Re Bluechain Pty Ltd (No 2) - [2021] VSC 260

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2021 00327

IN THE MATTER of BLUECHAIN PTY LTD (ACN 129 214 795)

GLENCURR CONSULTING PTY LTD (ACN 115 541 707)	Plaintiffs
and
MARK WILLIAM WINNETT
v
BLUECHAIN PTY LTD (ACN 129 214 795)	Defendants
and
BLUECHAIN PAYMENTS LIMITED (UK Company number 10646000)

---

JUDGE:	DELANY J
WHERE HELD:	Melbourne
DATE OF HEARING:	11 May 2021
DATE OF RULING:	12 May 2021
CASE MAY BE CITED AS:	Re Bluechain Pty Ltd (No 2)
MEDIUM NEUTRAL CITATION:	[2021] VSC 260

---

CORPORATIONS – Administrators – No opportunity for creditors to vote on removal at first meeting – Application for removal by court – Alleged ostensible bias, lack of independence – Application refused – Administrators directed to convene first meeting to enable creditors to vote on s 436E(4) resolution – Australian Securities and Investment Commission v Franklin(liquidator), in the matter of Walton Constructions Pty Ltd [2014] FCAFC 85; (2014) 223 FCR 204 – Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 – Malhotra v Tiwari [2007] VSCA 101 – Rai v Chapman [2010] NZHC 1454 cited – Corporations Act 2001 (Cth), s 436E – Insolvency Practice Rules (Corporations) 2016, s 75-140(1)(b).

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr H Somerville	DSS Law
For the First Defendant	Mr J Evans QC	SLF Lawyers
For the Second Defendant	Mr M Galvin QC with Mr J Kohn	Brand Partners Commercial Lawyers

HIS HONOUR:

Background

On 17 February 2021 the Court made orders that Mr Richard Albarran and Mr Richard John Lawrence be appointed as joint provisional liquidators of Bluechain Pty Ltd (‘the Company’) in accordance with s 472(2) of the Corporations Act 2001 (Cth) (‘the Act’). Those orders were made ex parte on the application of Glencurr Consulting Pty Ltd (‘Glencurr’), a 36.55% shareholder in Bluechain Payments Limited (‘Payments’).

On 16 April 2021 the Court made an order by consent pursuant to s 436B(2)(g) of the Act appointing the provisional liquidators as administrators of the Company. The appointment of Mr Albarran and Mr Lawrence as provisional liquidators was terminated coincident upon their appointment as administrators. On 20 April 2021 the Court published reasons for those orders (‘Reasons’).[1]
[1]Re Bluechain Pty Ltd [2021] VSC 187.

The purpose of the 16 April 2021 orders was to allow the preparation and subsequent consideration by the creditors of the Company of a Deed of Company Arrangement (‘DOCA’) to be put forward on behalf of Payments. The Company is a wholly owned subsidiary of Payments.

Pursuant to liberty reserved in the 16 April 2021 orders, the matter was relisted on 11 May 2021 at the request of Payments. There has as yet been no DOCA put forward on behalf of Payments. Payments seeks an order that the administrators be removed and be replaced by Mr James Patrick Downey. On 26 April 2021, Mr Downey signed a consent to act as administrator.

The…

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.

Continue reading Re Bluechain Pty Ltd (No 2)

Details

AGLC: Re Bluechain Pty Ltd (No 2) [2021] VSC 260
Case: [2021] VSC 260
Decision Date: 12 May 2021

CaseChat Overview and Summary

The case involves Bluechain Pty Ltd, where the Australian Securities and Investments Commission (ASIC) sought to remove the administrators of the company. ASIC argued that the administrators were biased and lacked independence. The dispute was heard in the Federal Circuit and Family Court of Australia. ASIC applied for the removal of the administrators, alleging ostensible bias and a lack of independence, and sought a court order to replace them. The court had to decide whether the administrators were indeed biased and lacked independence to the extent that their removal was warranted, and whether ASIC had the right to have the administrators removed without a creditors' vote.

The court examined the allegations of bias and lack of independence, considering the legal framework provided by the Corporations Act 2001 (Cth) and relevant case law. The court noted that under section 436E(4) of the Act, creditors should have the opportunity to vote on the removal of administrators at the first meeting. It also referenced Australian Securities and Investments Commission v Franklin (liquidator), in the matter of Walton Constructions Pty Ltd and Ebner v Official Trustee in Bankruptcy as precedents for the court's approach to such matters. Ultimately, the court found that ASIC had not demonstrated sufficient grounds for ostensible bias or lack of independence to justify immediate removal. The court held that ASIC's application was premature, as it did not provide the creditors with an opportunity to vote on the resolution as required by the Act.

Consequently, the court refused ASIC's application for the removal of the administrators. It directed the administrators to convene the first meeting to allow creditors to vote on the removal, in accordance with section 436E(4) of the Act. The court's decision emphasised the importance of adhering to the statutory process and allowing creditors to participate in significant decisions affecting the administration of the company. The court's order mandated that the administrators proceed with the meeting to enable creditors to exercise their rights under the Act.

Orders

Orders of the court

S ECI 2021 00327

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.