CBL Corporations Limited, re - [2018] NZHC 1998

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-000361

[2018] NZHC 1998

UNDER Part 19 of the High Court Rules and section 239ADO of the Companies Act 1993

IN THE MATTER OF

CBL CORPORATION LIMITED, LBC HOLDINGS NEW ZEALAND LIMITED, LBC HOLDINGS AMERICAS LIMITED, LBC HOLDINGS UK LIMITED, LBC HOLDINGS EUROPE LIMITED, LBC HOLDINGS AUSTRALASIA LIMITED, LBC TREASURY COMPANY LIMITED, DEPOSIT POWER LIMITED, SOUTH

BRITISH FUNDING LIMITED, CBL

CORPORATE SERVICES LIMITED (ALL ADMINISTRATORS APPOINTED)

AND

NEALE JACKSON and BRENDON JAMES GIBSON

Applicants

Hearing: On the papers

Judgment:

7 August 2018

JUDGMENT OF COURTNEY J

RE CBL CORPORATION LTD & ORS (ADMINISTRATORS APPOINTED) [2018] NZHC 1998 [7 August 2018]

Introduction

[1] The administrators of CBL Corporation Ltd and its subsidiaries are in voluntary administration under the control of administrators Brendon Gibson and Neale Jackson. The watershed meeting for CBL was previously adjourned to 17 August 2018 and the convening period for the subsidiaries to 17 November 2018.1 The administrators have applied for:

(a)An order further adjourning the watershed meeting of CBL to 17 November 2018; and

(b)An order further adjourning the convening period for the watershed meeting of the subsidiaries to 17 November 2018; and

(c)Other ancillary orders relating to service and the ability for parties to apply to be heard in relation to aspects of any order made.

[2] The application has been brought without notice pursuant to r 7.46 of the High Court Rules because the administrators consider that requiring it to proceed on notice would cause undue delay or prejudice. I accept that this is so.

[3] The CBL group is large and complex and including a number of overseas companies. The number of creditors means that service of the application would have been time-consuming and onerous. It would also have been impractical because of the imminent expiry of the previous adjournment of the CBL watershed meeting (and the desirability of the convening period for the watershed meeting of the subsidiaries to be aligned with the date for the CBL watershed meeting). Based on the liquidators’ experience with the previous adjournments, there is unlikely to be any objection or perceived disadvantage to creditors but any concern can be overcome by the requirement for the orders to be publicly advertised and an appropriate reservation of a right to apply to discharge or vary the orders.

1 Re CBL Corporation Ltd (Administrator Appointed) [2018] NZHC 1400 and Re CBL Corporation Ltd (Administrators Appointed) [2018] NZHC 1019.

Adjournment of watershed meeting

[4] The application to adjourn the watershed meeting for CBL is made under s 239AZ of the Companies Act 1993. Although s 239AZ(1) only permits an adjournment of the watershed meeting of 30 days, s 239AZ(2) permits the Court, on the administrator’s application, to order that the meeting be adjourned for longer. In my earlier decision allowing the first adjournment of the watershed meeting, I discussed the approach to take to such an application; the power under s 239AZ(2)…

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 1998
Decision Date: 7 August 2018

CaseChat Overview and Summary

In the High Court of New Zealand, the administrators of CBL Corporation Ltd and its subsidiaries sought an order further adjourning the watershed meeting of CBL and the convening period for the subsidiaries. This application arose from the voluntary administration of CBL Corporation Ltd and its subsidiaries under the Companies Act 1993. The court had to decide whether to grant the application for adjournment and extension, considering the complexity of the administration, the need for further asset realisation, the pending outcome of related litigation, and the interests of creditors and other stakeholders. The court granted the application for further adjournment and extension, aligning the dates for the watershed meetings of CBL and its subsidiaries to 17 November 2018. The court found that the adjournment and extension were appropriate, given the complexity of the administration, the need for further asset realisation, and the pending outcome of related litigation. The court also found that the adjournment and extension would not prejudice any person, including creditors of CBL, and could be accommodated by reserving leave to any interested person to vary or set aside the order. The court granted the application for adjournment and extension, subject to certain terms and conditions, including public advertisement of the orders and the right to apply to discharge or vary the orders.

This case highlights the importance of considering the complexity of the administration, the need for further asset realisation, and the pending outcome of related litigation when deciding whether to grant an application for adjournment and extension of a watershed meeting under the Companies Act 1993. It also highlights the importance of balancing the interests of creditors and other stakeholders with the need for further investigation and evaluation of restructuring proposals. The court's decision in this case provides guidance on how to approach such applications and the factors to consider when deciding whether to grant them.

Orders