Re Lowki Transfers Pty Ltd (Administrators Appointed) (ACN 607 670 253) & Ors
[2024] WASC 510
•6 JANUARY 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE LOWKI TRANSFERS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 607 670 253) & ORS; EX PARTE RE ROBERT ALLAN JACOBS AND ANDREW MICHAEL SMITH IN THEIR CAPACITY AS ADMINISTRATORS OF LOWKI TRANSFERS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 607 670 253) & ORS [2024] WASC 510
CORAM: HILL J
HEARD: 13 DECEMBER 2024
DELIVERED : 13 DECEMBER 2024
PUBLISHED : 6 JANUARY 2025
FILE NO/S: COR 194 of 2024
MATTER: IN THE MATTER OF LOWKI TRANSFERS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 607 670 253) & ORS
EX PARTE
ROBERT ALLAN JACOBS AND ANDREW MICHAEL SMITH IN THEIR CAPACITY AS ADMINISTRATORS OF LOWKI TRANSFERS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 607 670 253)
First Plaintiff
LOWKI TRANSFERS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 607 670 253)
Second Plaintiff
ROBERT ALLAN JACOBS AND ANDREW MICHAEL SMITH IN THEIR CAPACITY AS ADMINISTRATORS OF LOWKI LEASING PTY LTD (ADMINISTRATORS APPOINTED) (ACN 630 133 514)
Third Plaintiff
LOWKI LEASING PTY LTD (ADMINISTRATORS APPOINTED) (ACN 630 133 514)
Fourth Plaintiff
ROBERT ALLAN JACOBS AND ANDREW MICHAEL SMITH IN THEIR CAPACITY AS ADMINISTRATORS OF LOWKI SERVICE CENTRE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 631 739 001)
Fifth Plaintiff
LOWKI SERVICE CENTRE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 631 739 001)
Sixth Plaintiff
ROBERT ALLAN JACOBS AND ANDREW MICHAEL SMITH IN THEIR CAPACITY AS ADMINISTRATORS OF EXPRESS TRANSPORT WA PTY LTD (ADMINISTRATORS APPOINTED) (ACN 637 576 982)
Seventh Plaintiff
EXPRESS TRANSPORT WA PTY LTD (ADMINISTRATORS APPOINTED) (ACN 637 576 982)
Eighth Plaintiff
ROBERT ALLAN JACOBS AND ANDREW MICHAEL SMITH IN THEIR CAPACITY AS ADMINISTRATORS OF RAPID PERSONNEL AUSTRALIA PTY LTD (ADMINISTRATORS APPOINTED) (ACN 645 747 717)
Ninth Plaintiff
RAPID PERSONNEL AUSTRALIA PTY LTD (ADMINISTRATORS APPOINTED) (ACN 645 747 717)
Tenth Plaintiff
ROBERT ALLAN JACOBS AND ANDREW MICHAEL SMITH IN THEIR CAPACITY AS ADMINISTRATORS OF REGIONAL EXPRESS DISTRIBUTION PTY LTD (ADMINISTRATORS APPOINTED) (ACN 652 306 066)
Eleventh Plaintiff
REGIONAL EXPRESS DISTRIBUTION PTY LTD (ADMINISTRATORS APPOINTED) (ACN 652 306 066)
Twelfth Plaintiff
ROBERT ALLAN JACOBS AND ANDREW MICHAEL SMITH IN THEIR CAPACITY AS ADMINISTRATORS OF HEM WA PTY LTD (ADMINISTRATORS APPOINTED) (ACN 659 180 935)
Thirteenth Plaintiff
HEM WA PTY LTD (ADMINISTRATORS APPOINTED) (ACN 659 180 935)
Fourteenth Plaintiff
Catchwords:
Corporations - External administration - Application by administrators to extend convening period for second creditors' meeting - Whether modification in the interests of creditors as a whole - Whether interests of any persons prejudiced by modification are protected by terms of orders - Turns on own facts
Legislation:
Corporations Act 2001 (Cth) s 435A, s 439A, s 447A
Result:
Application granted
Category: B
Representation:
Counsel:
| First Plaintiff | : | M R Crommelin |
| Second Plaintiff | : | M R Crommelin |
| Third Plaintiff | : | M R Crommelin |
| Fourth Plaintiff | : | M R Crommelin |
| Fifth Plaintiff | : | M R Crommelin |
| Sixth Plaintiff | : | M R Crommelin |
| Seventh Plaintiff | : | M R Crommelin |
| Eighth Plaintiff | : | M R Crommelin |
| Ninth Plaintiff | : | M R Crommelin |
| Tenth Plaintiff | : | M R Crommelin |
| Eleventh Plaintiff | : | M R Crommelin |
| Twelfth Plaintiff | : | M R Crommelin |
| Thirteenth Plaintiff | : | M R Crommelin |
| Fourteenth Plaintiff | : | M R Crommelin |
Solicitors:
| First Plaintiff | : | Murfett Legal |
| Second Plaintiff | : | Murfett Legal |
| Third Plaintiff | : | Murfett Legal |
| Fourth Plaintiff | : | Murfett Legal |
| Fifth Plaintiff | : | Murfett Legal |
| Sixth Plaintiff | : | Murfett Legal |
| Seventh Plaintiff | : | Murfett Legal |
| Eighth Plaintiff | : | Murfett Legal |
| Ninth Plaintiff | : | Murfett Legal |
| Tenth Plaintiff | : | Murfett Legal |
| Eleventh Plaintiff | : | Murfett Legal |
| Twelfth Plaintiff | : | Murfett Legal |
| Thirteenth Plaintiff | : | Murfett Legal |
| Fourteenth Plaintiff | : | Murfett Legal |
Case(s) referred to in decision(s):
Diamond Press Australia Limited [2001] NSWSC 313
In the matter of Harrisons Pharmacy Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2013] FCA 458
Mighty River International Ltd v Hughes [2018] HCA 38
Shaw and Albarran (Joint and Several Administrators of Home Art Building Group Pty Ltd) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274
