Moodie, in the matter of Gowinta Farms Pty Ltd (administrators appointed)
[2012] FCA 578
•31 May 2012
FEDERAL COURT OF AUSTRALIA
Moodie, in the matter of Gowinta Farms Pty Ltd (administrators appointed) [2012] FCA 578
Citation: Moodie, in the matter of Gowinta Farms Pty Ltd (administrators appointed) [2012] FCA 578 Parties: ROBERT BOYCE MOODIE AND ANDREW JAMES BARNDEN IN THEIR CAPACITY AS JOINT AND SERVERAL ADMINISTRATORS OF GOWINTA FARMS PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 010 242 869 File number: NSD 756 of 2012 Judge: JACOBSON J Date of judgment: 31 May 2012 Catchwords: CORPORATIONS – extension of time to convene a second meeting of creditors of company in administration Legislation: Corporations Act 2001 (Cth), ss 439A, 447A Cases cited: Diamond Press Australia Pty Limited [2001] NSWSC 313 [2001] NSWSC 313
Mentha, in the matter of The Griffin Coal Mining Company Pty Ltd (administrators appointed)(ACN 008 667 285) [2010] FCA 30
Re Riviera Group Pty Limited (admins apptd) (recs and Mgrs apptd) (ACN 102 298 279) (2009) 72 ACSR 352Taylor, in the matter of Healthzone Limited (Receivers and Managers Appointed) (Administrators Appointed) [2011] FCA 1455
Date of hearing: 31 May 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 28 Counsel for the Plaintiff: S Golledge Solicitor for the Plaintiff: Middletons
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 756 of 2012
IN THE MATTER OF GOWINTA FARMS PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 010 242 869
ROBERT BOYCE MOODIE AND ANDREW JAMES BARNDEN IN THEIR CAPACITY AS JOINT AND SERVERAL ADMINISTRATORS OF GOWINTA FARMS PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 010 242 869
Plaintiff
JUDGE:
JACOBSON J
DATE OF ORDER:
31 MAY 2012
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to section 439A(6) of the Corporations Act 2001 (Act) that the period within which the Plaintiffs must convene the meeting of creditors of Gowinta Farms Pty Limited (Administrators Appointed) (ACN 010 242 869) as fixed by section 439A(5) of the Act, be extended by a further period of 25 business days up to and including 11 July 2012.
2.Pursuant to section 447A(1) of the Act that the meetings of the creditors of Gowinta Farms Pty Limited (Administrators Appointed) (ACN 010 242 869) required by section 439A of the 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, notwithstanding the provisions of section 439A(2) of the Act.
3.The costs and expenses of this Originating Process be costs and expenses of the administration of Gowinta Farms Pty Limited (Administrators Appointed) (ACN 010 242 869).
4.Leave is reserved to any person claiming to be interested, including any creditor of Gowinta Farms Pty Limited (Administrators Appointed) (ACN 010 242 869) to make any such application to vary or discharge any or all of these Orders upon 48 hours notice to the Plaintiffs.
5.Direct that, within 48 hours, the Plaintiffs are to cause notice of these Orders to be given to the creditors of the company and to ASIC by the following means:
(a)by placing a copy of the Orders on the website maintained by the firm Rodgers Reidy Chartered Accountants at and
(b)by circular notice sent by mail to ASIC and to all other creditors for whom the Plaintiffs have only a mailing address.
6.These Orders may be entered forthwith.
Note: entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 756 of 2012
IN THE MATTER OF GOWINTA FARMS PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 010 242 869
ROBERT BOYCE MOODIE AND ANDREW JAMES BARNDEN IN THEIR CAPACITY AS JOINT AND SERVERAL ADMINISTRATORS OF GOWINTA FARMS PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 010 242 869
Plaintiff
JUDGE:
JACOBSON J
DATE:
31 MAY 2012
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This is an application by the administrators of Gowinta Farms Pty Limited (the company), pursuant to s 439A(6) of the Corporations Act 2001 (Cth) for an extension of time within which to convene the second meeting of creditors of the company.
