SCOTT DAVID HARRY LANGDON AND CLIFFORD STUART ROCKE AS ADMINISTRATORS FOR PETRO VENTURES INTERNATIONAL LIMITED (ADMINISTRATORS APPOINTED)
[2014] WASC 48
•25 FEBRUARY 2014
SCOTT DAVID HARRY LANGDON AND CLIFFORD STUART ROCKE AS ADMINISTRATORS FOR PETRO VENTURES INTERNATIONAL LIMITED (ADMINISTRATORS APPOINTED) [2014] WASC 48
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 48 | |
| 25/02/2014 | |||
| Case No: | COR:17/2014 | 30 JANUARY 2014 | |
| Coram: | EM HEENAN J | 30/01/14 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Time for convening second meeting of creditors extended by 21 days. Second meeting of creditors to be held within extended period but with at least five days' notice being given to creditors. | ||
| B | |||
| PDF Version |
| Parties: | SCOTT DAVID HARRY LANGDON AND CLIFFORD STUART ROCKE AS ADMINISTRATORS FOR PETRO VENTURES INTERNATIONAL LIMITED (ADMINISTRATORS APPOINTED) PETRO VENTURES IINTERNATIONAL LIMITED (ADMINISTRATORS APPOINTED) |
Catchwords: | Corporations Corporation in administration Ex parte application Application to extend convening period for second meeting of creditors Earlier extension of period for convening second meeting of creditors Role of administrators in dealing with litigation concerning company and subsidiary in Holland Litigation continuing Pending application by major creditor for removal of administrators Inability to convene second meeting of creditors before expiration of extended period Need for report by administrators to be made to creditors of latest position of company's affairs |
Legislation: | Corporations Act 2001 (Cth), s 329A(2), s 436A, s 439A, s 447A(1), s 447E |
Case References: | Re Evans & Tate Ltd (Administrators Appointed) (Receivers and Managers Appointed) Ex parte Jones [2007] WASC 235 Re Geraldton Building Co Pty Ltd (Administrators Appointed); Ex parte Trevor [2000] WASC 320 Re Levi (1996) 19 ACSR 521 Re New Horizons Corporation; Ex parte De Vries [2004] NSWSC 253 Re Pan Pharmaceuticals (Admin Appointed) [2003] FCA 598; (2003) 46 ACSR 77 Re TPE Kintech Pty Ltd; Ex parte Carter [2004] NSWSC 250; (2004) 49 ACSR 106 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Applicant
PETRO VENTURES IINTERNATIONAL LIMITED (ADMINISTRATORS APPOINTED)
Second Applicant
Catchwords:
Corporations - Corporation in administration - Ex parte application - Application to extend convening period for second meeting of creditors - Earlier extension of period for convening second meeting of creditors - Role of administrators in dealing with litigation concerning company and subsidiary in Holland - Litigation continuing - Pending application by major creditor for removal of administrators - Inability to convene second meeting of creditors before expiration of extended period - Need for report by administrators to be made to creditors of latest position of company's affairs
Legislation:
Corporations Act 2001 (Cth), s 329A(2), s 436A, s 439A, s 447A(1), s 447E
Result:
Time for convening second meeting of creditors extended by 21 days.
Second meeting of creditors to be held within extended period but with at least five days' notice being given to creditors.
