FEDERAL COURT OF AUSTRALIA
Atlas Iron Limited, in the matter of Atlas Iron Limited (No 2) [2016] FCA 481
File number: NSD 423 of 2016 Judge: GLEESON J Date of judgment: 28 April 2016 Date of publication of reasons: 10 May 2016 Catchwords: CORPORATIONS – scheme of arrangement – scheme approved Legislation: Corporations Act 2001 (Cth) ss 411(4)(b), 411(11), 411(12)
Federal Court (Corporations) Rules 2000 r 3.5
Corporations Regulations 2001 (Cth) regs 5.6.14A(1), 5.6.75
Securities Act of 1933 (US) s 3(a)(10)
Cases cited: Re Central Pacific Minerals NL [2002] FCA 239
Re David Jones Ltd (No 3) [2014] FCA 753; (2014) 32 ACLC 14-037
Re NRMA Ltd (No 2) [2000] NSWSC 408; (2000) 156 FLR 412
Re Permanent Trustee Company Limited [2002] NSWSC 1177; (2002) 43 ACSR 601
Re Seven Network Limited (No 3) [2010] FCA 400
Re Seven Network Ltd (ACN 052 816 789) (No 3) [2010] FCA 400; (2010) 267 ALR 583
Re Solution 6 Holdings Ltd [2004] FCA 1049; (2004) 50 ACSR 113
Date of hearing: 28 April 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 22 Counsel for the Plaintiff: Mr I Jackman SC with Mr MA Izzo Solicitor for the Plaintiff: Ashurst Australia Counsel for the TLB Lenders: Mr J Williams Solicitors for the TLB Lenders: Gilbert & Tobin
Table of Corrections 26 June 2017 The words “Date of publication of reasons: 10 May 2016” have been added to the cover page 26 June 2017 The letters “TBL” have been replaced with “TLB” in the heading preceding [21] and in [21]. ORDERS
NSD 423 of 2016 IN THE MATTER OF ATLAS IRON LIMITED (ACN 110 396 168)
BETWEEN: ATLAS IRON LIMITED (ACN 110 396 168)
Plaintiff
JUDGE:
GLEESON J
DATE OF ORDER:
28 APRIL 2016
THE COURT ORDERS THAT:
1.Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (“Corporations Act”) the scheme of arrangement (“scheme”) between the plaintiff, the lenders to the plaintiff under the Syndicated Facility Agreement dated 10 December 2012, and certain holders of subordinate claims against the plaintiff, being the scheme in the form contained in annexure A to the explanatory statement which is exhibit 1 in the proceeding, be and is hereby approved.
2.Pursuant to s 411(12) of the Corporations Act, the plaintiff be exempted from compliance with s 411(11) of the Corporations Act.
THE COURT NOTES THAT:
3.The plaintiff will rely on the Court’s approval of the scheme for the purposes of qualifying for exemption from the registration requirements of the Securities Act of 1933 (US), provided for by s 3(a)(10) of that Act, in connection with the shares and options to be issued as part of the implementation of the scheme.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
GLEESON J:
On 28 April 2016, I conducted the second court hearing…
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- Case
- [2016] FCA 481
- Decision Date
CaseChat Overview and Summary
The Court found that Atlas complied with the orders convening the scheme meeting, including the dispatch of the scheme booklet to the lenders and the holding of the scheme meeting. The statutory majority was achieved, and there was no criticism of the disclosure provided to the lenders. The Court also considered that the scheme was fair and reasonable, as it did not usurp the decision of the relevant class by imposing its own commercial judgment on the scheme. Given these findings, the Court exercised its discretion to approve the scheme, making orders pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth).
The Court concluded that Atlas had fulfilled the necessary requirements for the approval of the scheme and granted the approval, noting that Atlas would rely on the Court's approval for exemption from the registration requirements of the Securities Act of 1933 (US). The Court also exempted Atlas from compliance with s 411(11) of the Corporations Act.
Orders
Orders of the court
1. Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (“Corporations Act”) the scheme of arrangement (“scheme”) between the plaintiff, the lenders to the plaintiff under the Syndicated Facility Agreement dated 10 December 2012, and certain holders of subordinate claims against the plaintiff, being the scheme in the form contained in annexure A to the explanatory statement which is exhibit 1 in the proceeding, be and is hereby approved.
