FEDERAL COURT OF AUSTRALIA

Hayes, in the matter of Estate Property Group Limited (Administrators Appointed) [2007] FCA 935

CORPORATIONS – extension of convening period for second meeting of creditors of companies in administration

Corporations Act 2001 (Cth), ss 439A, 439B, 441A, 447A

Fincorp Group Holdings Pty Limited [2007] NSWSC 363, cited 

IN THE MATTER OF ESTATE PROPERTY GROUP LIMITED (ADMINISTRATORS APPOINTED) ACN 089 187 548 AND IN THE MATTER OF THE COMPANIES SET OUT IN THE SCHEDULE

JOSEPH DAVID HAYES, MURRAY CAMPBELL SMITH, SCOTT BRADLEY KERSHAW AND COLIN MCINTOSH NICOL IN THEIR CAPACITY AS VOLUNTARY ADMINISTRATORS OF ESTATE PROPERTY GROUP LIMITED (ADMINISTRATORS APPOINTED) AND THE COMPANIES SET OUT IN THE SCHEDULE

NSD 1079 OF 2007

IN THE MATTER OF AUSTRALIAN CAPITAL RESERVE LIMITED (ADMINISTRATORS APPOINTED) ACN 089 187 502

GREGORY WINFIELD HALL AND PHILIP PATRICK CARTER IN THEIR CAPACITY AS JOINT AND SEVERAL VOLUNTARY ADMINISTRATORS OF AUSTRALIAN CAPITAL RESERVE LIMITED (ADMINISTRATORS APPOINTED)

NSD 1085 OF 2007

GYLES J

15 JUNE 2007

SYDNEY

IN THE MATTER OF ESTATE PROPERTY GROUP LIMITED (ADMINISTRATORS APPOINTED) ACN 089 187 548 AND IN THE MATTER OF THE COMPANIES SET OUT IN THE SCHEDULE

THE COURT ORDERS AND DIRECTS THAT:

1.      With respect to each company identified in the Schedule (“Companies”) the convening period for the meeting of creditors required to be held under s 439A of the Corporations Act (“the Act”) be extended to midnight 23 July 2007.

2.      Reserve for further consideration any application to further extend the convening period for the meeting of creditors required to be held under s 439A of the Act with respect to any one or more of the Companies.

3.      With respect to each of the Companies, pursuant to s 447A(1) of the Act, Pt 5.3A of the Act is to operate as if:

(a)      section 439A(1) also provided that the meeting of creditors required by that section may be convened and held within the convening period (including within the convening period as extended pursuant to subs 439A(6));

(b)      section 439A(2) of the Act provided that the meeting must be held within five business days from being convened in accordance with subs 439A(3) and subs (4), being a date not necessarily within five business days from the end of the convening period (including the convening period as extended pursuant to subs 439A(6)); and

(c)      section 439A of the Act operated generally to permit the convening and holding of the meeting of creditors of any one or more of the Companies during the convening period (including the convening period as extended pursuant to s 439A(6)) provided the requirements of subs 439A(3) and subs (4) are complied with.

4.          Liberty to apply be granted to any person who can demonstrate a sufficient interest to modify or discharge orders 1, 2 or 3, on not less than 48 hours’ notice to the plaintiffs.

5.          With respect to so many creditors (including persons claiming to be creditors) as the plaintiffs have a current email address, direct the plaintiffs to inform such creditors by email of these orders, with a copy of these orders to be attached to such emails, by 9.00 pm today.

6.          Direct the plaintiffs to forward to the Australian Securities and Investments Commission at Level 18 1 Martin Place, Sydney (marked to the attention of Tim Mullaly) a copy of these orders by 9.00 pm today, either physically or to Mr Mullaly’s email address.

7.          Adjourn the proceedings for mention on 6 July 2007 at 2.15 pm.

8.          Plaintiffs have liberty to apply on 24 hours’ notice.

9.          These orders be entered forthwith.

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

IN THE MATTER OF AUSTRALIAN CAPITAL RESERVE LIMITED (ADMINISTRATORS APPOINTED) ACN 089 187 502

THE COURT:

1.         GRANTS leave to the plaintiffs to file in Court:

(a)        an Originating Process;

(b)        an Interlocutory Process; and

(c)        the affidavit of Philip Patrick Carter, sworn 15 June 2007.

2.         ORDERS that the Interlocutory Process and the Originating Process be made returnable instanter.

3.         ORDERS that formal service of the Originating Process, the Interlocutory Process and the affidavit of Philip Patrick Carter, sworn 15 June 2007, be dispensed with.

4.         ORDERS that the convening period for the meeting of creditors of Australian Capital Reserve Limited (administrators appointed) required to be held under s 439A of the Act be extended to midnight on 23 July 2007.

5.         MAKES an order reserving for further consideration any application to further extend the convening period for the meeting of creditors required to be held pursuant to s 439A of the Act with respect to Australian Capital Reserve Limited (administrators appointed).

