Re Elmore Ltd (Receivers and Managers Appointed) (Administrators Appointed)

[2024] WASC 76

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   RE ELMORE LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED); EX PARTE ELMORE LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) [2024] WASC 76

CORAM:   HILL J

HEARD:   5 MARCH 2024

DELIVERED          :   5 MARCH 2024

PUBLISHED           :   19 MARCH 2024

FILE NO/S:   COR 26 of 2024

MATTER:   IN THE MATTER OF ELMORE LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

EX PARTE

ELMORE LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

First Plaintiff

MARTIN BRUCE JONES as administrator of ELMORE LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Second Plaintiff

CLINT PETER JOSEPH as administrator of ELMORE LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Third Plaintiff

MATTHEW DAVID WOODS as administrator of ELMORE LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Fourth Plaintiff

PEKO IRON PROJECT PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Fifth Plaintiff

MARTIN BRUCE JONES as administrator of PEKO IRON PROJECT PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Sixth Plaintiff

CLINT PETER JOSEPH as administrator of PEKO IRON PROJECT PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Seventh Plaintiff

MATTHEW DAVID WOODS as administrator of PEKO IRON PROJECT PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Eighth Plaintiff

PEKO GOLD LENDING PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Ninth Plaintiff

MARTIN BRUCE JONES as administrator of PEKO GOLD LENDING PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Tenth Plaintiff

CLINT PETER JOSEPH as administrator of PEKO GOLD LENDING PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Eleventh Plaintiff

MATTHEW DAVID WOODS as administrator of PEKO GOLD LENDING PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Twelfth Plaintiff

SITZLER SAVAGE PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Thirteenth Plaintiff

MARTIN BRUCE JONES as administrator of SITZLER SAVAGE PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Fourteenth Plaintiff

CLINT PETER JOSEPH as administrator of SITZLER SAVAGE PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Fifteenth Plaintiff

MATTHEW DAVID WOODS as administrator of SITZLER SAVAGE PTY LTD  (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Sixteenth Plaintiff

ICA MINING PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Seventeenth Plaintiff

MARTIN BRUCE JONES as administrator of ICA MINING PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Eighteenth Plaintiff

CLINT PETER JOSEPH as administrator of ICA MINING PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Nineteenth Plaintiff

MATTHEW DAVID WOODS as administrator of ICA MINING PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Twentieth Plaintiff

PEKO BULL PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Twenty First Plaintiff

MARTIN BRUCE JONES as administrator of PEKO BULL PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Twenty Second Plaintiff

CLINT PETER JOSEPH as administrator of PEKO BULL PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Twenty Third Plaintiff

MATTHEW DAVID WOODS as administrator of PEKO BULL PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Twenty Fourth Plaintiff

PEKO REHABILITATION PROJECT PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Twenty Fifth Plaintiff

MARTIN BRUCE JONES as administrator of PEKO REHABILITATION PROJECT PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Twenty Sixth Plaintiff

CLINT PETER JOSEPH as administrator of PEKO REHABILITATION PROJECT PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Twenty Seventh Plaintiff

MATTHEW DAVID WOODS as administrator of PEKO REHABILITATION PROJECT PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED)

Twenty Eighth Plaintiff

FRATRES MINING PTY LTD (ADMINISTRATORS APPOINTED)

Twenty Ninth Plaintiff

MARTIN BRUCE JONES as administrator of FRATRES MINING PTY LTD (ADMINISTRATORS APPOINTED)

Thirtieth Plaintiff

CLINT PETER JOSEPH as administrator of FRATRES MINING PTY LTD (ADMINISTRATORS APPOINTED)

Thirty First Plaintiff

MATTHEW DAVID WOODS as administrator of FRATRES MINING PTY LTD  (ADMINISTRATORS APPOINTED)

Thirty Second Plaintiff

DHAAB MINING PTY LTD (ADMINISTRATORS APPOINTED)

Thirty Third Plaintiff

MARTIN BRUCE JONES as administrator of DHAAB MINING PTY LTD (ADMINISTRATORS APPOINTED)

Thirty Fourth Plaintiff

CLINT PETER JOSEPH as administrator of DHAAB MINING PTY LTD (ADMINISTRATORS APPOINTED)

Thirty Fifth Plaintiff

MATTHEW DAVID WOODS as administrator of DHAAB MINING PTY LTD (ADMINISTRATORS APPOINTED)

Thirty Sixth Plaintiff

Catchwords:

