Kumfs Group Limited - [2019] NZHC 2552

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002082

[2019] NZHC 2552

IN THE MATTER of Part 19 of the High Court Rules and sections 239F and 280 of the Companies Act 1993

IN THE MATTER

of KUMFS GROUP LIMITED, KUMFS BRAND LIMITED,

ZIERA RETAIL NZ LIMITED and ZIERA SHOES NZ LIMITED

IN THE MATTER

of an application by
CONOR JOHN MCELHINNEY and

ANDREW JOHN GRENFELL of Auckland, insolvency practitioners

Applicants

Hearing: [On the Papers]

Counsel:

S A Barker and M Harris for the Applicants

Judgment:

4 October 2019

Reasons:

8 October 2019

JUDGMENT OF EDWARDS J

This judgment was delivered by me on 8 October 2019 at 3.00 pm pursuant to r 11.5 of the High Court Rules.

Deputy Registrar

Solicitors: Buddle Findlay, Barristers and Solicitors, Wellington

RE KUMFS GROUP LTD [2019] NZHC 2552 [8 October 2019]

[1] The applicants are the appointed administrators of Kumfs Group Ltd, Kumfs Brand Ltd, Ziera Retail NZ Ltd and Ziera Shoes NZ Ltd (the Companies). They applied on a without notice basis for orders:

(a)dispensing with service;

(b)extending the convening period in the administration, as defined in s 239AT(2) of the Companies Act 1993 (Act) to 31 January 2020;

(c)extending the 14-day period under s 239Y of the Act within which they are required to give notice of termination of contracts of employment without incurring personal liability to employees to 31 January 2020; and

(d)orders incidental to the extensions.

[2] I granted the application on 4 October 2019. My reasons for doing so now follow.

Background

[3] The applicants were appointed administrators by the directors of each of the Companies on 24 September 2019. The appointment is made under Part 15A of the Act.

[4] The Companies form part of a group carrying out the wholesale and retail sale of shoes throughout New Zealand, Australia, the United States and Asia. The Companies have approximately 22 leased retail sites around New Zealand, 140 employees, approximately 130 unsecured creditors, and five secured creditors.

[5] Since their appointment, the administrators have been investigating the Companies’ affairs to assess the available options going forwards. They are looking at a potential sale of the businesses. If they are unable to find a buyer, they will need to consider a sale of stock and intellectual property. In the meantime, the administrators have adopted a “trading as usual” strategy.

[6] Investigating these options takes time. Accordingly, the administrators seek extensions to the relevant statutory periods to allow their investigations to continue.

Without notice

[7] The application is commenced on a without notice basis. As explained further below, the relevant time periods are relatively short. Requiring service of the application on any interested parties at this interim stage would cause unnecessary delay. Further, the administrators are of the view that interested parties are unlikely to be prejudiced by the extensions sought, and in fact, it is to their benefit. In any respect, if any parties are so prejudiced, then…

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 Kumfs Group Limited

Details

AGLC: Kumfs Group Limited [2019] NZHC 2552
Case: [2019] NZHC 2552
Decision Date: 4 October 2019

CaseChat Overview and Summary

The applicants, Conor John McElhinney and Andrew John Grenfell, who are the appointed administrators of Kumfs Group Limited, Kumfs Brand Limited, Ziera Retail NZ Limited, and Ziera Shoes NZ Limited, applied to the High Court of New Zealand for orders dispensing with service, extending the convening period for the administration, and extending the period within which they are required to give notice of termination of contracts of employment without incurring personal liability to employees. The application was made on a without notice basis due to the short relevant time periods and the belief that interested parties were unlikely to be prejudiced by the extensions sought. The administrators sought extensions to the convening period and the period for giving notice of termination of contracts of employment to allow time to investigate options for the businesses and finalise the report to creditors.

The legal issues before the court were whether the court should dispense with service, extend the convening period, and extend the period for giving notice of termination of contracts of employment. The court considered the purpose of the voluntary administration regime and the duties imposed on administrators, as well as the potential for voluntary administration to operate adversely on creditors of the company. The court also considered factors relevant to the determination, such as the size, sale, and complexity of the administration.

The court found that due to the size, sale, and complexity of the administration, an extension was required to allow the administrators to complete investigations into the options for the businesses and finalise the report to creditors. The court granted the application and made the following orders: service of the application was dispensed with, the convening period in the administration was extended to 31 January 2020, the period of time in which the applicants were required to give notice of termination of a contract of employment was extended to 31 January 2020, the administrators may convene a watershed meeting in respect of any of the Companies at any time within the period for which the extension had been granted, leave to apply was granted to any person who can demonstrate a sufficient interest to modify or discharge the above orders upon three working days’ notice being given to the applicants, and the administrators were required to advertise the orders once in The New Zealand Herald, Dominion Post, The Press, and Otago Daily Times and post a copy of the orders on McGrathNicol’s website within seven days of the Court’s order. The costs of this application were to be paid out of the assets of the Group.

Orders