Re Abra Mining Pty Ltd (Administrators Appointed); [No 2]
[2024] WASC 240
•2 JULY 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 [No 2] [2024] WASC 240
CORAM: MASTER RUSSELL
HEARD: 27 JUNE 2024
DELIVERED : 27 JUNE 2024
PUBLISHED : 2 JULY 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 - External administration - Application pursuant to Corporations Act 2001 (Cth) s 447A to limit administrators' personal liability - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), Part 5.3A, s 443A(1), s 447A(1)
Rules of the Supreme Court 1971, O 67B r 5
Result:
Application granted
Category: B
Representation:
Counsel:
| First named First Plaintiff | : | Mr P Edgar SC |
| Second named First Plaintiff | : | Mr P Edgar SC |
| Second Plaintiff | : | Mr P Edgar SC |
Solicitors:
| First named First Plaintiff | : | Clayton Utz |
| Second named First Plaintiff | : | Clayton Utz |
| Second Plaintiff | : | Clayton Utz |
Cases referred to in decision:
In the matter of Globaltech Corporation Pty Ltd (administrators appointed) [2024] WASC 196
Re Abra Mining (administrators appointed); Ex Parte Tucker and Hutson as joint and several administrators of Abra Mining Pty Ltd [2024] WASC 195
Re Strawbridge (in their capacity as joint and several voluntary administrators of each of Virgin Australia Holdings Ltd (admins apptd) (ACN 100 686 226) and Others (No 2) [2020] FCA 717; (2020) 144 ACSR 347
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
MASTER RUSSELL:
(This judgment was delivered extemporaneously on 27 June 2024 and has been edited from the transcript to correct matters of grammar and infelicity of expression. Authorities and other references have been footnoted.)
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 Proprietary Limited (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).
On 30 April 2024, I made an order extending the convening period for the second meeting of creditors by four months to 2 September 2024, and other related orders. The background to the Administrator's appointment, the nature of the Company, its ownership, number of employees, and the Company's primary creditors are set out in those earlier reasons for decision in Re Abra Mining (administrators appointed).[1]
[1] Re Abra Mining (administrators appointed); Ex Parte Tucker and Hutson as joint and several administrators of Abra Mining Pty Ltd [2024] WASC 195.
Also set out in those reasons are the steps that had been taken by the Administrators as at 30 April 2024 and the further steps and work required for the Administrators to further investigate the business, the property, affairs and financial circumstances of the Company, which was significant given the size and complexity of the Abra mine business, the large number of employees (both direct and indirect), amongst the other matters deposed to in the supporting affidavits to that application.
The current application
By interlocutory process filed on 11 June 2024, the Administrators now seek relief, pursuant to s 447A(1) of the Act, to limit their personal liability arising from a loan agreement between the Company and Taurus Mining Finance Fund No 2 L.P. (Taurus), entered into on 11 June 2024 in respect of a US$7 million facility (Loan Agreement).[2]
[2] Counsel for the plaintiffs indicated this is approximately AUD$10 million.
The effect of the orders sought by the Administrators is to limit any liability to the assets of the Company, without any recourse to the Administrators personally beyond those assets.
The application is made ex parte and is supported by three affidavits sworn by the first named first plaintiff, Richard Scott Tucker; two dated 11 June 2024, one of which is confidential, and one dated 24 June 2024.
The confidential affidavit sworn by Mr Tucker on 11 June 2024 contains information that is confidential and commercially sensitive, and is the subject of an application for restriction pursuant to O 67B r 5 of the Rules of the Supreme Court 1971 (WA).
The Administrators also rely upon affidavits sworn by Mr Tucker in April 2024 in support of the application to extend the convening period, being two affidavits of Mr Tucker sworn on 24 April 2024, one open and one confidential, and a further affidavit sworn by Mr Tucker on 29 April 2024. They also rely on an affidavit sworn by Damon Mazzeo Miles on 26 June 2024.
The background to the application and a summary of the evidence in relation to the structure and operation of the Loan Agreement are helpfully set out in the outline of submissions filed in support of the application on 24 June 2024, which I accept.
Notice of the application
Although the application is made ex parte, the Administrators informed the Company's creditors of the application on 12 June 2024 via circular and by publication on KordaMentha's website.
The Company's primary creditors, CBH, Toho, Galena and Taurus (each more fully identified in my reasons in Re Abra Mining (administrators appointed),[3] and in the submissions filed in support of this application) have been separately advised. I will return to notice of the application.
[3] Re Abra Mining (administrators appointed); Ex Parte Tucker and Hutson as joint and several administrators of Abra Mining Pty Ltd [2024] WASC 195.
The structure and operation of the Loan Agreement
Information relating to the terms of the Loan Agreement and other finance documents are set out in Mr Tucker's confidential affidavit of 11 June 2024. I have considered the confidential affidavit, but given its commercially sensitive and confidential nature, I do not refer to its contents in any detail in these reasons. I accept the summary of the structure and operation of the Loan Agreement, including in relation to the Original Facility Agreement[4] as security for the Loan Agreement, and the submissions in paragraphs 8 to 30 of the outline of submissions.
[4] As defined in the outline of submissions filed on 24 June 2024 [9].
