Polymer Group Limited v South Vineyard Limited HC Wellington CIV-2009-485-1298

[2010] NZHC 2358

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2009-485-1298

BETWEEN  POLYMER GROUP LIMITED Plaintiff

ANDSOUTH VINEYARD LIMITED Defendant

CIV-2010-485-897

AND IN THE MATTER OF  the Companies Act 1993

BETWEEN  CAPITAL AND COAST DISTRICT HEALTH BOARD

Plaintiff

ANDSOUTH VINEYARD LIMITED Defendant

Hearing:         15 November 2010

Appearances: S. Brown - Counsel for defendant in each matter

- Counsel for creditors Xtreme Forwarding NZ Ltd, Trent Property Holdings Ltd, Barry M Osborne, Tom Scott Productions Ltd, Hirepool Ltd and DJI Fibreglass Ltd

- Appearing on instructions from C. Walker, counsel for plaintiffs in 1298, Polymer Group Ltd.

D. Lester - Counsel for plaintiff in 897 Capital and Coast District

Health Board

Judgment:      15 November 2010

ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:         Stephen Brown, Solicitor, PO Box 12293, Wellington Maude & Miller, Solicitors, PO Box 213, Wellington C. Walker, Solicitors, PO Box 38440, Howick

POLYMER GROUP LIMITED V SOUTH VINEYARD LIMITED HC WN CIV-2009-485-1298  15 November

2010

Introduction

[1]      Before the Court are applications to place the defendant company South Vineyard Limited into liquidation by Polymer Group Ltd (CIV-2009-485-1298) and by Capital and Coast District Health Board (CIV-2010-485-897).

[2]     The proceeding in particular brought by Polymer Group Limited was commenced in July 2009.  It has been the subject of a number of adjournments since that time to enable the directors of the defendant company to endeavour to make financial arrangements with third parties first, to settle their outstanding creditors and secondly, to “save” the movie making venture which the defendant was incorporated to produce.

[3]      The debts currently outstanding from existing creditors of the defendant, as I

understand the position, are approximately $5.8 million.

[4]      The  directors  of  the  defendant  company  I  am  told  have  paid  some

$200,000.00 into the company in recent months and this amount has been distributed pro-rata as a part payment to creditors of the company.

[5]      In  recent  weeks Mr Brown, counsel  for the defendant,  has  said that  the defendant company has been successful in reaching an agreement with third party financiers who he has indicated are willing to finance completion of the movie in question.   Those financiers have apparently paid $1,000,000.00 into Mr Brown’s trust account which is held at present.

[6]      This  $1,000,000.00  was  paid  on  the  basis  that  it  would  only  be  made available to the defendant company if a part 15 Companies Act 1993 Creditors’ Proposal was approved and proceeded.  On this basis the $1,000,000.00 was to be paid pro rata to existing creditors of the company.

The Part 15 Companies Act 1993 Proposal

[7]      Also before the Court is an On Notice Application by the defendant company for approval of a Part 15 Companies Act 1993 Proposal to its creditors.

[8]      This proposal broadly takes the form of a 1 year moratorium from action by existing creditors of the defendant company, a payment of $1,000,000.00 pro-rata to those creditors immediately and an injection of finance from the third party funders to  enable  completion  of  the  movie  and  settlement  of  the  balance  owing  to  all creditors as I understand it over that 12 month period.

[9]      That On Notice Part 15 Compromise Application to this Court has not been opposed by any creditors.   The proposal was properly put to all creditors of the company and a postal ballot meeting occurred.

[10]     As I understand the position, of the total 275 creditors of the company, some

214 or 78% in number voted in favour of the proposal.  Those voting in favour of the proposal held some $5.2 million of the total $5.8 million indebtedness of the defendant company and this totalled 89%.

[11]     Mr Brown, counsel for the defendant indicated to the Court today that only 3 creditors voted against the proposal these totalling 1% in number.  Those creditors voting against had debts of about $15,000.00 which represented less than 1% of the total creditors of the company.

[12]     Before me today, Ms Lester appeared as counsel for the plaintiff in matter

897, the Capital & Coast District Health Board and indicated that there was also no opposition to the Part 15 proposal from the Board.  She went on to state that if the proposal is approved by the Court then the application by Capital & Coast District Health Board to place the defendant company into liquidation would be withdrawn.

