Leigh (In his capacity as voluntary administrator of Coastjet Pty Limited (Administrator Appointed) ACN 050 100 279
[2009] FCA 377
•11 February 2009
FEDERAL COURT OF AUSTRALIA
Leigh (In his capacity as voluntary administrator of Coastjet Pty Limited (Administrator Appointed) ACN 050 100 279 [2009] FCA 377
Corporations Act 2001 (Cth)
DAVID LEIGH (IN HIS CAPACITY AS VOLUNTARY ADMINISTRATOR OF COASTJET PTY LIMITED (ADMINISTRATOR APPOINTED) ACN 050 100 279
NSD 110 of 2009
EMMETT J
11 FEBRUARY 2009
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 110 of 2009
DAVID LEIGH (IN HIS CAPACITY AS VOLUNTARY ADMINISTRATOR OF COASTJET PTY LIMITED (ADMINISTRATOR APPOINTED) ACN 050 100 279
Plaintiff
JUDGE:
EMMETT J
DATE OF ORDER:
11 FEBRUARY 2009
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to section 439A(6) of the Corporations Act 2001 (Cth) (“the Act”), the period within which the Administrator of:
(a)Coastjet Pty Limited (Administrator Appointed) ACN 050 100 279;
(b)Coastjet Aircraft Pty Limited (Administrator Appointed) ACN 118 585 783;
(c)Coastjet Aircraft Maintenance Pty Limited (Administrator Appointed) ACN 106 163 937;
(d)Lund International School of Aviation Pty Limited (Administrator Appointed) ACN 117 819 708;
(e)Arena Coastjet International Aviation College Pty Limited (Administrator Appointed) ACN 129 780 418;
(f)Johnston Aviation Pty Limited (Administrator Appointed) ACN 124 829 376; and
(g)Fly Air Diamond Pty Limited (Administrator Appointed) ACN 121 084 599 (collectively, “the Companies”),
must convene a meeting of creditors as required by section 439A of the Act is extended up to and including 26 March 2009.
2.Pursuant to section 447A(1) of the Act, the meeting of the creditors of the Companies required by section 439A of that Act may be held at any time during, or within 5 business days after the end of, the convening period, as extended by Order 1 above notwithstanding the provisions of section 439A(2) of the Act.
3.Liberty is granted to the Applicant to apply for any further extensions of the convening period referred to in Order 1 at any time prior to 26 March 2009.
4.The costs and expenses of this application be costs and expenses of the administration of the Companies.
5.Liberty to apply be granted to any person who can demonstrate sufficient interest to modify or discharge the orders on appropriate notice to the Applicants.
6.The proceeding be listed for directions on Friday, 20 March 2009.
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 eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 110 of 2009
DAVID LEIGH (IN HIS CAPACITY AS VOLUNTARY ADMINISTRATOR OF COASTJET PTY LIMITED (ADMINISTRATOR APPOINTED) ACN 050 100 279
Plaintiff
JUDGE:
EMMETT J
DATE:
11 FEBRUARY 2009
PLACE:
SYDNEY
REASONS FOR JUDGMENT
Mr David Leigh is the administrator of a number of companies, having been appointed on 15 January 2009. The companies loosely form a group, although they are not entirely commonly owned. In accordance with the provisions of the Corporations Act 2001 (Cth) (the Act), Mr Leigh has convened the first meeting of the creditors of each of the companies. He now seeks an extension pursuant to s 439A(6) of the Act of the period within which the second meeting of creditors of the companies must be convened. As the administration commenced on 15 January 2009, the convening period for the second meeting ends on Thursday, 12 February 2009. Mr Leigh seeks an extension of that period for 42 days, up to and including 26 March 2009. He also seeks an order that, if it be appropriate, the meetings be convened during that extended convening period, or within five days after the end of it, notwithstanding the provisions of s 439A(2) of the Act.
Coastjet Pty Ltd (Coastjet) conducted a number of business operations, including an aircraft charter service, aerial work operations, flight training and an air ambulance service. It has been operating since 1989. It operated its businesses from a property in Port Macquarie Airport and remains in occupation of the property.
Coastjet Aircraft Pty Ltd (Coastjet Aircraft) was formed to buy two jet aircraft from Eclipse Aviation in the United States. Coastjet Aircraft has paid $US2,100,000 to Eclipse Aviation as a deposit. That sum represents 60% of the purchase price. However, on 25 November 2008, while the jets were still under construction, Eclipse Aviation entered into bankruptcy arrangements in the United States.
As a result of orders apparently made by the United States Bankruptcy Court for the District of Delaware, it appears that Coastjet Aircraft will be afforded the opportunity of continuing the contract for the purchase of the two jet aircraft. The opportunity involves Coastjet Aircraft signing a new purchase agreement within 15 days from 15 January 2009 agreeing to pay an additional amount of $US1,375,000. It would pay a 10% deposit at that date and would then be required to pay further instalments during the period of manufacture of the aircraft. It appears that the time for the exercise of the option has been extended, although Mr Leigh, at this stage, does not know precisely when the option must be taken up. If Coastjet Aircraft does not take up that option the deposit that it has paid could be lost. It is not clear whether there is likely to be any distribution in the bankruptcy of Eclipse Aviation such that the deposit may not be totally lost. The extent to which there would be any amount available in the bankruptcy is unclear at present.
Coastjet Aircraft Maintenance Pty Limited (Coastjet Maintenance) operated the business of repairing and maintaining aircraft and holds the necessary Certificate of Approval for carrying out aircraft maintenance. Coastjet Maintenance operates its business form premises at Port Macquarie Airport. Hastings Shire Council, the owner of those premises, has indicated that there is no current lease in place other than a tenancy from month to month.
