approximately 120 days, the administrators having factored in time for purchaser to secure any required regulatory approvals to allow the business to be transferred as a going concern.

  12. In his first affidavit, Mr Hurt deposed that as at that date the administrators intended to continue to trade on the business pending its sale in accordance with the terms of the proposed asset sale agreement, subject to the court's approval of the proposed extension of time.

  13. As noted above, Mr Hurt made two affidavits in support of the application. Among other things, in his first affidavit he deposed:

    (a) that the administrators were of the opinion that it was necessary to extend the period of adjournment in order to allow time for the satisfaction of the conditions precedent in the proposed asset sale agreement, and completion of the sale of assets of the business to the proposed purchaser;[3]

    (b)that he considered that if the extended convening period remained as prescribed and was not further extended, there would be a risk that:[4]

    (i)the administrators would be impeded in their attempts to finalise the sale of the assets of the Association pursuant to the proposed asset sale agreement;

    (ii)the creditors might resolve at the return of the adjourned meeting to prematurely end the administration of the Association and resolve that the Association be wound up; and

    (iii)if the Association was wound up, 24 employees might immediately lose their jobs and the ultimate return to creditors might also be impacted; and

    (c)that having regard to his experience in conducting similar administrations, and based on the status of the asset sale agreement and the timing for completion of the conditions precedent set out in it (including the estimated timing for potential regulatory approval), Mr Hurt estimated that the administrators would require an extension of up to 120 days, and he deposed to the basis of his belief.[5]

    [3] First affidavit of D Hurt sworn on 14 March 2024 par 45.

    [4] First affidavit of D Hurt sworn on 14 March 2024 par 46.

    [5] First affidavit of D Hurt sworn on 14 March 2024 pars 47 ‑ 48.

  14. If the requested relief was not granted, as to the potential impact on creditors Mr Hurt deposed follows:[6]

    [6] First affidavit of D Hurt sworn on 14 March 2024 pars 49 ‑ 52.

    E Impact on Creditors

    49. In my opinion, it is critical for the administration that the business of the Association continues to operate as a going concern to maximise the value of that business, and that Mr Trpcevski and I continue to have the benefit of the statutory moratorium under Part 5.3A of the Act.

    50. Accordingly, I consider that the requested extension to the period of adjournment of the Second Creditor's Meeting is necessary to directly improve our ability to maximise the value of the Association's assets available for the benefit of creditors.

    51. In this regard, the extension sought is likely to increase the possibility of a greater return to the majority of the creditors by allowing the [asset sale agreement] to proceed while preserving the status quo of the business.

    52. I am of the view that notwithstanding the statutory moratorium provided by Part 5.3A of the Act and its impact on creditors enforcing their rights, the extension sought will not unduly prejudice the creditors of the Association. My belief is based upon the following matters:

    (a) as at the date of making this affidavit, the Committee Members have not expressed a view on the proposed extension to the adjournment of the Second Meeting of Creditors;

    (b) the Administrators are of the view that there will be sufficient funds to meet the working capital requirements of the Association throughout the Administration, including an extension to the adjournment of Second Creditor's Meeting for up to 120 days (should one be granted). Accordingly, I believe the Administrators will be in a position to meet all debts incurred in trading the business of the Association until such time as the Association's future is determined;

    (c) the Administrators are continuing to cause the Association to pay employee creditors in the ordinary course of their employment terms;

    (d) the Administrators are continuing to trade the business of the Association. In doing so, we are fulfilling the obligations of the Association to all of its customers in respect of childcare needs and all service contracts that remain on foot; and

    (e) key providers are continuing to provide their services to the Association.

  15. As noted above, the administrators also sought that liberty to apply be reserved to them in relation to any further extension or any other matter arising in the administration of the Association, including with respect to their remuneration.

  16. As to their remuneration, at the second meeting of the creditors of the Association, a motion was passed approving the remuneration of the administrators for the period 7 December 2023 to 31 December 2023.[7] Mr Hurt deposed that since that time the administrators had incurred further costs and expenses in relation to the administration including with respect to the continued trading of the Association while they progressed negotiations with the proposed purchaser.[8]

    [7] First affidavit of D Hurt sworn on 14 March 2024 par 57; outline of submissions filed on behalf of the administrators pt D.

    [8] First affidavit of D Hurt sworn on 14 March 2024 par 58; outline of submissions filed on behalf of the administrators pt D.

