Intercapital Cleaners (Aust) Pty Limited, in the matter of Intercapital Cleaners (Aust) Pty Limited
[2010] FCA 433
•14 April 2010
FEDERAL COURT OF AUSTRALIA
Intercapital Cleaners (Aust) Pty Limited, in the matter of Intercapital Cleaners (Aust) Pty Limited [2010] FCA 433
Citation: Intercapital Cleaners (Aust) Pty Limited, in the matter of Intercapital Cleaners (Aust) Pty Limited [2010] FCA 433 Parties: IN THE MATTER OF INTERCAPITAL CLEANERS (AUST) PTY LTD (Administrators Appointed);
CHRISTOPHER MEL CHAMBERLAINFile number: NSD389 of 2010 Judge: EMMETT J Date of judgment: 14 April 2010 Date of hearing: 14 April 2010 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 15 Solicitor for the Plaintiff: Shaw, Reynolds, Bowen & Gerathy
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 389 of 2010
IN THE MATTER OF INTERCAPITAL CLEANERS (AUST) PTY LTD
CHRISTOPHER MEL CHAMBERLAIN (IN HIS CAPACITY AS ADMINISTRATOR OF INTERCAPITAL CLEANERS (AUST) PTY LIMITED)
Plaintiff
JUDGE:
EMMETT J
DATE OF ORDER:
14 APRIL 2010
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to s 447A(1) of the Corporations Act 2001 (Cth) (the Act), Pt 5.3A of the Act is to operate as if:
1.1The number “45” in s 439B(2) of the Act were omitted and replaced with the number “90”; and
1.2The number “45” in reg 5.6.18(2) of the Corporations Regulations 2001 (Cth) were omitted and replaced with the number “90”.
2.The requirements in s 439A(4) of the Act be dispensed with for the adjourned meeting of the company and the notice convening the meeting be accompanied by a statement from the administrator setting out the reasons for and against the further adjournment of the meeting for a period consistent with the orders set out in sub-paragraphs 1(a) and (b) above.
3.Liberty be granted to any person who can demonstrate sufficient interest to modify or discharge these orders upon appropriate notice being given to the plaintiff.
4.The plaintiff’s costs and expenses of this application be costs and expenses in the administration of the company.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 389 of 2010
IN THE MATTER OF INTERCAPITAL CLEANERS (AUST) PTY LIMITED
CHRISTOPHER MEL CHAMBERLAIN (IN HIS CAPACITY AS ADMINISTRATOR OF INTERCAPITAL CLEANERS (AUST) PTY LIMITED)
Plaintiff
JUDGE:
EMMETT J
DATE:
14 APRIL 2010
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The plaintiff, Mr Christopher Chamberlain, is a chartered accountant and an official liquidator. On 6 January 2010, Mr Chamberlain was appointed as administrator of Intercapital Cleaners (Aust) Pty Limited (the Company) under s 436A of the Corporations Act 2001 (Cth) (the Act). On 15 January 2010, Mr Chamberlain’s appointment as administrator was ratified at the first meeting of creditors of the Company. At that meeting, a committee of creditors was formed. Section 439A(3) of the Act requires Mr Chamberlain to convene a second meeting of creditors within the convening period as defined in the Act.
Section 439A(4)(a) of the Act provides that the notice given to a creditor of a meeting convened under s 439A(3) must be accompanied by a report by the administrator about the company’s business, property, affairs and financial circumstances, together with a statement setting out the administrator’s opinion as to whether it would be in the interests of the creditors for the company to execute a deed of company arrangement, for the administration to end or for the company to be wound up. On 2 February 2010, Mr Chamberlain circulated a report to creditors pursuant to s 439A(4)(a) of the Act.
Mr Chamberlain entered into discussions with an interested party concerning the possible purchase of the Company’s business as a going concern. In the circumstances, Mr Chamberlain considered that it would be of benefit to creditors for the second meeting of creditors to be adjourned, since the proposed sale of the business would be of benefit to them. A second meeting of creditors was convened on 10 February 2010 and the creditors resolved the meeting be adjourned for a period up to, but not exceeding, 45 days.
Section 439B(1) of the Act provides that, at a meeting convened pursuant to s 439A, the administrator is to preside. Under s 439B(2), the meeting may be adjourned from time to time, but the period of the adjournment, or the total of the periods of adjournment, must not exceed 45 business days. The effect of those provisions is that the adjourned meeting of the creditors of the Company should be completed no later than 16 April 2010. However, Mr Chamberlain considers that there is a reasonable prospect of effecting a sale of the Company’s business as a going concern. Such a sale would be in the interests of the Company and its creditors.