Lund International School of Aviation Pty Ltd (LISA) operated a business from other premises at Port Macquarie Airport. LISA owns an aircraft and its principal source of income was aircraft hire fees and the provision of aircraft hanger space. In January 2008 an agreement was entered into between LISA and The International School of European Aviation, formed as a collaboration between Lund University in Sweden and the University of Wollongong, to operate a satellite school. The first students of the LISA satellite school were expected to arrive in February 2009.
Arena Coastjet International Aviation College Pty Ltd (ACIAC), was set up to establish an aviation training college aimed at attracting students from the Asia Pacific region. ACIAC has not traded since its incorporation.
Fly Air Diamond Pty Ltd (Fly Air) was engaged in aircraft charter following its incorporation in August 2006. Fly Air operated seven Piper Chieftain aircraft which were used for both ordinary commercial charter and as part of an air ambulance service conducted with Coastjet.
Johnston Aviation Pty Ltd is another company in the group. It has not traded since its incorporation.
Since the commencement of the administration of the companies, Mr Leigh has undertaken a wide range of tasks. Those tasks included discussing the sale of the businesses with potential purchasers, investigating the value of aircraft owned by companies in the group, pursuing the directors to provide reports as to the affairs of the companies, dealing with inquiries by creditors and reviewing proofs of debt, assessing the assets and liabilities of the companies and reviewing their assets to ascertain their value, liaising with regulatory bodies regarding the transfer of certificates and approvals held by companies in the group, dealing with employees of the companies and obtaining legal advice and other professional advice in relation to the various matters.
In addition, Mr Leigh has investigated the purchase of jet aircraft from Eclipse Aviation and has conducted investigations into the bankruptcy of Eclipse Aviation. He has also been liaising with National Australia Bank, which has a charge over all of the assets of Coastjet, Coastjet Aircraft and Coastjet Maintenance, although National Australia Bank claims to be a creditor only of Coastjet Aircraft, in the sum of approximately $3,190,000.
At the first meeting of creditors of the companies Mr Leigh indicated that, given the complex nature of the businesses of the group, he would require an extension of the convening period of the administration. He indicated that that could be done either by adjourning the second creditors’ meeting, having convened it in accordance with the Act, or applying to the Court for an extension of the time for convening the second meeting. He indicated that the latter course was preferable.
At the meeting of creditors of Coastjet, a Mr Dunlop, who apparently represented a creditor in the sum of several hundred dollars, inquired why the creditors should allow an extension. No other creditor indicated any objection to an extension of the convening period. In relation to several of the companies a quorum was not present. However, the minutes of the creditors’ meeting record that there was general consensus on the part of the creditors that it would be in their best interests for the administrators to seek an extension of the convening period.
Mr Leigh’s preliminary investigations indicate that, in relation to Coastjet, there are 140 preferred and unsecured creditors, who are owed a total of some $583,000, and that it has aircraft valued at between $374,000 and $569,000, as well as plant and equipment valued at between $60,000 and $136,000. Coastjet also has receivables at a little under $100,000 on its books, although Mr Leigh has no view, at present, as to their collectability.
Coastjet Aircraft has five unsecured creditors owned a total of $1,454,000, as well as the secured debt to National Australia Bank. Coastjet Aircraft also has the arrangements with Eclipse Aviation. Coastjet Maintenance has some 37 preferred and unsecured creditors owed a total of some $76,000 and assets valued at between $14,000 and $37,000. LISA has three unsecured creditors owed a total of some $229,000 and a secured creditor owed the sum of $330,000. Fly Air has one unsecured creditor in the sum of $14,900 and Westpac Banking Corporation has a fixed and floating charge over its assets to secure the sum of approximately $3,377,000. Fly Air has aircraft valued at between $980,000 and $1,323,000.
The primary object of administration under Part 5.3A of the Act is to maximise the chances of the company in administration either continuing in existence or terminating its existence in the most appropriate way. The obligation of an administrator is to make a report to the creditors to enable them to be fully informed as whether, at the second meeting, they should resolve that a deed of company arrangement be executed, that the voluntary administration come to an end and the company be returned to the directors, or that the company be wound up. In order to be in a position to give a meaningful report, an administrator needs to have investigated fairly fully the circumstances of the company. If an extension is necessary to enable the administrators to provide a report and statements that are meaningful, then it may well be appropriate for an extension to be given.
Mr Leigh considers that the extension now sought is in the interests of the creditors of the companies for a number of reasons. First, it will permit him sufficient time to determine the best method of sale of the businesses conducted by the various companies. He is satisfied that, notwithstanding that the companies have ceased trading, their businesses may well be capable of sale as going concerns. An extension would permit him to investigate whether LISA would be able to rent out the hanger space at Port Macquarie. It would also enable him to pursue the question of the arrangements with Eclipse Aviation.
One possibility that Mr Leigh has in mind is pooling arrangements to increase the return to ordinary unsecured creditors of the companies by means of a deed of company arrangement. While he has pursued the possibility of sale of the businesses, an extension would afford him the opportunity of continuing negotiations for the possible sale and calling for expressions of interest in the purchase of any of the businesses or the assets of the companies. In order to convene the meeting in accordance with the Act and to adjourn it, expenditure in the sum of some $25,000 to $30,000 would be involved. That would be saved by an extension as sought.
In all of the circumstances I am persuaded that it is appropriate to accede to Mr Leigh’s application for an extension of the convening period.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 21 April 2009
Counsel for the Plaintiff: AM Seward Solicitor for the Applicant: Kemp Strang
Date of Hearing: 11 February 2009 Date of Judgment: 11 February 2009
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