Jonsson, in the matter of Institute for Aboriginal Development (Aboriginal Corporation) (administrator appointed)
[2019] FCA 862
•5 June 2019
FEDERAL COURT OF AUSTRALIA
Jonsson, in the matter of Institute for Aboriginal Development (Aboriginal Corporation) (administrator appointed) [2019] FCA 862
File number: QUD 354 of 2019 Judge: DERRINGTON J Date of judgment: 5 June 2019 Catchwords: CORPORATIONS – indigenous corporation – administration – extension of convening period Legislation: Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) s 521-1
Corporations Act 2001 (Cth) s 447A(1)
Date of hearing: 5 June 2019 Registry: Queensland Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 7 Counsel for the Plaintiff: Mr P O’Brien Solicitor for the Plaintiff: Holman Webb ORDERS
QUD 354 of 2019 IN THE MATTER OF INSTITUTE FOR ABORIGINAL DEVELOPMENT (ABORIGINAL CORPORATION) (IN ADMINISTRATION) ICN 7395
ANTHONY JAMES JONSSON AS ADMINISTRATOR OF INSTITUTE FOR ABORIGINAL DEVELOPMENT (ABORIGINAL CORPORATION) ICN 7395
Plaintiff
JUDGE:
DERRINGTON J
DATE OF ORDER:
5 JUNE 2019
THE COURT ORDERS THAT:
1.Pursuant to s 521.1 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act) and s 439A(6) of the Corporations Act 2001 (Cth) (the Act) the convening period by which the plaintiff is required by s 439A of the Act to convene the second meeting of creditors of Institute For Aboriginal Development (Aboriginal Corporation) (Administrator Appointed) ICN 7395 (the Company) is extended up to and including 31 July 2019.
2.Pursuant to s 447A(1) of the Act, that Part 5.3A of the Act is to operate in relation to the Company such that, notwithstanding s 439A(2) of the Act, the second meeting of creditors be convened at any time during, or within 5 business days after the end of, the convening period as extended by the Court, provided that the plaintiff gives notice of the meetings in accordance with the CATSI Act and the Act.
3.Within 3 business days of these orders being entered, the plaintiffs cause notice of the orders to be given to creditors of the Company by:
(a)means of a circular sent by post or email to all known creditors of the Company (including persons claiming to be creditors) for whom or which the plaintiff has a current email or postal address;
(b)placing a sealed copy of these orders on the website of the plaintiff;
(c)to all members of the company; and
(d)causing such notice to be sent to the Office of the Registrar of Indigenous Corporations.
4.Liberty to apply be granted to any person, including any creditor of the Company or the Registrar of Indigenous Corporations, who can demonstrate sufficient interest to set aside or vary Orders 1 and 2 above on the giving of 3 days’ notice to the plaintiff and to the Court.
5.The plaintiff has leave to apply for any further extension of the convening period referred to in Order 1 or in relation to any other matter arising in the administration of the Company generally.
6.The costs of this application be costs and expenses in the administration of the Company and be paid out of their assets.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
DERRINGTON J:
This is an application by Mr Anthony Jonsson, who has been appointed the administrator of the Institute for Aboriginal Development (Aboriginal Corporation) (the company). He was appointed on 8 May 2019. The company is registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth). Nevertheless, it is subject to the provisions of the Corporations Act 2001 (Cth). Mr Jonsson has brought today’s application seeking an order for the extension of the convening period in the administration for a period of eight weeks.
Presently, the convening period for the second meeting of creditors expires today, 5 June 2019. If successful in his application, the administrator would have until 31 July 2019 to convene the second meeting. I have the advantage in these proceedings of the careful and thorough submissions of Mr O’Brien which I have made an exhibit to the application. In those submissions, Mr O’Brien has made reference to the relevant provisions of the Corporations Act and the Corporations (Aboriginal and Torres Strait Islander) Act granting power to this Court to extend a convening period in respect of a company incorporated under the latter Act. I am satisfied that this Court has that power.
The principles which this Court generally applies in relation to the exercise of the power to extend the convening period of a company in administration are two-fold. First, the Court is required to have regard to the important criteria that the administration process will proceed in a relevantly expeditious way, although that needs to be balanced with the need to give administrators of companies time to allow creditors to make meaningful choices in respect of any proposals that are put to them. Secondly, the statutory objects of the administration are to maximise the chances of a company continuing in existence or, if that is not possible, terminating its existence in a way which maximises a return for creditors.
Here, the company was founded in 1969 to assist with the community development needs of Aboriginal people in central Australia, and it became a registered company under the Corporations (Aboriginal and Torres Strait Islander) Act on 17 June 2010. Its business is generally one of a registered trading organisation, and its core businesses included the provision of accredited and non-accredited education and training programs for the delivery of language and cultural services and programs. In furtherance of that business, the company seems to have acquired some significant assets, and, indeed, it has a publishing arm which produces important cultural material.
The affidavit of Mr Jonsson shows that until recently, the company was operating profitably, but financial difficulties have arisen due to alterations in Federal and Northern Territory funding criteria. Mr Jonsson also deposes that the company owns five separate parcels of land in Alice Springs which adjoin each other, and these parcels comprise the company’s educational campus. In his submissions, Mr O’Brien has identified the various creditors of the company. All creditors have been notified of the application, and many support it. There does not seem to be any concern about the extension of the period, and I suspect that, in the circumstances of this case, it is most appropriate that the time be extended.
I am assisted by Mr Jonsson’s views as to the benefits of extending the convening period. He identifies a number of tasks which he seeks to pursue if the period is extended. They are set out in his affidavit, and there is no need to repeat them. That said, it is clear that his objectives are well-intentioned, and one might say appropriate in the circumstances of this case where, if successful, his efforts may provide a better return to creditors and may preserve the important assets of the company. Mr Jonsson has indicated that he might complete the work within eight weeks, and at that time, a deed of corporation arrangement might be forthcoming. He also is of the view that it may be possible to put together a restructuring plan. These considerations are more than sufficient to allow the Court to exercise its discretion favourably to grant the extension sought by Mr Jonsson, and it is appropriate that an order be made.
A draft order has been provided. The first order is for the extension of the convening period up until 31 July 2019, and it is appropriate to make that order. Secondly, an order is sought pursuant to s 447A(1) of the Corporations Act that Part 5.3A of that Act is to operate in relation to the company such that, notwithstanding s 439A(2), the second meeting of creditors can convene at any time during or within five days after the end of the convening period. That is appropriate and an ordinary order in cases of this nature. The third order seeks to protect the interests of creditors who may wish to be heard about the order and, again, that is appropriate, so I am prepared to make an order requiring a notification of the Court’s orders made today. Order 4 is of the same purpose. By draft order 5, Mr Jonsson seeks leave to apply for any further extension of the convening period or in relation to any other matter arising under the administration of the company generally. I am prepared to make that order, although observe that it perhaps is not really necessary. But in the circumstances of this case where, no doubt, a number of people will be made aware of the orders of the Court, it may be appropriate to forewarn them that such possibilities may exist. The costs of the application ought be the costs and expenses in the administration of the company and paid out of its assets. That is the appropriate order. In those circumstances, I make the orders as per the draft.
I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Derrington. Associate:
Dated: 5 June 2019
0
0
2