Tucker (Administrator) v Bolten (Trustee), in the matter of Quintis Leasing Pty Ltd (Administrators Appointed) (No 2) [2024] FCA 46
HILL J:
(This judgment was delivered extemporaneously and has been edited from the transcript to include references, headings and to correct matters of grammar and expression.)
By originating process dated 10 December 2024, the plaintiffs seek orders under s 439A(6) of the Corporations Act 2001 (Cth) (Act) that the convening period of the second creditors' meetings of each of the Lowki Group companies (collectively, the Companies) be extended for approximately 15 weeks, until 31 March 2025. The plaintiffs also seek an order pursuant to s 447A(1) of the Act that the second creditors' meeting may be held at any time during the extended period and the period of five business days thereafter, notwithstanding the provisions of s 439A(2) of the Act.
The originating process has come on for hearing before me today on an urgent basis. In support of the application, the plaintiffs read two affidavits: an affidavit of Andrew Michael Smith, the second named first plaintiff, filed 10 December 2024; and an affidavit of Michael Richard Crommelin, a solicitor employed by the plaintiffs' solicitors, filed 11 December 2024.
Factual background
The factual background to the application is set out in the affidavit of Mr Smith and can be briefly summarised as follows.
On 12 November 2024, the first, third, fifth, seventh, eleventh, and thirteenth plaintiffs were appointed as joint and several voluntary administrators of each of the Companies (Administrators), pursuant to s 436A of the Act.[1]
[1] Affidavit of Andrew Michael Smith filed 10 December 2024 [7.1].
The Companies are involved in the transport industry providing a range of services including hire and purchase, servicing and maintenance of vehicles, as well as providing personnel and heavy equipment mechanical services in Western Australia.
The first creditors' meetings for each of the Companies were held concurrently on 22 November 2024.[2] At this meeting, the Administrators informed creditors of their intention to make this application seeking an extension of the convening period for the second creditors' meeting. No objections or questions were raised by any of the creditors in relation to this application at that meeting, nor has any creditor sought to be heard or have appeared before me today.
[2] Affidavit of Andrew Michael Smith filed 10 December 2024, 'AMS-8'.
Since their appointment, the Administrators have continued to trade each of the businesses operated by the Companies and have commenced work on a marketing campaign for the sale of the businesses. The Administrators seek an extension of time for the holding of the second creditors' meeting until 31 March 2025 to enable them to complete this process.[3]
[3] Affidavit of Andrew Michael Smith filed 10 December 2024 [21] - [25].
Pursuant to s 439A(5)(b) of the Act, the convening period for the second creditors' meeting ends on 10 December 2024, with the second creditors' meeting to be held by no later than 17 December 2024.[4]
[4] Affidavit of Andrew Michael Smith filed 10 December 2024 [33].
Mr Smith's evidence is that the Administrators are of the opinion that it is possible that one of two things may occur, both of which would provide a better return for unsecured creditors than winding up. First, the businesses of each of the Companies could be sold as a going concern. In the alternative, a deed of company arrangement (DOCA) may be proposed for the group. In this respect, the evidence before me is that Mr Nguyen, the sole director of each of the Companies, intends to submit a DOCA on condition that the Company's businesses continue to trade in the interim.[5]
[5] Affidavit of Andrew Michael Smith filed 10 December 2024 [20], [26] - [28], 'AMS-10'.
Mr Smith's opinion is that there are good prospects of receiving offers from interested parties through a marketing campaign and sale process, and that it is likely that a collective sale of the businesses will attract prospective buyers as opposed to the Companies being sold individually. As a result, Mr Smith believes that further time is required to prepare an information memorandum and to establish a data room for the Companies as part of the sale process, which is unlikely to be completed until late December. The Administrators will then need time to go to market to assess and negotiate any offers that are received from interested parties and prepare a creditors' report with their recommendations ahead of the convening of the second creditors' meetings.[6]
[6] Affidavit of Andrew Michael Smith filed 10 December 2024 [23] - [25].
