In the matter of Tuftmaster Carpets Pty Ltd (Admin Apptd) and Tuftex Carpets Pty Ltd (Admin Apptd)
[2024] VSC 64
•23 February 2024 (ex tempore)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2024 00694
IN THE MATTER OF TUFTMASTER CARPETS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 004 802 564) AND TUFTEX CARPETS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 006 580 650)
BETWEEN
| ANDREW REGINALD YEO AND LINDSAY STEPHEN BAINBRIDGE IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF TUFTMASTER CARPETS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 004 802 564) AND TUFTEX CARPETS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 006 580 650) (and others according to the attached schedule) | Applicants |
| v | |
| NO RESPONDENT |
---
JUDGE: | Delany J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 23 February 2024 |
DATE OF JUDGMENT: | 23 February 2024 (ex tempore) |
CASE MAY BE CITED AS: | In the matter of Tuftmaster Carpets Pty Ltd (Admin Apptd) and Tuftex Carpets Pty Ltd (Admin Apptd) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 64 |
---
MEETINGS — Creditors meeting — Extension of convening period for meeting of creditors pursuant to s 439A(6) of Corporations Act 2001 (Cth) —Administration of related companies — Consideration of the interests of one class of creditors of one of the companies — Appropriate case for extension of convening period — Re Strawbridge, Virgin Australia Holdings Ltd (Admins Apptd) (No 2) (2020) 144 ACSR 347, applied.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | V Bell | Mills Oakley |
| For the CFMEU | V Wiles (representative of CFMEU) |
TABLE OF CONTENTS
The Companies................................................................................................................................... 2
Creditors............................................................................................................................................... 3
The Extension Application............................................................................................................... 3
The Principles..................................................................................................................................... 5
Evidence concerning the sale process............................................................................................ 7
Consideration.................................................................................................................................... 10
HIS HONOUR:
This application was commenced on 19 February 2024 by Andrew Yeo and Lindsay Bainbridge in their capacity as joint and several administrators (‘Administrators’) of Tuftmaster Carpets Pty Ltd (Administrators Appointed) (‘Tuftmaster’) and Tuftex Carpets Pty Ltd (Administrators Appointed) (‘Tuftex’) (together, the ‘companies’).
The Administrators were appointed on 25 January 2024 by Karen Scott, the sole director of each of the companies. The sole shareholder of each company is Balston Holdings Pty Ltd (‘Balston’), a company associated with Ms Scott. The Administrators issued their first report to creditors on 30 January 2024 and on 7 February 2024 convened and held the concurrent first meeting of the companies. The application is urgent. The convening period for the second meeting for each of the companies will expire today unless extended.
The Administrators seek an order pursuant to ss 439A and 447A(1) of the Corporations Act 2001 (Cth) (‘Corporations Act’) to extend the period for the second meeting of creditors for a period of up to three months up to and including 23 May 2024. They seek ‘Daisytek orders’ under s 447A of the Corporations Act, being orders to the effect that the second creditors’ meetings may be held at any time within the extended convening period or the period of five business days thereafter, notwithstanding the effect of s 439A(2) of the Corporations Act.
The Administrators rely on affidavits of Andrew Yeo made 16 February 2024, 21 February 2024 and 22 February 2024. Certain of the exhibits to those affidavits are confidential and I will make an order preserving the confidentiality of those exhibits as part of the orders disposing of the application.
The application to extend the convening period of Tuftex is opposed by the Construction, Forestry and Maritime Employees Union (‘CFMEU’), an organisation of employees registered under the Fair Work (Registered Organisations) Act 2009 (Cth), the manufacturing division of which is a creditor of Tuftex in relation to unremitted union membership fees. As a creditor of Tuftex, the CFMEU has standing to be heard on the application.
The CFMEU also seeks leave to be heard pursuant to r 2.13 Supreme Court (Corporations) Rules 2013 (Vic) on the basis that it represent the industrial interests of multiple union members who are former employees and current priority employee creditors of Tuftex and/or on the basis that the CFMEU is otherwise another interested person in the proceeding. As the CFMEU is a creditor of Tuftex in its own right, it is unnecessary to deal with the other grounds advanced in support of it being heard on this application.
The Companies
Tuftmaster was incorporated on 10 December 1969 and Tuftex was incorporated on 5 June 1986.