Corporations - Insolvency - External administration - Application by administrators to extend convening period for second creditors’ meeting - Whether modification in the interests of creditors as a whole - Whether interests of any persons prejudiced by modification are protected by terms of orders - Turns on own facts

Legislation:

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

Result:

Convening period extended

Category:    B

Representation:

Counsel:

First Plaintiff	:	I Rosenstreich
Second Plaintiff	:	I Rosenstreich
Third Plaintiff	:	I Rosenstreich
Fourth Plaintiff	:	I Rosenstreich
Fifth Plaintiff	:	I Rosenstreich
Sixth Plaintiff	:	I Rosenstreich
Seventh Plaintiff	:	I Rosenstreich
Eighth Plaintiff	:	I Rosenstreich
Ninth Plaintiff	:	I Rosenstreich
Tenth Plaintiff	:	I Rosenstreich
Eleventh Plaintiff	:	I Rosenstreich
Twelfth Plaintiff	:	I Rosenstreich
Thirteenth Plaintiff	:	I Rosenstreich
Fourteenth Plaintiff	:	I Rosenstreich
Fifteenth Plaintiff	:	I Rosenstreich
Sixteenth Plaintiff	:	I Rosenstreich
Seventeenth Plaintiff	:	I Rosenstreich
Eighteenth Plaintiff	:	I Rosenstreich
Nineteenth Plaintiff	:	I Rosenstreich
Twentieth Plaintiff	:	I Rosenstreich
Twenty First Plaintiff	:	I Rosenstreich
Twenty Second Plaintiff	:	I Rosenstreich
Twenty Third Plaintiff	:	I Rosenstreich
Twenty Fourth Plaintiff	:	I Rosenstreich
Twenty Fifth Plaintiff	:	I Rosenstreich
Twenty Sixth Plaintiff	:	I Rosenstreich
Twenty Seventh Plaintiff	:	I Rosenstreich
Twenty Eighth Plaintiff	:	I Rosenstreich
Twenty Ninth Plaintiff	:	I Rosenstreich
Thirtieth Plaintiff	:	I Rosenstreich
Thirty First Plaintiff	:	I Rosenstreich
Thirty Second Plaintiff	:	I Rosenstreich
Thirty Third Plaintiff	:	I Rosenstreich
Thirty Fourth Plaintiff	:	I Rosenstreich
Thirty Fifth Plaintiff	:	I Rosenstreich
Thirty Sixth Plaintiff	:	I Rosenstreich

Solicitors:

First Plaintiff	:	Allens
Second Plaintiff	:	Allens
Third Plaintiff	:	Allens
Fourth Plaintiff	:	Allens
Fifth Plaintiff	:	Allens
Sixth Plaintiff	:	Allens
Seventh Plaintiff	:	Allens
Eighth Plaintiff	:	Allens
Ninth Plaintiff	:	Allens
Tenth Plaintiff	:	Allens
Eleventh Plaintiff	:	Allens
Twelfth Plaintiff	:	Allens
Thirteenth Plaintiff	:	Allens
Fourteenth Plaintiff	:	Allens
Fifteenth Plaintiff	:	Allens
Sixteenth Plaintiff	:	Allens
Seventeenth Plaintiff	:	Allens
Eighteenth Plaintiff	:	Allens
Nineteenth Plaintiff	:	Allens
Twentieth Plaintiff	:	Allens
Twenty First Plaintiff	:	Allens
Twenty Second Plaintiff	:	Allens
Twenty Third Plaintiff	:	Allens
Twenty Fourth Plaintiff	:	Allens
Twenty Fifth Plaintiff	:	Allens
Twenty Sixth Plaintiff	:	Allens
Twenty Seventh Plaintiff	:	Allens
Twenty Eighth Plaintiff	:	Allens
Twenty Ninth Plaintiff	:	Allens
Thirtieth Plaintiff	:	Allens
Thirty First Plaintiff	:	Allens
Thirty Second Plaintiff	:	Allens
Thirty Third Plaintiff	:	Allens
Thirty Fourth Plaintiff	:	Allens
Thirty Fifth Plaintiff	:	Allens
Thirty Sixth Plaintiff	:	Allens

Cases referred to in decision:

Diamond Press Australia Limited [2001] NSWSC 313

In the matter of Harrisons Pharmacy Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2013] FCA 458

Mighty River International Limited v Hughes [2018] HCA 38

Re Daisytek Australia Pty Ltd (Administrators Appointed) [2003] FCA 768

Shaw and Albarran (Joint and Several Administrators of Home Art Building Group Pty Ltd) v Home Art Building Group Pty Ltd (admin apptd) [2016] WASC 274

Tucker (Administrator) v Bolten (Trustee), in the matter of Quintis Leasing Pty Ltd (Administrators Appointed) (No 2) [2024] FCA 46

HILL J:

(This judgment was delivered extemporaneously and has been edited from the transcript.)

