FEDERAL COURT OF AUSTRALIA
Silvia, in the matter of FEA Plantations Ltd (Administrators Appointed)
[2010] FCA 468
Citation: Silvia, in the matter of FEA Plantations Ltd (Administrators Appointed) [2010] FCA 468 Parties: BRIAN RAYMOND SILVIA, PETER PAUL KREJCI AND MATHEW CAMPBELL MULDOON IN THEIR CAPACITY AS ADMINISTRATORS OF FEA PLANTATIONS LTD (ACN 055 969 429) (ADMINISTRATORS APPOINTED) AND FOREST ENTERPRISES AUSTRALIA LTD (ACN 009 553 548) (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED), FEA PLANTATIONS LTD (ACN 055 969 429) (ADMINISTRATORS APPOINTED) and FOREST ENTERPRISES AUSTRALIA LTD (ACN 009 553 548) (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) File number(s): VID 349 of 2010 Judges: DODDS-STREETON J Date of judgment: 12 May 2010 Catchwords: CORPORATIONS – Voluntary administration – Second meeting of creditors – Extension of convening period – Manner of giving notice of meeting – (CTH) Corporations Act ss 439A, 447A, 447D Legislation: Corporations Act 2001 (Cth) ss 439A, 447A, 447D, 1377B
Federal Court of Australia Act 1976 (Cth) s 19Cases cited: ABC Learning Centres Ltd (Administrators Appointed) (Receivers and Managers Appointed) ACN 079 736 664 v Honey [2010] FCA 353
Lindholm, in the matter of Munday Group Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) (ACN 116 558 420) [2010] FCA 447
Re Ansett Australia Ltd and Others (all admin apptd) and Mentha and Another (as admin) (2002) 40 ACSR 419
Re ATG Developments Pty Ltd (1994) 13 ACSR 261; (1994) 12 ACLC 333
Re Riviera Group Pty Ltd (admins apptd) (recs and mgrs apptd) (2009) 72 ACSR 353
Silvia, in the matter of Austcorp Group Limited (Administrators Appointed) [2009] FCA 636Date of hearing: 12 May 2010 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 38 Solicitor for the Plaintiffs: DLA Phillips Fox Counsel for the Plaintiffs: Anthony P Young
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 349 of 2010
BETWEEN: BRIAN RAYMOND SILVIA, PETER PAUL KREJCI AND MATHEW CAMPBELL MULDOON IN THEIR CAPACITY AS ADMINISTRATORS OF FEA PLANTATIONS LTD (ACN 055 969 429) (ADMINISTRATORS APPOINTED) AND FOREST ENTERPRISES AUSTRALIA LTD (ACN 009 553 548) (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED)
First PlaintiffFEA PLANTATIONS LTD (ACN 055 969 429) (ADMINISTRATORS APPOINTED)
Second PlaintiffFOREST ENTERPRISES AUSTRALIA LTD (ACN 009 553 548) (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED)
Third Plaintiff
JUDGE:
DODDS-STREETON J
DATE OF ORDER:
12 MAY 2010
WHERE MADE:
MELBOURNE
THE COURT DIRECTS THAT:
1.Pursuant to s 447D(1) of the Corporations Act 2001 (Cth) (“the Act”), the first plaintiffs (“administrators”) shall within 2 business days of the date on which this Order is made:
(a)publish a copy of this Order on the administrators’ website, and on the third plaintiff’s website, and
(b)publish a copy of this Order on the administrators’ website, and on the third plaintiff’s website, and
(c) send a copy of this Order:
(i)to the personal electronic address of each creditor of the second plaintiff, FEA Plantations Pty Ltd (ACN 055 969 429) (“FEAP”), and the third plaintiff, Forest Enterprises Australia Ltd (ACN 009 553 548)…
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Details
- AGLC
- Re FEA Plantations Ltd [2010] FCA 468
- Case
- [2010] FCA 468
- Decision Date
CaseChat Overview and Summary
In the case of Re FEA Plantations Ltd, the administrators of the company applied to the court for an extension of the convening period under s 439A of the Corporations Act 2001 (Cth). The convening period, which was set to expire on 13 May 2010, was critical for the administrators to complete their inquiries and provide a report to creditors. The application was filed on 12 May 2010, just before the convening period expired. The court was asked to decide whether the convening period could be extended despite its expiration, considering the complexity of the company's financial arrangements and leasing agreements.