6.         ORDERS that with respect to Australian Capital Reserve Limited (administrators appointed), pursuant to s 447A(1) of the Act, Pt 5.3A of the Act is to operate as if:

(a)        section 439A(l) also provided that the meeting of creditors required by that section may be convened and held within the convening period (including within the convening period as extended pursuant to subs 439A(6));

(b)        section 439A(2) of the Act provided that the meeting must be held within five business days from being convened in accordance with subs 439A(3) and subs (4), being a date not necessarily within five business days from the end of the convening period (including the convening period as extended pursuant to subs 439A(6)); and

(c)        section 439A of the Act operated generally to permit the convening and holding of the meeting of creditors of the second plaintiff during the convening period (including the convening period as extended pursuant to s 439A(6)) provided the requirements of subs 439A(3) and subs (4) are complied with.

7.         ORDERS that the plaintiffs’ costs of the proceedings be paid as a cost of the administration of Australian Capital Reserve Limited (administrators appointed).

8.         ADJOURNS the proceedings for mention on 6 July 2007 at 2.15 pm.

9.         DIRECTS that these orders be passed and entered forthwith.

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

IN THE MATTER OF ESTATE PROPERTY GROUP LIMITED (ADMINISTRATORS APPOINTED) ACN 089 187 548 AND IN THE MATTER OF THE COMPANIES SET OUT IN THE SCHEDULE

IN THE MATTER OF AUSTRALIAN CAPITAL RESERVE LIMITED (ADMINISTRATORS APPOINTED) ACN 089 187 502

REASONS FOR JUDGMENT

1                     These two applications seek effectively the same relief, namely, the extension of the convening period for the purpose of s 439A of the Corporations Act 2001 (Cth).  In the case of Estate Property Group Limited an extension to midnight on 1 November 2007 is sought.  The corporations concerned are linked in ways I need not deal with at the moment.  These applications raise the familiar tension between, on the one hand, the objective of having the first stage of administration dealt with promptly so as not to unduly interfere with the rights of those whom a moratorium affects and, on the other hand, giving worthwhile information to the creditors so that sensible decisions can be made at the meeting.  It is well understood that in complex administrations these two objectives can often be in collision.  If they are in collision then, in many cases, priority will be given to obtaining sensible information and advice from the administrators to enable the creditors to have the material before them to make an informed decision.  The power of the creditors at the meeting to adjourn the meeting for a limited period (s 439B) to some extent alleviates the problem but in complex matters the period in question (not more than 60 days) is often not sufficient to meet the exigencies of the situation. 

2                     These applications are of particular difficulty because the administrations involve the development of a number of properties at different stages of development making any assessment of overall value extraordinarily difficult.  There will be commercial decisions to be made about, for example, completing uncompleted projects.  I have no doubt that in each case there is a strong case for extending the convening period.

3                     The aspect of the matter which has caused me concern is that a period of months is a substantial stretch of the statutory provisions.  I know it has been done in other cases.  Some of those cases – for example, Fincorp Group Holdings Pty Limited [2007] NSWSC 363– bear at least some resemblance to the present case, both because of the nature of the corporations and because of the closeness in time to the present collapse.  Having considered the evidence in this case, I think that it is too early to commit to such a lengthy period before the creditors have any real say in the matter.

4                     A course which is taken in some of these matters and was, I notice, taken in Fincorp [2007] NSWSC 363, is to provide for a lengthy period but also, by an order under s 447A, permit foreshortening of the period if events warrant it.  Other courses which can be taken are, if a case is made out, to utilise s 447A to extend the period for which the creditors can adjourn the meeting pursuant to s 439B or to utilise s 447A to grant a further extension of the convening period under s 439A.  The latter course has been taken in a number of matters.  It seems to me that would be the appropriate course to be taken in these matters if necessary. 

5                     I take into account, amongst other factors, the opposition of at least one secured creditor in the Estate Property Group case, albeit a creditor who has not filed evidence and is not present.  I take into account the short notice of this application to creditors generally and to the Australian Securities and Investment Commission.  I also have in mind the link between the two cases and the fact that the applications are also linked with an extension of the decision period pursuant to s 441A in relation to the rights of Australian Capital Reserve Limited.  On the other hand, I take into account the fact that I should not be building up costs or causing too much diversion of effort by the administrators in making successive applications to the Court instead of getting on with their job.  I think there is sufficient flexibility built into these matters if I commit to the use of s 447A to fix a further extension of the convening period if appropriate.  I will ensure that there is an adequate extension of the convening period after the date to which the matters will be adjourned so that, even if I am not persuaded there should be a further extension, there will be a practical way of coping with the situation. 

6                     In each of these matters, namely, Estate Property Group Limited, NSD 1079 of 2007 and Australian Capital Reserve Limited, NSD 1085 of 2007, I make orders respectively in accordance with the short minutes of order which I have initialled and placed with the papers in each matter. 

Associate:

Dated:         20 June 2007