Re Abra Mining Pty Ltd (Administrators Appointed)
[2024] WASC 195
•24 MAY 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE ABRA MINING PTY LTD (ADMINISTRATORS APPOINTED); EX PARTE TUCKER and HUTSON as joint and several administrators of ABRA MINING PTY LTD [2024] WASC 195
CORAM: MASTER RUSSELL
HEARD: 30 APRIL 2024
DELIVERED : 24 MAY 2024
FILE NO/S: COR 68 of 2024
MATTER: IN THE MATTER OF ABRA MINING PTY LTD (ADMINISTRATORS APPOINTED) (ACN 110 233 577)
EX PARTE
RICHARD SCOTT TUCKER as joint and several administrator of ABRA MINING PTY LTD (ADMINISTRATORS APPOINTED) (ACN 110 233 577)
First named First Plaintiff
ROBERT WILLIAM HUTSON as joint and several administrator of ABRA MINING PTY LTD (ADMINISTRATORS APPOINTED) (ACN 110 233 577)
Second named First Plaintiff
ABRA MINING PTY LTD (ADMINISTRATORS APPOINTED) (ACN 110 233 577)
Second Plaintiff
Catchwords:
Corporations - Voluntary administrators - Ex parte application to extend time for convening second meeting of creditors - Extension of four months sought - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 435A, s 438A, s 439, s 439A(1), s 439A(2), s 439A(5), s 439A(5)(a), s 439A(5)(b), s 439A(6), s 447A(1)
Rules of the Supreme Court 1971 (WA), O 67 r 5
Supreme Court (Corporations) (WA) Rules 2004
Result:
Application granted
Convening period extended by four months
Category: B
Representation:
Counsel:
| First named First Plaintiff | : | RL Hanrahan |
| Second named First Plaintiff | : | RL Hanrahan |
| Second Plaintiff | : | RL Hanrahan |
Solicitors:
| First named First Plaintiff | : | Clayton Utz |
| Second named First Plaintiff | : | Clayton Utz |
| Second Plaintiff | : | Clayton Utz |
Case(s) referred to in decision(s):
Algeri (Administrator), in the matter of Murray & Roberts Pty Ltd (Administrators Appointed) (No 2) [2022] FCA 1563
Cameron Shaw and Richard Albarran (in their Capacity as Joint and Several Administrators of Home Art Building Group Pty Ltd (Administrators Appointed)) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274
Diamond Press Australia Limited [2001] NSWSC 313
Mighty River International Limited v Hughes [2018] HCA 38
Re ABC Learning Centres Ltd (No 8) (2009) 73 ACSR 478
Re Bragu Pty Ltd (administrators apptd) [2023] WASC 388
Re Daisytek Australia Pty Ltd [2003] FCA 575; (2003) 45 ACSR 446
Re Harrisons Pharmacy Pty Ltd (admin apptd) (recs and mgrs apptd) [2013] FCA 458
Re Mallee Resources Limited (administrators apptd) (receivers & manager apptd) [2023] WASC 379
Re Riviera Group Pty Ltd (admin apptd) (recs and mgrs apptd) (2009) 72 ACSR 352
Re Yeeda Pastoral Company Pty Ltd (administrators appointed) (ACN 094 819 717); Ex Parte Richard Scott Tucker as Joint And Several Administrator of Yeeda Pastoral Company Pty Ltd (administrators appointed) (ACN 094 819 717) [2024] WASC 120
Shaw and Albarran (Joint and Several Administrators of Home Art Building Group Pty Ltd) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274
Tucker (Administrator) v Bolten (Trustee), in the matter of Quintis Leasing Pty Ltd (Administrators Appointed) (No 2) [2024] FCA 46
MASTER RUSSELL:
Introduction
The first and second named first plaintiffs, Richard Scott Tucker and Robert William Hutson, are the joint and several administrators (Administrators) of the second plaintiff, Abra Mining Pty Ltd (administrators appointed) (ACN 110 233 577) (Company). The Administrators were appointed to the Company on 4 April 2024, by written resolution of the board and pursuant to s 436A of the Corporations Act 2001 (Cth) (Act).
The Administrators were required to convene a second meeting of the Company's creditors by 2 May 2024, on which date the convening period was to expire, pursuant to s 439A(5) of the Act.
By ex parte originating process filed on 24 April 2024, together with a certificate of urgency, the plaintiffs sought orders pursuant to s 439A(6) of the Act to extend the convening period by four months.
