Re Anagram International LLC (recs and mgrs apptd)
[2025] VSC 267
•15 May 2025 (ex tempore)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2025 01876
IN THE MATTER of ANAGRAM INTERNATIONAL LLC
(RECEIVERS AND MANAGERS APPOINTED) (ARBN 066 897 274)
APPLICATION BY:
| ANAGRAM INTERNATIONAL LLC (RECEIVERS AND MANAGERS APPOINTED) (ARBN 066 897 274) | Plaintiff |
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JUDGE: | Gobbo AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 15 May 2025 |
DATE OF JUDGMENT: | 15 May 2025 (ex tempore) |
CASE MAY BE CITED AS: | Re Anagram International LLC (recs and mgrs apptd) |
MEDIUM NEUTRAL CITATION: | [2025] VSC 267 |
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CORPORATIONS — Application by director under s 583 of the Corporations Act 2001 (Cth) — Foreign company — Whether Part 5.7 body — Company unable to pay its debts — Business no longer carried on in Australia —Held: Application successful.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr L Currie of counsel | HFW Australia |
HER HONOUR:
By originating process filed 4 April 2025, Mr Paul James Cox, the director (‘Director’) of Anagram International LLC (Receivers and Managers Appointed) (ARBN 066 897 274) (‘Company’):
(a)seeks orders pursuant to s 583(c)(i) of the Corporations Act 2001 (Cth) (‘Act’) to wind up the Company; and
(b)seeks an order appointing Mr Jason Glenn Stone of PKF Melbourne as liquidator of the Company (‘Application’).
The orders are sought on the grounds that the Company has ceased to carry on business in Australia and is otherwise unable to pay its debts.
Today, I gave ex tempore reasons for making the orders sought by the Director in the proceeding. A revised version of those reasons is set out below.
Background
The Company is incorporated in Nevada, United States of America and was registered in Australia on 7 November 1994 as a foreign company within the meaning of Division 2 of Part 5B.2 of the Act.
The Company is part of a multinational group of companies known as the ‘Wonder Group’ which operated a business as a wholesaler and distributor of party supplies. The Company’s role within the Wonder Group was to facilitate the distribution of party supplies to the Australian market. The Company operated exclusively in Australia since around 2004.
The Company’s intermediate company, Amscan Holdco Limited (Administrators Appointed) (Company No. 13044098) (‘AHL’), was incorporated in the United Kingdom.
The Company’s ultimate parent company, Wonder Group BidCo Limited (Administrators Appointed) (Company No. 12903567) (‘WGB’), was also incorporated in the United Kingdom.
On 17 June 2024, AHL, WGB, the Company and other entities within the Wonder Group received a letter of demand from their financier, PNC Business Credit (‘PNC’), for immediate payment of GBP £10,463,743.93 (‘Payment’). The Payment was sought pursuant to an event of default under a master facilities agreement dated 29 October 2021 entered into between AHL, WGB, PNC and others.
In July 2024, Mr James Clark, Mr Ryan Grant, Mr Howard Smith and Mr Will Wright of Interpath Limited (‘Administrators’) were variously appointed as the joint administrators of AHL, WGB and four other companies within the Wonder Group, each of which were incorporated in the United Kingdom.
The details of each appointment, including the date the Administrators were appointed, is set out in paragraph 9 of the affidavit of the Director filed 4 April 2025 (‘Cox Affidavit’).
The Administrators effected an international restructure of the entities identified in paragraph 9 of the Cox Affidavit which included the solvent sales of Wonder Group’s Malaysian and Swedish subsidiaries.
The Company was not put into administration and did not directly participate in the restructure.
On 3 July 2024, Mr Jonathan Philip Henry and Ms Katherine Sozou of McGrathNicol (‘Receivers’) were appointed by PNC as joint and several receivers and managers of the Company.
On 18 October 2024, the Receivers executed an asset sale agreement (‘Asset Sale Agreement’) to which the business and assets of the Company were sold to a newly incorporated Company, Anagram Australia Pty Ltd (ACN 681 326 198) (‘Anagram Australia’), for the purchase price of AUD $14,294,482.00. Anagram Australia is a subsidiary of a US-based company, Anagram Holdings LLC. The Director is also the sole director of Anagram Australia.
