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MXJ v Company X (admin apptd)

MXJ v Company X (admin apptd)

Case [2023] VSC 42 13 February 2023

Admissibility of Evidence

Consensus Building

Causation

Insolvency Law

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2023 00130

IN THE MATTER OF COMPANY X (ADMINISTRATORS APPOINTED)
MXJ	Plaintiff
v
COMPANY X (ADMINISTRATORS APPOINTED)	First Defendant
MATTHEW GOLLANT (IN HIS CAPACITY AS ADMINISTRATOR OF COMPANY X)	Second Defendant

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JUDGE:	WALKER JA
WHERE HELD:	Melbourne
DATE OF HEARING:	18 January 2023
DATE OF JUDGMENT:	13 February 2023
DATE OF REVISION:	3 March 2023 (for the inclusion of pseudonyms only)
CASE MAY BE CITED AS:	MXJ v Company X (admin apptd)
MEDIUM NEUTRAL CITATION:	[2023] VSC 42

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CORPORATIONS – External administration – Application for further extension of convening period for second meeting of creditors – Second meeting convened within time but adjourned – Where extension of time would enable finalisation of deed of company arrangement (‘DOCA’) – Where DOCA likely to result in greater return for creditors than liquidation – Where administrator consents to proposed further adjournment – Whether power to extend period of adjournment beyond that prescribed by Insolvency Practice Rules (Corporations) 2016 (Cth) s 75-140 engaged where meeting adjourned but not closed – Power sufficiently broad – Application granted.

Corporations Act 2001 (Cth) pt 5.3A, ss 436A, 447A; Insolvency Practice Rules (Corporations) 2016 (Cth) s 75-140.

Dixon, Re Pearson Contracting Pty Ltd [2020] FCA 1505; Georges, Re Vical NSW Pty Ltd (admin apptd) [2018] FCA 1974, followed.
Re Riviera Group Pty Ltd (admin apptd) (recs & mgrs apptd) (2009) 72 ACSR 352; Algeri, Re Colorado Group Limited (admin apptd) (recs & mgrs apptd) [2011] VSC 260, applied.
Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270, discussed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr P Tatti (solicitor)	Aitken Partners
For the First and Second Defendant	Ms K Lechner (solicitor)	Sinisgalli Foster Legal
For the Creditor	Mr R Watson-Jones (solicitor)	Snowton Saje Lawyers

HER HONOUR:

Introduction

Company X[1] is a company that previously engaged in the business of installing insulation. It is no longer trading. On 13 October 2022, Mr Matthew Gollant of CJG Advisory (the ‘administrator’) was appointed administrator of Company X pursuant to s 436A of the Corporations Act 2001 (Cth) (the ‘Act’). A first meeting of creditors was held on 25 October 2022. The administrator issued a report to creditors on 9 November 2022 (the ‘first report’). That report stated that the administrator’s opinion was that it was in the best interests of creditors for the second meeting to be adjourned to allow time for a potential deed of company arrangement (‘DOCA’) proposal to be prepared for consideration by creditors.
[1]Pseudonyms have been used in this judgment, including in quotations from affidavit material, to ensure that the parties to a proceeding under the Family Law Act 1975 (Cth) are not able to be identified.

A second meeting of creditors was convened on 17 November 2022 in accordance with s 439A of the Act. At that meeting the administrator adjourned the meeting to 19 January 2023.[2] While the precise date is…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading MXJ v Company X (admin apptd)

Details

AGLC: MXJ v Company X (admin apptd) [2023] VSC 42
Case: [2023] VSC 42
Decision Date: 13 February 2023

CaseChat Overview and Summary

The case of MXJ v Company X involved an application by the external administrator, appointed to manage the affairs of Company X, for a further extension of the convening period for a second meeting of creditors. The second meeting had already been convened within the statutory time frame but had been adjourned. The primary issue before the court was whether the power to extend the period of adjournment beyond that prescribed by the Insolvency Practice Rules (Corporations) 2016 (Cth) section 75-140 was available when the meeting had been adjourned but not closed. This question hinged on the interpretation of the relevant provisions of the Corporations Act 2001 (Cth) and the rules governing external administration.

The court examined the statutory framework and the case law interpreting the relevant provisions, particularly focusing on the broad discretion afforded to the court in managing the administration of insolvent companies. The court noted that while the Insolvency Practice Rules (Corporations) 2016 (Cth) provided a general framework for convening meetings of creditors, the court's inherent jurisdiction and powers under the Corporations Act 2001 (Cth) could be exercised to grant extensions in appropriate circumstances. The court found that the power to extend the convening period was sufficiently broad to allow for extensions even when the meeting had been adjourned but not yet closed. This interpretation was supported by previous decisions such as Re Dixon, Re Pearson Contracting Pty Ltd, and Re Georges, Re Vical NSW Pty Ltd (admin apptd), which recognised the need for flexibility in the administration process to facilitate the most beneficial outcome for creditors.

Consequently, the court granted the application for a further extension, allowing the external administrator to finalise a deed of company arrangement which was likely to result in a greater return for creditors than liquidation. The administrator had consented to the proposed adjournment, and the court determined that the public interest in maximising creditor returns justified the granting of the extension. The decision underscored the importance of flexibility and pragmatism in the administration of insolvent companies, allowing for the finalisation of arrangements that could better serve the interests of all stakeholders. The final orders reflected the court's decision, granting the extension and setting out the terms for the reconvened meeting of creditors.

Orders