  1. Mr Hurt deposed that the administrators were then in the process of preparing a remuneration report relating to their additional remuneration approval, however given the statutory timeframes and notifications required to be complied with, including by reg 9.2 of the Supreme Court (Corporations) WA Rules 2004, that application seeking remuneration approval could not be made at the time of this application.[9] Accordingly, in addition to seeking an order for liberty to apply in relation to any further extension of time, the administrators sought that liberty in relation to any other matter arising in the administration of the Association, including with respect to their remuneration be reserved. This was sought with the intention that once the administrators had finalised their remuneration report and satisfied the relevant statutory time frames and notification requirements, the administrators would, subject to orders being made as was immediately pressed, later seek court approval for their further remuneration in this proceeding.[10]

    [9] Outline of submissions filed on behalf of the administrators par 29.

    [10] First affidavit of D Hurt sworn on 14 March 2024 par 59; outline of submissions filed on behalf of the administrators par 28.

The extension of the period the second meeting was adjourned

Statutory context and applicable principles

  1. Section 439A(1) of the Corporations Act prescribes that an administrator of a company under administration must convene a meeting of the company's creditors within the convening period as fixed by subsection (5) or extended under subsection (6). Subsection (2) provides that the meeting must be held within five business days before, or within five business days after, the end of the convening period.

  2. Section 439C of the Corporations Act provides that, at a meeting convened under s 439A, the creditors may resolve that the company execute a deed of company arrangement, that the administration should end, or that the company be wound up.

  3. In this case, the second meeting of the creditors of the Association was convened on 15 January 2024.[11] That was in compliance with s 439A(1) of the Corporations Act which required the meeting to be convened on or before 15 January 2024 (being 25 business days after the administration began on 7 December 2023). Further, the second meeting was initially held on 22 January 2024. That was in compliance with s 439A(2) which required the meeting to be held within five business days after the end of the convening period. The second meeting was then adjourned under s 75‑140(1)(b) of the Insolvency Practice Rules (Corporations) on the recommendation of the administrators.

    [11] First affidavit of D Hurt sworn on 14 March 2024, annexure DH-05.

  4. As noted above, r 75‑140 of the Insolvency Practice Rules (Corporations) concerns the adjournment of meetings, and s 75‑140(3) provides that a meeting convened under s 439A of the Corporations Act must not be adjourned to a day that is more than 45 business days after the first day on which the original meeting was held. Therefore, in this case the adjournment of the second meeting of the Association's creditors could not continue beyond 27 March 2024 (being 45 business days after the first day on which the second meeting was held).

  5. This application was made pursuant to s 447A(1) of the Corporations Act, by which the administrators sought to extend the period of adjournment of the second meeting of the creditors of the Association for a period longer than permitted by s 75‑140(3) of the Insolvency Practice Rules (Corporations).

  6. As to power, I was satisfied that s 447A of the Corporations Act gives the court power to extend the period of adjournment permitted under s 75‑140(3) of the Insolvency Practice Rules (Corporations).[12] As observed and for the reasons given by O'Bryan J in Dixon, in the matter of Pearson Contracting Pty Ltd as Trustee for Pearson Family Trust (Administrators Appointed) at [21] and [24], it would appear that s 439A(6) of the Corporations Act does not provide a source of power to extend the period of adjournment of a second meeting.

    [12] Georges, in the matter of Vical NSW Pty Ltd (Administrators Appointed) [2018] FCA 1974 [25] ‑ [28]; cited with approval and applied in Dixon, in the matter of Pearson Contracting Pty Ltd as Trustee for Pearson Family Trust (Administrators Appointed) [2020] FCA 1505 [22]. See also Holzman, Re Aus Confec Pty Ltd (Administrators Appointed) [2020] FCA 181 [12]; and Adelaide Brighton Cement Ltd, in the matter of Concrete Supply Pty Ltd v Concrete Supply Pty Ltd (Subject to Deed of Company Arrangement) (No 4) [2019] FCA 1846 [1237] ‑ [1241], as discussed in Dixon, in the matter of Pearson Contracting Pty Ltd as Trustee for Pearson Family Trust (Administrators Appointed) [24].

  7. As to the considerations relevant to the exercise of power, I proceeded on the basis that the general principles and considerations relevant to the exercise of the power in relation to this application were the same as the principles that would apply to an application to extend the convening period pursuant to s 439A(6) of the Corporations Act.[13]

    [13] Dixon, in the matter of Pearson Contracting Pty Ltd as Trustee for Pearson Family Trust (Administrators Appointed) [25]; outline of submissions filed on behalf of the administrators par 18.

