Octaviar Ltd (Administrators appointed), Re

[2008] QSC 272

[2008] QSC 272

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

PD MCMURDO J

No 9922 of 2008

IN THE MATTER OF OCTAVIAR LIMITED (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED ACN 107 863 436

and

IN THE MATTER OF OCTAVIAR INVESTMENT NOTES LIMITED (ADMINISTRATORS APPOINTED) ACN 122 141 986

and

IN THE MATTER OF OCTAVIAR INVESTMENT
BONDS LIMITED (ADMINISTRATORS APPOINTED)
ACN 126 878 608

and

IN THE MATTER OF OCTAVIAR FINANCIAL
SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN
126 878 608

and

IN THE MATTER OF OCTAVIAR ADMINISTRATORS PTY LTD (ADMINISTRATORS APPOINTED) ACN 101 069 390

BRISBANE

..DATE 10/10/2008

ORDER

HIS HONOUR:  On 15 September last I adjourned four

applications for winding up of members of the Octaviar Group

to be heard on 7 November next.  The reasons for that appear

from those which I published for the orders which I made on 12

September 2008.  Administrators were appointed to each of

those companies on 13 September and those administrators today

apply for orders extending the convening period in the

administration of each of those four companies and the

convening period of a fifth Octaviar company, which is

Octaviar Administration Pty Ltd (administrators appointed).

In each case the application is to extend the convening period

by effectively two months save for Octaviar Administration,

where the extension is relatively shorter.  In each case the

application is to extend the period to 10 December 2008.

On the same basis the administrators seek to have the hearing

of each of the four applications for winding up adjourned to

18 December 2008, the intention being that the outcome of the second meeting in each company be known before the Court hears the application for winding up.

The administrators' applications have been served upon each of

the parties which participated in the hearing before me in

September and which I described as the large creditors of the

group.  Most of them have appeared in response to the

administrators' applications today.  None opposes the orders

sought, but I had the benefit of submissions for the Public

Trustee as to the terms on which orders should be made and it

is appropriate that there be orders in those terms as

suggested by the Public Trustee if the convening periods are

to be extended and the applications for winding up be

adjourned.

The Commissioner of Taxation, like the Public Trustee, neither

supports nor opposes the present applications.  The companies

I have previously described as Wellington and OPI have

appeared to support the administrators' applications.  I was

informed that the company I described as Challenger, which has

not appeared today, has indicated to the administrators that

it does not oppose these applications. 

The administrators seek these extensions of the convening periods essentially because of the complexity of their task.  A reading of my reasons for judgment published on 12 September would make the administrators’ predicament unsurprising.  The administrators need further time to investigate the financial

position or positions of various members of the group and in

turn need time to be able to prepare the required report for

meetings of creditors. 

The administrators also refer to work which is being done by the directors of Octaviar Limited on a proposal which those persons might wish to put to creditors with a view to a company arrangement.  There is some evidence that this could be a proposal which the group, or some members of the group, with the agreement of their creditors, would continue to trade.  No proposal is yet formulated.  The possibility of that proposal is, of course, a relevant matter for today's purposes, but in my view the principal consideration is that because of the complexity of the affairs of this group, the administrators have not yet had a proper opportunity do the work which the Act requires of them.

The evidence does not indicate the likelihood of any

particular prejudice from the orders which are sought.  Mr

O'Sullivan appearing for the Public Trustee referred to the

fact that with the passage of time money is being spent and to

the fact that he said some $10 million had been spent since

the appointment of the administrators.

Accepting that to be so and accepting the likelihood of

similar expenditure between now and the middle of December,

that does not seem to me to be a consideration which put

against the others which I have mentioned already, should

result in the refusal of the orders which the administrators

seek.  Moreover there is a substantial prospect that much of

the work which will be done by the administrators between now

and then would be for the ultimate benefit of the company in

question should it be ordered to be wound up.

As appears from the reasons given on 12 September, a

particular concern of some creditors and in particular those

represented by the Public Trustee, was the effect upon

relation back periods of an administration preceding any

liquidation.  But the orders which are sought would not affect

the orders which I made on 12 September which were designed to

overcome the suggested difficulties with relation back

periods.  So then apart from the matter of the ongoing cost of

administering these companies, there is no apparent

disadvantage to creditors from extending the convening

periods.

