Corporations - External administration - Application by joint and several administrators for orders pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) concerning entry into a funding agreement - Application pursuant to the Corporations Act 2001 (Cth) s 447A seeking orders as to how pt 5.3A is to operate - Debts and liabilities incurred under a loan agreement - Conduct of arbitrations and adjudications - Application pursuant to s 65-45 of the Insolvency Practice Schedule (Corporations) concerning use of a special bank account to perform a treasury function
Corporations - External administration - Application by joint and several administrators pursuant to the Corporations Act s 447A seeking orders as to how pt 5.3A is to operate - Existing and future agreements - Orders made subject to conditions
Legislation:
Corporations Act 2001 (Cth) s 440D, s 443A, s 443D, s 447A Insolvency Practice Schedule (Corporations) s 65-45, s 90-15 Rules of the Supreme Court 1971 (WA) O 67B r 11
[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.
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AGLC
Re Aerison Group Ltd (Administrators Appointed) [2023] WASC 274
Case
[2023] WASC 274
Decision Date
CaseChat Overview and Summary
In the matter of Aerison Group Ltd, the applicants sought urgent relief to facilitate the ongoing administration of the companies in the group. The applicants were the administrators of Aerison Group Ltd and its subsidiaries, who applied for various orders under the Corporations Act and the Insolvency Practice Schedule (Corporations). The Commonwealth Bank of Australia, as a secured lender, provided consent to the proposed funding arrangement. The primary legal issues revolved around the administrators' authority to enter into a funding agreement, the status of any debts incurred by the administrators under the agreement, and the use of a specific bank account for the administration of the group companies.
The court examined whether the administrators were justified in entering into the funding agreement, whether any debts incurred by the administrators under the agreement would be considered debts incurred in the exercise of their functions, and whether the administrators would be personally liable for any shortfall in the indemnity provided by the group companies. The court also considered whether the external administration account for one of the group companies could be used as the special bank account for the group and whether the administrators could transfer funds between accounts and make payments from the special bank account without complying with certain provisions of the Insolvency Practice Schedule (Corporations).
The court found that the administrators were justified in entering into the funding agreement and that any debts incurred under the agreement would be considered debts incurred in the exercise of their functions. The court also held that the administrators would not be personally liable for any shortfall in the indemnity provided by the group companies. Furthermore, the court granted the administrators permission to use the external administration account for one of the group companies as the special bank account for the group and to transfer funds between accounts and make payments from the special bank account without complying with certain provisions of the Insolvency Practice Schedule (Corporations).
The court made the orders sought by the administrators, including orders that the administrators are justified in entering into the funding agreement, that any debts incurred under the agreement are in the nature of debts incurred in the exercise of their functions, that the administrators will not be personally liable for any shortfall in the indemnity provided by the group companies, and that the external administration account for one of the group companies may be used as the special bank account for the group and that the administrators may transfer funds between accounts and make payments from the special bank account without complying with certain provisions of the Insolvency Practice Schedule (Corporations).
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
By an application filed and heard on 13 June 2023, urgent relief was sought under s 447A of the Corporations Act, and s 90‑15(1) and s 65‑45 of the Insolvency Practice Schedule (Corporations), which schedule forms sch 2 to the Corporations Act. The administrators sought:(1)an order pursuant to s 90‑15(1) of the Insolvency Practice Schedule (Corporations) that the administrators are justified in entering into and performing a funding agreement the subject of consent given under s 443E(5) by Commonwealth Bank of Australia (CBA), secured lender, to support the working capital needs of the Group Companies and administration costs (Loan Agreement);(2)an order pursuant to s 447A of the Corporations Act that pt 5.3A of the Corporations Act is to operate as if s 443A(1) of the Corporations Act provides that any debts or liabilities of the administrators incurred under the Loan Agreement (including but not limited to monies borrowed, interest in respect of monies borrowed and borrowing costs) are in the nature of debts incurred by the administrators in performance and exercise of their functions and powers as joint and several voluntary administrators of the second to eighth plaintiffs (that is, the Group Companies);(3)an order pursuant to s 447A of the Corporations Act that the operation of s 443A(1) of the Corporations Act is modified, insofar as it applies to any liability of the administrators (in their capacities as joint and several administrators of the Group Companies) pursuant to the Loan Agreement, so that if the indemnity of the administrators under s 443D of the Corporations Act from the Group Companies is insufficient to meet any amount for which the administrators might be liable arising out of or in connection with the Loan Agreement, then the administrators will not be personally liable to repay any such amount to the extent of the insufficiency;(4)an order pursuant to s 65‑45 of the Insolvency Practice Schedule (Corporations) that, up to and including 24 July 2023:(a)the external administration account for the third plaintiff, Aerison Pty Ltd (administrators appointed), may be used as the special bank account for the Group Companies;(b)the administrators may transfer any funds received into the administration accounts for the second and fourth to eighth plaintiffs to the administration account for the third plaintiff; and(c)the administrators may make payments in relation to the Group Companies from the administration account for the third plaintiff (being the special bank account in accordance with the proposed order above) and are not required to comply with s 65‑25 of the Insolvency Practice Schedule (Corporations) in relation to the Group Companies; and(5)an order pursuant to s 447A of the Corporations Act that the operation of s 440D is modified so that the words 'including any arbitration or adjudication' are inserted in place of 'in a court' so that s 440D reads 'During the administration of a company, a proceeding in a court including any arbitration or adjudication against the company or in relation to any of its property cannot be begun or proceeded with, except with the administrator's written consent or with the leave of the Court.'