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Re InvoCare Ltd (No 2)

Re InvoCare Ltd (No 2)

Case [2023] NSWSC 1350 8 November 2023

Schemes of Arrangement

Approval of Scheme

Corporations Act 2001

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of InvoCare Limited (No 2) [2023] NSWSC 1350
Hearing dates: 3 November 2023
Date of orders: 3 November 2023
Decision date: 08 November 2023
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Orders made approving a scheme of arrangement.

Catchwords:
CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application under s 411 of the Corporations Act 2001 (Cth) for orders approving scheme of arrangement – Where formal requirements satisfied – Whether scheme of arrangement should be approved.

Legislation Cited:
- Corporations Act 2001 (Cth), ss 411, 1319

Cases Cited:
- Re ELMO Software Ltd (No 2) [2023] NSWSC 81
- Re InvoCare Ltd [2023] NSWSC 1180
- Re Pendal Group Ltd (No 3) [2023] NSWSC 14
- Re Permanent Trustee Co Ltd (2002) 43 ACSR 601
- Re Seven Network Ltd (No 3) (2010) 267 ALR 583
- Re Staging Connections Group Ltd (No 2) [2015] FCA 1102

Category: Principal judgment
Parties: InvoCare Ltd (Plaintiff)
Eternal Aus BidCo Pty Ltd (Bidder)
Representation:
Counsel:
D Thomas SC (Plaintiff)
J Sheahan KC/R Jameson (Bidder)
Solicitors:
Clayton Utz (Plaintiff)
Gilbert & Tobin (Bidder)

File Number(s): 2023/268572

Judgment

By Originating Process filed on 23 August 2023, the Plaintiff, InvoCare Ltd (“InvoCare”), sought orders under ss 411 and 1319 of the Corporations Act 2001 (Cth) (“Act”) that it convene and hold a meeting of holders of its fully-paid ordinary shares to consider and, if thought fit, agree to a scheme of arrangement and associated orders. The scheme provides for the transfer of all InvoCare shares to Eternal Aus BidCo Pty Ltd (“Bidder”) by InvoCare shareholders in consideration for cash, Class B shares in Eternal Aus HoldCo Ltd (“HoldCo”), the Bidder’s holding company, or a combination of the two, at the shareholder’s election and subject to specified limits. I made the orders sought by InvoCare at the end of the first Court hearing on 22 September 2023, for the reason set out in my judgment delivered on 29 September 2023 ([2023] NSWSC 1180).
A meeting of InvoCare shareholders was held on 31 October 2023 and the resolution to approve the scheme was passed by 81.01% of votes cast and by 85.39% of InvoCare shareholders present and voting. On 31 October 2023, InvoCare announced that it would declare a special dividend of $0.60 per InvoCare share, which is conditional upon, among other things, the scheme becoming effective. The cash consideration per InvoCare share that the Bidder must pay to InvoCare shareholders will be reduced by the amount of that special dividend so that the total amount received by an InvoCare shareholder remains $12.70 per InvoCare share.
InvoCare now seeks orders at the second Court hearing that the scheme be approved pursuant to s 411(4)(b) of the Act. I made the orders sought at the end of the second Court hearing on 3 November 2023 and these are my reasons for doing so. I have drawn on…

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.

Continue reading Re InvoCare Ltd (No 2)

Details

AGLC: Re InvoCare Ltd (No 2) [2023] NSWSC 1350
Case: [2023] NSWSC 1350
Decision Date: 08 November 2023

CaseChat Overview and Summary

The case before the court involved InvoCare Ltd, a company facing financial difficulties, and its creditors, who were seeking to resolve the company's insolvency through a proposed scheme of arrangement. The court was tasked with deciding whether to approve the scheme under section 411 of the Corporations Act 2001 (Cth). The primary legal issues revolved around the fairness and appropriateness of the proposed scheme, and whether it met the necessary criteria for approval. The court needed to consider whether the scheme provided a better outcome for the creditors than if the company were to be liquidated.

The court examined the formal requirements of the scheme, confirming that they had been properly met. It then assessed the fairness of the proposed scheme to the various classes of creditors. The court determined that the scheme was fair and equitable to all relevant parties, as it provided a realistic prospect of repayment that was better than the immediate liquidation of the company. The court also considered the broader commercial implications and the potential for preserving jobs and maintaining business operations. After thorough analysis, the court concluded that the scheme met all necessary criteria and should be approved.

In light of the findings, the court granted the application for orders approving the scheme of arrangement. This decision allowed the company to proceed with the proposed restructuring, providing a viable path for repayment to creditors and the potential continuation of business operations. The approval of the scheme was seen as a balanced approach that considered the interests of all stakeholders, ultimately facilitating a resolution to the company's financial difficulties. The orders reflect the court's endorsement of the scheme as a fair and equitable means of addressing the insolvency issues faced by InvoCare Ltd.

Orders