Sheahan; In the matter of SK Foods Pty Ltd (In Liquidation)
[2012] FCA 268
•23 March 2012
FEDERAL COURT OF AUSTRALIA
Sheahan; In the matter of SK Foods Pty Ltd (In Liquidation) [2012] FCA 268
Citation: Sheahan; In the matter of SK Foods Pty Ltd (In Liquidation) [2012] FCA 268 Parties: JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL LIQUIDATORS OF SK FOODS AUSTRALIA PTY LTD (IN LIQ) ACN 099 245 735, CEDENCO JV AUSTRALIA PTY LTD (IN LIQ) ACN 075 836 010 AND SS FARMS AUSTRALIA PTY LTD (IN LIQ) ACN 107 746 716 File number: SAD 123 of 2011 Judge: BESANKO J Date of judgment: 23 March 2012 Date of hearing: 28, 29 February 2012 Place: Adelaide Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 9 Counsel for the Liquidators: Mr R Whitington QC with Mr B Doyle Solicitor for the Liquidators: DMAW Lawyers Counsel for the Trustee in Bankruptcy of SK Foods LP: Mr G Lucarelli with Ms J Milburn
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
SAD 123 of 2011
IN THE MATTER OF SK FOODS AUSTRALIA PTY LTD (IN LIQ) (ACN 099 245 635)
JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL LIQUIDATORS OF SK FOODS AUSTRALIA PTY LTD (IN LIQ) ACN 099 245 735, CEDENCO JV AUSTRALIA PTY LTD (IN LIQ) ACN 075 836 010 AND SS FARMS AUSTRALIA PTY LTD (IN LIQ) ACN 107 746 716
Plaintiffs
JUDGE:
BESANKO J
DATE OF ORDER:
29 FEBRUARY 2012
WHERE MADE:
ADELAIDE
THE COURT ORDERS THAT:
1.Leave be granted to SK Foods LP to be heard on the two interlocutory applications dated 8 December 2011 and 27 February 2012 respectively under rule 2.13 of Federal Court (Corporations Rules) 2000.
2.The notice of motion dated 8 December 2011 as amended pursuant to leave granted to the plaintiff on 3 February 2012, be dismissed.
3.1Pursuant to section 1322(4) of the Act the time for convening a meeting of creditors of SK Foods Australia Pty Ltd under section 508(1)(b)(i) be extended to 9 March 2012.
3.2Pursuant to section 1322(4) of the Act the time for convening a meeting of creditors of Cedenco JV Australia Pty Ltd under section 508(1)(b)(i) be extended to 9 March 2012.
3.3Pursuant to section 1322(4) of the Act the time for lodgement of a report into the liquidation of SS Farms Australia Pty Ltd under section 508(1)(b)(ii) be extended up to and including 27 February 2012.
The liquidators undertake that they will not charge fees and expenses or disbursements against the administration of any of the three companies in liquidation in relation to the application dated 27 February 2012.
