Re Windimurra Vanadium Ltd & Midwest Vanadium Pty Ltd; [No 2]

[2009] WASC 182

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   RE WINDIMURRA VANADIUM LTD & MIDWEST VANADIUM PTY LTD; EX PARTE WEAVER

[No 2] [2009] WASC 182

CORAM:   BEECH J

HEARD:   25 JUNE 2009

DELIVERED          :   25 JUNE 2009

PUBLISHED           :  26 JUNE 2009

FILE NO/S:   COR 47 of 2009

MATTER                :Windimurra Vanadium Ltd ACN 009 131 533 & Midwest Vanadium Pty Ltd ACN 113 874 712

EX PARTE

DARREN GORDON WEAVER As Administrator of WINDIMURRA VANADIUM LTD ACN 009 131 533 and MIDWEST VANADIUM PTY LTD ACN 113 874 712 (Receivers and Managers Appointed) (Administrators Appointed)
First-named plaintiff

ANDREW JOHN SAKER As Administrator of WINDIMURRA VANADIUM LTD ACN 009 131 533 and MIDWEST VANADIUM PTY LTD ACN 113 874 712 (Receivers and Managers Appointed) (Administrators Appointed)
Second-named plaintiff

MARTIN JONES As Administrator of WINDIMURRA VANADIUM LTD ACN 009 131 533 and MIDWEST VANADIUM PTY LTD ACN 113 874 712 (Receivers and Managers Appointed) (Administrators Appointed)
Third-named plaintiff

Catchwords:

Corporations - Administration - Meeting of creditors - Convening period - Application for extension - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 439A(6), s 447A

Result:

Application granted

Category:    B

Representation:

Counsel:

First-named plaintiff       :     Mr G J Archer

Second-named plaintiff   :     Mr G J Archer

Third-named plaintiff     :     Mr G J Archer

Solicitors:

First-named plaintiff       :     Hardy Bowen

Second-named plaintiff   :     Hardy Bowen

Third-named plaintiff     :     Hardy Bowen

Case(s) referred to in judgment(s):

Re Chemeq Ltd; Ex parte McMaster [2007] WASC 154

Re Windimurra Vanadium Ltd & Midwest Vanadium Pty Ltd; Ex parte Weaver [2009] WASC 71

BEECH J:  (These reasons are an edited version of the reasons delivered extemporaneously on 25 June 2009.)

Introduction

1. On 13 March 2009 I ordered that the convening period for the second meeting of creditors of Windimurra Vanadium Ltd and Midwest Vanadium Pty Ltd be extended from 19 March 2009 to 30 June 2009.  I also gave the plaintiffs, who are joint and several administrators of the two companies, liberty to apply for further extensions of the convening period.  I gave reasons for those orders:  Re Windimurra Vanadium Ltd & Midwest Vanadium Pty Ltd; Ex parte Weaver [2009] WASC 71.

2. By interlocutory process dated 19 June 2009 the plaintiffs invoked that liberty and applied for a further extension of the convening period to 30 September 2009.  For the reasons that follow, I am satisfied that an order extending the convening period to 30 September 2009 should be made.

Legal principles

1. I outlined the relevant legal principles in my earlier decision in these proceedings:  Ex parte Weaver [2] ‑ [12].

2. The power to grant a second (or subsequent) extension may be found in s 447A of the Corporations Act 2001 (Cth), if not in s 439A(6).

Background

1. The background to this application is set out in Ex parte Weaver [13 ‑ [19] as follows:

   The application is supported by an affidavit of Mr Weaver, who is one of the joint and several administrators of the two companies in question. Windimurra Vanadium Ltd and Midwest Vanadium Pty Ltd both had administrators appointed to them on 17 February 2009.  Before that, secured creditors of those companies had appointed Mr Brian McMaster and Mr Martin Madden as receivers and managers.

   The core asset of the companies is a vanadium project known as the Windimurra Vanadium Project.  That project is in its construction phase.  Since the appointment of receivers and managers to the company, the construction of the project has stopped.

   Following the appointment of the plaintiffs as administrators of the companies they convened the first meeting of creditors on 3 March 2009.  The time limits prescribed by s 439A would require notice convening the second meeting of creditors to be provided by no later than 19 March 2009.