Category: B
Representation:
Counsel:
First Applicant : Mr L Ayres
Second Applicant : Mr L Ayres
Solicitors:
First Applicant : Minter Ellison
Second Applicant : Minter Ellison
Case(s) referred to in judgment(s):
Re Evans & Tate Ltd (Administrators Appointed) (Receivers and Managers Appointed) Ex parte Jones [2007] WASC 235
Re Geraldton Building Co Pty Ltd (Administrators Appointed); Ex parte Trevor [2000] WASC 320
Re Levi (1996) 19 ACSR 521
Re New Horizons Corporation; Ex parte De Vries [2004] NSWSC 253
Re Pan Pharmaceuticals (Admin Appointed) [2003] FCA 598; (2003) 46 ACSR 77
Re TPE Kintech Pty Ltd; Ex parte Carter [2004] NSWSC 250; (2004) 49 ACSR 106
1 EM HEENAN J: There are related proceedings over which I have been presiding (IND Energy Inc (A Company Incorporated In The British Virgin Islands) v Langdon and Rocke As Administrators Of Petro Ventures International Limited (Administrators Appointed) (COR 227 of 2013) brought under the Corporations Act 2001 for the removal of the two administrators of Petro Ventures International Ltd (the 'company' or PVIL); the appointment of other administrators and/or, alternatively, for other relief pursuant to s 447E of the Act for certain orders or directions concerning the roles of the existing administrators of the company. That other application involves a complex background of facts and a fast changing series of litigation before the Enterprise Division of the Court of Appeal in Amsterdam as well as other pending litigation in Holland. That other application was heard before me on 23, 24 and 28 January 2014 and was the subject of further evidence received by leave on 30 January 2014. On 31 January it was further adjourned to 4 February with further affidavit evidence to be filed on 3 February. That litigation is continuing and it will not be possible for any final judgment or orders to be given or made before 4 February at the earliest. Rather than attempt here to describe the many complicated issues arising in and from that application, I shall for now simply refer to the reasons for decision on that application which will be given in due course in COR 227 of 2013.
2 This present application, however, brought on at short notice, is an application by the existing administrators of the company for a further extension of the convening period for the company to hold the second meeting of creditors required by s 439A of the Act. It is made pursuant to s 447A(1).
3 Formal notice of the application has not been given to any of the creditors claiming in the administration or known to the administrators as likely to claim in the administration, nor to the committee of inspection. However, the two major probable creditors, the first a secured creditor and the second a contingent creditor of the company, are IND Energy Inc (A company incorporated in the British Virgin Islands) (IND) and Gemini Oil and Gas Fund II, LP (A partnership incorporated in the Channel Islands) (Gemini). Each is a party in the related proceedings COR 227 of 2013, which I have already briefly described. Furthermore, IND is the sole member of the committee of inspection in the administration.
4 Each of these two companies has been given informal notice of the present application by the administrators and has appeared by counsel on this application. Each supports the granting of some extension of time for the administrators to convene and hold the second meeting of creditors but IND does not support the extension to 31 July 2014 claimed by the administrators contending, instead, that only a much shorter extension should be granted.
5 In the event, and essentially by consent, I ordered on 31 January 2014 that an extension of 21 days from that date be granted to the administrators for the holding of the second meeting of creditors, notwithstanding the provisions of s 329A(2) of the Act. This means that the meeting of creditors is to be held within that 21-day period and not within a further five-day period after the notice of the meeting has been given. The effect is that the meeting of creditors is to be held within 21 days but after not less than five days' notice has been given by the administrators. This does not exclude the possibility of a further extension of time being granted if application were made by any interested party for good cause.
6 I accept the submissions of counsel for IND that one effect of this order is that should the associated proceedings in COR 227 of 2013 result in an order removing the existing administrators and appointing new administrators, then the new administrators would remain bound to hold the second meeting of creditors of the company within the period of the extension which I have granted unless, of course, they were to apply successfully for a further extension of that convening period.
7 The background to this present application is described fully in the affidavit of one of the administrators, Mr S D H Langdon, sworn 29 January 2014. In this, Mr Langdon explains how administrators of the company were appointed on 13 September 2013 pursuant to s 436A of the Act as the joint and several voluntary administrators of the company. The first meeting of creditors was held on 25 September 2013, in accordance with s 436A and, among other things, that meeting confirmed the appointment of the two joint administrators. At that meeting IND, the company's largest creditor, was appointed as the sole member of the committee of creditors.
8 Later, on application by the administrators, the convening period for the second meeting of the company's creditors was extended from 11 October 2013 to 31 January 2014.