[13]     Mr  Brown,  counsel  for  the  defendant  also  confirmed  today that  he held instructions from Mr Walker, counsel for Polymer Group  Limited to  appear on behalf  of  that  plaintiff.     The  instructions  from  Polymer  Group  Limited  as  I understand the matter are similar to those confirmed to the Court today by Capital and Coast District Health Board.     These are to the effect that Polymer Group Limited does not oppose the Part 15 Proposal and in fact as I understand it supports the proposal.   And similarly, if the proposal is approved, then the liquidation proceedings from that plaintiff can also be withdrawn.

[14]     Mr Brown also indicated today that he appeared with instructions from a number of other creditors of the defendant company, these being Xtreme For New Zealand Limited, Trent Property Holdings Limited, Barry M Osborne, Tom Scott Productions  Limited,  Hire  Pool  Limited  and  DJI  Fibreglass  Limited.     As  I understand the position, those creditors also support the present Part 15 Application.

[15]     Finally, today Mr Brown handed up a consent from another creditor New Millenium Design Limited confirming its approval to the Part 15 Compromise Proposal.

[16]     Taking into account all matters before the Court I am satisfied that it is appropriate here for the Court to approve the Part 15 Compromise Proposal which has been accepted by what is a vast majority of the creditors in this case.   It will provide those creditors with an immediate pro-rata payment of $1,000,000.00 amounting to about 20% of the outstanding indebtedness, a payment alone that, but for the proposal, they would be unlikely to achieve.

[17]     It will also provide creditors with the hope and expectation that the balance of their individual debts will be settled within the next 12 month period.  Finally, there is some hope and expectation, as I understand the position, that the third party financiers will provide additional capital to enable the movie in question to be re- activated and completed.  This as I see it is in the broad interests of all concerned including the public and commercial community generally.

Orders

[18]     That  said,  an  order  is  now  made  in  terms  of  the  Companies  Act  1993 approving  the  Part  15  Creditor’s  proposal  in  terms  of  the  application  by  the defendant filed in this Court on 3 November 2010.

[19]     The following ancillary orders of this Court are also made:

(a)       All existing creditors of the defendant South Vineyard Limited (“the company”) henceforth shall not take any winding up, liquidation or

enforcement  action  against  the  company  before  the  1st   December

2011 subject to satisfactory performance of the actions and conditions described below.

(b)The  sum  of  $1,000,000.00  currently  held  in  the  trust  account  of Stephen Brown, Solicitor, Wellington is to be transferred to the company and distributed as follows:

(i)To pay the costs of the creditors of the company as ordered subsequently by this Court; and

(ii)The balance to be distributed pro-rata to all creditors as a part and not full satisfaction of their debts owing by the company.

(c)       If  the  $1,000,000.00  referred  to  above  is  not  distributed  by  30

November 2010, Polymer Group Limited and/or Capital and Coast District Health Board shall be entitled to have their respective liquidation applications placed into the next Companies List of this Court and an appropriate order made for the company to be wound up.

(d)      If the $1,000,000.00 distribution referred to above is made by 30

November 2010, then the company is to file in this Court an affidavit confirming such distribution and an order is to follow that these proceedings CIV-2009-485-1298 and CIV-2010-485-897 are to be dismissed.

(e)      Notwithstanding these orders the company is entitled to negotiate with and  reach  compromise  with  individual  creditors  regarding  their existing debts if thought appropriate.

(f)From and after 1 December 2011, any creditor of the company whose debt is not satisfied in full shall be entitled to take such proceedings against the company as they shall at that time think fit.

Costs

[20]     As to costs on the various applications before the Court, these are reserved. Although certain submissions on costs were made to me today, any further submissions on costs which the defendant company shall wish to make are to be filed and served within a further 10 working days of today.

[21]     Any  further  submissions  in  response  from  Polymer  Group  Limited  from Capital and Coast District Health Board and from any creditors in support or other creditors of the defendant company are then to be filed and served within a further

10 working days of that date.

[22]     Those submissions are then to be referred to me and a decision on costs will be made.

Miscellaneous

[23]     At the request of counsel, a further order is now made that the voting papers for the Creditors’ Compromise Application in terms of part 14 Companies Act 1993 currently held by Mr Wayne Seymour Chapman, Wellington, Solicitor may be destroyed.

‘Associate Judge D.I. Gendall’