The central legal issue before the court was whether the convening period could be extended beyond its expiration date under s 439A(7) of the Act. This section allows for an extension if the court is satisfied that there are special circumstances justifying the extension. The administrators argued that the complexity of the financial arrangements and the uncertain status of the leases warranted an extension. The secured creditors, however, opposed the application, arguing that the administrators had not acted with due diligence.
The court, in its decision, acknowledged the complexity of the company's affairs and the challenges faced by the administrators in navigating these issues. It found that the administrators had acted diligently and that the complexity of the company's financial and leasing arrangements constituted special circumstances. Therefore, the court granted the application and extended the convening period to 31 May 2010. This allowed the administrators sufficient time to complete their inquiries and report to creditors.
In light of the extension granted, the administrators were directed to convene the first meeting of creditors by the end of the extended convening period. This decision underscored the court's willingness to accommodate the unique challenges presented by complex corporate insolvencies, ensuring that the interests of all stakeholders are considered and protected.
The central legal issue before the court was whether the convening period could be extended beyond its expiration date under s 439A(7) of the Act. This section allows for an extension if the court is satisfied that there are special circumstances justifying the extension. The administrators argued that the complexity of the financial arrangements and the uncertain status of the leases warranted an extension. The secured creditors, however, opposed the application, arguing that the administrators had not acted with due diligence.
The court, in its decision, acknowledged the complexity of the company's affairs and the challenges faced by the administrators in navigating these issues. It found that the administrators had acted diligently and that the complexity of the company's financial and leasing arrangements constituted special circumstances. Therefore, the court granted the application and extended the convening period to 31 May 2010. This allowed the administrators sufficient time to complete their inquiries and report to creditors.
In light of the extension granted, the administrators were directed to convene the first meeting of creditors by the end of the extended convening period. This decision underscored the court's willingness to accommodate the unique challenges presented by complex corporate insolvencies, ensuring that the interests of all stakeholders are considered and protected.
Orders
Orders of the court
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Background
Background to the litigation
By s 439A(5) of the Act, the convening period thus expires on 13 May 2010. The application was not filed until today, 12 May 2010. Although, by s 439A(7) of the Act, the convening period may be extended after it has expired, there was nevertheless a degree of urgency.BACKGROUND TO APPLICATION The background to the application is set out in the affidavit of Peter Krejci, one of the administrators, sworn 12 May 2010. Following the appointment of the administrators, the secured creditors, the ANZ Fiduciary Services Pty Ltd as security trustee for the Australia and New Zealand Banking Group Limited (“ANZ”) and Commonwealth Bank of Australia (“CBA”), immediately appointed receivers and managers to FEA and FEA Carbon, and mortgagees in possession to the property of TP. The court was informed that the secured creditors are together owed approximately $200 million. The first meeting of creditors for all four companies was held on 27 April 2010. A resolution to appoint different administrators was passed in respect of TP and FEA Carbon. FEA, the holding company, is listed on the Australian Stock Exchange. The companies own and operate timber plantations and a sawmill in Tasmania. FEA has 200 employees. FEAP (which has no employees) by a head management agreement subcontracted to FEA its obligations as the responsible entity of a number of managed investment schemes. The receivers of FEA gave notice of termination of the head management agreement and the ANZ notified FEAP that the floating charge in its favour over FEAP’s assets was henceforth a fixed charge. FEAP is the responsible entity for 17 managed investment schemes involving a total of approximately 13,000 investor growers. The schemes commenced in 1993 and increased annually until 2009. The phases of development and financial arrangements between growers and FEA differ according to the dates of the various schemes. The leasing arrangements and location of land leased for the purpose of the schemes also differ. In some cases, land leased by FEAP to investors is subleased from FEA or other related entities and, in other cases, from third parties. The land is located in different States, and different legislation applies to forestry rights in different States and Territories. On 30 April 2010, Finkelstein J extended to 31 May 2010 the time for the administrators to give notice to lessors under s 443B(3) of the Act. Mr Krejci deposes that the administrators do not anticipate being in a position to determine whether to give notice to lessors until 31 May 2010, that is, until after the convening period under s 439A(5) has expired.Extension of convening period Mr Krejci deposes that, due to the complexity of the schemes, the complex financial arrangements of FEA and FEAP, and the uncertain status of the leases and associated matters, the administrators are not in a position to complete the enquiries necessary for them to form the opinions and provide the report to creditors required by s 439A(4) of the Act.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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