Re Grocon Pty Ltd (admins apptd) (No 4) - [2021] VSC 129

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 (according to the attached Schedule)

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 EIGHTY NINTH PLAINTIFFS (as set out in the attached Schedule)	Second Plaintiffs
CRAIG PETER SHEPARD, ANDREW LYALL KNIGHT and MARK ANTHONY KORDA in their capacity as joint and several voluntary administrators of the NINETY-FIRST PLAINTIFF	Ninetieth Plaintiffs

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATES OF HEARING:	15 March 2021
DATES OF JUDGMENT:	15 March 2021
DATE OF REASONS:	19 March 2021
CASE MAY BE CITED AS:	Re Grocon Pty Ltd (admins apptd) (No 4)
MEDIUM NEUTRAL CITATION:	[2021] VSC 129

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PRACTICE AND PROCEDURE – Application for joinder to existing proceeding of additional companies placed into administration within a large corporate group – Same administrators appointed to additional companies – Common issues arising involving parties already joined – Additional companies under administration joined to existing proceeding – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 9.06.

CORPORATIONS – Application by administrators to extend previous orders to modify Division 80 of the Insolvency Practice Schedule (Corporations) in Schedule 2 of the Corporations Act 2001 (Cth) to allow for formation of a single committee of inspection for a large group of companies under administration to additional companies within the corporate group placed under administration – Plaintiffs sought orders to be permitted to form single committee of inspection by joint resolution of creditors if deed of company arrangement entered into – Potential of some creditors of companies within the corporate group participating in single committee of inspection and other creditors to companies within the group creating separate committees of inspection impracticable and inefficient – Orders made extending provision for the formation of a single committee of inspection using the mechanism and procedure for nomination to the single committee of inspection – Insolvency Practice Schedule (Corporations) in Schedule 2 of the Corporations Act 2001 (Cth), ss 80-10, 80-15 and 90-15 – Insolvency Practice Rules (Corporations) 2016 (Cth), rr 75-190 and 80-5 – Re Techfront Australia Pty Ltd (admins apptd) [2020] FCA 542.

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

HIS HONOUR:

This is the fourth application made by administrators relating to the administration of companies in the Grocon Group.[1] 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 were appointed as joint and several administrators of…

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: [2021] VSC 129
Decision Date: 19 March 2021

CaseChat Overview and Summary

The administrators of Grocon Pty Ltd and other companies within a large corporate group applied to the Supreme Court of Victoria for joinder of additional companies to an existing proceeding. The application also sought an extension of previous orders to modify Division 80 of the Insolvency Practice Schedule to allow for the formation of a single committee of inspection for the entire group of companies under administration. The plaintiffs argued that having separate committees of inspection for different companies within the group would be impracticable and inefficient, and sought to form a single committee by joint resolution of creditors if a deed of company arrangement was entered into.

The court had to decide whether to allow the joinder of additional companies to the existing proceeding and whether to extend the orders to permit the formation of a single committee of inspection for the entire group. The court also had to consider the potential impact of the decision on the creditors of the companies within the corporate group.

The court found that the joinder of additional companies to the existing proceeding was appropriate, as the same administrators had been appointed to the additional companies and there were common issues arising involving the parties already joined. The court also found that extending the orders to permit the formation of a single committee of inspection for the entire group would be in the best interests of the creditors and the companies within the corporate group. The court made orders allowing the joinder of the additional companies and extending the provision for the formation of a single committee of inspection using the mechanism and procedure for nomination to the single committee of inspection. The court also made orders extending the previous orders to permit the formation of a single committee of inspection by joint resolution of creditors if a deed of company arrangement was entered into.

The court's decision was based on the principle that the administration of insolvent companies should be efficient and in the best interests of the creditors. The court found that having a single committee of inspection for the entire group of companies under administration would promote efficiency and avoid duplication of effort. The court also found that the extension of the orders to permit the formation of a single committee of inspection by joint resolution of creditors would facilitate the administration of the companies within the corporate group and promote the efficient use of resources.

Orders