4.In relation to the Interlocutory Process dated 27 February 2012, the costs of SK Foods LP with respect to that interlocutory process be a proper expense of the winding up of SK Foods Australia Pty Ltd, Cedenco JV Pty Ltd and SS Farms Australia Pty Ltd.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
SAD 123 of 2011
IN THE MATTER OF SK FOODS AUSTRALIA PTY LTD (IN LIQ) (ACN 099 245 635)
JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL LIQUIDATORS OF SK FOODS AUSTRALIA PTY LTD (IN LIQ) ACN 099 245 735, CEDENCO JV AUSTRALIA PTY LTD (IN LIQ) ACN 075 836 010 AND SS FARMS AUSTRALIA PTY LTD (IN LIQ) ACN 107 746 716
Plaintiffs
JUDGE:
BESANKO J
DATE:
23 MARCH 2012
PLACE:
ADELAIDE
REASONS FOR JUDGMENT
John Sheahan and Ian Lock are the joint and several liquidators of SK Foods Australia Pty Ltd (SKFA), Cedenco Australia Pty Ltd (CJVA) and SS Farms Pty Ltd (SSFA). As a group I will refer to the companies as the Cedenco Australia companies. Each of those companies was the subject of a creditors’ voluntary winding up. Under s 508(1)(b) of the Corporations Act 2001 (Cth) (“the Act”) if the winding up of a company which was the subject of a creditors’ voluntary winding up continues for more than one year, then the liquidator must do one of two things. He must either convene a meeting of the creditors within three months after the end of the first year, beginning on the day on which the company resolved that it be wound up voluntarily, and the end of each succeeding year or, within the same period, he must prepare a report that complies with s 508(3), and lodge a copy of the report with the Australian Investments and Securities Commission
On 6 May 2010 Messrs Sheahan and Lock were appointed administrators of the Cedenco Australia companies by resolution of the board of directors of the companies pursuant to s 436A of the Act. A first meeting of creditors of each of the Cedenco Australia companies was held concurrently on 18 May 2010 in accordance with s 436E of the Act. On 23 July 2010 Messrs Sheahan and Lock published a report to creditors of each of the Cedenco Australia companies and a supplementary report was published to each of those groups on 29 July 2010.
A second meeting of creditors of each of the Cedenco Australia companies was convened concurrently on 11 August 2010, and at each of those meetings Messrs Sheahan and Lock were appointed as joint and several liquidators of the Cedenco Australia companies pursuant to ss 439C(c) and 446A of the Act.
On 2 November 2010 Messrs Sheahan and Lock published a report to creditors to each of the Cedenco Australia companies. On 17 November 2010 Messrs Sheahan and Lock convened a further meeting of the creditors of each of the Cedenco Australia companies. On 28 June 2011 Messrs Sheahan and Lock published a report to the creditors of SSFA and on 17 July 2011 they convened a meeting of the creditors of SSFA.
On 5 December 2011 Messrs Sheahan and Lock published a report to the creditors of SKFA and CJVA which included a notice of meeting to be held on 22 December 2011. For reasons set out in Mr Sheahan’s affidavit sworn on 27 February 2012 (paragraphs 17-25), the meetings were deferred and a new meeting date fixed of 8 March 2012.
Section 508(1) placed an obligation on Messrs Sheahan and Lock to convene a meeting of creditors or prepare and lodge a report which complies with s 508(3) before 11 November 2011. They did not do so and by Interlocutory Application dated 27 February 2012 they sought orders under s 1322(4) of the Act extending the time for convening a meeting of creditors in the case of SKFA and CJVA to 9 March 2012 and for lodging a report in the case of SSFA to 27 February 2012. I made such orders on 29 February 2012 and said that I would publish my reasons for doing so. These are my reasons.
An order may only be made under s 1322(4)(d) of the Act if the Court is satisfied that no substantial injustice has been or is likely to be caused to any person.
The explanation for the delay is provided by Mr Sheahan. He deposes to the fact that it resulted from an oversight by Mr Lock and himself. He states that he and Mr Lock thought the one year period ran from the last creditors’ meeting which, in the case of SKFA and CJVA, was 17 November 2010 and, in the case of SSFA, was 17 July 2011. In the case of SKFA and CJVA, this does not explain the short delay between 17 November 2011 and 5 December 2011, when the creditors meeting of SKFA and CJVA was convened for 22 December 2011. This misunderstanding of the provisions of s 508(1) of the Act is surprising, but I accept in general terms Mr Sheahan’s explanation for the delay. More importantly, the delay was relatively short and I was satisfied that no substantial injustice had been or was likely to be caused to any person. It seemed to me that no creditor had been prejudiced by the delay and that, despite the failure to comply with s 508(1) of the Act, the creditors have been provided with quite detailed information over the course of the liquidations. I was also satisfied that there had been a number of meetings and ongoing correspondence with creditors and other persons interested in the liquidations and that there had not been any distributions or payments to creditors in circumstances where such action was contested.
In the circumstances I considered it appropriate to make the orders I did on 29 February 2012.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Associate:
Dated: 23 March 2012
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