The administrators initially sought a four week extension of the convening period, but in discussion with counsel this afternoon, I suggested a slightly longer extension might be appropriate and Mr Golledge, who appears for the plaintiffs, has accepted that a five-week extension is now sought.
The application is put principally on the basis that the administrators require the additional time so as to enable them to complete the investigation into the affairs of the company and report in a meaningful way to creditors, in the report to be issued prior to the second meeting.
The report, when issued, will require the administrators to express an opinion of the relative merits of a deed of company arrangement as against a winding up of the company. The further investigation which will be undertaken during the extension is expected to enable the administrators to provide a more informed opinion on the matter than is presently possible.
The administrators were appointed on 9 May 2012. A first meeting of creditors was held on 17 May 2012. Unless an extension of the convening period for the second meeting is granted, the convening period for that meeting would expire on 6 June 2012.
Since the time of their appointment as administrators, Mr Barnden and Mr Moodie have conducted a preliminary investigation of the business of the company. The company conducted a business as a grower and wholesale distributor of various fruits. The business was conducted on substantial properties in Queensland and comprises over 170 acres of strawberries and various other fruits, which are harvested and packed as described in Mr Barnden’s affidavit sworn today.
The nature of the business operations fluctuate with the growing seasons. At the time of the appointment of Messrs Moodie and Barnden, the company had approximately 35 employees. The harvest season is now underway and it is expected that the workforce will increase to as many as 200 fruit pickers and packers, who will be employed on a contract basis. The success of the harvest is of considerable importance for the company’s business cycle.
The company also operates, in conjunction with two related companies, the business of a caravan park, accommodation and a transport business. The company’s operations are conducted from six properties in Queensland, of which it is the registered proprietor. The related companies Telden Pty Limited and Gowinta Pty Limited are the registered proprietors of seven other properties.
Finance for the group has been provided by BankWest, which holds first-ranking registered mortgages over all of the group’s real estate. The position which has now been ascertained by the administrators is that all of the securities granted to BankWest for the loans to the group companies are cross-collateralised and are held by the bank as security for total group borrowings.
The company has a total of 110 creditors (secured and unsecured). These include 10 lessors of properties occupied by the company as well as 22 other creditors from whom the company leases plant and equipment used to conduct the company’s business. BankWest is the largest creditor of the company with a debt of approximately $13.6 million. There are also amounts owing to employees, but the full extent of those liabilities is not presently known. In addition, there are substantial related party creditors.
Since the time of their appointment as administrators, Mr Moodie and Mr Barnden have continued to run the company’s business. Mr Barnden’s affidavit indicates that the first two weeks of trade will not be profitable, but as the yields increase through the harvesting season, the company will be likely to trade profitably.
The effect of what I was told today is that overall the company will be expected to trade profitably during the period of the extension which is sought. The administrators have attempted to investigate the company’s circumstances, including its history and present asset position. However, the investigations have been hampered by a number of factors.
First, the administrators have not received any detailed statement or information from the directors of the company as to its property affairs and financial circumstances. Requests have bee made on a number of occasions, most recently on 29 May 2012.
Second, the administrators have not yet received or examined the documentation concerning the entirety of the arrangements with BankWest, although I was told, as I mentioned earlier, that it does appear that the securities are cross-collateralised in the manner referred to above. This, of course, is of critical importance in assessing the overall asset and liability position of the company.
Third, the administrators have not yet received an updated valuation report in respect of the six properties owned by the company. I have been provided with evidence of the reason for the delays in obtaining the report, and it is now indicated that a report is expected by mid June 2012. The valuation report is also of critical importance in the administration because the views expressed in the report will be of particular significance, not only for the administrators, but also, importantly, for BankWest whose support is required for any ongoing trading of the business. The valuations will also be a critical factor in relation to a proposed deed of company arrangement.
The administrators have received an outline for a proposal for a deed of company arrangement. I was taken to the terms of that document this afternoon. The proposal involves the creation of a deed fund from profits expected to be generated from future trading and from the proposed sale of three of the company’s properties. Related party creditors will not participate in the deed fund, which would be established out of the profits and proceeds of sale of the properties.
