Re Bridgman

[2016] NZHC 933

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-000928 [2016] NZHC 933

IN THE MATTER OF

Part 19 of the High Court Rules and

sections 239F and 280 of the Companies
Act 1993

AND

IN THE MATTER OF

an application concerning NICHOLAS JERMYN LIMITED

AND

IN THE MATTER

of an application by DAVID JOHN BRIDGMAN and LARA MAREE BENNETT

Applicants

Hearing:	(On the papers)
Counsel:	L A O'Gorman and A L Harlow for Applicants
Judgment:	9 May 2016

JUDGMENT OF VENNING J

This judgment was delivered by me on 9 May 2016 at 4.20 pm], pursuant to Rule 11.5 of the High

Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Buddle Findlay, Auckland

Copy to:            Civil Manager, Auckland

The Registrar, Auckland

Re: Application by Bridgman & Bennett [2016] NZHC 933 [9 May 2016]

[1]      This file was referred to me this afternoon as Duty Judge.

[2]      It is an application for an order permitting Mr Bridgman and Ms Bennett to act as administrators, deed administrators and liquidators.  It is noted as being filed on 5 May 2016.  Given that it was a without notice application it should have been referred to the duty Judge that day.   A copy of this minute is to go to the Civil Manager and Registrar.

[3]      As noted, the substantive application is for leave to appoint Mr Bridgman and Ms Bennett as administrators, deed administrators or liquidators of Nicholas Jermyn Limited, (the company).   There is also an application for leave to commence the proceedings by way of originating application.

[4]      The company is currently suffering cash flow problems.  There are a number of options potentally available:

(a)       the appointment of administrators; (b)  following a watershed meeting:

(i)        a deed of company arrangement;  or

(ii)       appoint liquidators;  or

(iii)      end the administration.

[5]      The company would prefer to appoint Mr Bridgman and Ms Bennett as administrators.

[6]      In this case s 280(1)(ca) and (cb), s 239F and s 239ACD of the Companies Act 1993 would otherwise prohibit the appointment of the applicants as administrators, deed administrators or liquidators.

[7]      That is because Mr Bridgman and members of his team undertook a high level review of the company’s financial position and provided advice about potential restructuring options during March and April 2016.   They also provided limited advice about the options to address the company’s cash flow problems.  Further, Mr Bridgman and Ms Bennett’s firm PwC has a continuing business relationship with two secured creditors of the company, Bank of New Zealand (Bank) and Fuji Xerox

Finance Ltd (Fuji).1

[8]      Because  of  Mr  Bridgman’s   involvement   with   the  company  and   Mr Bridgman’s and Ms Bennett’s firm’s relationship with the secured creditors leave of the Court is required for them to be appointed as administrators, or deed administrators or liquidators in the event that any watershed meeting was to support such appointment.

[9]      The  purpose  of  s 280  is  to  ensure  persons  appointed  have  sufficient independence, competence and integrity to carry out the roles without causing risk to creditors or third parties.

[10]     An important consideration on an application such as this is whether there is a risk that the proposed administrators’/liquidators’ independence and ability to carry out their tasks professionally and effectively might be compromised in the particular circumstances.  The interest of the creditors are important.

[11]     Prior advice provided by applicants to the company should not always lead to a bar on appointment.  Indeed on occasion familiarity with the company’s position can support appointment provided the Court can be otherwise satisfied as to the independence of the proposed appointees.

[12]     In the present case the extent of the applicants’ recent involvement with the company was, on the evidence,  a high level review of the company’s financial

position.  That should not of itself bar their appointment.

1      Although a secured creditor Fuji’s interest is in one photocopier leased to the company for $276 a month.

[13]     The more major issue is in relation to the services the applicants’ firm has provided to the Bank over the last two years.

[14]     Mr Bridgman has properly advised that he  is acting as a receiver under appointments from the Bank in the case of Mainzeal and that he was appointed as a liquidator of the company in another case where the Bank was a major secured creditor.  In Re D & F Contracting Ltd Associate Judge Doogue considered such an appointment an relevant factor supporting the declinature of leave.2   However, in the present case if ultimately the company is placed in administration rather than liquidation then the Official Assignee would have no role.

[15]     As Mr Bridgman has confirmed in his affidavit the applicants are aware of their obligations to act independently and professionally in the role as administrators. They are also subject to the rules of professional conduct for chartered accountants and are both experienced insolvency practitioners who are regularly appointed as liquidators by the Court and act as officers of the Court.

[16]     Any other credible and experienced insovlency practitioner is likely to face similar issues in respect of s 280 arising from relationships or appointments by the Bank.

[17]     On  the  current  information  the  Bank’s  security  will  most  likely  cover amounts owing to it by the company otherwise its debt would not be part of the company’s core trading debt subject to any restructure.  Both the company and the Bank support the appointment.

[18]     The  practical  knowledge  acquired  by  the  applicants  through  providing services to the company supports the application.  It will lead to an efficent and cost effective administration which will be in the interests of creditors both secured and unsecured.

[19]     The creditors can be informed of the orders made and have the opportunity to revisit them, and may vote to have the applicants removed at a creditors’ meeting.

2      Re D & F Contracting Ltd HC Auckland CIV-2008-404-5443, 18 & 22 September 2008.

[20]     For the above reasons I am satisfied that the applications are appropriate.

There will be orders in terms of the draft filed.

Venning J