Altus UAS International Limited

[2020] NZHC 928

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV 2020-419-000084

[2020] NZHC 928

IN THE MATTER OF

The Companies Act 1993

AND

IN THE MATTER OF

An application by ALTUS UAS
INTERNATIONAL LIMITED a duly

incorporated company having its registered office at 219 Crawford Road, RD 8,

Hamilton, for an order permitting the appointment of a liquidator Applicant

Hearing:	On the papers
Counsel:	J D Savage for the Applicant
Judgment:	6 May 2020

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 6 May 2020 at 3.00pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:

J D Savage, Barrister, Hamilton Norris Ward McKinnon, Hamilton

ALTUS UAS INTERNATIONAL LIMITED [2020] NZHC 928 [6 May 2020]

[1]    Steven Khov, Kieran Jones and Thomas Rodewald, who were appointed administrators and then liquidators of Altus UAS International Limited (the Company), apply for orders under s 280 of the Companies Act 1993 (the Act) to enable the appointment of Mr Khov and Mr Jones as liquidators of the Company’s wholly owned subsidiary companies, Altus UAS Limited (Altus UAS) and Altus IP Limited (Altus IP).1

[2]    The applicants also seek leave to bring the proceeding by originating application without notice.

[3]    Mr Khov has filed an affidavit2 on behalf all three applicants in support of the application and the application for leave which explains that the purpose of the appointment of himself and Mr Jones as liquidators of the subsidiary companies is to liquidate those companies and include the intellectual property owned by the subsidiary companies into a proposed sale of the business of the three companies, which have been run as a single business enterprise, as a going concern.

[4]    Attached as exhibits to Mr Khov’s affidavit are copies of the Companies Office registrations for the Company, Altus IP and Altus UAS. These confirm that the Company is the sole shareholder of the other two companies and that all three companies have the same single director.

[5]Also attached as exhibits to Mr Khov’s affidavit are copies of:

(a)A resolution adopted by the Company’s board on 30 March 2020 at which it was resolved that Company be placed into voluntary administration and the applicants be appointed as joint and several administrators for this purpose;

1      The initial application, dated 2 April 2020, was made when the applicants were administrators of Altus UAS International. An updated application dated 4 May 2020 was filed subsequently to reflect the fact that the applicants had been appointed administrators of Altus UAS International on 30 April 2020.

2      Mr Khov initially filed an affidavit that was signed and dated 1 April 2020 but was unattested because of the level 4 lockdown under the Covid-19 emergency. Mr Khov filed an updated affidavit which was affirmed on 4 May 2020 and attested by a barrister and solicitor by means of audio-visual link.

(b)The minutes of a Watershed Meeting of creditors of the Company, held on 30 April 2020 by audio-visual link, at which the applicants were appointed liquidators of the Company.

[6]    Mr Savage, counsel for the applicants, has filed a memorandum dated 1 April 2020 in support of the application.

Reason for application

[7]The updated application states, at paragraph 2(f):

Consent of the Court may be necessary to the appointment of the Applicants as liquidators of the Subsidiaries. The Company is likely to be a Creditor of the Subsidiaries and is a shareholder of them. There may be issues under section 280(ca) and (cb) of the Act that arise solely out of the Applicants’ previous appointment as Administrators of the Company.

Statutory scheme

[8]Section 280(1) of the Act provides:

(1)Unless a court orders otherwise, none of the following persons may be appointed or act as a liquidator of a company:

…

(ca) a person who has, or whose firm has, within the 2 years immediately before the commencement of the liquidation, provided professional services to the company, unless, within 20 working days before the appointment of the liquidator, the board of the company resolves that the company will, on the appointment of the liquidator, be able to pay its debts and a copy of the resolution is delivered to the Registrar for registration:

(cb) a person who has, or whose firm has, within the 2 years immediately before the commencement of the liquidation, had a continuing business relationship (other than through the provision of banking or financial services) with the company, its majority shareholder, any of its directors, or any of its secured creditors, unless, within 20 working days before the appointment of the liquidator, the board of the company resolves that the company will, on the appointment of the liquidator, be able to pay its debts and a copy of the resolution is delivered to the Registrar for registration:

…

[9]Section 286(4)(b) of the Act provides:

(4)A court may, in relation to a person who fails to comply with an order made under subsection (3), or is or becomes disqualified under section 280 to become or remain a liquidator,—

…

(b)order that the person may  be  appointed and  act, or may continue to act, as liquidator, notwithstanding the provisions of section 280.