1. On 1 March 2024, the plaintiffs filed an originating process seeking orders under s 439A(6) of the Corporations Act2001 (Cth) (the Act) that the convening period with respect to the Elmore Group companies be extended for a period of approximately 10 weeks, namely up to and including 15 May 2024. The plaintiffs also seek an order that, pursuant to s 447A(1) of the Act, the meetings of creditors of each of the group companies required by s 439A of the Act may be held at any time during the extended period and the period of five business days thereafter, notwithstanding the provisions of s 439A(2) of the Act.

2. The originating process came on for hearing before me on an urgent basis this morning. In support of the application, the plaintiffs have filed and rely on the affidavit of Martin Bruce Jones filed 1 March 2024.

Factual background

1. The factual background to this application is set out in the affidavit of Mr Jones and can be summarised as follows.

2. On 6 February 2024, the second, third and fourth plaintiffs were appointed joint and several administrators of Elmore Limited, a publicly listed company, and to each of the eight companies within the Elmore Group, pursuant to s 436A of the Act.

3. The Elmore Group owns and operates a mining services business and owns and operates the Peko Iron Ore and Gold Project located in the Tennant Creek region in the Northern Territory.

4. The first meeting of creditors for each of the companies in the Elmore Group was held concurrently on 16 February 2024.  The minutes of the first meeting of creditors is in evidence before me today.  I am satisfied at this meeting that the plaintiffs informed creditors of their intention to make this application seeking an extension of the convening period for the second creditors meeting.  No objections or questions were raised by any of the creditors in relation to this application at that meeting, nor has any creditor sought to be heard or appear before me today.

5. Mr Jones' evidence is that he intended to issue an update to all creditors giving notice of this application and would file any supplementary affidavits detailing any communications received from creditors concerning this application.  I am informed by counsel who appears on behalf of the plaintiffs today that this update was issued on Friday 1 March 2024 and that, as of 9:30 am this morning, no communication had been received from any creditor.

6. After the first meeting of creditors of the companies within the Elmore Group occurred, Mr Richard Tucker and Mr John Bumbak of KordaMentha were appointed as joint and several receivers to six of the companies within the Elmore Group, excluding Fratres Mining Pty Ltd (the twenty-ninth plaintiff) and DHAAB Mining Pty Ltd (the thirty‑third plaintiff).

7. Since their appointment, the receivers have been managing the day-to-day operations of the companies in receivership.  The evidence before me is that the receivers support the application today by the second, third and fourth plaintiffs to extend the convening period for eight to ten weeks.

8. Pursuant to s 439A(5)(b) of the Act, the convening period for the second creditors' meeting is the period of 20 business days beginning on the day after the administration begins or, if that day is not a business day, the next business day.

9. On this basis, the convening period for the Elmore Group companies ends on 6 March 2024, with the requirement that a second creditors' meeting be held by no later than 13 March 2024.

10. The evidence of Mr Jones is that the plaintiffs intend to explore the possibility of a deed of company arrangement (DOCA) with interested parties to restructure or recapitalise the Elmore Group or, alternatively, to consider and investigate the possibility of the purchase of the assets and undertakings of the Elmore Group.[1]

    [1] Affidavit of Martin Bruce Jones filed 1 March 2024 [23].

11. Mr Jones' evidence is that there are parties who may be interested in proposing a DOCA to enable one of these options to occur, and that he requires the additional time sought in order to enable the receivers to undertake a sales campaign and to allow the administrators to make an informed recommendation to creditors.  Mr Jones' opinion is that at this stage the administrators are unable to make an informed recommendation and that unless an extension to the convening period is granted, it is likely that they would have to recommend the companies go into liquidation.

Legal principles

1. The legal principles that govern this application are well-known and not in dispute.

2. Pursuant to s 439A(6) of the Act, the court may extend the convening period on an application made during or after the period referred to in paragragh (5)(a) or (b) as the case requires.

3. In determining the application, it is necessary for the court to consider the objects and scheme of pt 5.3A of the Act.

