Re Chemeq Ltd ACN 009 135 264 (Administrators Appointed) (Receivers and Managers Appointed); [No 2]

[2008] WASC 14

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   RE CHEMEQ LTD ACN 009 135 264 (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED); EX PARTE McMASTER [No 2] [2008] WASC 14

CORAM:   LE MIERE J

HEARD:   31 JANUARY 2008

DELIVERED          :   31 JANUARY 2008

FILE NO/S:   COR 91 of 2007

MATTER                :Section 439A(6) of the Corporations Act 2001 (Cth)

Chemeq Ltd ACN 009 135 264 (Administrators Appointed) (Receivers and Managers Appointed)

EX PARTE

BRIAN KEITH McMASTER
DAVID WINTERBOTTOM
Plaintiffs

Catchwords:

Corporations Act 2001 (Cth) - Meetings of creditors - Second application to extend convening period for meetings of creditors - Whether circumstances justify extension of time - Whether circumstances justify unusually lengthy extension - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 439B, s 447A

Result:

Application granted

Category:    B

Representation:

Counsel:

Plaintiffs:     Mr J L Sher

Solicitors:

Plaintiffs:     Corrs Chambers Westgarth

Case(s) referred to in judgment(s):

Dean-Willcocks (Administrators of Powerline GES Pty Ltd) v Powerline GES Pty Ltd [2002] NSWSC 40; (2002) 40 ACSR 516

Re Double v Marketing Pty Ltd (in admin) (1995) 16 ACSR 498

1. LE MIERE J:  In this matter the plaintiffs are the administrators of Chemeq Ltd, administrators appointed, receivers and managers appointed, which company I will hereafter refer to as Chemeq. 

2. The plaintiffs seek an order pursuant to s 447A(1) of the Corporations Act2001 (Cth) (the Act) that the 60 day period in s 439B(2) of the Act be extended for a further 90 days to 10 May 2008. The s 439B(2) time limit will expire on 10 February 2008 if not extended.

3. Counsel for the plaintiff submits that the questions arising in this application are, first, whether the court has power under s 447A(1) of the Act to extend the period under s 439B(2) of the Act and, secondly, whether in the circumstances the granting of this extension is appropriate.

4. In relation to the first matter I am satisfied that the court has power under s 447A(1) of the Act to extend the period under s 439B(2) of the Act. The matter was discussed and the relevant authorities referred to by Barrett J in Dean-Willcocks (Administrators of Powerline GES Pty Ltd)v Powerline GES Pty Ltd [2002] NSWSC 40; (2002) 40 ACSR 516.

5. I turn then to the question of the appropriateness of granting the extension.  The application is supported by an affidavit of Brian Keith McMaster sworn on 24 January 2008.  Mr McMaster is one of the two joint administrators of Chemeq.  In his affidavit Mr McMaster explains the background to and the reasons for seeking this extension.  They are set out essentially in [21] ‑ [25] of Mr McMaster's affidavit and I incorporate, without reading into these reasons, those paragraphs of Mr McMaster's affidavit.  The matters there adverted to by Mr McMaster provide strong commercial and practical reasons why the extension should be granted. 

6. Another matter which should be adverted to is the prejudice or possible prejudice to unsecured creditors and employees of Chemeq.  That matter is adverted to in [26] of Mr McMaster's affidavit where he says:

   There will not be any prejudice to the remaining three employees (who will be employed by the company on an ongoing basis) and the unsecured creditors, as the commercialisation of the intellectual property under the DOCA [Deed of Company Arrangement] proposal is the only remaining course practically available to recover the money owing to them.  On the contrary, I am of the view that the unsecured creditors and remaining employees would suffer prejudice if I were left with no practical choice but to convene the second creditors' meeting, and recommend a course of action, prior to receiving the DOCA proposal.

7. The extension sought of 90 days is for a very long period. That must also be seen in the context that on 18 June this court made an order that the convening period for the second meeting of creditors of Chemeq be extended under s 439A(6) of the Act up to and including 7 December 2007.

8. The reason for the particular period of 90 days being sought is that the receivers and managers, Ferrier Hodgson, have informed the administrators that that is the period sought by them to take legal advice and to formulate a DOCA proposal.  That matter is set out in a letter of 22 January 2008 from Ferrier Hodgson to Mr McMaster, which is annexure BKM5 to Mr McMaster's affidavit.  That letter sets out both the proposal to put forward a DOCA and in the third‑last paragraph one of the joint and several receiver and managers, Mr Jones, says as follows:

   To allow sufficient time to consider the matter further, take legal advice and to formulate a DOCA proposal, it is requested that you apply to the Court for a further 90 day extension to reconvene the adjourned meeting of creditors.

9. As I have said, the extension period sought is a very long period and that is all the more significant because of the extension granted by the court for the convening of the second meeting of creditors previously granted.  That causes me to examine very carefully the application before me.

10. However, in all the circumstances, I am satisfied that it is appropriate to grant the extension which is sought.  The court has power to grant the order on conditions and I propose to add an order in similar terms to that made by Lindgren J in Re Double v Marketing Pty Ltd (in admin) (1995) 16 ACSR 498 where his Honour ordered that leave be reserved to any person claiming to be interested, including any creditor of the company and the Australian Securities and Investments Commission, to make such application as he, she or it may be advised to vary the orders upon 24 hours' notice to the applicant.