Re Refap Pty Ltd (Admin Apptd) Summary

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE REFAP PTY LTD (ADMIN APPTD); EX PARTE ROBERT MICHAEL KIRMAN AND LINDA METHVEN SMITH as joint and several administrators of REFAP PTY LTD [2024] WASC 205
CORAM:   HILL J
HEARD:   17 MAY 2024
DELIVERED          :   17 MAY 2024
PUBLISHED           :   6 JUNE 2024
FILE NO/S:   COR 35 of 2024
MATTER:   IN THE MATTER OF REFAP PTY LTD (ADMIN APPTD)
EX PARTE

ROBERT MICHAEL KIRMAN AND LINDA METHVEN SMITH as joint and several administrators of REFAP PTY LTD
First Plaintiff

ROBERT MICHAEL KIRMAN AND LINDA METHVEN SMITH as joint and several administrators of REFAP INDUSTRIAL SERVICES
Second Plaintiff

ROBERT MICHAEL KIRMAN AND LINDA METHVEN SMITH as joint and several administrators of BUSHLOLLY ENTERPRISES PTY LTD
Third Plaintiff

Catchwords:

Corporations - Insolvency - External administration - Extension granted to extend convening period for second creditors' meeting - Application to seek further extension - 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 439A, s 447A

Result:

Application granted

Category: B

Representation:

Counsel:

First Plaintiff	:	A McDonald
Second Plaintiff	:	A McDonald
Third Plaintiff	:	A McDonald

Solicitors:

First Plaintiff	:	Pragma Lawyers
Second Plaintiff	:	Pragma Lawyers
Third Plaintiff	:	Pragma Lawyers

Cases referred to in decision:

Re Daisytek Australia Pty Ltd (Administrators Appointed) [2003] FCA 768
Re Refap Pty Ltd; Ex parte Kirman [2024] WASC 93

HILL J:

(This judgment was delivered extemporaneously and has been edited from the transcript.)

On 8 March 2024, the plaintiffs filed an originating process seeking orders under s 439A(6) of the Corporations Act2001 (Cth) (Act) for the extension of the convening period with respect to the Refap group of companies (Refap Group Companies). On 15 March 2024, orders were made extending the convening period up to and including 20 May 2024.
On 15 May 2024, the plaintiffs requested the matter be relisted as a matter of urgency to seek a further extension of the convening period until 21 June 2024. The plaintiffs also seek what is termed a Daisytek order pursuant to s 447A(1) of the Act, that the meetings of creditors of each of the group companies required by s 439A of the Act 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.[1]
[1] Re Daisytek Australia Pty Ltd (Administrators Appointed) [2003] FCA 768.
In support of the application, the plaintiffs filed two affidavits of Robert Michael Kirman (one open, one confidential) on 15 May 2024.

Factual background

Much of the relevant background to the application is set out in my original reasons for decision which granted the initial extension.[2] Those reasons must be read with these reasons.
[2] Re Refap Pty Ltd; Ex parte Kirman [2024] WASC 93.
The evidence of Mr Kirman is that some of the business and associated assets of the Refap Group Companies have been sold, as was contemplated at the initial hearing, although not all assets of the Refap Group Companies have yet been sold. Mr Kirman estimates that a further period of four weeks (until 21 June 2024) is required to enable either a deed of company arrangement (DOCA) to be proposed by one of the directors or to enable finalisation of the views of the administrators, as well as to review all relevant matters that are still outstanding.

Disposition

On the basis of the evidence before the court, for the following reasons, I am satisfied it is appropriate to grant a further extension of the convening period.
First, the initial extension of the convening period was granted to facilitate the sale of the business (or the associated assets) of the Refap Group Companies, or to enable a DOCA to be proposed. These processes have not yet been completed, although the administrators have a basis to believe a DOCA will be proposed, as set out in the affidavits filed in support of the application.
Second, I am satisfied that there remains some complexity to the administration of the Refap Group Companies, which the administrators are still in the process of resolving.
Third, no creditor has raised any opposition to the extension, nor has anyone appeared before me today to oppose the orders sought.
Fourth, Mr Kirman's opinion is that an extension is required until 21 June 2024. On the basis of the evidence before me, I am satisfied that there is a reasonable basis for this estimate.
Finally, I am satisfied on all of the evidence that the potential benefit of the extension will outweigh any prejudice to the creditors and is in the best interest of creditors of the Refap Group Companies as a whole. In particular, I note the evidence of Mr Kirman that, if a DOCA is proposed, there is some realistic prospect that all creditors of the Refap Group Companies will be paid out in full and there will be a return to members, which is a different position than that which would apply in a liquidation.

Conclusion

Given these matters, I am satisfied that orders should be made in terms of the plaintiffs' minute of proposed orders, subject to one amendment. These orders include the provision that a Daisytek order ought to be made by the court.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JN
Associate to the Honourable Justice Hill
6 JUNE 2024

Refap Pty Ltd was in an external administration overseen by an administrator appointed by the Court. The administrator applied for an extension of time to convene a second creditors' meeting, which the Court granted. The administrator then sought a further extension to convene the meeting. The dispute centred around whether this additional extension should be granted, focusing on whether it was in the interests of the creditors as a whole and whether any prejudiced parties were sufficiently protected by the terms of the orders.

The primary legal issues the court had to address were whether granting the extension was in the interests of the creditors as a whole and if the interests of any prejudiced parties were adequately safeguarded. This required a careful analysis of the specific circumstances of the case, including the reasons for the delay in convening the meeting and the potential impact on creditors. The court also had to consider whether the extension was necessary to achieve the objectives of the administration and if there were any statutory or procedural barriers to granting the extension.

The court determined that the application for the extension was warranted, as it was necessary to achieve the objectives of the administration and did not prejudice the interests of any creditors in a manner not protected by the terms of the orders. The court found that the administrator had acted in good faith and that the extension was essential to ensure the meeting could be held effectively. The court granted the extension, emphasizing that the interests of the creditors as a whole would be best served by allowing the additional time. This decision underscored the importance of considering the specific circumstances of each case when deciding on extensions in insolvency proceedings.

The final orders included the grant of the extension to the administrator to convene the second creditors' meeting, subject to the terms and conditions set out by the court. The orders also included provisions to ensure that any prejudiced parties were adequately protected, reflecting the court's careful consideration of the interests of all stakeholders involved in the administration.

Re Refap Pty Ltd (Admin Apptd)

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established