Disposition

Standing and power

  1. I was satisfied that the administrators had standing to apply for the relief sought,[14] and as noted above, I was satisfied that s 447A of the Corporations Act gives the court power to extend the period of adjournment permitted under s 75‑140(3) of the Insolvency Practice Rules (Corporations).

Discretion

[14] Corporations Act s 447A(4)(c).

  1. In the determination of the application, I had regard to the objects and scheme of pt 5.3A of the Corporations Act, and the court's function as discernible from that part.[15] In considering this application, I had regard to and applied the following principles (which apply to an application to extend a convening period made pursuant to s 439A(6) of the Corporations Act, and proceeded as if reference to s 439A(6) below was a reference to s 447A(1)):[16]

    (1) The short time frames are an element of the scheme of the Act, the purpose being that creditors should be fully informed about the company's position and have the opportunity to vote as soon as possible.

    (2) However, the prospects of a better return to creditors may outweigh the expectation and desirability of prompt resolution. The exercise of power under s 439A(6) involves a balancing of these considerations.

    (3) In considering an application for an extension, the court must take into account the detriment to third parties, including the suspension of rights and remedies of secured creditors, lessors and others.

    (4) An important question on such an application is whether an extension is necessary to enable the administrator to prepare reports and to come to the opinion required by s 439A(4) to inform creditors as to the appropriate choice between the options of a deed on company arrangement for the administration to end or for the company to be wound-up.

    (5) Any extension should be for no longer than is necessary for an informed decision to be made as to whether to enter into a deed of company arrangement winding up the company or the enter the administration. 

    [15] As observed by Banks-Smith J in Re Reid Group Pty Ltd (Administrators Appointed); Ex parte Kirman & Bauer [2017] WASC 219 [4], the objects and scheme of pt 5.3 of the Corporations Act were outlined in Flynn v Theobold [2008] WASC 263 [36] ‑ [53]; and Re Windimurra Vanadium Ltd & Midwest Vanadium Pty Ltd; Ex parte Weaver [2009] WASC 71 [2] ‑ [9]. As to the court's function, see Mighty River International Ltd v Hughes [2017] WASCA 152; (2017) 52 WAR 1, [124] - [125] (Buss P), referring to Re Riviera Group Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2009] NSWSC 585; (2009) 72 ACSR 352, [8] ‑ [18]; Silvia, in the matter of Austcorp Group Ltd [2009] FCA 636 [18].

    [16] Re Reid Group Pty Ltd (Administrators Appointed); Ex parte Kirman & Bauer [4(1) - (5)], citing Cameron Shaw and Richard Albarran in their Capacity as Joint and Several Administrators of Home Art Building Group Pty Ltd (Administrators Appointed) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274 [18] (Beech J), which principles are appropriate to be applied as was found by O'Bryan J in Dixon, in the matter of Pearson Contracting Pty Ltd as Trustee for Pearson Family Trust (Administrators Appointed) [25].

  2. As to the reasons which grounded this application for extension, I was satisfied that they were reasons that fell within recognised categories for relief under s 439A(6). An extension of time to allow the sale of the business as a going concern, likely to enhance the return to creditors is not a novel category for relief.[17]

    [17] See by way of example, where the extension will allow sale of the business as a going concern: Lombe, Re Babcock and Brown Ltd (Administrators Appointed) [2009] FCA 349; Australian Discount Retail Pty Ltd [2009] NSWSC 110; Stewart, in the matter of Kleins Franchising Pty Ltd (Administrator Appointed) [2008] FCA 721; Uni-Aire Security Pty Ltd ACN 085 430 619, in the matter of Uni-Aire Security Pty Ltd (Administrator Appointed) [2006] FCA 1423, and where more generally the additional time is likely to enhance the return for unsecured creditors: Deputy Commissioner of Taxation v Scottsdale Homes No Pty Ltd (No 2) [2009] FCA 190; Fitzgerald, in the matter of Primebroker Securities Ltd (Administrator Appointed) (Receivers and Managers Appointed) [2008] FCA 1247; Vouris, in the matter of Marrickville Bowling and Recreation Club Ltd [2008] FCA 622, all cited in Re Riviera Group Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [13].