The companies operated a business manufacturing and distributing carpets (the ‘business’). The business manufactured over 30 product ranges and has a customer base made up of prominent retailers, distributors and commercial customers across Australia. The business operated from an extensive manufacturing and warehouse facility in Preston (‘warehouse’) which Tuftex occupied pursuant to a lease from an unrelated party (‘lease’). The companies also utilise a logistics warehouse facility at Laverton North. Prior to the appointment of the Administrators, the companies had approximately 67 employees, each of whom were employed by Tuftex.
Mr Yeo has given evidence that based on his understanding of the organisational structure of the companies, Tuftmaster is the primary asset holding and operating entity, with Tuftex’s activities in relation to the business being to employ the employees and to act as tenant under the lease.
Upon their appointments, a preliminary assessment of the financial position of the companies by the Administrators confirmed there was limited cash available to permit the business to trade on. As a result, the initial strategy implemented by the Administrators was to cease operations with regard to production of new products. That required the Administrators to terminate all of the existing production staff. Thirty-three of the production staff, the majority of the production workers who were employees of Tuftex prior to the appointment of the Administrators, are members of the CFMEU manufacturing division. An enterprise agreement approved under the Fair Work Act 2009 (Cth) covers the CFMEU manufacturing division members as well as the CFMEU itself.
A portion of the Tuftex workforce was retained to allow the Administrators to continue to operate the business in a reduced function. Work being performed includes completion or fulfilling of existing and new orders and the maintenance of existing relationships with key customers which would be attractive to a prospective buyer of the business. The Administrators have retained employees whose roles within the business are likely to be critical to a business sale or, if such a sale is not able to be achieved, to assist with any required sale and removal of assets.
Creditors
The Administrators are aware of claims made by the following classes of creditors:
(a) With respect to Tuftmaster:
(b) With respect to Tuftex:
The secured creditors’ claims for Tuftmaster include $5,380,390.82 claimed by Balston. Cashflow Finance Australia Pty Ltd trading as Earlypay holds a first ranking ALLPAAP security interest over the companies’ assets. As at 24 January 2024, the debt owed to Earlypay was $3,531,808.
As shown in the table above, claims to unpaid employee entitlements relating to Tuftex of which the Administrators are aware total $3,039,893.
The Extension Application
The primary ground relied on by the Administrators in support of a three month extension of the convening period is to enable the Administrators to finalise the sale of the business.
Mr Yeo’s evidence is that:
[I]t is critical that we pursue the potential sale of the Business of the Companies to is conclusion, including the potential subsequent removal of the Companies assets. Based on our investigations to date, it is our view that a sale of the Business is likely to result in a better outcome for the creditors of the Companies than an immediate liquidation of the Companies and is therefore in the best interests of all creditors.
It is Mr Yeo’s evidence that a sale of the business on terms most beneficial to the creditors will require preparing and executing the necessary sale agreements; liaising with Earlypay and other secured creditors to obtain their consent to the sale of the business; and allowing sufficient time to enable interested parties to negotiate an assignment or novation of the lease of the warehouse and for the assets of the companies to be removed and relocated after the sale is complete.
The Administrators also submit that an extension of the convening period will enable them to properly discharge their duties under s 438A of the Corporations Act to investigate the companies’ business, property, affairs and financial circumstances and to complete the investigation required in order to fulsomely report to creditors in accordance with s 439A of the Corporations Act.
While these matters are also relied on in support of the three month extension of the convening period, I do not consider either matter to be material on the determination of the application. That is so having regard to the significance appropriately attached to the concerns of the CFMEU about the impact of delay as a result of any extension of the convening period on the ability of the former employees of Tuftex to claim payment of unpaid employee entitlements under the Fair Entitlements Guarantee Scheme (‘FEGS’) set out in the Fair Entitlements Guarantee Act 2012 (Cth) (‘FEG Act’).
The CFMEU submits the employees of Tuftex will be prejudiced and financially disadvantaged by the delay in their ability to claim their entitlements under the FEGS if the extension is granted. It submits the basis on which the Administrators contend the proposed orders can reasonably be considered to be in the interests of the creditors of Tuftex, in particular, priority employee creditors, is not clear. It submits the application and orders effectively subjugate the interests of the employee creditors to those of the secured creditors, in particular the director Ms Scott via her sole shareholding of Balston.
The CFMEU submitted the benefit from a sale to one corporate entity (Tuftmaster) and its creditors, for which the extension of the convening period is sought, should not ground a justification to extend the convening period for another entity (Tuftex). It submitted the three month extension sought to the convening period for Tuftex is not appropriate and that the Court should not exercise its discretion in favour of an extension in the case of that company.