Major features of the administration
9 As outlined by Mr Langdon in his affidavit, the major activities of the company concern interests in oil and gas exploration and development which have been pursued ever since its inception in 2007. The major, indeed crucial, asset of the company, which is the chief focus of the administration, is a joint venture interest participating in oil and gas concessions in certain regions of the Black Sea under the control of the government of Romania. As described by Mr Langdon, the company's major asset is its shareholding in a wholly owned subsidiary, a Dutch company, Petro Ventures Europe BV (PVE). PVE's assets include, among other things:
(i) Midia and Pelican Block, being a joint venture project with Sterling Resources 65% interest), Gas Plus International (15% interest) and PVIL (20% interest). The Midia Block Licence was awarded in 1992 and has a term of 30 years from that date, expiring in 2022. The records of the company as at the date of appointment of the administrators to the company suggest that this asset is valued at the equivalent of approximately USD$40 million;
(ii) Exxon Agreement, being an entitlement under an agreement with ExxonMobil to receive three tranches of moneys from the Midia Pelican Block subject to production, calculated as totalling USD$23 million (being USD$9 million in tranche 1, USD$9 million in tranche 2, and USD$5 million in tranche 3);
(iii) VAT Refund, being an estimated value of €6 million; and
(iv) Block 25 Luceafarul, being a joint venture project with Midia Resources (50%) of which the value is unknown. This project is located in the Black Sea and is under-developed to date. Accordingly, its value is uncertain.
10 The evidence shows that IND is the major creditor of the company and is asserting an indebtedness of approximately USD$60 million, although the alleged debt is not presently accepted by the administrators. Further, and importantly, IND claims to be a secured creditor entitled under that security and under a share pledge made by PVIL over all its shares in PVE to enforce that security against the whole of PVIL's shareholding in PVE.
11 The other major claiming creditor, Gemini, is party to an Investment Agreement with PVIL under which it is entitled to receive a royalty, calculated by reference to the value of oil and gas production, from certain of the fields, if and when, they reach production.
12 Because of the financial difficulties of PVIL, which resulted in its present administration, the company has been attempting to sell its shareholding in PVE but, in those negotiations with prospective purchasers has faced demands by Gemini for payment of the value of its loss of the royalty which would result if the shares were sold. No agreement about compensation to be paid to Gemini has been reached and Gemini has intimated to PVIL that it has a claim for unliquidated damages for alleged breach of the Investment Agreement if a sale of the PVE shares proceeds. Again, the quantum of that claim for damages has not been determined and the administrators have not received any proof of debt from Gemini nor formally admitted it as a creditor, although they have been proceeding on the basis that it has, at least, an arguable substantial claim.
13 Several proceedings have been commenced in courts in Holland dealing with IND's claim to be entitled to enforce its security over the PVE shares. The nature and course of these proceedings is complex and need not be fully stated now. The first proceedings were brought by IND in the Hague and sought leave of that court for IND to proceed and sell the PVE shares at a price (a modest one) fixed in the security documents. PVIL, by its administrators, and Gemini, opposed that application and the court in the Hague later ruled that it would not give leave for IND to sell the PVE shares at the nominated contract price because it was not satisfied that a better price could not be achieved by a public sale of the securities.
14 A second set of proceedings was commenced by Gemini in the court at the Hague against IND. In these PVIL, by the administrators, and supported by Gemini, contended that, for a number of reasons and on several different grounds, the share pledge agreement charging PVE's shares in favour of IND was not valid or should not be enforced. Those proceedings remain pending.
15 A third set of proceedings has been commenced by PVIL by its administrators, in the Enterprise Division of the Court of Appeal in Amsterdam in which the administrators, supported by Gemini, are seeking the establishment of an Inquiry (a remedy under Dutch law) as provided by the Dutch Civil Code into the policies, operations and the proprieties of the management of PVE granting the share pledge to PVIL and in granting other securities, and into the role of PVIL in attempting to enforce those securities. In that same application for an Inquiry the administrators, again supported by Gemini, are seeking further interim relief within the power of the Dutch court, the effect of which would be to take control of PVE back out of the hands of its sole corporate director who is said to be associated with IND (that director having been appointed by IND following the defaults) and to consider different measures for the resolution of the insolvency. At the time of the hearings before me, including the hearing on COR 227 of 2013 at the stage which it had then reached, the decision of the Enterprise Division of the Court of Appeal in Amsterdam had not been given, although its result was thought to be imminent. (It has since been delivered but after my orders on this application were made.)
