Moodie, in the matter of JD Transport Pty Ltd (Administrators appointed)
[2014] FCA 813
•1 August 2014
FEDERAL COURT OF AUSTRALIA
Moodie, in the matter of JD Transport Pty Ltd (Administrators appointed) [2014] FCA 813
Citation: Moodie, in the matter of JD Transport Pty Ltd (Administrators appointed) [2014] FCA 813 Parties: ROBERT BOYCE MOODIE AND GEOFFREY PHILIP REIDY IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF JD TRANSPORT PTY LTD (ADMINISTRATORS APPOINTED) ACN 062 633 729 File number(s): NSD 782 of 2014 Judge(s): YATES J Date of judgment: 1 August 2014 Catchwords: CORPORATIONS - application for extension of convening period under s 439A(6) of the Corporations Act 2001 (Cth) Legislation: Corporations Act 2001 (Cth) ss 436A, 436E, 439A, 447A Date of hearing: 1 August 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 15 Counsel for the Plaintiffs: Mr G Carolan Solicitor for the Plaintiffs: William James
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 782 of 2014
IN THE MATTER OF JD TRANSPORT PTY LTD (ADMINISTRATORS APPOINTED) ACN 062 633 729
BETWEEN: ROBERT BOYCE MOODIE AND GEOFFREY PHILIP REIDY IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF JD TRANSPORT PTY LTD (ADMINISTRATORS APPOINTED) ACN 062 633 729
Plaintiffs
JUDGE:
YATES J
DATE OF ORDER:
1 AUGUST 2014
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (the Act), the period within which the plaintiffs must convene the meeting of creditors of JD Transport Pty Limited (Administrators Appointed) ACN 062 633 729 (the company) as fixed by s 439A(5) of the Act be extended up to and including 20 August 2014 (the extended period).
2.Pursuant to s 447A(1) of the Act, Part 5.3A of the Act shall have effect in relation to the company, such that the meeting of creditors required by s 439A(1) may be held at any time during the extended period or up to or within 5 business days after 20 August 2014, notwithstanding s 439A(2) of the Act.
3.Leave be granted to any person claiming to be interested, including any creditor of the company, to apply to the Court to vary or discharge any or all of these orders upon 48 hours’ notice to the plaintiffs and to the Court.
4.The costs of and incidental to the application be costs in the administration of, and be paid out of the assets of, the company.
5.Exhibit A is to be kept confidential and is not to be disclosed to any person without an order of the Court. This Order is made on the basis that non-publication of the evidence is necessary to prevent prejudice to the proper administration of justice.
6.Order 5 is to operate until 20 September 2014, unless further extended.
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 782 of 2014
IN THE MATTER OF JD TRANSPORT PTY LTD (ADMINISTRATORS APPOINTED) ACN 062 633 729
BETWEEN: ROBERT BOYCE MOODIE AND GEOFFREY PHILIP REIDY IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF JD TRANSPORT PTY LTD (ADMINISTRATORS APPOINTED) ACN 062 633 729
Plaintiffs
JUDGE:
YATES J
DATE:
1 AUGUST 2014
PLACE:
SYDNEY
REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)
On 9 July 2014, the plaintiffs were appointed as the joint and several voluntary administrators of JD Transport Pty Limited (the company) pursuant to s 436A of the Corporations Act 2001 (Cth) (the Act). The first meeting of creditors required by s 436E of the Act has been held. The period within which the plaintiffs must convene a meeting of the company’s creditors to be held pursuant to s 439A of the Act ends on 6 August 2014, unless extended. The plaintiffs seek an extension of the convening period to 20 August 2014.
Background
The company operates a road transport business, predominantly transporting building products such as bricks, tiles and paving slabs, in New South Wales and Queensland. It operates a fleet of prime movers, semi-trailers, flat-top trucks and brick forklift trucks. The company’s primary customer is Adbri Masonry Pty Limited (Adbri). Adbri manufactures and sells bricks, tiles and pavers on a national basis.
