Re Grocon Pty Ltd (admins apptd) (No 1) - [2020] VSC 833

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2020 04517

IN THE MATTER of Grocon Pty Ltd (Administrators Appointed) (ACN 006 772 238) & ors in the attached schedule

APPLICATION BY

CRAIG SHEPARD AND MARK KORDA in their capacity as joint and several voluntary administrators of the THIRD PLAINTIFF (as set out in the attached schedule)	First plaintiffs
CRAIG SHEPARD AND ANDREW KNIGHT in their capacity as joint and several voluntary administrators of the FOURTH to FORTY-FIRST PLAINTIFFS (as set out in the attached schedule)	Second plaintiffs

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	10 December 2020
DATE OF JUDGMENT:	10 December 2020
DATE OF REASONS:	17 December 2020
CASE MAY BE CITED AS:	Re Grocon Pty Ltd (admins apptd) (No 1)
MEDIUM NEUTRAL CITATION:	[2020] VSC 833

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CORPORATIONS – Application by administrators to modify the operation of Division 65 of the Insolvency Practice Schedule (Corporations) in Schedule 2 of the Corporations Act 2001 (Cth) concerning the handling of funds in the administrations – Single company operated treasury bank account for the group of companies prior to administration – ss 65-45 and 90-15 of the Insolvency Practice Schedule (Corporations) – Re Ten Networking Holdings (admins apptd) (recs and mgrs apptd) [2017] FCA 1144.

CORPORATIONS – Application by administrators to modify the operation of s 75-35 of the Insolvency Practice Rules (Corporations) 2016 (Cth) to allow notification of creditors’ meetings by email and the provision of documents in electronic form – s 90-15 of the Insolvency Practice Schedule (Corporations) – Re Virgin Australia Holdings Ltd (admins apptd) (No 2) (2020) 144 ACSR 347.

CORPORATIONS – Application by administrators to extend time period under s 70-1(2)(a) of the Insolvency Practice Rules (Corporations) 2016 (Cth) to respond to requests for information and documents to 10 business days – Application granted.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr P Fary SC	Norton Rose Fulbright

HIS HONOUR:

This proceeding concerns the voluntary administration of the third to forty-first plaintiffs (Grocon Companies). The first plaintiffs, Mark Korda and Craig Shepard (Grocon Administrators), were appointed as joint and several voluntary administrators to the third plaintiff, Grocon Pty Ltd (Grocon), pursuant to s 436A of the Corporations Act 2001 (Cth) (the Act) on 27 November 2020. The second plaintiffs, Craig Shepard and Andrew Knight (Companies’ Administrators), were appointed as joint and several administrators to the fourth to forty-first plaintiffs (Companies) on the same date. The Grocon Administrators and Companies’ Administrators are collectively referred to as ‘the Administrators’ in these reasons.

The administrations of the Grocon Companies are at an early stage. The concurrent first meetings of creditors for the Grocon Companies were held virtually on 9 December 2020 (First Creditors’ Meetings). There were no resolutions proposed at the First Creditors’ Meetings to appoint committees of inspection nor to replace the Administrators.

On 10 December 2020 I made directions and orders…

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.

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Details

Case: [2020] VSC 833
Decision Date: 10 December 2020

CaseChat Overview and Summary

The case of Re Grocon Pty Ltd (admins apptd) (No 1) involves administrators applying to modify the operation of certain sections of the Insolvency Practice Schedule (Corporations) and the Insolvency Practice Rules (Corporations) 2016. The applicants seek modifications to allow the administration of funds held in a treasury bank account operated by a single company for a group of companies, to permit the notification of creditors’ meetings by email and the provision of documents in electronic form, and to extend the time period for responding to requests for information and documents. The application was heard in the Federal Court of Australia.

The primary legal issues before the court were whether the administrators could utilise a single company's treasury bank account for the group, whether they could notify creditors and provide documents electronically, and whether the time period for responding to requests for information and documents could be extended. These issues revolved around the interpretation and application of sections 65-45, 90-15, and 75-35 of the Insolvency Practice Schedule (Corporations), and section 70-1(2)(a) of the Insolvency Practice Rules (Corporations) 2016.

The court found that the administrators had the authority to use the single treasury bank account for the group, as this would facilitate efficient administration. Regarding the notification of creditors and the provision of documents, the court allowed this practice, citing technological advancements and the need to expedite proceedings. The court also granted the extension of the time period for responding to requests for information and documents, recognising the complexity of the administration and the need for flexibility. Consequently, the application was successful, and the requested modifications were approved.

Orders