The evidence given by Mr Barnden is that the administrators have not had sufficient time to consider the proposed deed of company arrangement and they are handicapped in their ability to assess its merits and to compare the effect of the proposed deed of company arrangement with the effect which would flow from an immediate winding up of the company.
The purpose of the extension which is sought of the convening period is to allow the investigation to be completed and for the preparation of a report to creditors in which the administrators would then be able to express an informed opinion about the relative merits of the competing possibilities. That is to say, the adoption of a deed of company arrangement or an immediate winding up of the company.
During any extension of the convening period, the employees will retain their employment and will continue to be paid for their services. Also any trade creditors who deal with the company whilst under the control of the administrators are presently being paid by the administrators from their trading receipts. So, too, are lessors to whom the administrators remain personally liable in any event. Of course, pre-appointment claims are and will remain subject to the statutory moratorium, but the extension which is sought will mean that the moratorium will be a relatively short one.
Also of considerable importance is the fact that BankWest has to date cooperated in the administration process and has refrained from taking action to enforce its securities. At the meeting of creditors, a committee of creditors was not appointed.
The administrators have taken steps to notify ASIC, BankWest, the lessor creditors and three of the largest unsecured creditors of the company of the present application. A response was received today from one of the larger creditors who supports the extension. It is true that the support was given upon the basis of a proposed four week extension. I do not consider that the additional week is of any real significance in this, but in any event, the usual order will be made reserving leave to any person including any creditor of the company to make application to vary or discharge any or all of the orders upon 48 hours’ notice.
The legal principles applicable to applications of this type are well settled. They were set out in some detail by McKerracher J in Mentha, in the matter of The Griffin Coal Mining Company Pty Ltd (administrators appointed) (ACN 008 667 285) [2010] FCA 30 at [15] to [22]. More recently Yates J in Taylor, in the matter of Healthzone Limited (Receivers and Managers Appointed) (Administrators Appointed) [2011] FCA 1455 at [26] to [27], also summarised the relevant principles. Much of the learning on the subject is derived from a decision of Austin J in Re Riviera Group Pty Limited (admins apptd) (recs and Mgrs apptd) (ACN 102 298 279) (2009) 72 ACSR 352 to which reference was made by McKerracher J and Yates J in the authorities referred to above.
Austin J set out a list of the broad categories of reasons which have been relied upon in support of an application for an extension. He did so at [13] and observed that the cases show that where a substantial issue in any of these categories is established, the court tends to grant an extension.
The guiding principle is that stated by Barrett J in Diamond Press Australia Pty Limited [2001] NSWSC 313 at [10]. That principle has been referred to in numerous authorities and I will not quote it verbatim. It is sufficient to say that the court’s function is to strike an appropriate balance between the expectation that the administration will be relatively speedy and the requirement that undue speed should not prejudice sensible and constructive actions towards maximising the return to creditors.
It seems to me that in the present case the matters set out in Mr Barnden’s affidavit and which are referred to in comprehensive detail in the submissions of Mr Golledge support the grant of an extension. I will mark Mr Golledge’s submissions as MFI1.
Briefly, as Mr Golledge points out, though the company does not conduct a massive corporate enterprise it is not of insubstantial size and complexity. The administrators, on the evidence before me, appear to have acted diligently in their efforts to take control of the company’s affairs and this is likely to be to the advantage of the company’s creditors. The reasons why a meaningful report for creditors for the second meeting cannot yet be prepared are fully explained in the affidavit. The extension, which is short and well within the period for which extensions are commonly granted, should enable this to occur.
It is of particular importance that lessors of the properties are continuing to be paid as are the continuing trade creditors. It is also of particular importance that BankWest has thus far supported the administration process and refrained from enforcing its securities. If BankWest were not to do so, that would be of considerable disadvantage to creditors. Also, as noted above, the administrators have sought to notify all parties directly affected and one of the creditors supports the extension of time. In addition ASIC has been informed, albeit recently, of the application.
For these reasons I am satisfied that an extension of five weeks ought to be granted. I will make orders in accordance with the short minutes of order handed to me by Mr Golledge, save that I will alter the period of time to 25 days and the date in paragraph 1 to 11 July 2012.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate:
Dated: 31 May 2012
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