The company leases two depot sites from which its business is operated. One site is at 16-18 Kellet Street, Erskine Park, New South Wales. The other site is at unit 2, 39 Eddie Road, Minchinbury, New South Wales. The company also operates its business from properties owned or held by Adbri, including in Queensland and New South Wales. There are no formal lease agreements for those sites.
At the time the plaintiffs were appointed as administrators, the company had 46 full‑time employees. Two employees have since been made redundant.
The company has about 125 creditors of which 10 are secured to some extent. There are 116 security interests registered on the Personal Property Securities Register with respect to the company’s property. These relate primarily to leased vehicles. National Australia Bank Limited holds more than 80 security interests over the whole, or substantially the whole, of the company’s property. Adbri has a registered, second ranking general security agreement over all, or substantially all, of the company’s property.
Since their appointment, the plaintiffs have, amongst other things, completed all relevant statutory lodgements and notifications, including informing creditors, employees and lessors of their appointment as administrators; continued to trade the road haulage business of the company; responded to various queries from creditors, employees, lessors and shareholders of the company; dealt with proofs of debt and proxy forms for the first meeting of creditors of the company; commenced their investigations into the financial affairs of the company; and liaised with directors and conducted other ancillary investigations as required.
An arrangement is currently in place between the plaintiffs and Adbri under which Adbri pays to the company the sum of $60,000 plus GST per day, excluding weekends. Based on that arrangement, the company’s business is currently cash flow positive on an accruals basis. The plaintiffs have advised Adbri that were it to cease making these payments, the company would cease to trade.
Reason for seeking extension
The reason for seeking an extension of the convening period is the receipt by the plaintiffs on 25 July 2014 of a presently confidential and non-binding deed of company arrangement proposal from Adbri (Adbri’s proposal). No other deed of company arrangement proposal has been received. The directors of the company have not indicated to the plaintiffs that they will be making a proposal.
The plaintiffs require additional time to prepare cash flow projections for the company’s business, assuming implementation of Adbri’s proposal; negotiate the terms of Adbri’s proposal in light of, amongst other things, those cash flow projections; otherwise seek to refine the terms of Adbri’s proposal; and allow Adbri the opportunity to obtain valuations of vehicles held by the company.
In an affidavit made on 29 July 2014, the first-named plaintiff, Mr Moodie, has expressed his expectation that the extension sought would affect creditors in the following ways. All pre-appointment claims and entitlements will remain in moratorium, subject to the outcome of the administration. Employee creditors will continue their employment and will be paid during the administration period. The lessors of real property will continue to be paid amounts due to them pursuant to applicable leases during the administration period for the properties that the company continues to use. However, the lessors will not be able to enforce their rights under their respective leases during that period. Trade creditors will be paid for goods and services supplied under purchase orders signed by one or other of the plaintiffs or their representatives.
Consideration
In considering applications of this nature, the Court is involved in a balancing exercise. A balance needs to be struck between the expectation that an administration under Pt 5.3A of the Act be conducted with relative speed, to which the relevant provisions of the Act give due recognition, and the requirement that speed not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders.
In the present case, Adbri’s proposal is the only deed of company arrangement proposal that has been forthcoming. Mr Moodie has expressed his belief that this proposal is worth pursuing. The extension sought is a relatively modest one, and for the reasons advanced by Mr Moodie, it seems to me to be justified.
There is evidence before me that employees in the plaintiffs’ firm, Rodgers Reidy, have telephoned or endeavoured to telephone the company’s major creditors to inform them of the present application. With respect to the creditors who have been successfully contacted, the evidence does not reveal any substantial objection to the extension of the convening period that is sought. Nevertheless, when extending the convening period, I will grant liberty to vary or discharge the order extending the convening period to any person who can demonstrate a sufficient interest to make such an application.
I will also make an order pursuant to s 447A(1) of the Act that the operation of Pt 5.3A of the Act is to have effect in relation to the company so that the meeting of creditors required by s 439A of the Act may be held at any time during the period up to, or within five business days after, 20 August 2014, notwithstanding the provisions of s 439A(2) of the Act.
Disposition
Relief, substantially as sought by the plaintiffs, should be granted.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate:
Dated: 1 August 2014
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