The lease remains on foot but, as Mr Yeo correctly states, the moratorium which precludes the landlord from evicting Tuftex from the warehouse will end if Tuftex is wound up. It was submitted there is no evidence about how the landlord of the warehouse may act if the convening period is not extended and the protection of the Corporations Act is lost by the Administrators.
It was also submitted that it was not clear how the Administrators might apply funds that may flow to Tuftex as a creditor of Tuftmaster. As discussed during the hearing, I consider questions relating to that topic are not questions for the present application.
The Principles
The principles to be applied on an application such as the present were set out by Middleton J in Re Strawbridge, Virgin Australia Holdings Ltd (Admins Apptd) (No 2) (‘Re Strawbridge’):[1]
[1][2020] FCA 717, (2020) 144 ACSR 347, 370-371 [64]-[68].
64 The circumstances in which the Court will extend a convening period are well established. In making such an order, the Court must reach an appropriate balance between an expectation that the administration will be relatively speedy and summary, and the countervailing factor that undue speed should not be allowed to prejudice sensible and constructive actions directed to maximising a return for creditors: Mann v Abruzzi Sports Club Ltd (1994) 12 ACSR 611 (Young J); Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10] (Barrett J).
65 The approach to be adopted was recently set out by Thawley J in Farnsworth v About Life Pty Ltd (admin apptd) [2019] FCA 11 at [3]–[8], where his Honour endorsed the comments of Austin J in Re Riviera Group Pty Ltd (admins apptd) (recrs and mgrs apptd) (2009) 72 ACSR 352; [2009] NSWSC 585 (Re Riviera) at [13] as to the categories of cases in which an extension is granted including, relevantly:
(1) where the size and scope of the business in administration is substantial (citing Lombe, Re Babcock & Brown Ltd (admins apptd) [2009] FCA 349; Worrell; Re Storm Financial Ltd (recs and mgrs apptd) (2009) 69 ACSR 584; [2009] FCA 70; and ABC Learning Centres Ltd, Re ABC Learning Centres Ltd; Application by Walker (No 5) [2008] FCA 1947);
(2) where the extension will allow sale of the business as a going concern, citing Lombe Re Australian Discount Retail Pty Ltd [2009] NSWSC 110; Stewart, Re Kleins Franchising Pty Ltd (admins apptd) [2008] FCA 721; Re Uni-Aire Security Pty Ltd (admins apptd) [2006] FCA 1423; and
(3) more generally, where additional time is likely to enhance the return for unsecured creditors: Deputy Commissioner of Taxation v Scottsdale Homes No 3 Pty Ltd (No 2) [2009] FCA 190; Fitzgerald, Re Primebroker Securities Ltd (admin apptd) (recs and mgrs apptd) [2008] FCA 1247; Ex parte Vouris; Re Marrickville Bowling & Recreation Club Ltd (under administration) [2008] FCA 622.
66An extension of the administration period to facilitate either (or both) of: (a) the sale of the business of the company as a going concern, so as to maximise the value of the company’s assets; or (b) the progression and assessment of a DOCA proposal that may provide a better return to creditors than a winding up, are well-recognised examples of situations where the Court has extended the convening period: Mentha, Re Hans Continental Smallgoods Pty Ltd (admins apptd) [2008] FCA 1933 (Jacobson J); Re Riviera (Austin J); Re Austcorp Group Ltd (admins apptd) [2009] FCA 636 (Re Austcorp) (Lindgren J); and Re Kavia Holdings Pty Ltd (admins apptd) (recs and mgrs apptd) [2013] NSWSC 737 (Black J).
67In Mighty River International Ltd v Hughes (as deed administrators of Mesa Minerals Ltd (subject to deed of company arrangement)) (2018) 359 ALR 181; 130 ACSR 427; [2018] HCA 38 at [73], Nettle and Gordon JJ (in dissent, but not relevantly in this respect) referred to a number of cases including Re Riviera and concluded:
… Generally speaking, courts have been disposed to grant substantial extensions in cases where the administration has been complicated by, for example, the size and scope of the business, substantial offshore activities, large numbers of employees with complex entitlements, complex corporate structures and intercompany loans, and complex recovery proceedings, and, more generally, where the additional time is likely to enhance the return to unsecured creditors. Provided the evidentiary case for extension has been properly prepared, there has been no evidence of material prejudice to those affected by the moratorium imposed by the administration, and the administrator’s estimate of time has had a reasonable basis, the courts have tended to grant extensions for the periods sought by administrators. …
68 Finally, the administrator’s own opinion as to the need for an extension will be given weight in an application of this kind: Owen (in their capacity as joint and several administrators of Rivercity Motorway Pty Ltd (admins apptd) (recs and mgrs apptd)) v Madden (recs and mgrs) (No 4) (2012) 92 ACSR 255; [2012] FCA 1491 at [26] (Logan J); Re Belmont Sportsmans Club Co-Operative Ltd (admin apptd) [2015] NSWSC 543 at [9] (Black J); Re application by Jahani (in their capacity as joint and several administrators of Northern Energy Corporation Ltd (admins apptd)) (No 2) [2019] FCA 382 at [67] (Farrell J); Re Duro Felguera Australia Pty Ltd (admins apptd) [2020] FCA 422 at [32] (Gleeson J).
