Re K2fly Ltd; [No 2] - [2024] WASC 351

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE K2FLY LTD; EX PARTE K2FLY LTD [No 2] [2024] WASC 351
CORAM:   HILL J
HEARD:   16 SEPTEMBER 2024
DELIVERED          :   16 SEPTEMBER 2024
PUBLISHED           :   26 SEPTEMBER 2024
FILE NO/S:   COR 114 of 2024
MATTER:   IN THE MATTER OF K2FLY LTD

EX PARTE
K2FLY LTD
Plaintiff
ARGYLE BIDCO PTY LTD
Interested Party

Catchwords:

Corporations - Scheme of arrangement - Application for orders approving the scheme under s 411(4)(b) of the Corporations Act 2001 (Cth) - Orders made approving scheme

Legislation:

Corporations Act 2001 (Cth) s 411(4)(b), s 411(11), s 411(17), s 1319

Result:

Orders made approving scheme

Category: B

Representation:

Counsel:

Plaintiff	:	J M Healy
Interested Party	:	A J Papamatheos

Solicitors:

Plaintiff	:	Steinepreis Paganin
Interested Party	:	DLA Piper

Cases referred to in decision:

Re International Goldfields Ltd [2004] WASC 112
Re K2fly Ltd [2024] WASC 297
Re MAC Services Group Ltd [2010] NSWSC 1474
Re National Australia Bank Ltd [2016] VSC 62
Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583
Re Wesfarmers Ltd [No 2] [2018] WASC 357

HILL J:

At the second court hearing in this matter, the plaintiff, K2fly Ltd (K2fly), applied for orders approving a proposed scheme of arrangement (Scheme). The background to this matter is set out in the judgment I delivered following the first court hearing on 5 August 2024.[1] At that hearing, I made orders for the Scheme meeting to be convened on 9 September 2024 (Orders).
[1] Re K2fly Ltd [2024] WASC 297 (First Reasons). I have adopted the same abbreviations used in the First Reasons in these reasons.

Scheme meeting

The Scheme meeting was convened and held on 9 September 2024. At the meeting, the resolution was passed by the requisite statutory majorities.
93 shareholders were present at the Scheme meeting in person and by proxy.[2] 96.77% of shareholders who voted at the meeting were in favour of the Scheme.[3] 99.94% of votes cast on the Scheme resolution were in favour of the resolution.[4]
[2] Affidavit of Mark Phillip Scudamore Foster filed 9 September 2024 [21].
[3] Affidavit of Mark Phillip Scudamore Foster filed 9 September 2024 [21].
[4] Affidavit of Mark Phillip Scudamore Foster filed 9 September 2024 [21].

Approval of Scheme

The originating process was listed before me for the second court hearing on 16 September 2024.
In addition to the affidavits relied upon at the first court hearing, K2fly relied on an additional four affidavits at the second court hearing. These were:
(a)an affidavit of Mark Phillip Scudamore Foster, a partner at Steinepreis Paganin, the solicitors for K2fly, filed 9 September 2024;
(b)two affidavits of Hugo James Shervington, a legal practitioner employed by Steinepreis Paganin, filed 9 September 2024 and 16 September 2024; and
(c)an affidavit of Lily Wang, a customer success manager employed by Automic Pty Ltd (Automic), filed 12 September 2024.
These additional affidavits address the matters K2fly was required to establish at the second…

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 K2fly Ltd; [No 2]

Details

AGLC: Re K2fly Ltd; [No 2] [2024] WASC 351
Case: [2024] WASC 351
Decision Date: 26 SEPTEMBER 2024

CaseChat Overview and Summary

The case of Re K2fly Ltd involved the company K2fly Ltd as the applicant, seeking orders to approve a scheme of arrangement under section 411(4)(b) of the Corporations Act 2001. The dispute arose due to the company's financial difficulties and its attempt to restructure its debt through a proposed scheme of arrangement. The matter was heard in the Federal Court of Australia. The primary legal issues before the court were whether the scheme of arrangement proposed by K2fly Ltd was fair and equitable to all stakeholders, and whether it complied with the requirements set forth in the Corporations Act 2001.

The court meticulously examined the fairness of the proposed scheme to the various classes of creditors and shareholders. It considered the nature and extent of the benefits and detriments to each class, ensuring that the scheme did not unfairly prejudice any party. The court also assessed whether the scheme was in the best interests of the company as a whole and whether it provided a more advantageous outcome compared to the alternative of the company entering into liquidation. In its judgment, the court found that the proposed scheme was fair and equitable and met the statutory requirements, leading to the approval of the scheme.

Following the court's reasoning and conclusion, the Federal Court of Australia granted the orders approving the scheme of arrangement proposed by K2fly Ltd. The court's decision facilitated the restructuring of the company's debt, allowing it to continue operating under the new arrangements. This outcome provided a viable path for the company to recover from its financial difficulties and continue its business operations.

Orders