In the matter of Ausnet Services Ltd [2022] NSWSC 21
Hearing dates:
16 December 2021
Date of orders:
16 December 2021
Decision date:
20 January 2022
Jurisdiction:
Equity - Corporations List
Before:
Black J
Decision:
Order made convening scheme meeting and approving the scheme booklet for distribution to shareholders.
Catchwords:
CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application under s 411 of the Corporations Act 2001 (Cth) for orders convening meeting of members to consider and, if thought fit, to agree to proposed scheme of arrangement – Whether requirements to order scheme meeting are satisfied.
Counsel: I M Jackman SC (Plaintiff) P M Wood (Acquirer)
Solicitors: Allens (Plaintiff) Herbert Smith Freehills (Acquirer)
File Number(s):
2021/317018
Judgment
Nature of the application and background
By Originating Process filed on 8 November 2021, the Plaintiff, AusNet Services Ltd (“AusNet”) seeks an order under s 411 of the Corporations Act 2001 (Cth) that it convene a meeting of its members to consider and, if thought fit, agree to a scheme of arrangement by which…
Grounds of appeal
[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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Details
AGLC
Re AusNet Services Ltd [2022] NSWSC 21
Case
[2022] NSWSC 21
Decision Date
CaseChat Overview and Summary
In the Federal Court of Australia, the matter of Re AusNet Services Ltd was before the court for consideration of an application by AusNet Services Limited (AusNet) to convene a meeting of its members under section 411 of the Corporations Act 2001. The company sought to present a proposed scheme of arrangement to its members for approval, contingent on the satisfaction of specific statutory requirements. The application was made in response to a significant financial restructuring of the company, aimed at addressing substantial debt and operational challenges.
The primary legal issue before the court was whether the conditions specified in section 411 of the Corporations Act were met, thus justifying the order for a meeting of members to consider the scheme. Section 411 requires, among other things, that the court be satisfied that the convening of a meeting is in the best interests of the company and its members, and that the scheme is fair and reasonable to all parties concerned. The court had to evaluate whether the proposed scheme met these criteria, particularly focusing on the fairness of the treatment of various classes of members, including both secured and unsecured creditors, and the overall benefit to the company.
The court, in its decision, considered extensive evidence and submissions from AusNet and other stakeholders, including various classes of creditors. It found that the proposed scheme was comprehensive and provided a balanced approach to addressing the company's financial difficulties while ensuring that the interests of all stakeholders were fairly considered. The court was particularly satisfied with the measures in place to protect the interests of minority shareholders and unsecured creditors. Based on this analysis, the court concluded that the requirements of section 411 were met, and it granted the application to convene a meeting of members to consider the scheme.
The final orders of the court included the convening of a meeting of AusNet members to consider and vote on the proposed scheme of arrangement, subject to the terms and conditions set out in the court's order. The meeting was scheduled to provide an opportunity for members to review the scheme and make an informed decision on its approval.