Re Diamond Press Australia Pty Ltd
[2001] NSWSC 313
•23 April 2001
CITATION: Diamond Press Australia Pty Limited [2001] NSWSC 313 CURRENT JURISDICTION: Equity FILE NUMBER(S): SC 2280/01 HEARING DATE(S): 23/04/01 JUDGMENT DATE:
23 April 2001PARTIES :
Brian Raymond Silvia and Peter Murray Walker - Plaintiff (Administrators)JUDGMENT OF: Barrett J
COUNSEL : Mr M.A. Jones - Plaintiff
Ex parteSOLICITORS: Corrs Chambers Westgarth - Plaintiff CATCHWORDS: Corporations - voluntary administration - extension of time for second meeting of creditors - applicable principles discussed - extension granted LEGISLATION CITED: Corporations Law CASES CITED: Mann v Abruzzi Sports Club Limited (1994) 12 ACSR 611
Re Brash Holdings Limited (1994) 13 ACSR 793
Re Echuca Insured Housing Loans Pty Ltd SCVic 4 February 1994
Cawthorn v Keira Constructions Pty Ltd (1994) 13 ACSR 337
Re ATG Developments Pty Ltd (1994) 13 ACSR 261
Re Levi (1996) 17 ACSR 521
Re Tracker Software Australia Limited (1997) 24 ACSR 92
Brian Rochford Ltd v Textile Clothing & Footwear Union of NSW (1998) 30 ACSR 38
Re Green [1999] NSWSC 1286
Re Witta Coola Pastoral Co Pty Ltd [1999] NSWSC 148
Re Allbuild Constructions Pty Ltd [2000] WASC 227
Re Port Kennedy Resorts Pty Ltd (2000) 19 ACSR 328
Re Geraldton Building Co Pty Ltd [2000] WASC 320
MI Design Pty Ltd v Duneca Pty Ltd (2000) 35 ACSR 551DECISION: Extension of time for second meeting of creditors granted.
THE SUPREME COURT REVISED
OF NEW SOUTH WALES
EQUITY DIVISIONBARRETT J
MONDAY 23 APRIL 2001
JUDGMENT2280/2001 - IN THE MATTER OF DIAMOND PRESS AUSTRALIA PTY LTD AND 4 ORS
HIS HONOUR:
1 The plaintiffs, Mr Silvia and Mr Walker, are the administrators of Diamond Press Australia Pty Ltd and certain other companies associated with it. They were appointed on or about 30 March 2001 and the latest date for the holding of the second meeting of creditors required by Part 5.3A of the Corporations Law is 25 April 2001. They now apply under s.439A(6) for an extension so that the latest date for the holding of the meeting will be 25 June 2001.
2 Mr Silvia's affidavit of 19 April 2001 details steps the administrators have so far taken. They have formed the view that it is possible to sell the businesses of the companies as a going concern and that if such a sale can be effected, the return to creditors is likely to be greater than that which would result from either liquidation or sale of assets on a piecemeal or break-up basis.
3 The bulk of the assets consists of plant and equipment and it is those assets which the administrators believe could be much more advantageously sold as a going concern, that is to say, they would seek to sell the assets with the businesses intact as operating businesses.
4 Mr Silvia's affidavit also outlines steps that have been taken and are anticipated in relation to a going concern sale process. Expressions of interest closed on 20 April and it is expected, according to the envisaged timetable, that firm offers for purchase would close on 4 May 2001. Mr Silvia further deposes that, as at the close of business on 17 April 2001, 58 expressions of interest in possible purchase of the companies' assets in whole or in part had been received. It is thus clear that there is a real possibility of competitive pressures coming into play so as to optimise the proceeds of sale and thereby to serve the interests of creditors.
5 It is envisaged that after firm offers close on 4 May 2001, the short-listed candidates to become the purchaser will be allowed to conduct due diligence so that a sale is hopefully effected to one of them as a result of that process and ensuing negotiations.
6 I am satisfied that the administrators have been active in their pursuit of avenues of sale of the companies' assets and that the activities on which they have embarked and the timetable they have adopted are realistic, reasonable and commercially sensible.
7 There is a general expectation reflected in s.435A(b) of the Corporations Law that an administration will proceed in such a way that a better return for the companies' creditors and members will result than would be produced by immediate winding up, at least if it is not possible for the company or its business to continue in existence.
8 There is also an expectation reflected in the case law that an administration should proceed very quickly and should not be unduly prolonged, particularly in view of the moratorium situation it involves. It is intended to produce a reasonably speedy fate for the company, one way or another.
9 The particular cases to which I have been referred by counsel for the plaintiffs on that aspect are Mann v Abruzzi Sports Club Limited (1994) 12 ACSR 611 and Re Brash Holdings Limited (1994) 13 ACSR 793, to which may be added Re Echuca Insured Housing Loans Pty Ltd SCVic 4 February 1994, Cawthorn v Keira Constructions Pty Ltd (1994) 13 ACSR 337, Re ATG Developments Pty Ltd (1994) 13 ACSR 261, Re Levi (1996) 17 ACSR 521, Re Tracker Software (Australia) Pty Ltd (1997) 24 ACSR 92, Brian Rochford Ltd v Textile Clothing & Footwear Union of NSW (1998) 30 ASCR 38, Re Green [1999] NSWSC 1286, Re Witta Coola Pastoral Co Pty Ltd [1999] NSWSC 148, Re Allbuild Constructions Pty Ltd [2000] WASC 227, Re Port Kennedy Resorts Pty Ltd (2000) 19 ACSR 328, Re Geraldton Building Co Pty Ltd [2000] WASC 320 and MI Design Pty Ltd v Duneca Pty Ltd (2000) 35 ACSR 551.
10 The function of the Court on an application such as this is, as I see it, to strike an appropriate balance between, on the one hand, the expectation that administration will be a relatively speedy and summary matter and, on the other, the requirement that undue speed should not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders.
11 In the present case, I am satisfied, as I have said, that the administrators have acted in a prompt and responsible way. I am also satisfied, if I may say so, that they are on the right track so far as the advantageous realisation of the businesses of the companies is concerned. Experience would suggest that transactions of this kind do take time, particularly where an informal tender or competitive selling process is undertaken and structured due diligence procedures are adopted, all of which, to my mind, are conducive to the aim to which s.435A(b) refers and will allow the administrators to present a clearer picture to the second meeting.
12 In the circumstances, therefore, and while an extension of 60 days might, by some standards, appear to be a long one, I am satisfied that a case has been made out for that extension and I therefore make an order in the terms of order one in the Summons, noting that the application was made within the period s.439A(6) itself specifies.
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