16 As well as these three sets of legal proceedings concerning the fate of the company's subsidiary interests in the Romanian oil and gas fields consortium, other proposals were under consideration to deal with an acute shortage of working capital by PVE which was faced with a substantial call to contribute further capital to the operations of the joint venture. These proposals involved several proposed capital raisings which, if agreed, would result in the issue of a large number of new shares in PVE to, among others, IND. Gemini was opposed to these proposals because of the great dilution which could be expected to follow of the interest of PVIL, in the oil and gas fields. The administrators of PVIL were also opposed, for similar reasons, but, chiefly, also because they were not then satisfied that the capital to be contributed by this equity raising would reflect sufficient value for the underlying assets of PVE.
17 These considerations show how the administrators have been faced with considerable difficulties and uncertainties when deciding whether or not to formulate some commercial solution to meet the present insolvency of PVIL. In evidence, Mr Langdon has asserted that he has reason to believe that a greater value should be attributed to PVE's interests in the consortium holding the oil and gas fields which, in turn, would result in a higher price being realised if IND's securities prove to be valid and are enforced or, alternatively, should result in a larger equity raising, on more favourable terms, than presently is on offer. In this regard, the administrators are placing considerable importance on the outcome of the pending Inquiry application before the court in Amsterdam because of its potential to lead to the disclosure of greater information to them about the affairs of PVE and because of the potential for the control of PVE to pass, temporarily, to some other body appointed by the Dutch court.
18 It is for these reasons that the present administrators have not yet formulated any proposal or recommendation to the creditors, nor have attempted to convene a second meeting of creditors to decide whether or not the company should be placed in liquidation or should enter into some acceptable deed of company arrangement either in the immediate future or in the near term. They consider that any such proposal is likely to depend upon the results of the proceedings in Holland and the outcome of negotiations concerning further capital raisings for PVE. I accept that there are cogent reasons for the administrators to have deferred any immediate proposal for a second meeting of creditors for these reasons.
19 As I have already explained, IND has, in the separate proceedings COR 227 of 2013, made application to have these administrators removed. That application is still under consideration and its outcome is, at least to some extent, also partially dependent on the results of the Inquiry application in Amsterdam and of the capital raising proposals still under consideration. Should the application for the removal of the existing administrators by IND succeed, then new administrators will need to be appointed and they will certainly need time to consider the latest position and to determine whether or not they are in a position to proceed immediately towards a second meeting of creditors.
20 All these factors combine to satisfy me that a short further extension of the time for convening a second meeting should be granted. In reaching this conclusion I have considered and applied the principles discussed in the authorities which have examined s 439 and s 439A and s 447A: see Re Pan Pharmaceuticals (Admin Appointed) [2003] FCA 598; (2003) 46 ACSR 77; Re TPE Kintech Pty Ltd; Ex parte Carter [2004] NSWSC 250; (2004) 49 ACSR 106; Re New Horizons Corporation; Ex parte De Vries [2004] NSWSC 253; Re Geraldton Building Co Pty Ltd (Administrators Appointed); Ex parte Trevor [2000] WASC 320; Re Levi (1996) 19 ACSR 521, which I examined and applied in Re Evans & Tate Ltd (Administrators Appointed) (Receivers and Managers Appointed) Ex parte Jones [2007] WASC 235.
21 For these reasons, I grant an extension of the time for the holding of a second meeting of creditors for 21 days, dating from 31 January 2014, but direct that the meeting should be held within that period, after at least five days' prior notice of the meeting had been given to interested parties.
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