In Re Strawbridge, the court was concerned with the Virgin group of companies which employed approximately 10,000 employees nationally and operated a fleet of 144 aircraft. Following the appointment of the administrators at a time when there were travel restrictions arising from COVID-19, the administrators sought to continue to trade the companies on a ‘business as usual’ basis, so far as that was possible.
No issue arose in Re Strawbridge about whether one of the 40 companies in the group should be treated separately for the purposes of the application to extend the convening period. In Re Strawbridge, the administrators were seeking to sell the business as a going concern or to recapitalise it through a proposal for a deed of company arrangement (‘DOCA’). As part of the administration, the administrators were continuing the appointment of staff and facilitating the payment of employee wages, including via the Commonwealth Government’s JobKeeper program, which was in place at that time. The question of delay in employees accessing entitlements under the FEGS did not arise in the case of the Virgin companies.
Evidence concerning the sale process
Prior to the appointment of the Administrators, Ms Scott engaged brokers to assist with attempting to sell the business. No sale eventuated, for reasons that included the poor financial record keeping of the business and the lack of financial forecasting along with other operational business matters.
Following the appointment of the Administrators, enquiries were made with Ms Scott and others about whether a DOCA was likely to be proposed (whether or not with a view to the business continuing). Neither Ms Scott, nor any other party, has indicated an intention or willingness to propose a DOCA.
In those circumstances, the Administrators formed the view that a sale of the business as a going concern would maximise the chances of the business continuing in existence (even if not operated by the companies) and would also likely maximise the amount receivable for the companies’ assets which would hopefully attract a premium above individual asset sales. With that view in mind, the Administrators commenced their own sale process to attempt to sell the business and assets of the companies. The timing of that process is as follows:
(a)On 7 February 2024, an information memorandum was finalised and circulated to parties who had expressed interest in the sale and executed a confidentiality deed. Those parties have since been given access to an online data room.
(b)Interested parties were invited to submit non-binding indicative offers or expressions of interest by 14 February 2024. Potential purchasers who submitted an eligible expression of interest or non-binding indicative offer are to be granted access to stage 2 of the data room for the purpose of undertaking detailed due diligence.
(c)By 29 February 2024, provided the Administrators receive a suitable offer capable of acceptance for the sale of the business, the Administrators anticipate entering into a sale transaction or commencement of a licence agreement (as applicable).
Confidential exhibits to the first affidavit of Mr Yeo disclose the number of parties that executed a confidentiality deed and received the information memorandum, parties that expressed interest as at 14 February 2024 but have not executed a confidentiality deed and parties that have submitted a non-binding indicative offer to the Administrators.
Mr Yeo expressed his view that it is necessary for the convening period to be extended in relation to both companies to avoid prejudicing the going concern sale of the business inclusive of the lease of the warehouse, as well as the possibility that the Administrators might need to remove the assets from the warehouse in order to realise the value if there is not a going concern sale. My attention was drawn to photographs of the plant and equipment at the warehouse, large parts of which, if not legally fixtures, certainly have the appearance of fixtures.
Those photographs and the other evidence relied on demonstrates the very significant nature of the manufacturing enterprise previously undertaken by the companies and the importance of the potential availability of the warehouse to a purchaser of the business on a going concern basis.
The confidential exhibits include a valuation of the plant and equipment and other assets held by the companies, including on a going concern basis, and a valuation of the companies’ inventory. It is sufficient for present purposes to say that the value of those assets, leaving to one side goodwill that might be associated with the business, is very substantial, even having regard to the level of creditors; secured, employee creditors and general unsecured creditors of the companies.
During the course of the hearing I was provided on a confidential basis with information from the Administrators concerning the levels of value at which expressions of interest and non-binding indicative offers have so far been made.
