Black Dog Consulting Limited - [2023] NZHC 573

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-132

[2023] NZHC 573

UNDER Part 15A of the Companies Act 1993 and Part 19 of the High Court Rules

IN THE MATTER

of BLACK DOG CONSULTING LIMITED

(administrator appointed) a duly

incorporated company having its registered office at Level 2, 40 Lady Elizabeth Lane, Wellington

AND

IN THE MATTER

of an application pursuant to section 239AT(3) of the Companies Act 1993 by HEATH LESLIE GAIR of Porirua, administrator, for an order extending the convening period of the voluntary

administration of BLACK DOG CONSULTING LIMITED

Hearing: On the papers

Appearances:

D G Dewar for Applicant

Date of Result:

20 March 2023

Reasons:

21 March 2023

JUDGMENT OF McQUEEN J

[1] The applicant is the appointed administrator of Black Dog Consulting Ltd (BDCL). He has applied on a without notice basis for orders:

(a)granting leave to make this application without notice;

RE BLACK DOG CONSULTING LIMITED [2023] NZHC 573 [20 March 2023]

(b)extending the maximum period of 20 working days under s 239AT(2) of the Companies Act 1993 during which the applicant must convene a watershed meeting for BDCL up to and including 19 June 2023;

(c)granting leave to any person who can demonstrate a sufficient interest to apply to the Court to modify or discharge these orders on appropriate notice being given to the applicant and the Court;

(d)determining that the costs of this application are an expense incurred by the applicant in the administration of the company; and

(e)directing notice of these orders is to be emailed to BDCL’s creditors at their last known email address and advertised once in the Dominion Post newspaper.

[2] I granted the application on 20 March 2023. My reasons for doing so now follow.

Background

[3] BDCL carries out construction, carpentry, concreting and earthquake strengthening services throughout the Wellington region. The applicant was appointed administrator on 21 February 2023 by directors’ resolution in view of BDCL’s poor financial position. BDCL commenced trading in 2006 and since 2018 has grown significantly in size due predominately to commercial seismic work in the Wellington CBD. BDCL has one director, Mr Peter Jones, who is also the 100 per cent shareholder. The company made a net profit for the year ending 2021 of $894,404 and a net loss for the year ending 2022 of $74,322. It currently trades with 16 staff and four contractors.

[4] Mr Gair, the administrator of BDCL, is an experienced insolvency practitioner. In his affidavit in support of the application, Mr Gair explains that he is seeking additional time to convene the watershed meeting so that he can complete his investigation into BDCL, resolve outstanding receivables and undertake an asset sale, as discussed further below. His goal is to repay creditors in full and return the company

to its director, or alternatively, put forward a deed of company arrangement to creditors at the watershed meeting.

[5] Mr Gair says that BDCL’s financial position is not…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Black Dog Consulting Limited [2023] NZHC 573
Case: [2023] NZHC 573
Decision Date: 21 March 2023

CaseChat Overview and Summary

The High Court of New Zealand, Wellington Registry, considered an application by Heath Leslie Gair, the administrator of Black Dog Consulting Limited (BDCL), for an extension of the convening period for a watershed meeting under section 239AT(3) of the Companies Act 1993. BDCL, a construction and earthquake strengthening services company, had been placed in voluntary administration by its directors due to financial difficulties. Mr Gair sought an extension to convene the meeting beyond the statutory 20 working days to allow him to complete an investigation into BDCL's financial position, resolve outstanding receivables, and undertake the sale of surplus assets.

The court was required to decide whether the extension was justified under the Companies Act 1993. The relevant legal issue was whether the requested extension was necessary to achieve the objectives of the voluntary administration regime, which include maximising the chances of the company continuing in existence or ensuring a better return for creditors and shareholders than an immediate liquidation. The court considered factors such as the time needed to execute an orderly process of disposal of assets, the time needed for a thorough assessment of a proposal for a deed of company arrangement, and whether additional time would enhance the return for unsecured creditors.

The court accepted Mr Gair's evidence that BDCL appeared balance sheet solvent, with significant receivables and surplus assets. The court found that the 90-day extension would allow sufficient time for the administrator to recover funds from customers and sell assets, which would likely benefit creditors. The court was satisfied that the extension was consistent with the speedy and summary objectives of administration, and that it was necessary for the administrator to effectively undertake these steps.

The court granted the application for an extension of the convening period up to and including 19 June 2023. The court also made orders allowing the application to proceed without notice, permitting interested parties to apply to modify or discharge the orders, determining that the costs of the application were an expense of the administration, and directing notice of the orders to BDCL's creditors.

Orders