In order to put the proposed sale in context, it is desirable to say something about the background of the Company. The Company has operated as commercial and industrial cleaning contractors in many different regional areas throughout New South Wales and Victoria for nearly 30 years. It now provides services to industries in central and southern New South Wales and in Victoria and, over time, has diversified into many areas. It has invested in equipment and product from Europe, the United States of America and England. The Company currently employs about 23 employees and has approximately 10 current cleaning contracts in place.
However, in 2004 the Company was the recipient of a number of adverse workers’ compensation claims. Those claims resulted in an increase in its workers’ compensation premiums from approximately $80,000 a year to approximately $344,000 per year. That additional burden, coupled with reduced contract margins and research and development expenditure, placed a strain on its cash flow. That resulted, ultimately, in the appointment of Mr Chamberlain as administrator on 6 January 2010.
Since his appointment, Mr Chamberlain has managed the continued trading of the Company on a profitable basis with the assistance of the directors. Mr Chamberlain has had access to the books and records of the Company and has determined that there does not appear to be any likely recovery action available to a liquidator if the Company went into liquidation.
Mr Chamberlain has also determined that the directors have not breached their duties and does not consider any report is necessary pursuant to s 438D of the Act. Under s 438D, if it appears to the administrator of a company under administration that:
·a past or present officer or employee of a company has been guilty of an offence in relation to the company; or
·a person who has taken part in the formation, promotion, administration, management or winding up of the company:
(i)may have misapplied or retained, or become liable or accountable for money or property; or
(ii)may have been guilty of negligence, default, breach of duty or breach of trust in relation to the company;
the administrator must lodge a report about the matter as soon as practicable and give the Australian Securities and Investments Commission (the Commission) such information, and such access to and facilities for inspecting and taking copies of documents as the Commission requires.
ISS Facilities Services Australia Limited (ISS) is one of the largest facility service providers in Australia. ISS has approximately 22,000 employees in Australia with offices in every state and territory and revenues worldwide approaching $1 billion. Shortly after Mr Chamberlain’s appointment as administrator of the Company, ISS commenced an examination of the affairs of the Company.
On 10 March 2010, ISS wrote to customers of the Company indicating its interest in taking over the business of the Company. In late March 2010, ISS met with the Company’s ten main customers. Thus, it appears that ISS has a genuine and real interest in the acquisition of the business of the Company as a going concern.
On 8 April 2010, Mr Chamberlain received an email communication from the Executive General Manager; Commercial Cleaning Division, of ISS, confirming that ISS had:
·completed a meeting with the customers of the Company;
·inspected the cleaning equipment at each cleaning contract site; and
·confirmed the annual leave liability for each employee.
The email also identified the intention of ISS to put a recommendation to the directors of ISS to proceed with the purchase of the Company’s business. The communication asked that there be an adjournment of the meeting of creditors of the Company to be called pursuant to s 439A.
On 10 March 2010, Mr Chamberlain had informed the committee of creditors of the sale negotiations with ISS. On 9 April 2010, a meeting of the committee of creditors was convened for the purposes of updating them on the progress of negotiations with ISS. Mr Chamberlain also sought the approval of the committee to make an application to the Court to extend the time for the meeting of creditors. At that meeting, the committee resolved that Mr Chamberlain be at liberty to approach the Court for an extension of the 45 day period referred in s 439B(2). The committee also approved that, insofar as any further report is required under s 439A(4), Mr Chamberlain be authorised to seek a dispensation from that requirement. The committee also approved that the costs of any application to the Court be paid as costs of the administration of the Company.
Mr Chamberlain considers that it is in the interests of the Company and its creditors, particularly its 23 employees, for the negotiations to sell the business to ISS to be completed. If the Company were to be wound up now, there would likely be no return to the employees or unsecured creditors, and the 23 employees would lose their jobs. On the other hand, if the Company’s business can be sold as a going concern, it is likely that the employees will be paid their entitlements and will retain their jobs.
Mr Chamberlain has now applied to the Court for an order under s 447A of the Act. Section 447A is in Division 13 of the Act, which deals with powers of the Court. Under se 447A(1), the Court may make such orders as it thinks appropriate about how Part 5.3A is to operate in relation to a particular company. The present application is for an order that part 5.3A of the Act is to operate as if the number “45” in s 439B(2) of the Act were omitted and replaced with the number “90”, and that the number “45” in regulation 5.6.18(2) of the Corporations Regulations 2001 (Cth) were omitted and replaced with the number “90”.
The effect would be that Mr Chamberlain is not required to convene the adjourned meeting of creditors for a further 45 days after 16 April 2010. Mr Chamberlain is also concerned that, on a strict reading of s 439A(4), there may be a requirement for a further report and statement to be sent to creditors. Having regard to the size of the Company and the fact that there has been compliance with s 439A(4) in relation to the meeting that was convened and adjourned, it is clear that there is no need for any further report or statement to be given to the creditors. Nevertheless, to the extent that the Court has power to do so, it is appropriate that any requirement to do so be dispensed with.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 11 May 2010
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