The plaintiffs also sought an order pursuant to s 447A(1) of the Act, a 'Daisytek Order',[1] that the second meeting of creditors of the Company required by s 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, notwithstanding the provisions of s 439A(2) of the Act.
[1] Re Daisytek Australia Pty Ltd [2003] FCA 575; (2003) 45 ACSR 446 (Lindgren J).
On 30 April 2024, I heard the plaintiffs' application on an urgent basis and made an order extending the convening period for the second meeting of creditors by four months to 2 September 2024, and other orders substantially in terms of the plaintiffs' minute of proposed orders. I said that I would publish reasons for my decision at a later date. These are my reasons.
Affidavits and submissions in support of the application
In support of the application, the plaintiffs relied upon:
(a)three affidavits of Richard Scott Tucker, two sworn and filed on 24 April 2024, one of which is confidential, and one sworn and filed on 29 April 2024;
(b)an affidavit of Bidinia Listy Campbell-McPherson affirmed on 30 April 2024; and
(c)written submissions filed on 29 April 2024.
Notice of the application
At the first meeting of creditors on 16 April 2024, the creditors of the Company were notified of the Administrators' intention to bring this application. No creditors who attended the meeting raised any objections to the foreshadowed application.
On 29 April 2024, Mr Tucker caused a circular to be emailed to the Company's creditors and posted on the Administrators' website providing notice of the hearing on 30 April 2024. The Administrators did not receive any objection to the application from creditors.
On 29 April 2024, Taurus Mining Finance Fund No. 2 L.P, a creditor of the Company, contacted Mr Tucker advising that it supports the application.[2]
[2] Affidavit of Richard Scott Tucker sworn and filed on 29 April 2024 [12], 'RST-11'.
The Administrators have also provided notice of this application to the Australian Securities and Investments Commission,[3] as required by the Supreme Court (Corporations) (WA) Rules 2004.
[3] Affidavit of Bidinia Listy Campbell-McPherson affirmed on 30 April 2024 [4], 'BCM-01'.
Factual background
Mr Tucker deposes, on behalf of the Administrators, to the relevant factual background and the circumstances giving rise to the application. His evidence is conveniently summarised in the plaintiff's outline of submissions. I do not repeat all of the evidence or the submissions. I have given them due consideration. What follows is a summary.
The Company is an Australian exploration and mining company and the sole owner of the Abra Base Metals Mine (Abra Mine).
As at 4 April 2024, approximately 120 direct employees and 360 contracting staff were responsible for the mining and processing operations of the Company.
At the time of the Administrators' appointment, the indebtedness of the Company was approximately $279.5 million. The primary creditors of the Company are Taurus Mining Finance Fund No. 2 L.P, Byrnecut Australia Pty Ltd and the Company's shareholders.
The Company's ultimate holding company is Galena Mining Limited, which owns 60% of the issued shares in the Company. The other 40% of the shares are owned by Toho Zinc Co Ltd through its wholly-owned subsidiary, CBH Western Australia Pty Ltd.
Mr Tucker deposes that, due to weather events and underperforming ore grade at the Abra Mine, the Company is underperforming financially.
The Administrators consider that the Abra Mine can be preserved if the Company continues to trade and a sale of the business or other form of recapitalisation is completed. Mr Tucker deposes that he expects that the possible sale will take between two to six months to complete.
Mr Tucker explains that the extension of four months is sought to allow the Administrators time to further investigate the business, property, affairs and financial circumstances of the Company, given the size and complexity of the Abra Mine business, the large number of employees (both direct and indirect), among the other matters deposed to.
Since the date of their appointment, the Administrators have undertaken investigations as to:
(a)the continuity of business operations;
(b)the possible sale of the business and/or assets or recapitalisation of the Company; and
(c)the books and records of the Company.
As part of the investigations undertaken to date, the Administrators have obtained proposals from investment banks for the sale of the business, or its assets, or recapitalisation of the Company. Further time is required to allow the Administrators to properly consider and evaluate those proposals, and also for interested parties to undertake due diligence and to allow sufficient time for negotiation of transaction documents.
Mr Tucker also deposes to tasks and investigations still in progress or to be completed, including:
(a)investigating and quantifying any claims the Company may have;
(b)the proper investigation of the affairs of the Company as required under section 438A of the Act and to allow creditors to make a more fully informed decision at the second meeting of creditors; and
(c)investigating the Company's financial position, which is complex and involves pre-payment of debts to its shareholders, debts owed to the Company by contractors, notices issued by gas suppliers and multiple registered security interests against the Company.
