Old Villa Wellness Group Limited

[2022] NZHC 3563

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-2385

[2022] NZHC 3563

UNDER

Part 18 of the High Court Rules 2016 and s 239AZ of the Companies Act 1993

IN THE MATTER

of OLD VILLA WELLNESS GROUP

LIMITED (Administrators Appointed); TEAM CULTURE PLUS LIMITED

(Administrators Appointed); OLD VILLA TRUSTEE SERVICES LIMITED
(Administrators Appointed)

AND

of an application by REES GRAHAM LOGAN and ANDRES JOHN MCKAY

Defendant

Hearing:	On the papers
Appearances:	A L Harlowe for Applicants
Judgment:	20 December 2022

JUDGMENT OF LANG J

[on without notice originating application for orders under s 239AZ of the Companies Act 1993

This judgment was delivered by me on 20 December 2022 at 3 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

Solicitors:

Couch Harlowe Kovacevich, Auckland

In the matter of OLD VILLA WELLNESS GROUP LTD [2022] NZHC 3563 [20 December 2022]

[1]     The applicants in this proceeding are the administrators of three companies that operate a dental practice in Hamilton. The companies are Old Villa Wellness Group Limited, Team Culture Plus Limited and Old Villa Trustee Services Limited.

[2]     The administrators seek orders on a without notice basis permitting them to delay the resumption of ‘watershed” meetings for all three companies until 31 March 2023.

Background

[3]     The three companies are currently insolvent and have a combined indebtedness totalling approximately $750,000. The administrators were appointed as the administrators of the first two companies on 9 October 2022 and of the third company on 15 November 2022.

[4]     The administrators held the initial watershed meeting for the first two companies as required on 15 November 2022. They adjourned this for up to 30 working days because they were running a sale campaign to sell the business but a sale had not been completed. The sale campaign remains ongoing and, to facilitate this, the dentistry practice remains in operation. It has several permanent employees.

[5]     The first watershed meeting for the third company will be held on 21 December 2022 and will be adjourned on that date for a 30 day period to enable the sale process to continue.

[6]     As matters currently stand, the watershed meetings for the first two companies will need to be held no later than 6 January 2023. It will need to be held for the third company no later than 13 February 2023. However, the administrators will not be in a position to provide creditors and shareholders with informed advice regarding the available options for the companies by those dates. In order to do this they need either to conclude a sale of the companies’ business or improve the profitability of the business to the point where the companies are able to enter into a deed of arrangement with creditors. At this time it appears more likely that the former will be the appropriate option. However, the administrators need more time to investigate and progress whichever option they consider to be appropriate.

Decision

[7]     If watershed meetings were held in January and February 2023 as currently scheduled the companies would probably be placed in liquidation. This is unlikely to be in the best interests of creditors and shareholders because they would receive little by way of return. The most effective way to provide the greatest return is for the business to be sold to an entity who would continue to operate it.

[8]     I am satisfied it is appropriate to grant the orders sought on a without notice basis to enable the sale process to continue. I therefore make orders as sought in paragraph 1 of the without notice originating application dated 19 December 2022.

Lang J