DAVID JOHN COYNE AND PETER PAUL KREJCI IN THEIR CAPACITIES AS JOINT AND SEVERAL ADMINISTRATORS OF RICHSTONE PLUMBING PTY LTD (ADMINISTRATORS APPOINTED) (ACN 104 934 358), MODULAR PREFAB SOLUTIONS VIC PTY LTD (ADMINISTRATORS APPOINTED) (ACN 149 767 911), RSG BUSINESS SERVICES PTY LTD (ADMINISTRATORS APPOINTED) (ACN 634 410 138), RICHSTONE PLUMBING VIC PTY LTD (ADMINISTRATORS APPOINTED) (ACN 644 094 897), RICHSTONE AUSTRALIA GROUP PTY LTD (ADMINISTRATORS APPOINTED) (ACN 160 820 146), RICHSTONE VIC PTY LTD (ADMINISTRATORS APPOINTED) (ACN 634 950 628), RICHSTONE ADMINISTRATION PTY LTD (ADMINISTRATORS APPOINTED) (ACN 131 701 712) & ORS (according to the Schedule)

Plaintiffs

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JUDGE:	DELANY J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 March 2023
DATE OF JUDGMENT:	10 March 2023 (ex tempore)
CASE MAY BE CITED AS:	Re Richstone Plumbing Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 112

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CORPORATIONS – Application by the administrators of a group of companies for an order, pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), that they would be justified and are otherwise acting reasonably in disposing of assets of the companies over which they are appointed in accordance with sale transaction documentation – Sale to entity connected to the companies in administration – Only alternative to the sale is to immediately cease trading and terminate the employment of 150 employees – Appropriate to make order sought – Sale price supported by independent valuation of business as a going concern and by valuation of assets of the business – Deppeler, Re Moulamein Grain Co-Operative Limited (admins apptd) [2022] FCA 1154, applied.

CORPORATIONS – Application for limitation of personal liability of administrators with respect to liabilities incurred if conditions subsequent in transaction documents not satisfied – Modification of operation of s 443A under s 447A of the Corporations Act 2001 (Cth) – Where sale transaction in best interests of the creditors – Where administrators potentially exposed to personal liability in circumstances where debts may be incurred but over which they have no control – Algeri, Re Murray & Roberts Pty Ltd (admins apptd) [2022] FCA 1506, applied.

CORPORATIONS – Creditors meeting – Extension of convening period for second meeting of creditors pursuant to s 439A(6) and 447A of the Corporations Act 2001 (Cth) and s 90-15 of the Insolvency Practice Schedule (Corporations) – Appropriate case for extension of convening period – Strawbridge, Re Virgin Australia Holdings Ltd (admins apptd) (No 2) (2020) 144 ACSR 347, applied.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	V Bell	Mills Oakley
For the Commonwealth Bank of Australia	C Van Proctor	Maddocks
For Richstone Victoria Pty Ltd	N Frenkel	Hall & Wilcox

HIS HONOUR:

These reasons concern an urgent application initiated by originating process dated 9 March 2023 by the administrators of the Richstone group of companies. In short, the administrators and…

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 Richstone Plumbing Pty Ltd

Details

AGLC: Re Richstone Plumbing Pty Ltd [2023] VSC 112
Case: [2023] VSC 112
Decision Date: 10 March 2023 (ex tempore)

CaseChat Overview and Summary

The case of Re Richstone Plumbing Pty Ltd involved an application by the administrators of a group of companies seeking an order to justify their proposed disposal of the companies' assets. The companies were in administration, and the administrators argued that the only alternative to selling the assets was to cease trading immediately, which would result in the termination of employment for 150 employees. The application was heard in the Federal Court of Australia. The court was tasked with deciding whether the proposed sale of assets to an entity connected to the companies was justified and reasonable, as well as whether the administrators could be granted limited personal liability for any liabilities incurred if the conditions subsequent in the transaction documents were not satisfied.

The legal issues before the court included whether the administrators were justified in disposing of the companies' assets under the circumstances and whether the sale price was supported by an independent valuation. The court also had to consider whether the administrators could be granted limited personal liability for any liabilities incurred if the conditions subsequent in the transaction documents were not satisfied. The court examined the evidence provided by the administrators, including the independent valuation of the business as a going concern and the valuation of the assets of the business. The court referenced previous cases, such as Deppeler, Re Moulamein Grain Co-Operative Limited (admins apptd) [2022] FCA 1154, and Algeri, Re Murray & Roberts Pty Ltd (admins apptd) [2022] FCA 1506, in its reasoning.

The court found that the administrators were justified and reasonable in disposing of the companies' assets, as the sale was in the best interests of the creditors and the only alternative was to cease trading immediately, resulting in the termination of employment for 150 employees. The court also found that the sale price was supported by the independent valuation of the business as a going concern and the valuation of the assets of the business. The court granted the administrators limited personal liability for any liabilities incurred if the conditions subsequent in the transaction documents were not satisfied. Finally, the court granted an extension of the convening period for the second meeting of creditors, finding it appropriate in the circumstances. The court referenced previous cases, such as Strawbridge, Re Virgin Australia Holdings Ltd (admins apptd) (No 2) (2020) 144 ACSR 347, in its reasoning.

Orders