2. Pursuant to s 411(12) of the Corporations Act, the plaintiff be exempted from compliance with s 411(11) of the Corporations Act.
THE COURT NOTES THAT:
3. The plaintiff will rely on the Court’s approval of the scheme for the purposes of qualifying for exemption from the registration requirements of the Securities Act of 1933 (US), provided for by s 3(a)(10) of that Act, in connection with the shares and options to be issued as part of the implementation of the scheme.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
No representative of the Australian Securities and Investments Commission (“ASIC”) and no creditor (apart from the supporting TLB lenders) or shareholder of Atlas appeared at the second court hearing. Atlas received no notice of any intention to appear at the second court hearing from any other creditor or shareholder.CONSIDERATION The general principles which guide the Court’s discretion at the second court hearingare very well established. The Court has a discretion whether to approve a scheme, and is not bound to approve it merely because it has previously made orders for the convening of meetings or because the statutory majorities have been achieved: Re Seven Network Ltd (ACN 052 816 789) (No 3) [2010] FCA 400; (2010) 267 ALR 583 (“Re Seven Network”) at [31], citing Re NRMA Ltd (No 2) [2000] NSWSC 408; (2000) 156 FLR 412 (“Re NRMA Ltd”) at [22]. The matters the Court must take into account in deciding whether to approve the Scheme include:(a)whether the orders of the Court convening the scheme meeting were complied with;(b)whether the resolution to approve the scheme was passed by the requisite majority;(c) whether other statutory requirements have been satisfied;(d)whether all conditions to which the scheme is subject (other than Court approval and lodgement of the Court’s orders with ASIC) have been met or waived;(e)whether the scheme is fair and reasonable so that an intelligent and honest member of the relevant class (being the TLB lenders), properly informed and acting alone, might approve it. In considering this question, it is not the role of the Court to usurp the decision of the relevant class by imposing its own commercial judgement on the scheme or to consider whether a better scheme might have been proposed;(f)whether Atlas has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court’s discretion; and(g)whether there was full and fair disclosure to the TLB lenders of all information material to the decision whether to vote for or against the Scheme.See Re David Jones Ltd (No 3) [2014] FCA 753; (2014) 32 ACLC 14-037 at [3] (Farrell J) referring to Re Solution 6 Holdings Ltd [2004] FCA 1049; (2004) 50 ACSR 113 at [18]‑[24]; Re Permanent Trustee Company Limited [2002] NSWSC 1177; (2002) 43 ACSR 601 at [8]‑[10]; Re Central Pacific Minerals NL [2002] FCA 239 at [8]-[14]; Re Seven Network at [35]‑[39].Compliance with 31 March 2016 and 6 April 2016 orders I am satisfied that:(1)The scheme booklet was dispatched to the TLB lenders in accordance with order 3 made on 31 March 2016. This was demonstrated by the affidavits of Mr Mencher and Mr Benson. There were some minor changes to the version of the scheme booklet that had been approved by the Court, confined to correcting errors and inserting missing details (affidavit of Ms Clemente sworn 28 April 2016). (2)The scheme meeting was held in accordance with orders 4 to 6 of the 31 March 2016 orders. Mr Walsh chaired the scheme meeting. PPB Advisory was engaged to provide services in relation to the scheme, including to review and collate proofs of debt and proxy forms and Mr Carter acted as returning officer for the poll (Mr Carter’s affidavit);(3)Consistently with order 9, Mr Walsh relied on a lender list provided by the Credit Suisse AG, Cayman Island Branch, in determining the extent to which to accept each proof of debt lodged (affidavit of Mr Walsh sworn 27 April 2016 at [7], [12(b)]). The list relied on was current as at 31 March 2016 (rather than 18 April 2016 as specified in order 9) because this is the “Voting Entitlement Record Date” stipulated in s 7.5 of the explanatory statement (affidavit of Mr Walsh sworn 27 April 2016 at [15], [17]).(4)Consistently with order 11, the date of thesecond court hearingwas advertised in The Australian newspaper on 19 April 2016 in the form required by order 11 made on 31 March 2016, as varied on 6 April 2016 (affidavit of Ms Clemente at [9] and p 105 of exhibit “CC-3”).Statutory majority and voter turnout