Application to bring originating application without notice

[10]   Rule 7.23 of the High Court Rules 2016 provides that one of the grounds for an application to be made without notice is where requiring an applicant to proceed on notice would cause undue delay or prejudice to the applicant.

[11]   As Lang J said in Re Grant with regard to circumstances similar to those in the present case:3

Without notice applications will be appropriate where there is urgency and the interests of creditors can be protected. The Court will often direct the successful applicants to serve both the application and the order made by the Court on creditors at the same time and in the same manner as notice is given for the first creditors meeting.

[12]   In this case, Mr Khov does not assert urgency but says it would be costly, cumbersome and cause delay to require service on all creditors of the Company and its subsidiaries, and that not all creditors of the subsidiaries are yet known. Mr Khov also says that if the application is granted, notice of the application will be given to known creditors of the Company and its subsidiaries together with the first liquidators’ report.

[13]On that basis, I am satisfied that leave should be granted.

3      Re Grant [2019] NZHC 2423 at [6].

The substantive application

[14]   Although the application and supporting documents are not as specific as would have been desirable,  I infer that Mr Khov and Mr Jones may be  caught by     s 280(1)(ca) and (cb) because Mr Khov or Mr Jones, in their roles as administrators of the Company, may have provided professional services to either or both of Altus IP and Altus UAS, and the Company is also likely to be a creditor of either or both of Altus IP and Altus UAS.

[15]   Mr Khov says that neither he nor Mr Jones has had any prior connection with the shareholders and directors of the Company or its subsidiaries and they know of no reason that would preclude their appointment as liquidators of Altus IP and Altus UAS other than the fact they had been appointed administrators of the Company.

[16]   Mr Khov says he does not perceive any risk that would compromise the independence of himself or Mr Jones or their ability to discharge their obligations to act independently, professionally and efficiently. He notes they are subject to oversight and regulation by the Restructuring Insolvency and Turnaround Association of New Zealand and its Code of Conduct, and by Chartered Accountants Australia and New Zealand and its Code of Ethics.

[17]   Mr Khov considers the best interests of the creditors of the Company and its subsidiaries would be served by appointing the same liquidators over the entire group of companies and that this will enable the liquidation of the Company and the subsidiaries to be conducted on a cost-effective basis. It will enable efficient investigation of the transactions between the Company and its subsidiaries and avoid the delay and duplication of effort that would be caused by the appointment of separate liquidators for the subsidiaries.

[18]   As Venning J stated in Re Bridgman, the purpose of s 280 is “… to ensure persons appointed have sufficient independence, competence and integrity to carry out the roles without causing risk to the creditors or third parties.”4

4      Re Bridgman [2016] NZHC 933 at [9]. See also Re Grant above n 1, at [5].

[19]   I am satisfied that appointment of Mr Khov and Mr Jones as liquidators of Altus IP and Altus UAS, while they are also liquidators of the Company, will not compromise their independence, competence or integrity to carry out their roles or create unacceptable risks to creditors or third parties. As Lang J said in Re Grant:5

It is the type of situation that commonly arises where a group of related companies is placed in liquidation at the same time. Intercompany indebtedness is often encountered in such cases. It generally makes sense to have a single liquidator appointed for all of the companies because he or she will have the ability to maintain an overview of the situation and to make objective decisions as to how the intercompany debts are to be recovered or otherwise dealt with.

[20]   I am satisfied that the same reasons apply in the present circumstances and that I should make the orders requested.

Decision

[21]   I make an order granting the applicants leave to bring an originating application without notice.

[22]   I make a further order under ss 280 and 286(4) of the Companies Act 1993 that Mr Khov and Mr Jones may be appointed to act as liquidators of Altus UAS Limited and Altus IP Limited, notwithstanding their previous appointment as administrators of Altus UAS International Limited. This order is conditional on the applicants providing known creditors of Altus UAS International Limited, Altus UAS Limited and Altus IP Limited with notice of this decision and written notice of the documents supporting their application with their first liquidators’ report.

G J van Bohemen J

5 Above n 1, at [8].