Riad Tayeh and Anthony De Vries -v- The Black Stump Enterprises Pty Ltd (in liquidation)

[2007] NSWSC 1328

CITATION:	Riad Tayeh and Anthony De Vries -v- The Black Stump Enterprises Pty Ltd (in liquidation) [2007] NSWSC 1328
HEARING DATE(S):	8 November 2007
JUDGMENT OF:	Hammerschlag J
EX TEMPORE JUDGMENT DATE:	8 November 2007
DECISION:	Direction pursuant to section 511(1) of the Corporations Act 2001 (Cth) that liquidators justified in entering into a pooling deed and in convening a combined meeting of all known creditors of the group for the purpose of voting on a resolution to approve it.
CATCHWORDS:	CORPORATIONS – Ex parte application for directions under s 511 of the Corporations Act 2001 (Cth) that liquidator justified in entering into pooling arrangements – Form of notice to creditors considered
LEGISLATION CITED:	Corporations Act 2001 (Cth)
CASES CITED:	Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 42 NSWLR 209 Re Switch Communications Pty Ltd (in Liq); Ex parte Sherman (2000) 35 ACSR 172
PARTIES:	Riad Tayeh and Anthony De Vries The Black Stump Enterprises Pty Ltd (in liquidation) ACN 001 274 979
FILE NUMBER(S):	SC 5127/2007
COUNSEL:	A. P. Spencer (Plaintiffs)
SOLICITORS:	Somerset Ryckmans (Plaintiffs)

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

HAMMERSCHLAG J

8 NOVEMBER 2007

5126/2007 RIAD TAYEH and ANTHONY DE VRIES -v- THE BLACK STUMP ENTERPRISES PTY LTD (IN LIQUIDATION) ACN 001 274 979

EX TEMPORE JUDGMENT

1 HIS HONOUR: By amended originating process dated 8 November 2007 Messrs Tayeh and De Vries move for orders that as liquidators of the companies listed in the amended originating process (all of which are members of a group known as the Black Stump Group) they are justified in convening a combined meeting of all known creditors of the group for the purpose of voting on a resolution to approve a pooling deed under s 510 of the Corporations Act 2001 (Cth) (“the Act”).

2 Where a liquidator proposes a pooling, an application may be made ex parte for directions under s 511 of the Act to the effect that he or she is justified in entering into the pooling arrangements: Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 42 NSWLR 209 at 203; Re Switch Communications Pty Ltd (in Liq); Ex parte Sherman (2000) 35 ACSR 172.

3 The affidavit evidence is in the form of two affidavits of Mr Tayeh. It paints a striking picture of companies whose affairs are inextricably intermingled and of the difficulty, if not impossibility, of extricating the affairs of any of them from the others.

4 In Re Switch Communications Pty Ltd (in Liq); Ex parte Sherman, Santow J considered the appropriate procedure to be followed by a liquidator in circumstances such as the present. The appropriate steps include circulation of an explanatory memorandum to those interested and the convening of a Court hearing date with notice to potential dissentients.

5 In evidence is a draft explanatory memorandum proposed to be circulated. It contains notice to the unsecured creditors that the pooling, if implemented, may benefit some and prejudice others in respect of the dividend, if any, which they might have received in the event that the affairs of the companies were separated and treated individually.

6 There are certain respects in which that notice can and should be improved. With the benefit of submissions from Mr Spencer of counsel who appeared for the plaintiffs, I consider that notice in the following form would be adequate:

“Ordinary unsecured creditors should be aware that the effect of pooling would be that they would likely receive a rateable dividend of approximately 29 cents in the dollar. If each company's assets and liabilities were separated and treated individually (were it feasible to do so - which the Liquidators consider it is not) it is possible that some unsecured creditors might receive no dividend whilst others might receive as much as 100 cents in the dollar by way of dividend. The Liquidators are unable to determine whether in the case of any individual creditor, that creditor is likely to receive more than or less than the likely dividend to be paid consequent upon the assets and liabilities of the group being pooled. This is because, for the reasons stated in section 2, the Liquidators are unable to determine the net asset position of any individual company and in a large number of cases the Liquidators are also unable to determine which company is indebted to which creditor.”

7 In addition, there should, in my view, be included in the explanatory memorandum a statement to the effect of that referred to by Santow J in Re Switch Communications Pty Ltd (in Liq); Ex parte Sherman at [39] concerning Court sanction. There should be inserted in paragraph 5 of the explanatory memorandum immediately before the commencement of paragraph 6 the following statement in relation to the direction sought that the liquidators are justified in entering into the pooling deed:

“The direction does not limit in any way the Supreme Court's discretion to give or withhold any approval or any other order to be sought under any of the steps in the implementation steps. The Supreme Court may give or withhold approval or make any other order having regard to the circumstances and the evidence then before the Court.”

8 In my view, with those amendments, the liquidators would be justified in entering into the pooling deed. It contains a series of conditions precedent to its operation in cl 4, one of which is the making of the order which follows. Others are the subsequent approval of the Court of any compromise which might arise by virtue of the pooling deed and which would be prescribed under s 477(2A) of the Act and there being no objection to the result brought about by the deed within the period specified by s 510(4) of the Act.

9 The orders of the Court will be as follows:

1. Pursuant to s 511(1) of the Corporations Act 2001 (Cth) Riad Tayeh and Anthony De Vries in their capacity as liquidators ("the liquidators") of the companies listed in Schedule A (“the group”) are justified in entering into the pooling deed in the form of the draft annexed to this order ("the Pooling Deed").

2. Pursuant to section 511 of the Corporations Act 2001 (Cth) the liquidators are justified in convening a combined meeting of all known creditors of the group for the purpose of voting on a resolution to approve the Pooling Deed.

3. The matter is stood over to the Corporations List on 4 February 2008.

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