Bennetts Bookstores Limited

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-001420

[2019] NZHC 1658

UNDER Part 15A of the Companies Act 1993

IN THE MATTER

of BENNETTS BOOKSTORES LIMITED

(administrator appointed)

AND

an application by BRYAN EDWARD WILLIAMS as administrator of Bennetts Bookstores Ltd

Applicant

Hearing: On the papers

Judgment:

17 July 2019

JUDGMENT OF DOWNS J

This judgment was delivered by me on Wednesday, 17 July 2019 at 1 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Chapman Tripp, Auckland.

BENNETTS BOOKSTORES LTD [2019] NZHC 1658 [17 July 2019]

[1] Bennetts Bookstores Ltd operates a bookstore chain known to many New Zealanders as “Bennetts”. The chain specialises in tertiary education texts. On 21 June 2019, the directors of the company resolved to place it in administration. Put broadly, administration is when a failing company is placed in the hands of someone independent—an administrator. She or he takes control of the company, investigates its financial affairs, reports to creditors, and recommends what should happen to the company at a meeting called a watershed meeting.

[2] Mr Bryan Williams of BWA Insolvency was appointed the company’s administrator. Mr Williams seeks to extend the convening period—the period before the watershed meeting. It will expire 19 July 2019. The watershed meeting must be held on or before 26 July 2019. Mr Williams seeks a 30-working day extension of the convening period to 30 August 2019. Mr Williams seeks the extension to allow time to sell the company’s business.

[3] Mr Williams told the company’s creditors of his intention at the first meeting of creditors on 3 July 2019. Twelve supported the proposal. One did not. But, that creditor’s debt has now been assigned to a different creditor. And, it supports an extension.

[4] Extensions of time are not made as a matter of course. They are the exception, not the rule.1

[5] A 30-day extension is appropriate. The company has six stores across New Zealand. Mr Williams considers the business viable. He has received expressions of interest from possible purchasers. Mr Williams believes the business can be sold by 30 August 2019. A sale would be better for creditors (than an insolvent liquidation). Known creditors support the extension. Sale may provide continuity of employment for the company’s 12 employees and permit preservation of existing leases. More time is needed to explore possibility of sale. That sought is modest.

[6]I am also satisfied:

1 Re All Build Construction Co Pty Ltd; ex parte Featherby [2000] WASC 227.

(a)The watershed meeting may be held at any time during the period up to or within five business days after the end of the extended convening period, despite s 239ADO(2) of the Companies Act 1993.

(b)This application is properly decided on a without notice basis.

[7]So, I grant all orders sought.

……………………………..

Downs J

CaseChat Overview and Summary

Bennetts Bookstores Limited is a case involving the administration of a failing bookstore chain. The company had six stores across New Zealand and specialised in tertiary education texts. On 21 June 2019, the directors resolved to place the company in administration due to financial difficulties. Bryan Edward Williams, an administrator from BWA Insolvency, was appointed to manage the company's affairs. The central issue in this case was whether to extend the convening period, which is the time before a watershed meeting is held, to allow for the potential sale of the company's business. The administrator argued that a 30-working day extension was necessary to explore the possibility of a sale and to benefit the creditors, employees, and tenants of the company. The court was required to determine whether granting the extension was appropriate and whether the application could be decided without notice to the parties involved.

The court considered the application on the papers and found that a 30-day extension was appropriate in this case. The administrator had received expressions of interest from potential purchasers and believed that a sale could be completed by the end of the extended convening period. The court was also satisfied that the watershed meeting could be held at any time during the extended period, despite a provision in the Companies Act 1993. Furthermore, the court found that the application could be decided on a without notice basis. As a result, the court granted all orders sought by the administrator, allowing for the extension of the convening period.

In conclusion, the court granted the application for an extension of the convening period for Bennetts Bookstores Limited. The decision was based on the potential benefits of a sale for the company's creditors, employees, and tenants, as well as the modest nature of the requested extension. The court also determined that the application could be decided without notice to the parties involved.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

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Legal Principle Established