Lawrence Dry Cleaners Pty Limited
[2011] NSWSC 189
•18 March 2011
Supreme Court
New South Wales
Medium Neutral Citation: Lawrence Dry Cleaners Pty Limited [2011] NSWSC 189 Hearing dates: 18 March 2011 Decision date: 18 March 2011 Before: Justice Barrett Decision: Extension of convening period for second meeting of creditors granted
Catchwords: CORPORATIONS - voluntary administration - extension of convening period for second meeting of creditors - no matter of principle Legislation Cited: Corporations Act 2001 (Cth), Part 5.3A, ss 436A, 439A(6), 447A Cases Cited: Kassem v Milman International (Aust) Pty Ltd [2005] NSWSC 210
Re Diamond Press Australia Pty Ltd [2110] NSWSC 313Category: Principal judgment Parties: Michael John Morris Smith as administrator of Lawrence Dry Cleaners Pty Limited - Plaintiff Representation: Counsel:
Mr M Watson - Plaintiff
Solicitors:
Watson Mangioni Lawyers Pty Limited - Plaintiff
File Number(s): 2011/088675
Judgment
The plaintiff is the administrator of Lawrence Dry Cleaners Pty Limited under Part 5.3A of the Corporations Act 2001 (Cth). He was appointed on 24 February 2011 and now seeks orders under ss 439A(6) and 447A for extension of the convening period of the s 439A meeting of creditors.
The first meeting of creditors in the administration took place on 8 March 2011. The convening period for the second meeting of creditors will end on 24 March 2011 unless extended. In the absence of extension it will be necessary for the meeting to be held by 31 March 2011.
The plaintiff wishes to see the convening period for the second meeting of creditors extended so that it will end on 20 May 2011.
The company carries on a dry cleaning business and has a laundry and dry cleaning plant at Waterloo. Financial problems have arisen from contamination of the Waterloo site and claims generated by that contamination. The business itself, subject to those matters, is cash-flow positive.
The administrator's opinion is that there are good prospects of negotiating a sale of the business as a going concern. Such a course is supported by the sole secured creditor, by the landlord of the Waterloo premises and by the members of the committee of creditors which was appointed at the first meeting of creditors.
The business is continuing at this point. Employees have been retained and, according to the latest information from the administrator, none has resigned.
The administrator has advertised the business for sale in the press. Advertisements appeared on 9, 12 and 14 March 2011. An encouraging number of replies or expressions of interest have been received and, on the information before me, it appears that there may well be a competitive negotiation for a purchase.
The alternative, if there is no extension of the convening period, will, in the assessment of the administrator, make him proceed to a meeting not later than 31 March 2011 in the context of a recommendation that creditors vote to wind up the company.
If it is possible to negotiate a sale, of course, it may well be possible for some other outcome to eventuate.
On applications such as this the court has the task of balancing the expectation that voluntary administration should be a relatively quick and summary matter against the need, where practicable, to enhance the possibility of returns to creditors and the rehabilitation of the company in accordance with the s 436A objectives: Re Diamond Press Australia Pty Ltd [2110] NSWSC 313. In the circumstances as they have been presented, the interests of creditors will be better served by an extension of the convening period than by leaving in place a situation where a meeting must be held in the near future. It has been shown that the additional time will be put to good use in creditors' interests: Kassem v Milman International (Aust) Pty Ltd [2005] NSWSC 210.
I will therefore make the orders that have been sought.
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Decision last updated: 23 March 2011
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