Mr Tucker believes that an extension of the convening period for four months, to 2 September 2024, will be sufficient time to complete these outstanding tasks, which will inform the Administrators' report to creditors on the business, property, affairs and financial circumstances of the Company.
The Administrators have considered whether any specific prejudice might arise from the course proposed and the extension sought. Mr Tucker deposes that the Administrators are unaware of any specific prejudice that would be suffered by the creditors of the Company if an extension of the convening period is granted. The Administrators will continue to pay the wages and other entitlements of the Company's employees during the administration. They will also continue to pay all lease payments arising under leases and licences, property leases and plant and equipment hire and finance arrangements to which the Company is a party.
It is the Administrators' view that any potential prejudice to creditors is outweighed by the potential return from any sale or recapitalisation of the Company or its assets.
Applicable principles
The convening period for the second creditors' meeting is the period of 20 business days beginning on the day after the administration begins or, if that day is not a business day, the next business day.[4]
[4] Section 439A(5)(b) of the Act.
The court may extend the convening period upon an application made during or after the period referred to in s 439A(5)(a) or s 439A(5)(b) of the Act.[5]
[5] Section 439A(6) of the Act.
The court must determine such applications with consideration to the objects and scheme of pt 5.3A, as set out in s 435A of the Act, which are to provide for the business, property and affairs of an insolvent company to be administered in a way that:
(a)maximises the chances of the company or its business continuing in existence; or
(b)if it is not possible for the company or its business to continue in existence – results in a better return for the company's creditors and members than would result from an immediate winding up of the company.
The principles that apply are well established. They have been set out in many decisions of this and other courts. They were recently considered by Hill J in Re Yeeda Pastoral Company Pty Ltd (administrators appointed) (ACN 094 819 717); Ex Parte Richard Scott Tucker as Joint And Several Administrator of Yeeda Pastoral Company Pty Ltd (administrators appointed).[6] I respectfully adopt her Honour's summary of the relevant principles, as follows.
[6] Re Yeeda Pastoral Company Pty Ltd (administrators appointed) (ACN 094 819 717); Ex Parte Richard Scott Tucker as Joint And Several Administrator of Yeeda Pastoral Company Pty Ltd (administrators appointed) (ACN 094 819 717) [2024] WASC 120 (Re Yeeda) [15] - [19].
The objects of the Act must be appropriately balanced with the expectation that an administration will be undertaken in a relatively speedy and summary manner while ensuring consideration of sensible and constructive options directed towards maximising the returns for creditors and any return for shareholders.[7]
[7] Re Yeeda [2024] WASC 120 [16], citing Tucker (Administrator) v Bolten (Trustee), in the matter of Quintis Leasing Pty Ltd (Administrators Appointed) (No 2) [2024] FCA 46 [54] ( Banks-Smith J); Diamond Press Australia Limited [2001] NSWSC 313 [10] (Barret J).
The court must also take into account the detriment to third parties (if any), including the suspension of rights and remedies of secured creditors, lessors and others.[8] Creditors' interests can be prejudiced by not only delay, but by convening meetings prematurely. Instances where creditors have been prejudiced include where an administrator has been unable to obtain adequate information for the preparation of an administrator's report in a form that enables creditors to make an informed decision.[9]
[8] Re Yeeda [2024] WASC 120 [17], citing Shaw and Albarran (Joint and Several Administrators of Home Art Building Group Pty Ltd) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274 [18].
[9] Re Yeeda [2024] WASC 120 [17], citing Re Harrisons Pharmacy Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2013] FCA 458 [13].
In Mighty River International Limited v Hughes,[10] Nettle and Gordon JJ stated that the court will generally exercise its discretion to extend the convening period where one or more of the established categories are raised, where there is no evidence of material prejudice to those affected by the extension of time and the court is satisfied that the administrators' estimate of time has a reasonable basis. Relevantly, the established categories include:[11]
(a)whether the convening period allows enough time for the administrator to produce a satisfactory report;
(b)where there is a need to extend the administration period to facilitate the sale of the business of the company as a going concern or to progress and assess a deed of company arrangement (DOCA) proposal;
(c)the complexity of the administration, including transactions entered into by the company;
(d)whether creditors support the extension;
(e)the administrators' own opinion as to the need for an extension, particularly where the administration is complex; and
(f)more generally, where additional time is likely to enhance the return for unsecured creditors.