Applicable principles
The principles that apply, and to which I should have regard, in determining an application under s 447A of the Act, were recently summarised by Hill J in Re Yeeda Pastoral Company Pty Ltd (administrators appointed),[5] and also by Strk J in In the matter ofGlobaltech Corporation Pty Ltd (administrators appointed).[6] It is not necessary for me to repeat those principles. I have applied them in my determination of the application.
[5] 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 [38] ‑ [41].
[6] In the matter ofGlobaltech Corporation Pty Ltd (administrators appointed) [2024] WASC 196 [32] ‑ [35], [37] ‑ [41].
Disposition
In determining the application, I have considered the relevant criteria, that is:
(a)whether the Loan Agreement is in the interests of the Company's creditors and consistent with the objectives of Part 5.3A of the Act;
(b)whether it will enable the Company's business to continue trading for the benefit of the Company's creditors;
(c)whether there would be any prejudice or disadvantage to the Company's creditors in granting the relief sought; and
(d)whether notice has been given to those who may be affected by the orders that are sought.
There do not appear to be any significant material discretionary factors which would weigh against making the orders sought.
The evidence before the court is comprehensive, as are the submissions filed in support of the application. I do not refer to or repeat the matters stated in the evidence referred to or the submissions in any detail. I accept that the Loan Agreement is in the interests of the Company's creditors and consistent with the objectives of Part 5.3A of the Act, for the reasons set out in paragraphs 34 to 41 of the submissions.
In his affidavits on behalf of the Administrators, Mr Tucker deposes to and expresses his opinions based on the investigations of the Administrators to date, their familiarity with the operations of the Company and their experience as Administrators of mining assets. He states that, in the Administrators' opinion, the best return to creditors will result from a sale or restructuring process.
Mr Tucker states that, without the funding relief sought in the application, the Administrators would be exposed to risks, as deposed to by him, and the Company would most likely be unable to trade for sufficient time to implement a sale or restructuring process. He deposes that the consequence would be that the Administrators would need to immediately close down the Abra mine, put its operations into care and maintenance, terminate the employment of all employees and stand down contractors.
For the reasons deposed to by Mr Tucker, based on his knowledge of the Company and his experience as an administrator, if that were to happen, significant value in the Company would be lost for any sale or restructure as an operational mine, and there would be substantial costs incurred in placing the mine into care and maintenance.
I accept that the purpose of the funding under the Loan Agreement is to enable operations to continue at the Abra mine, and that the ongoing operation of the mine is of benefit to creditors as it will maintain the value of the Company's assets. Without the funding provided under the Loan Agreement, the value of the Company and its assets will be diminished. Mr Tucker is an experienced insolvency practitioner. He considers that the terms of the Loan Agreement are reasonable, commercial and appropriate in the circumstances, based on his experience.
By limiting the Administrators' personal liability in the manner proposed, the Administrators will be able to access the funding required to preserve and operate the business of the Company as a going concern, for the purposes of maximising the return to creditors. This is consistent with the objectives of Part 5.3A of the Act to preserve the Company's assets and maximise the potential return to creditors.
I accept, as counsel outlined in his submissions, that the Administrators are not seeking wider relief, as was the case in, for example, Re Strawbridge.[7] The facility under the Loan Agreement gives the Administrators the confidence to continue operations. They remain on risk for the wider liabilities of the Company, which is for the benefit of the creditors.
[7] Re Strawbridge (in their capacity as joint and several voluntary administrators of each of Virgin Australia Holdings Ltd (admins apptd) (ACN 100 686 226) and Others (No 2) [2020] FCA 717; (2020) 144 ACSR 347, 352 [7].
The lender, Taurus, supports the application. Galena and CBH have provided security on a limited recourse basis as outlined in counsel's submissions, and have consented to security being provided. They have been given notice of the application and have not sought to oppose it.
In the circumstances, as outlined on behalf of the plaintiffs, the relief sought is narrow, particularly having regard to the other liabilities of the Company, as have been outlined. I accept that there is unlikely to be any material prejudice or disadvantage to creditors by limiting the personal liability of the Administrators. The orders sought solely relieve the Administrators from personal liability in relation to the Loan Agreement, which is provided to allow the continued trading of the Company and a potential sale or recapitalisation, which is for the benefit of creditors.
The Company's creditors have been informed of the application. The Administrators have confirmed they will inform creditors via circular and by publication on KordaMentha's website of the orders made, if the application is successful. No objections have been received to the application. As stated, the Company's secured creditors are on notice of the application and have not opposed it.
Taurus, the lender under the Loan Agreement and one of the Company's primary creditors, supports the application. Galena and CBH have not sought to be heard. ASIC has also been given notice of the application, and it has indicated that it does not propose to intervene and has not sought to be heard. The Commonwealth Department of Workplace Relations has also been notified of the application and has not sought to be heard.
As was submitted on behalf of the plaintiffs, it is not likely that the creditors will be prejudiced by the proposed course. There are also orders proposed to provide for liberty to any party demonstrating sufficient interest to apply to modify or discharge the orders.
Conclusion and orders
In the circumstances, I am satisfied on the evidence before me that it is appropriate for the court to grant the Administrators the relief sought by the application made in the interlocutory process.
I will make orders substantially in the terms of the Minute of Proposed Orders filed on 26 June 2024, including to restrict access to the confidential affidavit of Richard Scott Tucker sworn on 11 July 2024, on the basis that that affidavit contains information that is confidential and commercially sensitive.
A copy of the orders made on 27 June 2024 is attached 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
2 JULY 2024
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