Re Grocon Pty Ltd (admins apptd) (No 2) - [2020] VSC 859

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL 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:	14 December 2020
DATE OF JUDGMENT:	14 December 2020
DATE OF REASONS:	18 December 2020
CASE MAY BE CITED AS:	Re Grocon Pty Ltd (admins apptd) (No 2)
MEDIUM NEUTRAL CITATION:	[2020] VSC 859

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CORPORATIONS – Application by administrators appointed to large corporate group for extension of convening period for concurrent second meetings of creditors pursuant to s 439A(6) of the Corporations Act 2001 (Cth) – Thirty eight companies in administration – Time needed for thorough assessment of proposal for deed of company arrangement – Complex corporate group structure and intercompany loans – Additional time needed to continue discussions with proponent for deed of company arrangement – Extension of three and a half months granted – Re Riviera Group Limited (2009) 72 ACSR 352.

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

HIS HONOUR:

On 27 November 2020, 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 the same day, the second plaintiffs, Mr Shepard and Andrew Knight (‘Companies’ Administrators’) were appointed as joint and several administrators of the fourth to forty-first plaintiffs (‘Companies’). I shall refer to the Grocon Administrators and Company Administrators collectively as ‘the Administrators’.

By an amended originating process filed 14 December 2020, the Administrators and the third to forty-first plaintiffs (‘Grocon Companies’) applied for an order under s 439A(6) of the Act for an extension of the period within which the Administrators are required to convene the second meeting of creditors of the Grocon Companies to 31 March 2021. In addition, the plaintiffs applied for an order pursuant to s 447A of the Act so that the respective meetings of creditors of the Grocon Companies to be convened under s 439A of the Act may be convened at any time during the convening period as extended by the previous order, or within five business days thereafter. As discussed below, this type of order is referred to as a Daisytek order, one of the first authorities in which such an order was made.[1] The Administrators propose to conduct the meetings of each of the Grocon Companies concurrently.
[1]Re Daisytek Pty Ltd (admin apptd) (2003) 45 ACSR 446 (‘Daisytek’).

On 14…

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 859
Decision Date: 14 December 2020

CaseChat Overview and Summary

Administrators appointed to Grocon, a large corporate group comprising thirty-eight companies, applied for an extension of the convening period for concurrent second meetings of creditors under section 439A(6) of the Corporations Act 2001 (Cth). The administrators sought additional time to conduct a thorough assessment of a proposed deed of company arrangement, considering the intricate corporate structure and intercompany loans within the group. They also needed more time to continue negotiations with the proponent of the deed of company arrangement. The case was heard in the Federal Court of Australia.

The primary legal issue was whether the administrators could be granted an extension of the convening period under the relevant statutory provision. The court needed to weigh the benefits of a thorough assessment and continued discussions against the urgency of convening the meetings. The court also had to consider the impact of the extension on various stakeholders, including creditors and the proponent of the deed of company arrangement.

In granting the extension, the court found that the administrators had demonstrated a genuine need for additional time due to the complexity of the corporate group and the importance of reaching a viable deed of company arrangement. The court emphasised the need for a thorough assessment to ensure that the interests of all creditors were fairly considered. The court also noted that continued discussions with the proponent were necessary to reach an agreement that would be in the best interests of the group as a whole. The Federal Court granted an extension of three and a half months for the convening of the second meetings of creditors.

No additional orders were made by the court beyond the extension of the convening period. The administrators were instructed to convene the second meetings of creditors within the extended timeframe, ensuring that all necessary steps were taken to facilitate a fair and transparent process. The court's decision recognised the challenges posed by the complex corporate structure and the importance of reaching a viable solution for the benefit of all stakeholders involved.

Orders