4. These objects are set out in s 435A of the Act, namely, to maximise the chances of the company (or as much as possible of its business) continuing in existence or, if not this is not possible, for the administration to be done in a way as to result in a better return for the company's creditors and members than would result from an immediate winding up of the company.

5. In reaching its decision, the court must maintain an appropriate balance between the expectation that an administration will be undertaken in a relatively speedy and summary manner with a need to ensure that the administration is not concluded without consideration of sensible and constructive options directed towards maximising the returns for creditors and any return for shareholders.[2]

   [2] Tucker (Administrator) v Bolten (Trustee), in the matter of Quintis Leasing Pty Ltd (Administrators Appointed) (No 2) [2024] FCA 46 [54], citing Barrett J in Diamond Press Australia Limited [2001] NSWSC 313 [10].

6. The court must also take into account the detriment to third parties (if any), including the suspension of rights and remedies of secured creditors, lessors and others.[3]

   [3] Shaw and Albarran (Joint and Several Administrators of Home Art Building Group Pty Ltd) v Home Art Building Group Pty Ltd (admin apptd) [2016] WASC 274 [18].

7. In this regard, creditors' interests can be prejudiced by not only delay, but by convening meetings prematurely.  Instances where creditors have been prejudiced include where an administrator has been unable to obtain adequate information for the preparation of an administrator's report in a form which enables creditors to make an informed decision.[4]

   [4] In the matter of Harrisons Pharmacy Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2013] FCA 458 [13].

8. In Mighty River International Limited v Hughes, Nettle and Gordon JJ stated that the court will generally exercise its discretion to extend the convening period where one or more of the established categories are raised, where there is no evidence of material prejudice to those affected by the extension of time and the court is satisfied that the administrators' estimate of time has a reasonable basis.[5]

   [5] Mighty River International Limited v Hughes [2018] HCA 38 [73].

9. The relevant established categories include:

   (a)whether the convening period allows enough time for the administrator to produce a satisfactory report;

   (b)where there is a need to extend the administration period to facilitate the sale of the business of the company as a going concern or to progress and assess a DOCA proposal;

   (c)the complexity of the administration, including transactions entered into by the company;

   (d)whether creditors support the extension;

   (e)the administrators' own opinion as to the need for an extension, particularly where the administration is complex; and

   (f)more generally, where additional time is likely to enhance the return for unsecured creditors.

Disposition

1. On the basis of the affidavit of Mr Jones, for the following reasons, I am satisfied that the application for an extension of the convening period should be granted.

2. First, I accept that the convening period mandated under the Act does not enable the administrators to produce a report containing a considered recommendation to creditors.  I specifically accept Mr Jones' evidence that, without the extension, the plaintiffs will not be in a position to make an informed recommendation to creditors as to the future of the Elmore Group companies given that discussions of a potential stage are still at an early stage.

3. Second, I accept that the convening period is required to be extended in order to facilitate the sale of the business or to enable a DOCA to be proposed and negotiated.  Both of these matters are consistent with the purposes of pt 5.3A of the Act.

4. Third, I accept that there is some complexity to the administration of the Elmore Group.  Mr Jones deposes that there are in excess of 120 unsecured creditors who are owed approximately $11.8 million across the Elmore Group.  In addition to this, there are two secured creditors with all-asset securities in relation to companies within the Elmore Group and competing security interests.[6]

   [6] Affidavit of Martin Bruce Jones filed 1 March 2024 [22].

5. Fourth, no creditor has raised any opposition to the proposed extension which was raised by Mr Jones with creditors at the first creditors' meeting.  I note that no creditor appeared before me today to oppose the orders sought, nor was there any response to the update that had been issued by Mr Jones on Friday 1 March 2024.

6. Fifth, the opinion of the administrators is that an extension is required for a period of 10 weeks.  On the basis of the evidence before me, I am satisfied that this is a reasonable basis for this estimate.

7. Finally, I am satisfied on all of the evidence that the potential benefit of the extension will outweigh any prejudice to creditors and is in the best interests of creditors of the Elmore Group companies as a whole.

Conclusion

1. Given these matters, I am satisfied that orders should be made in terms of the plaintiff's minute of proposed orders.  This includes the provision that a Daisytek order ought be made by the court.[7]

   [7] Re Daisytek Australia Pty Ltd (Administrators Appointed) [2003] FCA 768.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

JN

Associate to the Honourable Justice Hill

19 MARCH 2024