Evergreen Modular Limited (Administrators Appointed)

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1027

[2024] NZHC 1497

UNDER Part 19 of the High Court Rules 2016 and Sections 239Y, 239ADK and 239ADO of the Companies Act 1993

BETWEEN

EVERGREEN MODULAR LIMITED (ADMINISTRATORS APPOINTED)

BUILD PARTNERS LIMITED (ADMINISTRATORS APPOINTED)

RICHARDSON ROAD LIMITED (ADMINISTRATORS APPOINTED)

PROPERTY PARTNERS LIMITED (ADMINISTRATORS APPOINTED)

AND

an application by STEPHEN SPEERS

KEEN and MALCOLM RUSSELL MOORE

Administrators

Hearing: On the papers

Judgment:

7 June 2024

JUDGMENT OF VENNING J

This judgment was delivered by me on 7 June 2024 at 9.45 am , pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Russell McVeagh, Auckland

Re: EVERGREEN MODULAR LIMITED (ADMINISTRATORS APPOINTED) [2024] NZHC 1497 [7 June 2024]

[1] The Registrar has referred the administrators’ application for further orders in relation to the administration of Evergreen Modular Limited (Evergreen) Build Partners Limited, Richardson Road Limited (RRL) and Property Partners Limited (together the administration companies) to me as duty Judge. Coincidentally, on 30 May 2024 I dealt with an earlier application by the administrators in relation to the administration companies and so have some background knowledge about the issues.1 That decision and a previous judgment of O’Gorman J provide the background to the application.2

[2] The administrators seek further orders exempting them from liability for interim funding and in connection with a commitment letter. In addition, they seek a number of ancillary orders.

[3] The application is supported by an affidavit of Malcolm Moore, one of the joint administrators, and a memorandum of counsel. In short, the matter was not able to be resolved at the watershed meeting proposed for 5 June 2024 as it became clear that the lessors of Evergreen’s modular factory and warehouse (Evergreen Landlords) were unwilling to support the restructuring proposal in the form then proposed.

[4] The factory and warehouse is vital to the continued operations of Evergreen and the viability of the Evergreen business is fundamental to obtaining the additional funding, without which the proposed restructuring could not proceed.

[5]The watershed meeting was opened on 5 June but adjourned until 12 June.

[6] The administrators consider it important to obtain the support of the Evergreen Landlords and have sought to conclude negotiations with them. Mr Moore considers that there may now be an alignment on terms between the directors, the Evergreen Landlords and 1769 Funding. The negotiations have, however, caused delays and for that reason the administrators sought further funding from 1769 Funding to assist with the negotiations. Mr Moore confirms that the administrators consider it remains in the best interests of all stakeholders for the funding to be made available. However, there

1 Re Evergreen Modular Ltd [2024] NZHC 1403.
2 Re Evergreen Modular Ltd [2024] NZHC 1147.

remains a heightened risk that the final arrangements may fall through and the creditors will not vote in favour of the DOCA.

[7] As the administrators caused RRL and Evergreen to enter the commitment letter in relation to the funding the administrators are concerned to have their personal liability under that commitment letter limited.

[8] Largely for the reasons given in the previous judgments of this Court and in light of the further information obtained in Mr Moore’s affidavit of 6 June, the Court is satisfied that the orders sought, including the ancillary orders, are appropriate. Given the background to the matter and the urgency, it is also appropriate for the application to have been made without notice.

[9] Accordingly, for those reasons orders are made in accordance with paragraph 1(a)–(g) of the interlocutory application dated 6 June 2024.

Venning J

In the High Court of New Zealand, Venning J dealt with an application by the administrators of several companies, including Evergreen Modular Limited. The administrators sought further orders for interim funding and to limit their personal liability under a commitment letter related to the funding of Evergreen’s modular factory and warehouse. The application was made on the papers and the background to the matter involved previous judgments and an earlier application by the administrators regarding the administration companies. The viability of Evergreen’s business depended on the continued use of the factory and warehouse, and the support of the lessors, referred to as the Evergreen Landlords, was crucial for the restructuring proposal.

The legal issues before the court included whether the administrators should be exempt from liability for the interim funding and for their involvement in the commitment letter. Additionally, the court considered whether the ancillary orders sought by the administrators were appropriate. The administrators argued that the support of the Evergreen Landlords was essential for the restructuring and that there was a risk the creditors might not vote in favour of the deed of company arrangement if the arrangements did not finalise successfully. The court needed to balance the urgency of the situation with the need to protect the administrators from personal liability.

Venning J found that the orders sought by the administrators were appropriate, considering the urgency of the situation and the background provided by previous judgments and the affidavit of one of the joint administrators. The court was satisfied that the application, made without notice due to the urgency, aligned with the best interests of all stakeholders. The court granted the orders sought, including the ancillary orders, in accordance with the interlocutory application dated 6 June 2024.

The final orders included exempting the administrators from personal liability for the interim funding and their involvement in the commitment letter. The court also granted the ancillary orders sought by the administrators, recognising the importance of the negotiations with the Evergreen Landlords and the risk that the final arrangements might not proceed as intended. The court’s decision underscored the necessity of swift action to support the restructuring of the administration companies and protect the interests of all stakeholders involved.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established