The evidence before me is that notice of this application has been given to all known creditors of the Companies, as well as the Australian Tax Office and the Australian Securities and Investments Commission. No party has sought to be heard at today's hearing.[7]
[7] Affidavit of Michael Richard Crommelin filed 11 December 2024 [6] - [8], 'MRC-1', 'MRC-2'.
Should an extension of time for the convening period be granted?
The legal principles that govern this application are well known.
Pursuant to s 439A(6) of the Act, the court has power to extend the convening period on an application made during or after the period referred to in s 439A(5)(a) or (b), as the case may require.
In determining the application, the court is required to consider and take into account the objects and scheme of pt 5.3A of the Act. These objects are set out in s 435A of the Act, namely, to maximise the chances of the company (or as much as possible of its business) continuing in existence, or, if this is not possible, for the administration to be done in a way so as to result in a better return for the company's creditors and members than would result from an immediate winding up.
In reaching its decision, the court must maintain an appropriate balance between an expectation that the administration will be undertaken in a relatively speedy and summary manner, with a need to ensure that the administration is not concluded without consideration of sensible and constructive options directed towards maximising returns for creditors and any possible return for shareholders.[8]
[8] Tucker (Administrator) v Bolten (Trustee), in the matter of Quintis Leasing Pty Ltd (Administrators Appointed) (No 2) [2024] FCA 46 [54] (Banks‑Smith J), citing Barrett J in Diamond Press Australia Limited [2001] NSWSC 313 [10].
The court is required also to take into account the detriment to third parties (if any), including the suspension of rights and remedies of secured creditors, lessors, and others.[9]
[9] Shaw and Albarran (Joint and Several Administrators of Home Art Building Group Pty Ltd) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274 [18] (Beech J).
It is, however, important to note that creditors' interests can be prejudiced not only by delay, but also by the convening of meetings prematurely. This can occur where a meeting is convened prior to an administrator having the opportunity to obtain adequate information for the preparation of an administrator's report, in a form enabling creditors to make an informed decision.[10]
[10] In the matter of Harrisons Pharmacy Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2013] FCA 458 [13] (Farrell J).
In Mighty River International Ltd v Hughes, Nettle and Gordon JJ stated that the court will generally exercise its discretion to extend the convening period where one or more of the established categories are raised, where there is no evidence of material prejudice to those affected by the extension of time, and the court is satisfied that the administrator's estimate of time required has a reasonable basis.[11]
[11] Mighty River International Ltd v Hughes [2018] HCA 38 [73].
The relevant established categories include:
(a)whether the convening period allows enough time for the administrator to produce a satisfactory report;
(b)where there is a need to extend the administration period to facilitate the sale of the business of the company as a going concern or to progress and assess a DOCA proposal;
(c)the complexity of the administration, including transactions entered into by the company;
(d)whether the creditors support the extension; and
(e)the administrator's own opinion as to the need for an extension, particularly where the administration is complex.
For the following reasons, I am satisfied that in this case the application for an extension of the convening period should be granted.
First, I accept the convening period mandated under the Act does not enable the Administrators to produce a report containing a considered recommendation to creditors. Specifically, I accept Mr Smith's evidence that, without an extension, the plaintiffs will not be in a position to make an informed recommendation to creditors at the second creditors' meeting as to the future of the Companies.
Second, I also accept Mr Smith's evidence that an extension is required in order to facilitate the marketing campaign and sale of the businesses of the Companies as a going concern, or to enable a DOCA to be proposed and negotiated. In my view, both of these matters are consistent with the purposes of pt 5.3A of the Act.
Third, in my view, there is some complexity associated with the administration of the Companies that arises from the fact that there are seven related companies. This requires the Administrators to undertake a review of relevant intercompany material, related party transactions, and director loans in order to be able to ascertain and determine the correct position as to the assets and liabilities of each company.
Fourth, no creditor has raised any opposition to the proposed extension, and no one has appeared today to oppose the orders.
Fifth, the opinion of the Administrators is that an extension is required for a period of approximately 15 weeks. On the basis of the evidence before me, and, in particular, taking into account the fact that this application is brought shortly before the Christmas break, I am satisfied that there is a reasonable basis for the estimate.
Finally, I am satisfied on all the evidence before me that the potential benefit of the extension will outweigh any prejudice to creditors and that it is in the best interests of the creditors of the Companies as a whole.[12]
[12] At the conclusion of the hearing, I made orders in terms of Annexure 'A'.
Annexure A
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KC
Associate to the Honourable Justice Hill
6 JANUARY 2025
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