FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Vensys Australia Pty Limited (Administrators Appointed) (No 3) [2008] FCA 1793

Corporations Act 2001 (Cth), s 440A

DEPUTY COMMISSIONER OF TAXATION v VENSYS AUSTRALIA PTY LTD

NSD 581 of 2008

EMMETT J

23 OCTOBER 2008

SYDNEY

THE COURT ORDERS THAT:

1.                  Mr Venkatesh Paditham has leave to appear for the defendant.

2.                  The proceeding be adjourned to 3.00 pm tomorrow, 24 October 2008.

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

REASONS FOR JUDGMENT

1                     I have before me again a winding-up application in respect of Vensys Australia Pty Limited (the Company).  When the matter was called on this morning, I was informed that the agreement with HTC Global Services Australia Pty Limited (HTC), referred to in my earlier reasons for judgment (Deputy Commissioner of Taxation v Vensys Australia Pty Limited (No 2) [2008] FCA 1404), has been terminated by HTC.  I assume that it did so on the basis that it was not satisfied that the assets that it was proposing to buy were worth the purchase price that was contemplated by the agreement. 

2                     Notwithstanding that the agreement with HTC was terminated, Mr Paditham, the director of the Company, asked for the Court’s further indulgence by way of a further adjournment of the winding-up application to enable the Company to enter into negotiations with a Ms Malathi Srinivasan and her family for the sale of the Company or its business.  Ms Srinivasan gave evidence that she and her family may well be interested in acquiring the business of the Company as a going concern and that she and her family have the means to pay a price that would enable the Company to pay the debt due to the Deputy Commissioner of Taxation. 

3                     I indicated this morning that I would not be disposed to adjourn the hearing again unless there was concrete evidence before the Court that there was some security available from a prospective purchaser, in a sum in excess of $756,000, being the approximate debt due to the Deputy Commissioner.  When the matter was called on again this afternoon at 4.00 pm, no such evidence was available.

4                     However, without prior warning, there was tendered a resolution by the director that the Company is insolvent and that administrators be appointed.  That renders relevant s 440A of the Corporations Act 2001 (Cth).  Section 440A(2) provides that the Court is to adjourn the hearing of an application for an order to wind up a company if the company is under administration and the Court is satisfied that it is in the interests of the company’s creditors for the company to continue under administration rather than be wound up. 

5                     I had generally been of the view, up until today, that there was a benefit in not winding the Company up.  I considered that it may well be in the interests of the Company’s creditors for the Company to continue as a going concern, so long as there were real negotiations on foot for the sale of the Company’s business as a going concern.  Those negotiations, as I have said, have now come to nought.  The question is whether I could be satisfied that it is in the interests of the Company’s creditors for the company to continue under administration rather than be wound up. 

6                     One of the administrators attended in Court and addressed the Court from the bar table, indicating that some work had been done previously by the administrators.  Whether it was with a view to administration or otherwise is not entirely clear but, for the present, it does not matter.  The administrator indicated that he would be in a position, after four business hours, to place before the Court material upon which the Company might rely in its endeavour to satisfy the Court that it is in the interests of the Company’s creditors that the Company continue under administration. 

7                     I have found the conduct of the Company somewhat frustrating.  Indulgence after indulgence has been granted to the Company.  Some of those indulgences have been granted without opposition from the Deputy Commissioner.  Others have been granted over the objection of the Deputy Commissioner.  I have indicated that today I would make a winding-up order or dismiss the proceeding.  The only basis upon which I would dismiss the proceeding would have been that the Deputy Commissioner had been paid in full. 

8                     The events that have now occurred persuade me that I should give the Company 24 hours within which to endeavour to satisfy the Court that it is in the interests of the Company’s creditors that the Company continue under administration.  I will therefore adjourn the hearing of the winding-up application to 3.00 pm tomorrow on the basis that that is a convenient time for the Deputy Commissioner’s representatives.

9                     I will not entertain any application for a further adjournment unless, no later than 10.30 am tomorrow, the Commissioner’s costs of today in the sum of $1,654.26 have been paid and there has been delivered to the Deputy Commissioner’s solicitors, no later than 1 pm tomorrow, a report from the administrators, duly sworn, upon which the Company intends to rely in support of its further application for adjournment under s 440A(2). 

Associate:

Dated:         28 November 2008