New Ezibuy Limited - [2023] NZHC 1015

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE

CIV-2023-454-16

[2023] NZHC 1015

UNDER sections 239ADO and 239ADR of the Companies Act 1993 and Part 19 of the High Court Rules 2016

IN THE MATTER

of NEW EZIBUY LIMITED, EZIBUY CUSTODIAN LIMITED, EZIBUY HOLDINGS LIMITED, EZIBUY

LIMITED, EZIBUY OPERATIONS

LIMITED, LAST STOP SHOP LIMITED and SARA APPAREL LIMITED (ALL IN VOLUNTARY LIQUIDATION)

AND

of an application by DAMIEN MARK HODGKINSON and KATHERINE

ELIZABETH BARNET

Applicants

Teleconference: 26 April 2023

Counsel:

M Kersey and A A Duff for Applicants

Judgment:

2 May 2023

JUDGMENT OF RADICH J

Introduction

[1] Voluntary administrators of the Ezibuy Group of Companies1 (the Ezibuy Group) were appointed under Part 15A of the Companies Act 1993 (the Act) on 3 April 2023 when Mosaic Brands Limited, the ultimate holding company, withdrew financial support for the companies in the group.

1 NewEzibuy Limited, Ezibuy Custodian Limited, Ezibuy Holdings Limited, Ezibuy Limited, Ezibuy Operations Limited, Last Stop Shop Limited and Sara Apparel Limited.

RE NEW EZIBUY LIMITED AND ORS [2023] NZHC 1015 [2 May 2023]

[2] In a judgment of 5 April 2023, Palmer J granted leave for this proceeding to be commenced without notice, made orders as to the way in which notices to creditors under Part 15A of the Act were to be sent, gave directions about the holding of the first creditors meeting and reserved leave for any creditor of the Ezibuy Group to apply to vary or set the orders aside.2

[3] The first creditors meeting was held in accordance with s 239AN of the Act on 14 April 2023. At that meeting, the administrators outlined:

(a)their intended course of action for Ezibuy Group, including a strategy of realising inventory and pursuing a sale of parts of the business; and

(b)their intention to make the application that is the subject of this decision.

[4] The next step for the administrators in the administration process prescribed by Part 15A of the Act is the calling of a watershed meeting; a meeting of creditors to decide the future of the company and, in particular, whether the company might execute a deed of company arrangement under subpart 13 of Part 15A.3

[5] Under s 239AT of the Act, the watershed meeting is to be convened by the administrators within a period of 20 working days from the date of their appointment (the convening period). The Court may, under that provision, extend the convening period. With the appointment of the administrators on 3 April 2023, and in the absence of an extension, the meeting will need to be convened by 4 May 2023.

[6] The administrators are seeking an extension of the convening period so that they can complete their investigations into the position of the Ezibuy Group, more accurately report to – and make meaningful recommendations to – the creditors, further investigate the potential sale of parts of the group and to continue to trade with the protection…

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

AGLC: New Ezibuy Limited [2023] NZHC 1015
Case: [2023] NZHC 1015
Decision Date: 2 May 2023

CaseChat Overview and Summary

In the High Court of New Zealand, the voluntary administrators of the Ezibuy Group of Companies sought an extension to the convening period for the watershed meeting and exemption from personal liability for "other payments" under the leases of the group's companies. The Ezibuy Group, comprising several companies in voluntary liquidation, was appointed administrators to manage the companies' affairs and attempt to maximize returns for creditors. The administrators sought an extension of the convening period to allow for the completion of investigations, accurate reporting to creditors, and further exploration of potential sales of parts of the group. They also sought exemption from liability for "other payments" under the leases, which could result in the vacating of stores and adversely affect trading. The court found that the extension was appropriate to achieve the objectives of the voluntary administration regime and maximize returns for creditors. The exemption from liability for "other payments" was also appropriate, as the administrators were not willing to incur personal liability and the landlords would not be significantly disadvantaged as they would continue to be paid rent. The court made orders to extend the convening period to 18 July 2023 and exempt the administrators from liability for "other payments" under the leases of the Ezibuy Group companies.
In summary, the High Court of New Zealand granted the administrators' application for an extension to the convening period for the watershed meeting and exemption from personal liability for "other payments" under the leases of the Ezibuy Group companies. The court found that the extension was appropriate to achieve the objectives of the voluntary administration regime and maximize returns for creditors. The exemption from liability for "other payments" was also appropriate, as the administrators were not willing to incur personal liability and the landlords would not be significantly disadvantaged as they would continue to be paid rent.

Orders