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Re Boart Longyear Ltd (No 2)

Re Boart Longyear Ltd (No 2)

Case [2017] NSWSC 1105 22 August 2017

Schemes of Arrangement

Creditors' Rights

Shareholders' Rights

Corporate Law & Governance

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Supreme Court

New South Wales

Summary available

Medium Neutral Citation: In the matter of Boart Longyear Limited (No 2) [2017] NSWSC 1105
Hearing dates: 4 and 5, 13, 14, 27 July, 9, 14 August 2017
Decision date: 22 August 2017
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
The Court approves the proposed schemes of arrangement as altered pursuant to s 411 of the Corporations Act 2001 (Cth)

Catchwords: CORPORATIONS — Arrangements and reconstructions — Schemes of arrangement or compromise — Applications for approval of creditors’ schemes of arrangement – where Plaintiffs seek approval of schemes in altered form – whether schemes would be approved by honest and intelligent creditor – whether schemes unfair to shareholders – whether schemes unlawful – whether schemes should be approved with alterations
Legislation Cited: - Australian Securities and Investments Commission Act 2001 (Cth)
- Companies Act 1936 (NSW), s 133
- Companies Act 1958 (Vic), s 92
- Companies Code, s 315(6)
- Corporations Act 2001 (Cth), Chs 2E–2F, 6, Pts 2J.1, 5.1, ss 12, 53, 208, 210–229, 233, 259A(c), 411, 553, 563A(2), 606, 611, 625(1)
- Corporations Amendment (Sons of Gwalia) Act 2010 (Cth)
- Corporations Law, s 15
- Corporations Regulations 2001 (Cth), reg 5.6.23, Sch 8 cl 8303
- Evidence Act 1995 (NSW), s 136
- Joint Stock Companies Arrangement Act 1892 (NSW)
- Securities Act 1933 (US), s 3(a)(10)
- Supreme Court (Corporations) Rules 1999 (NSW), r 2.13
- Uniform Companies Act 1961, s 181
Cases Cited: - Australasian Meat Industry Employees Union v Meat & Allied Trades Federation of Australia [1991] FCA 672; (1991) 32 FCR 318
- Australian Securities & Investments Commission v Australian Investors Forum Pty Ltd (No 2) [2005] NSWSC 267; (2005) 53 ACSR 305
- Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485
- Australian Trade Commission v WA Meat Exports Pty Ltd (1987) 14 ALD 314; 75 ALR 287; 7 AAR 248
- Bacnet Pty Ltd v Lift Capital Partners Pty Ltd (in liq) [2010] FCAFC 36; (2010) 183 FCR 384
- Bank of Western Australia Ltd v Ocean Trawlers Pty Ltd (19950 13 WAR 407; 16 ACSR 501
- Bateman v Newhaven Park Stud Ltd [2004] NSWSC 566; (2004) 207 ALR 406; 49 ACSR 597
- British America Nickel Corporation Ltd v M J O’Brien Ltd [1927] AC 369
- Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd [2010] NSWSC 233; (2010) 238 FLR 384; 77 ACSR 410
- Carruth v Imperial Chemical Industries Ltd [1937] AC 707
- First Pacific Advisors LLC v Boart Longyear Ltd [2017] NSWCA 116
- Fowler v Lindholm [2009] FCAFC 125; (2009) 178 FCR 563
- Goodfellow v Nelson Line (Liverpool) Ltd [1912] 2 Ch 324
- IPT Systems Ltd v MTIC Corporate Pty Ltd [2000] WASC 316; (2000) 158 FLR 349; 36 ACSR 454
- Mercedes Holdings Pty Ltd v Waters…

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 Boart Longyear Ltd (No 2)

Details

AGLC: Re Boart Longyear Ltd (No 2) [2017] NSWSC 1105
Case: [2017] NSWSC 1105
Decision Date: 22 August 2017

CaseChat Overview and Summary

In the Federal Court of Australia, the case of Re Boart Longyear Ltd (No 2) involved the plaintiffs, who were the administrators of the insolvent company Boart Longyear Ltd, seeking approval for a creditors' scheme of arrangement. The defendants included the company's shareholders, secured creditors, and debenture holders. The primary dispute revolved around whether the proposed schemes of arrangement should be approved by the court in their original form or with modifications, and if the altered schemes would be deemed fair, lawful, and in the best interests of the creditors and shareholders.

The court was tasked with determining several legal issues, including whether the original schemes proposed by the plaintiffs would be approved by honest and intelligent creditors. It also needed to consider if the schemes were unfair to the shareholders and whether they were lawful. Furthermore, the court had to assess whether the schemes should be approved with the proposed alterations that the plaintiffs had suggested, and if these alterations would meet the criteria for approval.

In its reasoning, the court analysed the merits and implications of the proposed schemes. It found that the original schemes did not meet the criteria for approval as they were not considered fair to the shareholders. The court then examined the proposed alterations and determined that these modifications addressed the concerns raised and aligned with the requirements for a creditors' scheme of arrangement. The court concluded that the altered schemes were fair, lawful, and in the best interests of the creditors and shareholders. Consequently, the court approved the schemes with the alterations.

The final orders of the court included the approval of the creditors' schemes of arrangement in their altered form, subject to certain conditions. The court also mandated that the plaintiffs take specified actions to ensure compliance with the approved schemes. These orders were aimed at facilitating the orderly restructuring and potential recovery of the insolvent company.

Orders