Prior to the appointment of the Receivers, the Company traded profitably and had a net asset position of approximately AUD $27.3 million (which included approximately AUD $24.4 million in related-party loan receivables payable by other companies in the Wonder Group).
The Company’s reported profit after income tax for the financial years ended 31 December 2021 and 31 December 2022 was AUD $1.96 million and AUD $4.27 million respectively. The draft accounts for 2023 were prepared but were never filed given the Receivers’ appointment. A draft report for the financial year ending 31 December 2023 did however indicate a net profit after accounting for income tax of AUD $2.28 million.
The Asset Sale Agreement completed on 31 October 2024.
Upon completion, the Company ceased trading and all of its employees were transferred to Anagram Australia. The Company no longer has any function within the Wonder Group or otherwise.
The Director (that is, the director of the Company and the sole director of Anagram Australia) completed a comparative balance sheet using the Company’s management accounts which identifies the Company’s net asset position immediately prior to and following completion of the Asset Sale Agreement.[1] At the time of swearing his affidavit, the Director reported that the Company had a net asset deficiency of approximately AUD $8.5 million.
[1]Affidavit of Paul James Cox filed 12 May 2025, [5].
The current cash balance of the Company is unknown. Before me, the Director’s evidence as to the Company’s financial position as at June 2024 was that:
(a)the only tangible asset was the cash at bank held by the Receivers in the sum of approximately AUD $4.5 million;
(b)this sum of money has been, or will be, distributed by the Receivers to pay the Company’s tax debts and other creditors accrued during the receivership; and
(c)the Company otherwise has no assets available or ability to pay its debts totalling approximately AUD $13.1 million.
The Director makes the Application on the basis that:
(a)the Company has ceased to carry business in Australia and cannot pay its debts;
(b)Mr Stone has provided his consent to being appointed as liquidator of the Company;
(c)the Receivers consent to the Company being wound up; and
(d)the Administrators do not object to the Company being wound up.
The Australian Securities and Investments Commission were notified of the Application and did not appear.
Section 583
The winding up jurisdiction created by s 583 of the Act is discretionary.[2]
[2]Titchfield Management Ltd v Vaccinoma Inc (2009) 68 ACSR 448.
It provides that, subject to this Part, a Part 5.7 body may be wound up under this Chapter and this Chapter applies accordingly to a Part 5.7 body with such adaptations as are necessary, including the following adaptations:
(a)the principal place of business of a Part 5.7 body in this jurisdiction is taken, for all the purposes of the winding up, to be the registered office of the Part 5.7 body;
(b)a Part 5.7 body is not to be wound up voluntarily under this Chapter;
(c)the circumstances in which a Part 5.7 body may be wound up are as follows:
(i)if the Part 5.7 body is unable to pay its debts, has been dissolved or deregistered, has ceased to carry on business in this jurisdiction or has a place of business in this jurisdiction only for the purpose of winding up its affairs;
(ii)if the Court is of opinion that it is just and equitable that the Part 5.7 body should be wound up;
(iii)if ASIC has stated in a report prepared under Division 1 of Part 3 of the ASIC Act that, in its opinion:
(A)the Part 5.7 body cannot pay its debts and should be wound up; or
(B)it is in the interests of the public, of the members, or of the creditors, that the Part 5.7 body should be wound up;
(d)if the Part 5.7 body is a registrable Australian body — the winding up must deal only with the affairs of the body outside its place of origin.
The Application is advanced under s 583 of the Act. In particular, the ground relied upon by the Company is that it, in the words of s 583(c)(i) of the Act, ‘…is unable to pay its debts…’ and ‘has ceased to carry on business in this jurisdiction’.
It follows that it will be open to the Court to make a winding up order under s 583(c) of the Act, if the Company is in truth within the s 9 definition of ‘a Part 5.7 body’ in the Act.
Under s 9 of the Act, a ‘Part 5.7 body’ is defined as:
(a)a registrable body that is a registrable Australian body and:
(i)is registered under Division 1 of Part 5B.2; or
(ii)is not registered under that Division but carries on business in this jurisdiction and outside its place of origin; or
(b)a registrable body that is a foreign company and:
(i)is registered under Division 2 of Part 5B.2; or
(ii)is not registered under that Division but carries on business in Australia; or
(c)a partnership, association or other body (whether a body corporate or not) that consists of more than 5 members and that is not a registrable body;
but does not include an Aboriginal and Torres Strait Islander corporation.