The assets to which I have referred at the warehouse are assets of Tuftmaster and not of Tuftex. In his third affidavit, Mr Yeo confirmed that Tuftex does not hold any assets that will be the subject of the business sale. However, as earlier mentioned, it is the tenant of the warehouse at which the business was previously conducted.
The assets at the warehouse comprise 148 items of plant and equipment and approximately 3,500 items of stock. One of the matters to be addressed in any sale of the business will be an assignment or a novation of the lease held by Tuftex. If there is not a going concern sale, in order to sell the assets, the Administrators may need to remove the fixtures, the cost of which is expected to be significant, in addition to the need to remove the 3,500 items of stock.
Consideration
The principles to be applied are those set out above in Re Strawbridge.
Responding to the submission the extension cannot reasonably be considered to be in the interests of Tuftex, the Administrators submitted the CFMEU submission ignores the fact that Tuftex is the lessee and fails to consider the impact the liquidation of Tuftex might have on the administration of both companies.
Tuftex is a creditor for approximately $880,000 of Tuftmaster. That puts it in a position potentially to benefit if there is a distribution from Tuftmaster in favour of unsecured creditors of which it is one. As well as having the potential to benefit creditors more generally, if there were to be such a distribution, any such distribution may benefit employees to the extent their entitlements are not covered under the FEG legislation.
In response to the CFMEU submission that the interests of the employee creditors were being subjugated to secured creditors, it was submitted the Administrators must act for the interests of creditors as a whole. That includes the secured and unsecured creditors of Tuftex. What is required is a balancing of the impact of delay on one group of creditors compared to the prospect of a diminished return to the creditors as a whole, being the creditors of both companies. The secured creditor of Tuftex, Earlypay, consents to the extension sought by the Administrators.
The application came on for hearing at short notice. I was not directed to authority considering how an application for extension of the second meeting of creditors should be approached when companies form part of a group and their affairs are intertwined but where the interests of the creditors of one of the companies in the group conflicts with the interests of the creditors of the other company or companies in the group. It seems to me as a matter of principle it is necessary to have regard to the interests of the creditors of the individual company. It may be in a given case that will result in an application being granted in respect of one or more companies in the group and being refused in respect of another company where the interests of the creditors of that company do not support an extension.
However I do not consider that issue requires determination in this case. That is because Tuftex is an unsecured creditor of Tuftmaster. If the sale of Tuftmaster on a going concern or an otherwise satisfactory basis is achieved by the Administrators, Tuftex and its creditors have the potential to benefit as a result of that sale.
A significant factor in favour of extending the convening period for both companies is that if a sale of the business on a going concern is to occur, such a sale will most likely involve an assignment or novation of the lease of the warehouse. Although there is no evidence about what the landlord of the warehouse might do if Tuftex were to immediately be placed in liquidation, what is known is that if the administration continues, the Administrators will have the benefit of the protection of the CorporationsAct enabling them to continue in occupation while the sale process that is underway is completed.
I am conscious of the timeline for sale earlier referred to, of the confidential evidence concerning the valuations of assets of the business and the confidential information provided in relation to the process. Looking at the position of the companies together, I readily accept that a sale of the business is likely to result in a better outcome for the creditors of both companies than the immediate liquidation of the companies or either of them.
I am concerned that if I do not grant an extension of time for the convening period in respect of both companies, that failure to do so may thwart the Administrators’ attempts to sell the business or to sell the assets of the business in orderly fashion so as to achieve the best outcome for the creditors.
I am conscious that the interests of all classes of creditors, including the secured creditors of both companies and the employee creditors, must be considered.
Against the support of the secured creditor of Tuftex for the extension of the convening period, is the opposition of the employee creditors. Their concern is delay in accessing entitlements under the FEGS.
What might be described as the default position under the Fair Entitlements Guarantee Act 2012 (Cth) (‘FEG Act’) is that, upon a company being wound up, employees are able to access the entitlements for which the legislation provides. Section 49 of the FEG Act provides for its extended operation in relation to employers in administration. Section 49 is in the following terms:
49 Extended operation of this Act in relation to employers in administration under the Corporations Act 2001
Making a declaration
(1) The Minister may by legislative instrument declare that this Act applies in relation to persons who were employed, but are no longer employed, by a specified employer that is under administration under Part 5.3A of the Corporations Act 2001 (whether or not the employer was under administration while any of the persons were employed).
