FEDERAL COURT OF AUSTRALIA

Morgan, in the matter of Can Can Lingerie Group Pty Limited (Administrators Appointed) ACN 001 263 994 [2005] FCA 633

CORPORATIONS – administration – application for extension of period for administrator to convene meeting granted

Corporations Act 2001 (Cth), s 439A(6), s 447A

Re Henry Walker Eltin Group Limited (Administrators Appointed) [2005] FCA 316, cited

Re Diamond Press Australia Pty Ltd [2001] NSWSC 313, cited

IN THE MATTER OF CAN CAN LINGERIE GROUP PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 001 263 994

JOHN MAXWELL MORGAN AND DAVID JOSEPH LEVI (IN THEIR CAPACITY AS VOLUNTARY ADMINISTRATORS OF CAN CAN LINGERIE GROUP PTY LIMITED (ADMINISTRATORS APPOINTED)) ACN 001 263 994

NSD 699 OF 2005

GYLES J

6 MAY 2005

SYDNEY

IN THE MATTER OF CAN CAN LINGERIE GROUP PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 001 263 994

THE COURT ORDERS THAT:

1.         Leave be granted to the Applicant to make the application before Gyles J instanter.

2.         Pursuant to s 439A(6) of the Corporations Act 2001 (Cth), the period within which the Administrators of Can Can Lingerie Group Pty Ltd (Administrators Appointed) must convene a meeting of creditors under s 439A of the Corporations Act 2001 (Cth) is extended up to and including 8 July 2005.

3.         Pursuant to s 447A(1) of the Corporations Act 2001 (Cth), the meeting of the creditors of Can Can Lingerie Group Pty Limited (Administrators Appointed) required by s 439A of that Act may be held at any time during, or within five business days after the end of, the convening period, as extended by Order 2 above notwithstanding the provisions of s 439A(2) of the Corporations Act 2001 (Cth).

4.         Liberty is granted to the Applicants to apply for any further extensions of the convening period referred to in Order 2 at any time prior to 8 July 2005.

5.         The costs and expenses of this application be costs and expenses of the administration of Can Can Lingerie Group Pty Ltd (Administrators Appointed).

6.         Liberty to apply be granted to any person who can demonstrate sufficient interest to modify or discharge the orders on appropriate notice to the Applicants.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE MATTER OF CAN CAN LINGERIE GROUP PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 001 263 994

REASONS FOR JUDGMENT

1                     This is an application by John Maxwell Morgan and David Joseph Levi, in their capacity as administrators of Can Can Lingerie Group Pty Limited (‘the company’) (hereinafter called ‘the Administrators’) for orders pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (the Act) that the period within which a second meeting of creditors be convened be extended and an order consequently that, in effect, a meeting may be held at any time during the extended period.  There are some consequential orders also. 

2                     The Administrators were appointed on 22 April this year.  The first meeting of creditors was held on 29 April 2005.  The end of the convening period is thus 12 May next.  The company carries on a retail business at a number of locations in and around Sydney and has warehouse facilities as well.

3                     The Administrators formed the view that it was beneficial to continue to trade in order that options may be left open for the consideration of creditors.  That has been done.  There was no committee of creditors appointed at the first meeting of creditors.  Furthermore, at that meeting, the chairman, who is one of the Administrators, said:

‘I am going to ask this meeting if any creditors have any objection to the administrators making application to the court to extend the convening period because it will preserve the value of the company's assets while the sale process continues’. 

No attendee stated that there was any objection and several stated that they approved of such an application.  An affidavit has been filed which sets out, broadly speaking, the position of the company and it also sets out what has taken place during the administration to date. 

4                     The primary basis upon which the application is made is that unless the business is sold as a going concern the return from the sale of the assets would be minimal and certainly not sufficient to meet the claims of secured creditors.  In order to explore the possibilities of sale, it will be necessary to undertake a process about which evidence is given which would extend beyond the convening period whilst maintaining the business in the meantime.

5                     I am satisfied that this is a business and commercial decision which the Administrators are in a position to make. It appears perfectly reasonable.  I have only two caveats which have caused me some concern about the matter. 

6                     The first caveat is the absence of representation of any contradictor or potential contradictor.  However, I cannot, at the moment, see the necessity for a party to act as contradictor.  The facts have been exposed.  The Administrators are in the best position to expose those facts.  As it is an ex parte application there is a duty to bring forward all relevant matters.  The deponent to the affidavit is a registered liquidator and an official liquidator.  Furthermore, it is difficult to see who would be an appropriate representative as all creditors would have their own individual points of view.  That is not to say that in matters of this kind it may not be, on occasion, necessary to work out a process whereby a contradictor's point can be put.  I will, however, make an order along the lines made by Hely J in a recent case which will grant a special liberty to apply to persons with a sufficient interest to modify or discharge the orders pursuant to the statutory power so to do. 

7                     The other caveat is that the affidavit assumes that the Administrators might go ahead and sell the business.  That is not something that I have any view about one way or the other, but I would not wish it thought that the orders I have made here today are based upon that assumption.  I say no more.  I have not asked for submissions on the point and I am not expressing any view that suggests that I doubt that power.  It is a matter of principle which may arise later.  I am of the view that the steps taken and to be taken to explore that option more fully are perfectly reasonable, including calling for expressions of interest.

8                     I have been assisted in coming to the conclusions I have by considering the recent decision of Hely J in the matter of Re Henry Walker Eltin Group Limited (Administrators Appointed) [2005] FCA 316 (16 February 2005) which, in turn, acknowledged the guidance of the decision of Barrett J of the Supreme Court of New South Wales in Re Diamond Press Australia Pty Ltd [2001] NSWSC 313. 

9                     For those reasons I make the orders in the draft orders which I have initialled and dated.

Associate:

Dated:              20 May 2005