Evergreen Modular Limited (Administrators appointed) - [2024] NZHC 1403

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1027

[2024] NZHC 1403

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:

30 May 2024

JUDGMENT OF VENNING J

This judgment was delivered by me on 30 May 2024 at 3.30 pm, 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 1403 [30 May 2024]

[1] The judgment of O’Gorman J dated 9 May 2024 refers.1 In that judgment O’Gorman J made orders exempting Stephen Keen and Malcolm Russell’s (the administrators’) liability for borrowing to fund the administration and their liability for rent and other payments, together with ancillary orders.

[2]The administrators now apply for further orders:

(a)exempting their liability for further borrowing,

(b)exempting their liability for rent to fund the administration; and

(c)dealing with ancillary matters.

[3] I adopt the background to the matter as helpfully set out in O’Gorman J’s judgment. It is unnecessary to refer to it in this judgment.

[4] The current application for exemption of liability for borrowing has become necessary as the administrators wish to allow Richardson Road Ltd (RRL) to borrow
$666,000 from 1769 Funding to fund an additional week of administration and continue operation of RRL while limiting the administrators’ personal liability for the borrowing to the amount of RRL’s available assets.

[5] The administrators also seek to be exempted from personal liability for rent and other payments becoming due under a lease held by Property Partners Ltd (PPL) over the Group’s Head Office.

[6] Finally they seek orders allowing service of the application and the orders in accordance with the notice that was previously granted in this proceeding.

[7] There is a degree of urgency because obtaining the interim funding order is a condition to drawing the amended facility and the order must be obtained no later than 4 June 2024. The administrators are also currently exposed to personal liability under the Head Office lease, which was not addressed in their first application.

1 Re Evergreen Modular Ltd (administrators appointed) [2024] NZHC 1147.

[8] The directors of the companies in administration have proposed to creditors a restructuring to be implemented by way of a Deed of Company Arrangement (DOCA) which is to be voted on by creditors at the watershed meetings. The watershed meetings of the companies are to be held on 5 June 2024. If the qualifying DOCA is proposed and approved at the meetings the administration companies will exit administration and control will return to the directors subject to the terms of the DOCA. The parties are currently in the process of negotiating long-term…

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.

Continue reading Evergreen Modular Limited (Administrators appointed)

Details

AGLC: Evergreen Modular Limited (Administrators appointed) [2024] NZHC 1403
Case: [2024] NZHC 1403
Decision Date: 30 May 2024

CaseChat Overview and Summary

Evergreen Modular Limited and several related entities are under administration with administrators appointed. The administrators have applied for further orders to exempt their liability for additional borrowing and rent payments, and to deal with ancillary matters. The application was heard on the papers by Venning J, who granted the orders sought by the administrators. The administrators wished to borrow $666,000 to fund an additional week of administration for Richardson Road Ltd, while limiting their personal liability for the borrowing to the amount of the company’s available assets. The administrators also sought to be exempted from personal liability for rent and other payments under a lease held by Property Partners Ltd over the group’s head office. The administrators argued that obtaining the interim funding order was a condition to drawing the amended facility and that the order must be obtained by 4 June 2024. The administrators were also currently exposed to personal liability under the head office lease. The directors of the companies in administration have proposed a restructuring to be implemented by way of a Deed of Company Arrangement. The further order in relation to the interim funding of $666,000 was necessary as negotiations for long-term finance documents had taken longer than anticipated. Venning J accepted that entry into the proposed amended facility was in the interests of the creditors and consistent with the objectives of Part 15A of the Companies Act 1993. Venning J also accepted that it was reasonable for the administrators to be unwilling to incur personal liability in relation to the lease, yet it remained necessary to use, possess and occupy the head office premises. Maintaining the head office lease was likely to be beneficial to a restructuring of the administration companies. The landlord would not be prejudiced as it was intended that rental would continue to be paid in part from the interim funding. Venning J also accepted that it was appropriate for the application to be made without notice and that the service orders sought were appropriate.

Orders