[10] Mighty River International Limited v Hughes [2018] HCA 38 [73].
[11] Re Yeeda [2024] WASC 120 [19]; Mighty River International Limited v Hughes [2018] HCA 38 [73].
In considering an application for an extension, the court must take into account the detriment to third parties, including the suspension of rights and remedies of secured creditors, lessors and others.[12]
[12] Algeri (Administrator), in the matter of Murray & Roberts Pty Ltd (Administrators Appointed) (No 2) [2022] FCA 1563[10] (Banks-Smith J), citing Cameron Shaw and Richard Albarran (in their Capacity as Joint and Several Administrators of Home Art Building Group Pty Ltd (Administrators Appointed)) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274 [18] (Beech J).
The longer the extension sought, the more important it is that the applicant give a clear and complete explanation of the state of the administration, the grounds for the extension, and any potential prejudice that would flow from granting it.[13]
[13] Re Bragu Pty Ltd (administrators apptd) [2023] WASC 388 [25] - [26] referring to Re Harrisons Pharmacy Pty Ltd (admin apptd) (recs and mgrs apptd) [2013] FCA 458; Re ABC Learning Centres Ltd (No 8) (2009) 73 ACSR 478; Re Riviera Group Pty Ltd (admin apptd) (recs and mgrs apptd) (2009) 72 ACSR 352.
Disposition
Time periods prescribed by s 439A(5) of the Act will often not be sufficient to enable the administrators to perform the tasks required before the second meeting.[14]
[14] Re Mallee Resources Limited (administrators apptd) (receivers & manager apptd) [2023] WASC 379 [21].
The Company has a complex structure and financial position, as deposed to by Mr Tucker and having regard to:
(a)the position of its creditors;
(b)the pre-payment of debts to its shareholders;
(c)debts owed to the Company by contractors;
(d)notices issued by gas suppliers to the Administrators;
(e)multiple parties having registered security interests against the Company; and
(f)the Company's size and indebtedness.
In my view, an extension of the convening period for the second meeting of creditors is justified and appropriate, in the circumstances. The application in this case falls within the well-recognised categories of cases referred to in which the court has granted an extension of the convening period.
On the material before me, I accept the convening period under the Act does not enable the Administrators to produce a report containing a considered recommendation to creditors. I accept Mr Tucker's evidence that there are a number of steps that still need to occur and that, without the extension, neither the Administrators nor the creditors will be in a position to make an informed decision about the future of the Company.
I am satisfied that the Administrators have produced sufficiently detailed factual information to justify the request for the extension. Mr Tucker has provided a detailed account of and explanation for the investigations undertaken up until the date of the application and those outstanding.
On the evidence before me, four months is a reasonable estimate to complete the outstanding tasks and investigations, and the extension appears to be in the interests of stakeholders. It will allow the Administrators to further investigate the options that are being considered for the sale of the business and/or its assets or recapitalisation, which are directed towards maximising the returns for creditors, and is in the interests of employees.
I am satisfied that the potential prejudice of the extension outweighs any prejudice to creditors, and that granting the extension is in the interest of the Company.
The creditors of the Company have received notice of the Administrators' intention to bring the application. At least one creditor supports the application, and none have raised any objection or sought to be heard.
In any event, should any creditor of the Company or other interested person wish to be heard or claim to be aggrieved by any order granting an extension, the plaintiff's minute of proposed orders provides for liberty to any person who can demonstrate sufficient interest to apply to modify or discharge the order.
For these reasons, I was satisfied there should be an extension of the period within which the Administrators must convene the second meetings of creditors of four months to 2 September 2024. I also made a Daisytek order to facilitate any prospect of convening the meeting earlier than the latest possible date.
Confidentiality order
The plaintiffs also applied to restrict access to the confidential affidavit of Richard Scott Tucker sworn and filed on 24 April 2024, pursuant to O 67B r 5 of the Rules of the Supreme Court 1971 (WA) on the basis that it contains information and documents which contain sensitive commercial information.
Having reviewed the confidential Affidavit of Mr Tucker sworn on 24 April 2024, I was satisfied that it was appropriate to restrict access to it in the terms sought.
Conclusion and orders
For these reasons, I was satisfied that it was appropriate to make orders in the terms sought by the plaintiffs, with some minor modifications. A copy of the orders made is annexed to these reasons as Annexure A.
Annexure A
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AM
Associate to Master Russell
24 MAY 2024
1
12
3