IN THE MATTER OF UNLOCKD LIMITED (ADMINISTRATORS APPOINTED) ACN 169 872 502 AND OTHERS
KEITH ALEXANDER CRAWFORD AND ROBERT BRUCE SMITH IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF UNLOCKD LIMITED (ADMINISTRATORS APPOINTED) ACN 169 872 502, UNLOCKD IP PTY LTD (ADMINISTRATORS APPOINTED) ACN 602 741 355, UNLOCKD AU PTY LTD (ADMINISTRATORS APPOINTED) ACN 602 741 284 AND UNLOCKD OPERATIONS PTY LTD (ADMINISTRATORS APPOINTED) ACN 608 719 375 (and others according to schedule 1)		Plaintiffs

---

JUDGE:	SLOSS J
WHERE HELD:	Melbourne
DATE OF HEARING:	21 June 2018
DATE OF RULING:	22 June 2018
CASE MAY BE CITED AS:	Re Unlockd Ltd (administrators apptd) & Ors
MEDIUM NEUTRAL CITATION:	[2018] VSC 345

---

CORPORATIONS — Management and administration — Meetings — Application for extension of convening period for second meetings of creditors pursuant to ss 439A(6) and 447A of the Corporations Act 2001 (Cth) — Whether extensions in best interests of companies’ creditors — Whether prejudice may be caused to any creditor or third party.

CORPORATIONS — Voluntary administration — Corporate group of companies in administration — Application by administrators for directions under s 90-15 of Schedule 2 to the Corporations Act 2001 (Cth) (the Insolvency Practice Schedule (Corporations)) — Where operating company in group of companies has amounts of monies imminently due — Whether administrators would be justified in procuring the holding company to lend monies to the operating company under intercompany loan agreements.

CORPORATIONS — Management and administration — Orders sought for modification of operation of s 443A of the Corporations Act 2001 (Cth) for limitation of administrators’ personal liability in respect of relevant borrowings — Where administrators exposed to personal liability for proposed intercompany loan agreements — Whether interests of companies’ creditors best served by administrators’ proposed actions — Whether creditors of companies may be prejudiced or disadvantaged by order sought.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr S J Maiden QC	Herbert Smith Freehills

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Application for an extension of the convening period............................................................... 5

The statutory framework............................................................................................................. 5
Principles relevant to extending the convening period.......................................................... 7
The grounds relied upon by the administrators.................................................................... 12
Factors that justify an extension in these circumstances....................................................... 15

Application for a direction concerning the loans to be provided by Unlockd Limited to Unlockd Operations during the administration period...................................................................... 17

Application for an order capping the administrators’ personal liability............................... 23

Costs of the application................................................................................................................... 27

HER HONOUR:

Introduction

On 12 June 2018, Mr Keith Alexander Crawford and Mr Robert Bruce Smith were appointed as administrators of four companies in the ‘Unlockd Group’, as follows:

·as voluntary administrators of Unlockd Limited (administrators appointed) ACN 169 872 502 (Unlockd Limited);
·as joint and several administrators of Unlockd IP Pty Ltd (administrators appointed) ACN 602 741 355 (Unlockd IP);
·as joint and several administrators of Unlockd AU Pty Ltd (administrators appointed) ACN 602 741 284…

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 Unlockd Ltd (administrators appointed)

Details

AGLC: Re Unlockd Ltd (administrators apptd) [2018] VSC 345
Case: [2018] VSC 345
Decision Date: 22 June 2018

CaseChat Overview and Summary

Unlockd Ltd (administrators appointed) was the subject of an application before the Federal Court regarding various aspects of corporate voluntary administration under the Corporations Act 2001 (Cth). The administrators sought an extension of the convening period for the second meetings of creditors, directions regarding intercompany loans, and modifications to the limitation of their personal liability for certain borrowings. The court was tasked with determining whether the proposed actions were in the best interests of the companies’ creditors and whether they would cause prejudice to any creditor or third party.

The central legal issues before the court were whether the proposed extensions and intercompany loans would serve the best interests of the companies’ creditors and whether such actions would cause prejudice to any creditor or third party. The court also needed to decide if the proposed modification to the limitation of the administrators’ personal liability was appropriate given the circumstances. The court considered the implications of the proposed actions on the creditors and third parties, as well as the overall benefit to the companies in administration.

The court found that the proposed extensions and intercompany loans were in the best interests of the companies’ creditors. It determined that there would be no prejudice to any creditor or third party, and that the proposed actions would not disadvantage any creditor. Regarding the limitation of personal liability, the court concluded that the interests of the companies’ creditors would be best served by the proposed actions of the administrators. Consequently, the court granted the orders sought by the administrators.

The final orders included an extension of the convening period for the second meetings of creditors, directions for the holding company to lend monies to the operating company, and modifications to the limitation of the administrators’ personal liability in respect of the proposed intercompany loan agreements. The court’s decision emphasised the importance of considering the interests of creditors and the potential impact on third parties when making decisions in voluntary administration.

Orders