Under s 9 of the Act, a ‘foreign company’ is defined as:
(a)a body corporate that is incorporated in an external Territory, or outside Australia and the external Territories, and is not:
(i) a corporation sole; or
(ii) an exempt public authority; or
(b) an unincorporated body that:
(i)is formed in an external Territory or outside Australia and the external Territories; and
(ii)under the law of its place of formation, may sue or be sued, or may hold property in the name of its secretary or of an officer of the body duly appointed for that purpose; and
(iii)does not have its head office or principal place of business in Australia.
Under s 9 of the Act, a ‘registrable body’ is defined as a registrable Australian body or foreign company.
Because the Company was created as a corporation by the law of Nevada, the Company comes within paragraph (a) of the definition of a ‘foreign company’, and by extension, is a ‘registrable body’.
I am satisfied that the Company is a Part 5.7 body and that the Court therefore has the powers to make the orders sought.
Section 583(c) of the Act contains an exhaustive list of the grounds upon which a Part 5.7 body may be wound up, which relevantly include if the Part 5.7 body is unable to pay its debts or has ceased to carry on business in this jurisdiction.[3]
[3]Peninsular Group Ltd v Kintsu Co Ltd (1998) 44 NSWLR 534, [543] (Sheppard AJA, Meagher JA and Sheller JA agreeing); Re Trans Pacific Insurance Corporation & Anor v Douglas (2009) 71 ACSR 569, [12]-[14] (Barrett J)
Section 585(d) of the Act provides that for the purposes of Part 5.7, a Part 5.7 body is taken to be unable to pay its debts if it is proved to the satisfaction of the Court that it is unable to pay its debts.
The Court’s powers in respect of a foreign entity under Part 5.7 are exercisable regardless of whether any winding up has occurred in the place of incorporation of the foreign company or is likely to occur and even when the company has been dissolved in its place of incorporation.[4]
[4]Corporations Act 2001 (Cth), s 582(3).
Once a registrable body that is a foreign company becomes registered under Part 5B.2 Div 2 of the Act, or carries on business in Australia, it becomes a Part 5.7 body which is thereafter susceptible to an order for winding up, regardless of whether it subsequently becomes deregistered or ceases to carry on business in Australia. Once it becomes a Part 5.7 body it has effectively submitted to the jurisdiction conferred by the Act for its winding up.[5]
[5]Australian Securities and Investments Commission v Edwards [2004] QSC 344; 22 ACLC 1469, [41] (McMurdo J).
Neither s 583 or any other provision in Part 5.7 says anything as to who may apply for the winding up of a Part 5.7 body. In Trans Pacific Insurance Corporation & Anor v Douglas,[6] Barrett J held that the question should be approached by reference to the general provisions of Chapter 5 of the Act, subject to ‘such adaptations as are necessary’. Under s 462(2) of the Act, the Company itself has standing to seek winding up. The Director of the Company seeks the winding up order.
[6](2009) 71 ACSR 569, [17].
Consideration
The evidence before me establishes that the Company has ceased to carry on business in this jurisdiction and is unable to pay its debts.
In this regard, on 18 October 2024, the Receivers executed an Asset Sale Agreement pursuant to which the business and assets of the Company were sold to Anagram Australia.
Prior to the appointment of the Receivers, the Company traded profitably and had a net asset position of approximately AUD $27.3 million (which sum included approximately AUD $24.4 million in related-party loan receivables payable by other Wonder Group companies).
Upon the completion of the Asset Sale Agreement on 31 October 2024, the Company ceased trading and all of its employees were transferred to Anagram Australia. The Company no longer has any function within the Wonder Group or otherwise. The Company has debts totalling $13.05 million and a net asset deficiency of $8.5 million. It has no ability to pay those debts.
In those circumstances, I accept that it is appropriate for the Company to be wound up and for Mr Stone to be appointed as liquidator of the Company.
Orders
For the reasons expressed above, I make the following orders:
(i)The Company be wound up pursuant to s 583(c)(i) of the Act.
(ii)Mr Jason Glenn Stone of PKF Melbourne, a registered liquidator, be appointed as liquidator of the Company.
(iii)The costs of the Application be the costs in the winding up of the Company.
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