Re Windimurra Vanadium Ltd & Midwest Vanadium Pty Ltd; [No 3]
[2009] WASC 302
•13 OCTOBER 2009
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE WINDIMURRA VANADIUM LTD & MIDWEST VANADIUM PTY LTD; EX PARTE WEAVER [No 3] [2009] WASC 302
CORAM: BEECH J
HEARD: 24 SEPTEMBER 2009
DELIVERED : 24 SEPTEMBER 2009
PUBLISHED : 13 OCTOBER 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 plaintiffANDREW 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 plaintiffMARTIN 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 Windimurra Vanadium Ltd & Midwest Vanadium Pty Ltd; Ex Parte Weaver [2009] WASC 71
Re Windimurra Vanadium Ltd & Midwest Vanadium Pty Ltd; Ex Parte Weaver [No 2] [2009] WASC 182
BEECH J: (These reasons are an edited version of the reasons delivered extemporaneously on 24 September 2009.)
Background
The plaintiffs are joint and several administrators of two companies, Windimurra Vanadium Ltd and Midwest Vanadium Pty Ltd. On 13 March 2009 I ordered an extension of the convening period for the second meeting of creditors of those companies to 30 June 2009. On 25 June 2009 I granted a further extension of the convening period for the second meeting of creditors of those companies to 30 September 2009. The plaintiffs now apply for a further extension in relation to Midwest Vanadium Pty Ltd (Midwest). No extension is sought in relation to Windimurra Vanadium Ltd.
The relevant legal principles have been stated in my earlier decisions: Re Windimurra Vanadium Ltd & Midwest Vanadium Pty Ltd; Ex Parte Weaver [2009] WASC 71 (first decision) and Re Windimurra Vanadium Ltd & Midwest Vanadium Pty Ltd; Ex Parte Weaver [No 2] [2009] WASC 182 (second decision). The background facts can be seen in [13] ‑ [19] of the first decision and [7] ‑ [8] of the second decision.
The evidence in support of the application
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' [13] ‑ [19].
...
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.
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 [7] - [8].
In summary, I granted the extensions so as to enable the finalisation of any restructuring or sale proposed to occur and the taking of any necessary subsequent steps by the administrator.
Further application for extension
In my second decision, in granting the second extension I observed that the plaintiffs and other parties should expect that any application for a further extension beyond 30 September 2009 will be very carefully scrutinised. Having considered the material in support of this application, I am satisfied that a further extension should be granted in relation to Midwest.
In support of the application the first named plaintiff, Mr Darren Weaver, has sworn two affidavits. The first affidavit is confidential because it relates to the progress of negotiations in the expression of interest (EOI) process. I do not propose to outline all of its contents given that confidentiality but will say something to explain the conclusion I have reached.
It is apparent from the first affidavit that the EOI process has been actively pursued. There has been substantial progress made. Negotiations have been on foot for some time and remain on foot. Due diligence is being conducted. It is anticipated that one or more concrete offers will be received imminently. If these negotiations bear fruit it is anticipated that the deal will be documented in October 2009 with completion in November 2009.
On the basis of both of Mr Weaver's affidavits, I am satisfied that there has been sufficient progress and that there is sufficient substance in the negotiation process to support the grant of the extension of time that is sought. I am also satisfied in the circumstances that any proposal for recapitalisation or sale of the shares or assets, and the formulation of any deed of company arrangement, cannot be completed by 30 September 2009.
Mr Weaver's evidence is that preliminary investigations suggest that there are not likely to be significant recoveries if the company goes into liquidation. Mr Weaver says, in effect, and I accept, that it is in the interests of creditors and stakeholders to extend the time to allow the EOI process. This is because if that bears fruit it will lead to the best prospects of the returns to creditors and stakeholders, which would be completed over the next two months or so.
The grant of a further extension of time has the unanimous support of the committee of creditors of Midwest. It also has the support of Midwest's secured creditors. Paragraphs 7 to 9 of Mr Weaver's second affidavit satisfy me that there is no undue prejudice to any landlord or the owner of any other property over which the receivers have exercised property rights.
In the circumstances and for the reasons I have given, I am satisfied that it is appropriate to grant the extension sought. I would order that the convening period for the second meeting of creditors of Midwest be extended from 30 September 2009 to 2 December 2009.
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