In the course of submissions I discussed with counsel

appearing for the administrators and for the Public Trustee

whether it would be appropriate to adjourn the hearing of the

applications for winding up or whether it would not be

preferable to leave those dates for hearing as presently fixed

for 7 November, to see whether from some new material

circumstance which might emerge between now and 7 November, it would not be appropriate, if any party sought a winding-up order, to then wind the company up.

However, consistently with the reasons for extending the

convening period, it is logical to adjourn the applications

for winding up as requested until 18 December.  In doing

that, as is understood by all present at this hearing and

should be also understood by other interested creditors, I am

not precluding the possibility that a party with the necessary

standing could have the winding-up applications or any of them

brought forward for hearing on an earlier date, if the

circumstances which by then prevail warrant that course.  In

the same way, the administrators seek orders which would

permit them to bring forward the meetings of creditors if the

circumstances warrant that and notwithstanding the extension

of the convening periods to 10 December next.

The further matter to be mentioned about this is that no

creditors beyond those I have already mentioned have communicated to the administrators that they oppose the extension of the convening periods. It is, of course, necessary to have regard to the fact that the existence of a regime of administration does have a number of legal effects and the present question is, as it was described by Austin J in re New Horizon Corporation ex parte DeVries [2004] NSWSC 253 at para [5], one of balancing the need for the administration of the company be carried out as efficiently and expeditiously as practicable against the need to give the administrators time to present meaningful choices to the creditors at their meeting.

The Public Trustee submits that if the  hearings of the winding-up applications are to be adjourned, there should be an extension of the period within which the application is to be determined, being an order under section 559R(2) of the Corporations Act.  In particular, it is submitted that it would be appropriate to adjourn the date for the determination of the applications until 18 February 2009 or such other date as is fixed by the Court.  It is appropriate, as the administrators and other parties here accept, that there be an order to that effect also.

Accordingly, on the originating application filed on 7 October

last, it will be ordered that:

1. Pursuant to section 439A(6) of the Corporations Act, the

convening period defined in section 439A(5) of the Act

for each of Octaviar Limited, Octaviar Investment Notes

Limited, Octaviar Investment Bonds Limited, Octaviar

Financial Services Pty Ltd and Octavier Administration

Pty Ltd, be extended to Wednesday, 10 December 2008.

1. Pursuant to section 447A(1), the meetings of

creditors for each of the companies required by section

439A of the Act may be held at any time during or within

five business days after the end of the convening period

as extended by that first order, notwithstanding section

439A(2) of the Act.

1. It will be ordered that the costs and expenses of that

application be costs and expenses of the administrators

of the companies and of the companies.

In each of the proceedings for winding up these will be the

orders:

1. That the hearing of the application for winding-up of the

company be adjourned to 18 December 2008.

1. That the period within which the application for the

winding up of the company must be determined be extended

in accordance with section 459R(2) of the Act

until 18 February 2009.

1. That the costs and expenses of the administrators'

application in those proceedings be the costs and

expenses of the administrators of the company and of the

company.

1. In each proceeding there be liberty to apply.

It will be further ordered in the originating application

filed 7 October that there be liberty to apply.

I will hear other parties as to any further order of costs

which they seek.

...

HIS HONOUR:  I should add this to the reasons I have given.  I

have understood, as my reasons indicate, that it was the case

that $10 million had been spent since the appointment of the

administrators.  In the overall scale of this group of

companies the fact that that amount had been spent during the

period of the administration did not cause me immediate alarm,

but in truth, as I am now told, it is the period from July to

the present which is the period in which the $10 million

referred to by Mr O'Sullivan has been spent.  I had

misunderstood what Mr O'Sullivan had said in that respect.

Accordingly, the case for the extension of the convening

periods and otherwise for the orders which are sought by the

administrator is stronger still.

In each of the proceedings for winding up there will be these further orders as to costs:  namely, that the costs of the Public Trustee of Queensland be his costs in the winding up; and that the costs of OPI Pacific Finance Limited, the Commissioner of Taxation and Wellington Investment

Management Limited be reserved.

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