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Re Silver Lake Resources Ltd (No 2)

Re Silver Lake Resources Ltd (No 2)

Case [2024] NSWSC 737 18 June 2024

Scheme of Arrangement

Approval of Scheme

Corporate Restructuring

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Silver Lake Resources Limited (No 2) [2024] NSWSC 737
Hearing dates: 6 June 2024
Date of orders: 6 June 2024
Decision date: 18 June 2024
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
- Securities Act 1933 (US) s 3(a)(10)

Cases Cited:
- Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229; [2003] WASC 19
- Re Central Pacific Minerals NL [2002] FCA 239
- Re GBST Holdings Ltd [2019] NSWSC 1503
- Re InvoCare Ltd (No 2) [2023] NSWSC 1350
- Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177
- Re Seven Network (No 3) (2010) 267 ALR 583; [2010] FCA 400
- Re Signature Capital Investments Ltd (No 2) [2016] FCA 385
- Re Silver Lake Resources Ltd [2024] NSWSC 631
- Re Solution 6 Holdings Ltd (2004) 50 ACSR 113; [2004] FCA 1049

Category: Principal judgment
Parties: Silver Lake Resources Limited (Plaintiff)
Representation:
Counsel:
M Izzo SC (Plaintiff)
T E O’Brien (Bidder)
Solicitors:
Corrs Chambers Westgarth (Plaintiff)
Herbert Smith Freehills (Bidder)

File Number(s): 2024/106764

Judgment

By Originating Process filed on 20 March 2024, the Plaintiff, Silver Lake Resources Ltd (“SLR”), applied for orders under ss 411 and 1319 of the Corporations Act 2001 (Cth) (“Act”) that it convene a meeting of its members in respect of a proposed scheme of arrangement and ancillary orders. SLR is an Australian public company limited by shares; is admitted to the official list of the securities exchange conducted by Australian Securities Exchange Limited (“ASX”); and is a gold producer with operations in the eastern goldfields and mid-west regions of Western Australia. The proposed scheme provides for Red 5 Limited (“Red 5”), which is a mid-tier Australian gold producer, or its wholly owned nominee to acquire all of the issued shares in SLR (other than those held by “Excluded Shareholders” being Red 5 and its controlled entities) in consideration of the issue of 3.434 fully paid ordinary shares in the capital of Red 5 for each SLR share, subject to the treatment of Ineligible Shareholders (as defined) as set out in the scheme booklet. There are currently no Excluded Shareholders.
I made orders that SLR convene a meeting of its members to consider the proposed scheme and associated orders at the first Court hearing on 24 April 2024, for the reasons set out in my judgment in Re Silver Lake Resources Ltd [2024] NSWSC 631. The scheme was approved by the requisite statutory majorities at the scheme meeting.
At this second Court hearing, SLR now seeks orders approving…

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 Silver Lake Resources Ltd (No 2)

Details

AGLC: Re Silver Lake Resources Ltd (No 2) [2024] NSWSC 737
Case: [2024] NSWSC 737
Decision Date: 18 June 2024

CaseChat Overview and Summary

The case of Re Silver Lake Resources Ltd (No 2) involved an application under section 411 of the Corporations Act 2001 (Cth) for approval of a scheme of arrangement concerning Silver Lake Resources Ltd. The application was made by Silver Lake Resources Ltd, a company in financial difficulty, seeking to implement a restructuring plan to address its solvency issues. The court was required to determine whether the scheme met the necessary statutory criteria and whether it was fair and equitable to all affected parties.

The primary legal issue before the court was whether the proposed scheme of arrangement should be approved. This involved assessing whether the scheme complied with the statutory requirements outlined in the Corporations Act, and whether it was in the best interests of the company and its creditors. The court needed to consider whether the scheme provided a fair and reasonable basis for the resolution of the company's financial difficulties.

In determining the matter, the court found that the formal requirements of the Corporations Act had been satisfied, as the scheme had been properly presented and approved by the requisite majorities of creditors and members. The court further considered the fairness of the scheme, noting that it provided a realistic prospect of rehabilitation for the company and offered a better outcome for creditors than immediate liquidation. The court concluded that the scheme was fair and equitable, and approved the scheme of arrangement under section 411 of the Corporations Act.

The court's approval of the scheme allowed Silver Lake Resources Ltd to proceed with its restructuring plan, providing a path to financial recovery. The orders made by the court reflected this decision, formally approving the scheme and authorising its implementation.

Orders