(2) The Minister may make the declaration only if he or she is satisfied that:
(a) the employer’s creditors are expected to resolve at a meeting convened under section 439A of the Corporations Act 2001 that the employer be wound up; and
(b) if the declaration is made, it will be practicable to administer this Act as it will apply because of the declaration in relation to the employer.
Effect of declaration
(3) While the declaration is in force, this Act applies in relation to the persons and the employer as if:
(a) the administrator of the employer under Part 5.3A of the Corporations Act 2001 were a liquidator appointed when the administrator was appointed; and
(b) paragraph 14(2)(a) of this Act referred to the declaration being made (instead of an insolvency event happening to the employer).
Revoking a declaration
(4) The Minister may by legislative instrument revoke a declaration made under subsection (1).
I was informed during the hearing that, although s 49 of the FEG Act has been invoked in the past, its use has not been widespread. Implicit in the need for the Minister to make a declaration by legislative instrument pursuant to s 49(1) is the proposition that there will be a greater delay in employees being able to access their entitlements under the legislation than would be the case if the creditors resolved to wind up the company. The extent of that delay is uncertain. There is the further difference that, instead of the Department dealing with the liquidator to assist in the determination of the claims by former employees, in circumstances where s 49 applies, the Department is dealing with an administrator.
In his third affidavit, Mr Yeo has confirmed the accuracy of the CFMEU submission that the Administrators have not yet made a request to the Department of Employment and Workplace Relations that the relevant Minister exercise power under s 49 of the FEG Act to declare that the FEG Act applies to former employees of Tuftex whilst in administration.
In his third affidavit, Mr Yeo has given an undertaking on behalf of the Administrators that, if the Court makes orders extending the convening period, the Administrators will within three business days make a request to the Minister that he consider whether the FEG Act should apply in relation to persons who were employed but are no longer employed by Tuftex.
In addition to the undertaking, I was informed by counsel who appeared on behalf of the Administrators that the Administrators also undertake to respond promptly to enquiries and to provide information to the Department to facilitate the processing of claims by former employees of Tuftex.
In circumstances where the Administrators have undertaken to request the Minister to make the relevant declaration and where the employees’ interests are represented by the CFMEU who are also in a position to advocate on behalf of the employees with the Minister, there is at least a prospect, and I would hope a significant prospect, that the Minister will act promptly to make the relevant declaration.
Based on the evidence, there is little doubt in this case that the creditors of Tuftex will resolve at a meeting convened under s 439A of the Corporations Act that the company be wound up. Because the Administrators have provided the undertakings to which I have referred, it appears to me that it will in this case be practicable to administer the FEG Act in relation to the company. Confidential information relating to the entitlements of employees is already available and, apart from any relevant privacy considerations, there would not seem to be any reason why that information could not be provided promptly to the Department to assist the administration of the FEG Act in favour of the former employees. In those circumstances, whilst it is of course a matter for the Minister to be satisfied of the matters in s 49(2) of the FEG Act, it seems to me there is a very strong case for the Minister to make such a declaration and do so promptly.
Although an extension of the convening period will require the former employees to rely on the Minister exercising the power in s 49 of the FEG Act before they will be able to receive any of their unpaid entitlements, because I consider the criteria in s 49(2) are satisfied, and because of the undertaking and assurances provided by or on behalf of the Administrators, I regard the prospect of the employees being successful in obtaining their entitlements under the FEG Act before the adjourned meeting as a realistic prospect. While some delay in accessing employee entitlements under the FEGS will be occasioned if an extension is granted, that delay may well be less than a delay of three months. That is first because of s 49 of the FEG Act and second because it may be the case that the second meeting is convened before 23 May 2024. I do not consider prejudice to the employee creditors of Tuftex outweighs other considerations in favour of extending the convening period.
As was held in Re Strawbridge, I take into account the Administrators’ own opinion as to the need for an extension of the convening period.
For the reasons discussed, I consider it is appropriate in this case to extend the period for the second meeting of creditors for a period of up to three months, up to and including 23 May 2024. I will otherwise make orders substantially in accordance with those provided in draft on behalf the Administrators, including Daisytek orders.
SCHEDULE OF PARTIES
| ANDREW REGINALD YEO AND LINDSAY STEPHEN BAINBRIDGE IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF TUFTMASTER CARPETS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 004 802 564) AND TUFTEX CARPETS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 006 580 650) | First Plaintiff |
| TUFTMASTER CARPETS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 004 802 564) | Second Plaintiff |
| TUFTEX CARPETS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 006 580 650) | Third Plaintiff |
| - and - | |
| NO RESPONDENT |
0
1
0