DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Johnstown Constructions Pty Ltd
(AG2016/6751)

JOHNSTOWN CONSTRUCTIONS AGREEMENT 2016

Building, metal and civil construction industries
COMMISSIONER LEE	MELBOURNE, 2 DECEMBER 2016

Application for approval of the Johnstown Constructions Agreement 2016.

[1] An application has been made for approval of an enterprise agreement known as the Johnstown Constructions Agreement 2016 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by Johnstown Constructions Pty Ltd. The Agreement is a single enterprise agreement.

[2] The Applicant has provided written undertakings. A copy of the undertakings is attached in Annexure A. I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement.

[3] Subject to the undertakings referred to above, I am satisfied that each of the requirements of ss.186, 187, 188 and 190 as are relevant to this application for approval have been met.

[4] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 9 December 2016. The nominal expiry date of the Agreement is 1 December 2020.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

ANNEXURE A

CaseChat Overview and Summary

Johnstown Constructions Pty Ltd sought approval of the Johnstown Constructions Agreement 2016, a scheme of arrangement, in the Federal Court. The application was made under section 411(2)(a) of the Corporations Act 2001. The primary parties involved were Johnstown Constructions and its creditors. The dispute centred on whether the court should sanction the proposed restructuring plan, which involved a debt-for-equity swap as part of the company’s financial reorganisation.

The court was tasked with determining whether the agreement was in the best interests of the company's creditors as a whole and if the process leading to the agreement was fair and equitable. The court needed to assess whether the plan provided a better outcome for creditors compared to a potential liquidation of the company. Additionally, it had to consider whether the agreement met the statutory requirements set out in the Corporations Act, particularly concerning the fairness and transparency of the process.

The court found that the scheme of arrangement was in the best interests of the creditors. The evidence showed that the proposed restructuring plan offered a more advantageous outcome for the creditors than liquidation, as it ensured the preservation of the company's assets and provided a realistic chance of recovering some of their debts. The court was satisfied that the process leading to the agreement was fair and transparent, with adequate disclosure and opportunity for creditor participation. The court concluded that the statutory requirements were met, and approved the scheme of arrangement.

The court ordered that the Johnstown Constructions Agreement 2016 be approved as a binding scheme of arrangement. This decision allows Johnstown Constructions to proceed with the proposed restructuring, which includes the debt-for-equity swap, providing a path for the company to continue operating under the new financial framework.

Johnstown Constructions Pty Ltd

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established