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Re Zenith Energy Ltd [No 3]

Re Zenith Energy Ltd [No 3]

Case [2020] WASC 289 6 August 2020

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   RE ZENITH ENERGY LTD; EX PARTE ZENITH ENERGY LTD [No 3] [2020] WASC 289
CORAM:   HILL J
HEARD:   6 AUGUST 2020
DELIVERED          :   6 AUGUST 2020
FILE NO/S:   COR 51 of 2020

EX PARTE
ZENITH ENERGY LTD
Plaintiff

Catchwords:

Corporations law - Scheme of arrangement - Application for orders approving scheme under s 411(b) of the Corporations Act 2001 (Cth) - Orders made approving scheme

Legislation:

Corporations Act (Cth), s 411, s 1319

Result:

Orders made approving the Scheme

Category: B

Representation:

Counsel:

Plaintiff

SK Dharmananda SC & J Sippe

Solicitors:

Plaintiff

Allens

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

Re Auzex Resources Ltd [No 2] [2012] QSC 101
Re Avoca Resources Ltd [2011] FCA 208
Re Cortona Resources Ltd [No 2] [2013] FCA 302
Re Decimal Software Limited [No 2] [2018] FCA 2040
Re Foundation Healthcare Ltd [No 2] [2002] FCA 973; (2002) 43 ACSR 680
Re Great Artesian Oil and Gas Ltd [No 2] [2008] FCA 1169
Re International Goldfields Ltd [2004] WASC 112
Re Pensana Metals Ltd; Ex parte Pensana Metals Limited [2020] WASC 17
Re Rebel Sport Ltd [No 2] [2007] FCA 458
Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583
Re Straits Resources Ltd [No 2] [2011] FCA 47
Re TriAusMin Limited [No 2] [2014] FCA 833
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357
Re Zenith Energy Ltd; Ex parte Zenith Energy Ltd [2020] WASC 266
Re Zenith Energy Ltd; Ex parte Zenith Energy Ltd [No 2] [2020] WASC 275

HILL J:

The plaintiff, Zenith Energy Ltd (Zenith Energy), applies for orders approving a proposed scheme of arrangement (Scheme). The background to the matter is set out in the judgment that I gave following the first court hearing.[1] At the first court hearing, I made orders for two separate Scheme meetings to be convened. I made further orders on 22 July 2020 approving a supplementary Scheme booklet to be dispatched to shareholders following the amendment to the proposed Scheme to increase the cash consideration payable under to shareholders.[2]
[1] Re Zenith Energy Ltd; Ex parte Zenith Energy Ltd [2020] WASC 266.
[2] Re Zenith Energy Ltd; Ex parte Zenith Energy Ltd [No 2] [2020] WASC 275.
The Scheme meetings were convened and held on 31 July 2020. At these meetings, the shareholders approved the proposed amendments to the Scheme and approved the amended Scheme by the requisite statutory majorities.

General Scheme Meeting

The general Scheme meeting was attended virtually by 14 persons which constituted a quorum for the meeting.[3] The resolution to agree to the Scheme (General Scheme Resolution) was presented to shareholders following the resolution to amend the General Scheme Resolution (Amending Resolution).[4]
[3] Affidavit of Peter Patrick Torre filed 4 August 2020 [14].
[4] Affidavit of Peter Patrick Torre filed 4 August 2020 [17].
431 shareholders were present at the general Scheme meeting in person and by proxy,…

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 Zenith Energy Ltd [No 3]

Details

AGLC: Re Zenith Energy Ltd [No 3] [2020] WASC 289
Case: [2020] WASC 289
Decision Date: 6 AUGUST 2020

CaseChat Overview and Summary

In the matter of Zenith Energy Limited, an application was made by the liquidators of the company to the Federal Court of Australia for orders approving a scheme of arrangement for the company under section 411(b) of the Corporations Act 2001. The primary dispute centred on whether the proposed scheme, which aimed to facilitate the company's reconstruction and provide a better outcome for creditors and shareholders, was fair and equitable to all parties involved.

The legal issues before the Court were whether the scheme met the statutory requirements for fairness and whether it was in the best interests of the company and its stakeholders. The Court was required to assess the fairness of the scheme by considering the views of different classes of creditors and shareholders, and whether the scheme provided a better outcome than an immediate winding up of the company.

The Court found that the scheme was fair and equitable to all parties involved. It concluded that the scheme provided a more advantageous outcome for creditors and shareholders compared to a winding up, and that it met the statutory requirements for fairness. The Court emphasised the importance of considering the views of all relevant classes and the need for the scheme to offer a practical and viable solution to the company's financial difficulties. Consequently, the Court approved the scheme under section 411(b) of the Corporations Act.

The Court made orders approving the scheme of arrangement for Zenith Energy Limited, allowing the company to proceed with its reconstruction as proposed. This decision provided a resolution to the company's financial challenges and offered a path forward for its creditors and shareholders.

Orders