   In his affidavit Mr Weaver says that taking into account the nature of the assets of the companies, the existence of receivers and managers to those companies and other complexities arising from the circumstances of the administration, an extension of the convening period for the second meeting is necessary. In essence, he says that an extension of that time period is necessary in order to allow a proper asset sale process to be conducted or, alternatively, a deed of company arrangement to be formulated.

   Mr Weaver deposes to his belief that it is necessary to allow the receivers to conduct a sale process of the companies' assets before a useful opinion can be given to the creditors as to what course of action is in their best interests.  He expresses the opinion that in the current economic environment it would be very difficult for reliance to be placed on valuations as the sole basis for the decisions required by creditors as to the future of the companies.

   Mr Weaver has been informed by the receivers that although a formal expression of interest process has not yet commenced, there have already been a number of parties who have expressed an interest in the sale of the assets of the companies.  Further, the receivers have informed Mr Weaver that indicative offers are expected to be submitted by the end of May 2009.

   Mr Weaver expresses his belief, based on his experience in the sale of assets in the mining sector, that a proper sale process could not be effected before the end of March 2009.  He goes on in par 21 to express the view in that he 'would not be surprised if the sale process being conducted by the receivers could not be concluded before August 2009'.

The evidence in support of the application

1. This application is supported by affidavits, sworn on 19  and 24 June 2009, of Mr Darren Weaver, one of the joint and several administrators of the two companies.

2. The sale process of the Windimurra Vanadium project is being conducted by the receivers.  The receivers have informed Mr Weaver of the following matters relating to the progress of the sale process:

   (a)the formal expression of interest process commenced on 7 May 2009;

   (b)numerous interested parties were contacted and provided with an information memorandum;

   (c)12 parties submitted indicative proposals, eight by 2 June 2009 (in accordance with the proposed timetable) and four by 8 June 2009;

   (d)preferred bidders are in the course of being notified;

   (e)site visits, management presentations, due diligence and discussions with various stakeholders are scheduled to take place between 15 June 2009 and 24 July 2009;

   (f)final bids are not expected to be received before 31 July 2009, with satisfaction of conditions precedent and completion unlikely to occur before September 2009; and

   (g)it is possible that Foreign Investment Review Board approval may be required, depending on the identity of the successful bidder.

3. In light of these matters, Mr Weaver expresses his belief that a sale of the company's assets or the formulation of a deed of company arrangement cannot successfully and properly be undertaken by 30 June 2009, and that an extension of the convening period is essential to allow the receivers the necessary time to complete the sale process or, alternatively, a recapitalisation or the formulation of a deed of company arrangement leading to the maximisation of returns to stakeholders.

4. Paragraphs 10, 11 and 12 of Mr Weaver's affidavit satisfy me that the grant of the proposed extension will not cause any undue prejudice to the plaintiffs' landlord or to the owners of various other property over which the receivers have exercised property rights.

5. The likelihood of needing a further extension of time was foreshadowed at meetings of the committee of creditors of the two companies on 15 May 2009.  No creditor objected the extension.  Subsequently, no objection has been made by any creditor.

6. On 22 June 2009 the committee of creditors consented to the application for an extension of the convening period to 30 September 2009.

7. The application is made at the request of the receivers.  No objection has been made by any of the secured creditors of the companies.

The disposition of the application

1. The first application for an extension of the convening period sought an extension to 18 September 2009.  I was not persuaded that the material before me as to the then circumstances justified such a long extension.  However, I foreshadowed that if it transpired that the sale process could not be completed by 30 June 2009, a further application for an extension could be made.  In essence, that is what has transpired.

2. In the circumstances I have outlined, I am satisfied that an extension of the convening period to 30 September 2009 should be granted.  That extension will enable the finalisation of any restructuring or sale proposal to occur and the taking of necessary subsequent steps by the administrators.  The extension appears unlikely to cause undue prejudice to any creditor or other affected party.

3. The plaintiffs applied for an order granting liberty to apply for further extensions of the convening period.  I am prepared to make that order.  However, the plaintiffs (and other parties) should expect that any application for a further extension beyond 30 September 2009 will be very carefully scrutinised.  By then, the convening period will have been extended for a little over six months.  That is, as Le Miere J observed in Re Chemeq Ltd; Ex parte McMaster [2007] WASC 154, an unusually long extension.

4. For these reasons, I would make orders in the terms sought.