CBL Corporation Limited v Jackson - [2018] NZHC 1400

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-000361

[2018] NZHC 1400

UNDER Section 239AZ of the Companies Act 1993

IN THE MATTER OF

CBL CORPORATION LIMITED (ADMINISTRATOR APPOINTED) a duly

incorporated company having its registered office at Level 16, 45 Queen Street, Auckland

BETWEEN

NEALE JACKSON AND BRENDON GIBSON

Applicants

Hearing: On the papers

Judgment:

13 June 2018

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 13 June 2018 at 4.30 pm
pursuant to R 11.5 of the High Court Rules Registrar / Deputy Registrar
Date …………………………

JACKSON & OR [2018] NZHC 1400 [13 June 2018]

[1] CBL Corporation Ltd (CBL) and subsidiaries in the CBL Group are in voluntary administration. A watershed meeting of CBL was held on 18 May 2018 but adjourned to be held on a date no later than 2 July 2018. The administrators have applied without notice for an order under s 239AZ(2) of the Companies Act 1993 to further adjourn the watershed meeting.

[2] The application is supported by a memorandum of counsel and an affidavit from one of the administrators, Mr Brendon Gibson. The essential ground for the application is that a restructuring proposal by two of the directors of CBL has been made and the administrators consider that it warrants careful consideration but the current timeframe would not allow that.

[3]Section 239AZ is couched broadly:

(1)The watershed meeting may be adjourned, but only to a day that is not more than 30 days after the first day on which the meeting was held.

(2)However, the court may, on the administrator’s application, order that the meeting be adjourned for more than 30 working days.

[4] There are no previous cases involving an application under s 239AZ(2). Such an application must, of course, be considered against the purpose and the other provisions of the voluntary administration regime established by Part 15A of the Companies Act. The objects of Part 15A are:1
… to provide for the business, property, and affairs of an insolvent company, or a company that may in the future become solvent, to be administered in a way that –

(a)maximises the chances of the company, or as much as possible of its business, continuing in existence; or

(b)if it is not possible for the company or its business to continue in existence, results in a better return for the company’s creditors and shareholders than would result from an immediate liquidation of the company.

[5] The other provisions of Part 15 make it clear that an administrator is to act as promptly as possible. In Nylex (New Zealand) Ltd (administrators appointed and in receivership) v Nylex Engineering Systems Ltd (administrators appointed and in

1 Companies Act 1993, s 239A.

receivership) Heath J referred to the expectation that an administration will be relatively speedy.2 However, he also noted, in the context of an application under s 239AT(3) to extend the convening period for a watershed meeting, that there…

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

Case: [2018] NZHC 1400
Decision Date: 13 June 2018

CaseChat Overview and Summary

CBL Corporation Limited and its subsidiaries are in voluntary administration, and the administrators have applied to the High Court for an extension of the adjournment of the watershed meeting. The watershed meeting was originally scheduled for 18 May 2018 but was adjourned to no later than 2 July 2018. The administrators are seeking a further adjournment until 17 August 2018, to allow time to consider a restructuring proposal that has been put forward by two of the directors of CBL. The administrators believe that the proposal warrants careful consideration but that the current timeframe would not allow for this.

The legal issue before the court was whether the administrators' application should be granted. The court considered the purpose of the voluntary administration regime and the balance between the need for prompt action and the need to avoid undue haste that could prejudice sensible and constructive actions directed towards the objects of the regime. The court also considered the impact of the proposed adjournment on the creditors and other stakeholders, and whether there was any apparent prejudice to any party in adjourning the matter.

The court granted the administrators' application, finding that the restructuring proposal could result in benefit to both creditors and shareholders, and that the complexity of the group's affairs meant that any proposal for the restructuring of the business ought not to be approached hastily. The court also noted that there was no apparent prejudice to any party in adjourning the matter and that if there was concern from any party that such a prejudice would arise, it could be accommodated by reserving leave to any interested person to vary or set aside the order.

The court made orders in accordance with paragraph 1(a)-(f) of the interlocutory application dated 12 June 2018.

Orders