Walsh, in the matter of LakeCoal Pty Ltd (administrators appointed) (receivers and managers appointed) (No 2)
[2018] FCA 1635
•29 October 2018
FEDERAL COURT OF AUSTRALIA
Walsh, in the matter of LakeCoal Pty Ltd (administrators appointed) (receivers and managers appointed) (No 2) [2018] FCA 1635
File number: NSD 1979 of 2018 Judge: YATES J Date of judgment: 29 October 2018 Catchwords: CORPORATIONS – external administration – application to vary orders extending the convening period of the second meetings of creditors Legislation: Corporations Act 2001 (Cth), s 439A(5)(b) Cases cited: Walsh, in the matter of LakeCoal Pty Ltd (administrators appointed) (receivers and managers appointed) [2018] FCA 1634 Date of hearing: 29 October 2018 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 7 Counsel for the plaintiffs: Mr N M Bender Solicitor for the plaintiffs: Allens Polymer Innovations Pty Ltd Mr A Evans, the Managing Director of Polymer Innovations Pty Ltd, was granted leave to appear on the company’s behalf ORDERS
NSD 1979 of 2018 IN THE MATTER OF LAKECOAL PTY LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) ACN 094 084 787, FASSI COAL PTY LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) ACN 147 642 386 AND LDO COAL PTY LTD (ADMINISTRATORS APPOINTED) ACN 140 669 932
JUSTIN DENIS WALSH AND SAMUEL JOHN FREEMAN AS JOINT AND SEVERAL ADMINISTRATORS OF LAKECOAL PTY LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) ACN 094 084 787 and others named in the schedule
PlaintiffsJUDGE:
YATES J
DATE OF ORDER:
29 OCTOBER 2018
THE COURT ORDERS THAT:
1.The application of Polymer Innovations Pty Ltd to vary the orders made on 29 October 2018 be refused.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Revised from transcript)YATES J:
On 29 October 2018, I made orders extending the convening periods of the second meetings of creditors of LakeCoal Pty Ltd (administrators appointed) (receivers and managers appointed) (LakeCoal), Fassi Coal Pty Ltd (administrators appointed) (receivers and managers appointed) and LDO Coal Pty Ltd (administrators appointed) (together, the companies): Walsh, in the matter of LakeCoal Pty Ltd (administrators appointed) (receivers and managers appointed) [2018] FCA 1634 (my earlier reasons). I granted liberty to apply to modify or discharge the orders to any person demonstrating a sufficient interest. This was conditioned on three business days’ notice being given.
Immediately after making the orders, a creditor of LakeCoal—Polymer Innovations Pty Ltd (Polymer Innovations)—sought leave to appear to object to the extension of the convening period that had been granted in respect of that company. Mr Andrew Evans is the Managing Director of Polymer Innovations. Polymer Innovations claims a debt of $25,752.15.
I granted leave to Mr Evans to appear on behalf of Polymer Innovations. I dealt with his company’s application immediately, even though three business days’ notice had not been given. I did so because Mr Evans was present in Court and had prepared a written outline of his submissions. The plaintiffs’ legal advisers were still in Court. It was expedient and appropriate to deal with the application there and then, without further formality or delay.
Mr Evans raised a threshold issue, namely whether the Court’s power to extend the convening period had been properly engaged. He argued that the application to extend the convening period had been made outside the time prescribed in s 439A(5)(b) of the Corporations Act 2001 (Cth). This submission proved to be misconceived. Mr Evans accepted this to be the case.
Mr Evans raised three other objections. After providing a short adjournment to allow the plaintiffs an opportunity to consider Mr Evans’ written submissions, I heard further argument and then stated my conclusion that I would not vary the orders that had been made.
I gave the following reasons (revised from the transcript), which should be considered against the background of my earlier reasons:
Leaving to one side the timing issue referred to by Mr Evans, there are three matters he raises: first, that the extensions of the convening periods are too long; secondly, there could be a risk that the sale of the business could decrease if the mine fails to produce coal, as anticipated, up to 28 February 2019; and, thirdly, if the receivers are only mining existing developed areas and not developing new areas there could be a risk that the sales value of the business could decrease because a prospective buyer would have to account for a costly development phase prior to producing coal and income.
I acknowledge that those risks might exist. At the present time I have no way of telling whether those risks are likely or substantial. The evidence before me is that, on present indications, the administrators are of the view that if the convening periods are not extended, the only fate for the companies will be a liquidation, and on a liquidation it seems likely that there will be no dividend to unsecured creditors.
On the other hand, if a sale of the mining operations can be achieved, then there may be a return to unsecured creditors. And if there is to be a sale then the best way of achieving that is to allow for the convening periods to be extended for the period that I have allowed to enable the sales process to be properly and fully implemented to achieve the ends that are hoped to be achieved.
Whether those ends can be achieved or not, I simply do not know. But what I do know is that the unsecured creditors are unlikely to be worse off if the convening periods are extended. Indeed, on the contrary, they are likely to be better off. The position is unsatisfactory so far as unsecured creditors are concerned, and I understand their difficulties. However, the position has arisen and the task of the administrators is to ensure that the interests of creditors are protected as much as they reasonably can be. I am satisfied that, on the present material, that objective is being pursued.
For those reasons I will not vary the orders that have been made.
Polymer Innovations’ application was accordingly refused.
I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate:
Dated: 2 November 2018
SCHEDULE OF PARTIES
NSD 1979 of 2018 Plaintiffs
FASSI COAL PTY LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) ACN 147 642 386
LDO COAL PTY LTD (ADMINISTRATORS APPOINTED) ACN 140 669 932
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