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Evergreen Modular Limited (administrators appointed)

Evergreen Modular Limited (administrators appointed)

Case [2024] NZHC 1147 9 May 2024

Administrators' Liability

Funding Order

Exemption from Personal Liability

Electronic Notice

Creditors' Meetings

Insolvency Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1027

[2024] NZHC 1147

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

IN THE MATTERS OF

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

Counsel:

A R MacDuff and S J Jones for Administrators

Judgment:

9 May 2024

JUDGMENT OF O’GORMAN J

This judgment was delivered by me on 9 May 2024 at 4 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

…………………………………

Solicitors:
Russell McVeagh, Auckland

Re EVERGREEN MODULAR LIMITED (administrators appointed) [2024] NZHC 1147 [9 May 2024]

Overview

[1] This is an application by the Administrators, Stephen Keen and Russell Moore, who have been appointed to four companies:

(a)Evergreen Modular Ltd (administrators appointed) (Evergreen);

(b)Build Partners Ltd (administrators appointed) (BPL);

(c)Richardson Road Ltd (administrators appointed) (RRL) and, together with Evergreen and BPL, the “Initial Administration Companies”; and

(d) Property Partners Ltd (administrators appointed) (PPL), (together, the “Administration Companies”).
[2]The Administrators apply for orders to the following effect:

(a)An order under s 239ADO of the Companies Act 1993 (the Act) that any liability arising out of a drawdown under the Amended Facility Agreement will constitute a debt incurred in the performance and exercise of the administrators’ functions and granting an order excluding their personal liability for those debts (the Funding Order).

(b)Orders under s 239ADK of the Act exempting the Administrators from rental and other personal liability under certain leases and hire agreements.

(c)Ancillary orders, including for this application to be determined without notice, and for notices required to be given during the course of administration to be provided informally rather than requiring personal service.

[3] An administration is intended to be a relatively short-term measure that freezes the company’s financial position while the administrator and the creditors determine the company’s future. After taking control of the company, the administrators investigate the company’s affairs and form an opinion as to whether it would be in its creditors’ interests for:1

(a)the company to enter into a deed of company arrangement (DOCA); or

(b)the administration to end; or

(c)a liquidator to be appointed.

[4] The present orders are sought in the wider context of the directors’ intention to pursue a restructure under an intended DOCA, which would require creditor approval at a watershed meeting.

Factual background

[5] The Administrators were appointed to the Administration Companies by directors’ resolutions passed on 2 May 2024 for the Initial Administration Companies, and on 3 May 2024 for PPL. On 3 May 2024, the Administrators filed the present application, along with a memorandum in support and a supporting affidavit of Mr Keen.

[6]The application is made with urgency because:

(a)the Administrators are personally liable for rent and other payments for premises occupied…

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 1147
Case: [2024] NZHC 1147
Decision Date: 9 May 2024

CaseChat Overview and Summary

The case involves an application by the administrators of four companies, Evergreen Modular Limited, Build Partners Limited, Richardson Road Limited, and Property Partners Limited, for orders under the Companies Act 1993. The administrators seek to limit their personal liability for certain debts and obligations, including liabilities arising from a drawdown under an amended facility agreement, rental and other payments under leases and hire agreements, and to make ancillary orders for the efficient administration of the companies. The application is made in the context of a proposed restructuring of the companies under a deed of company arrangement. The administrators argue that the orders are necessary to facilitate the administration and potential restructuring of the companies, which would benefit creditors more than an immediate liquidation. The court considers the legal principles governing the liability of administrators and the objectives of the administration process, and finds that the orders sought are appropriate given the urgency of the situation and the potential benefits to creditors. The court grants the orders, including an order limiting the administrators' personal liability to the available assets of the companies and exempting them from personal liability for certain leases and hire agreements. The court also makes ancillary orders to allow for the efficient administration of the companies, including the use of electronic communication for notices and meetings. Leave is reserved for any interested party to apply to vary or set aside the orders.

Orders