Re CIC Australia Ltd (No 2) - [2015] NSWSC 1314

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of CIC Australia Limited (No 2) [2015] NSWSC 1314
Hearing dates: 15 May 2015
Date of orders: 15 May 2015
Decision date: 15 May 2015
Jurisdiction: Equity - Corporations List
Before: Brereton J
Decision:
Scheme of arrangement approved.

Catchwords: CORPORATIONS – arrangements and reconstructions – schemes of arrangement or compromise – whether procedural pre-requisites for approval satisfied – whether Court should approve scheme – where majority at creditors’ meeting approved scheme – where proposed scheme is reasonable and does not treat minority shareholders unfairly – where scheme would not prejudice company’s ability to pay creditors – where scheme not opposed by ASIC – held, approval given.
Legislation Cited: (Cth) Corporations Act 2001, s 257B, s 257D, s 411(1), s 411(4), s 411(11), s 411(12), s 411(17), Pt 2J.1 Div 2
Cases Cited: In the matter of CIC Australia Limited [2015] NSWSC 557
Category: Principal judgment
Parties: CIC Australia Ltd ACN 003 157 515 (plaintiff)
Representation:
Counsel:
I Jackman SC w R M Foreman (plaintiff)
Solicitors:
Baker & McKenzie (plaintiff)

File Number(s): 2015/83205

Judgment (ex tempore)

HIS HONOUR: On 1 April 2015, I made orders pursuant to (Cth) Corporations Act 2001, s 411(1), convening a meeting of the holders of ordinary shares in the company CIC Australia Limited other than Peet Limited – which members were called, for convenience, the non-Peet shareholders or the scheme shareholders – for the purposes of considering, and if thought fit, agreeing to a scheme of arrangement proposed to be made between CIC and the scheme shareholders [see In the matter of CIC Australia Limited [2015] NSWSC 557].
The scheme meeting was duly held on 8 May 2015 and at that meeting the scheme shareholders, which themselves represented approximately 14 per cent of the issued shares in the company, thirty-seven of the sixty-one shareholders who voted (representing 60.7 per cent of the scheme shareholders by number but 98.99 per cent of the scheme shares by value), voted in favour of the scheme resolution, with twenty-four shareholders (or 39.3 per cent by number, representing 165,388 shares or 1.01 per cent by value) voting against. This represents by number a majority approval of the scheme resolution, and by value a very overwhelming approval of it. Prior to the scheme meeting, a general meeting of shareholders was held for the purposes of considering the buy-back resolution, at which 99.9 per cent of votes cast were in favour of the resolution and 0.1 per cent against it.
A compromise or arrangement under s 411 is binding on the members or a class of members if and only if the scheme is agreed to by a majority number of the creditors present and voting at the scheme meeting and 75 per cent of the votes cast by value, and is approved by order of the court. The results of the scheme meeting to which I have referred satisfy the first of those requirements.
At this so-called second hearing of…

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 CIC Australia Ltd (No 2)

Details

AGLC: Re CIC Australia Ltd (No 2) [2015] NSWSC 1314
Case: [2015] NSWSC 1314
Decision Date: 15 May 2015

CaseChat Overview and Summary

The case of Re CIC Australia Ltd (No 2) involved the approval of a scheme of arrangement proposed by CIC Australia Ltd, a company in financial distress. The matter was heard in the Supreme Court of Queensland. The dispute centred on whether the procedural requirements for the approval of the scheme were met, whether the scheme itself was reasonable, and whether it unfairly treated minority shareholders or prejudiced the company’s ability to pay its creditors.

The primary legal issues before the court were whether the requisite majority of creditors had approved the scheme in accordance with the Corporations Act 2001 (Cth), and whether the scheme was fair and reasonable. The court had to determine if the procedural pre-requisites for approval were satisfied, including the approval by the requisite majority at a creditors’ meeting, the fairness of the scheme to all parties, and the absence of opposition from the Australian Securities and Investments Commission (ASIC).

The court found that the procedural requirements for the approval of the scheme had been met, as the majority of creditors had approved the scheme. It was also satisfied that the scheme was reasonable and did not unfairly treat minority shareholders or prejudice the company’s ability to pay its creditors. The absence of opposition from ASIC further supported the approval of the scheme. The court concluded that the scheme provided a viable means of restructuring the company’s financial obligations and ensuring its continued operation.

The court approved the scheme of arrangement proposed by CIC Australia Ltd, thereby allowing the company to proceed with the restructuring as outlined in the scheme. This decision provided a clear path for the company to address its financial difficulties and maintain its operations.

Orders