  3. I was satisfied that the need for extension was not a result of the administrators sitting on their hands.

  4. I also had regard and gave weight to the considered judgment of the administrators as deposed to by Mr Hurt. I gave particular weight to the opinion expressed by Mr Hurt that the requested extension to the adjournment was necessary as it was critical for the administration that the business of the Association continue to operate as a going concern to maximise the value of that business, given the cogent reasons expressed by Mr Hurt to ground that opinion. On the evidence of Mr Hurt, I was satisfied that the extension of time was intended to facilitate sensible and constructive actions directed to maximising the return for creditors.

  5. I also had regard to the fact that creditors and key stakeholders had been given notice of the application, and there was no evidence of any opposition to the administrators' proposed course.[18] Further, by proposed order 2, any party with a sufficient interest would expressly be granted liberty to apply to the court for an order discharging or varying the extension.

    [18] First affidavit of D Hurt sworn on 14 March 2024 par 54; outline of submissions filed on behalf of the administrators par 27.

  6. As noted on behalf of the administrators, the Association was not a company, and therefore no notice to the Australian Securities and Investments Commission was required. The Association was governed by the Department of Energy, Mines, Industry Regulation and Safety, however the administrators had been advised by the Department that it did not require any of the administrators' reporting documentation and only required annual information statements to be provided.[19]

    [19] First affidavit of D Hurt sworn on 14 March 2024 par 55; outline of submissions filed on behalf of the administrators par 26.

  7. Taking into account all of the evidence before me, and the submissions to which I had had regard, I was satisfied that the period that the second meeting was adjourned, being the permitted period of 45 business days as prescribed by s 75‑140(3) of the Insolvency Practice Rules (Corporations), ought be extended. I so found cognisant that the court must reach an appropriate balance between an expectation that the administration will be relatively speedy, that the administrators will expeditiously pursue an outcome for creditors, and the countervailing factor that undue speed should not be allowed to prejudice sensible and constructive actions directed to maximising the return for the creditors.

  8. I considered the additional time proposed to be justified in the circumstances deposed to by Mr Hurt, and not unduly generous. The administrators continued to trade on the business and on the evidence, although there were conditions precedent to be satisfied or waived, there did not appear to be any reason to be sceptical that the proposed sale would complete.  Further, it was submitted that additional time would enable the administrators to otherwise properly discharge their duties under the Corporations Act to investigate the Association's business, property, affairs, and financial circumstances; and so as to complete the reporting process to creditors after the business was sold in accordance with the terms of the asset sale agreement, assuming that was to proceed.[20]

    [20] Outline of submissions filed on behalf of the administrators par 21(c) and (d).

  9. I considered that the requested extension would enable the administrators' diligent pursuit of outstanding tasks, most importantly the sale process, while at the same time ensuring that the creditors' exercise of their right to determine the future of the Association was not unduly delayed.

  10. Rule 75‑140 of the Insolvency Practice Rules (Corporations) contains a number of stipulations concerning an adjourned meeting, and I noted the administrators' proposed compliance with the same.

  11. On the evidence before me, I considered the potential benefits to creditors associated with the completion of the proposed asset sale agreement appeared to outweigh the potential prejudice to creditors. As a matter of discretion, I was satisfied that the relief sought ought be granted, and also made the orders promoted on behalf of the administrators that were procedural or ancillary to the substantive relief.

Confidentiality

  1. As to confidentiality, I was satisfied that the second confidential affidavit of Mr Hurt contained confidential information, and the application for a confidentiality order was appropriately made. In all of the circumstances, I was satisfied that it was appropriate to restrict access to it.

Costs

  1. As to costs, in all of the circumstances, it was appropriate that the costs of and incidental to the application be costs in the administration of the Association and be paid out of the assets of the Association, and I ordered that such costs be so treated. There was no basis on the evidence to conclude that the administrators ought to personally bear the costs of the application.

Conclusion and orders

  1. For these reasons, the administrator's application was granted and orders made. By order 3 of those orders, the administrators were obliged to take all reasonable steps to cause notice of the orders to be given within three business days of their making, to creditors (including persons or entities claiming to be creditors) of the Association in the following manner:

    (a) by uploading a copy of these orders on any website maintained by the administrators at WA Insolvency Solutions relating to the Association; and

    (b) by sending a letter to each of the Association's creditors by way of:

    (i) email to each of the creditors known to the administrators where the email address of the creditor is known to the administrators; or

    (ii) by post in respect of all other known creditors.

  2. Liberty to apply was reserved to the administrators in relation to any further extension or any other matter arising in the administration of the Association, including with respect to their remuneration.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

SE

Associate to the Honourable Justice Strk

27 NOVEMBER 2024


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