FEDERAL COURT OF AUSTRALIA

ABC Learning Centres Limited, in the matter of; application by Walker (No 1) [2008] FCA 1943

PETER WALKER & GREGORY MOLONEY (IN THEIR CAPACITY AS VOLUNTARY ADMINISTRATORS OF ABC LEARNING CENTRES LTD (ADMINISTRATORS APPOINTED) (RECEIVERS & MANAGERS APPOINTED) & ORS, IN THE MATTER OF ABC LEARNING CENTRES LIMITED (ADMINISTRATORS APPOINTED) (RECEIVERS & MANAGERS APPOINTED)  and ORS

NSD 1749 of 2008

EMMETT J

7 NOVEMBER 2008

SYDNEY

IN THE MATTER OF ABC LEARNING CENTRES LIMITED & ORS,

THE COURT ORDERS THAT:

1.                  The Plaintiff have leave to file in the Registry an originating process in the form initialled and dated with today’s date by the Honourable Justice Emmett.

2.                  Pursuant to s 447A(1) of the Corporations Act 2001 (Cth) (the Act) Part 5.3A of the Act is to operate in relation to each of the Second Plaintiffs such that notice of the first meeting of creditors of the Second Plaintiffs convened pursuant to s 436E of the Act will be validly given to any creditors who appear from the books and records of the Second Plaintiffs to be employees of any of the Second Plaintiffs by:

(a)        sending notice of the meeting to the personal electronic addresses of each employee creditor of the Second Plaintiffs at such addresses as are recorded in the books and records of the Second Plaintiffs;

(b)        directing each director, of each childcare centre operated by any of the Second Plaintiffs, to distribute the notice to each employee using each employee’s pigeon hole located at the centre at which the employee works;

(c)        causing notice of the meeting to be published in The Australian newspaper; and

(d)        placing notice of the meeting on the website that is maintained by the Administrators

at least 5 business days before the first meeting.

3.                  The costs and expenses of this proceeding be costs and expenses of the administration of the Second Plaintiffs.

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

Schedule 1

All in Administration and with Receivers and Managers Appointed

IN THE MATTER OF ABC LEARNING CENTRES LIMITED & ORS,

REASONS FOR JUDGMENT

1                     I have before me an application for orders pursuant to s 447A(1) of the Corporations Act 2001 (Cth) (the Act).  Section 447A(1) provides that the Court may make such order as it thinks appropriate about how Part 5.3A of the Act is to operate in relation to a particular company.  Part 5.3A is concerned generally with the administration of a company’s affairs with a view to executing a deed of company arrangement.  Under s 436A, a company may appoint an administrator of the company if its board has resolved to the effect that, in the opinion of the directors, the company is insolvent and an administrator of the company should be appointed.

2                     Section 436E of the Act provides that the administrator of a company under administration must convene a meeting of the company’s creditors in order to determine whether to appoint a committee of creditors and, if so, who are to be the committee’s creditors.  Section 436E provides that such a meeting must be convened at least two business days before the meeting, by giving written notice of the meeting to as many of the company’s creditors as is reasonably practicable, and causing notice of the meeting to be published in a national newspaper.

3                     The First Plaintiffs, Messrs Peter Walker and Gregory Maloney (the Administrators), were appointed as joint administrators of each of the Second Plaintiffs on 6 November 2008.  The Second Plaintiffs consist of ABC Learning Centres Limited (ABC) and other companies associated with ABC.  There are some 39 companies in the group and the Administrators have been appointed to each of them.  On the same day, Messrs Christopher Honey, Murray Smith and John Cronin (the Receivers) were also appointed joint receivers and managers of each of the Second Plaintiffs.

4                     ABC is a public, listed company.  Its business involves providing early childhood development, day care and education programs to children throughout Australia in both franchised and managed childcare centres.  Having regard to the recency of the Administrators’ appointment, they are unable to provide any more detailed analysis of the activities of the companies in the group.  The group employs permanent staff who work at 1075 centres throughout Australia. 

5                     ABC Developmental Learning Centres Pty Limited (ABC Developmental Learning) is one of the plaintiffs.  ABC Developmental Learning is the actual employer of all of the permanent staff of the Group.  The books and records of ABC Developmental Learning indicate that there are approximately 16,000 employees, although the precise number fluctuates according to factors such as seasonal considerations, holidays, family movements and the like.  ABC Development Learning maintains an internal email communication system, called Communications Central, by which communication is maintained with each centre director. 

6                     The group also employ a significant number of casual staff.  The casual staff, however, are provided by a recruitment placement agency known as 123 Careers.  The books and records of the Second Plaintiffs do not record such casual staff as direct creditors.  However, 123 Careers is shown as a creditor in respect of remuneration due to the casual staff. 

7                     All permanent employees have personal email addresses with ABC Developmental Learning and the Administrators have considered obtaining notifications from employee creditors of their email address to have notices sent to them by email pursuant to s 600G of the Act.  Section 600G provides that, if a person is authorised or required to give or send a notice to a person under various provisions of the Act, including s 436E, a fax number or electronic address may be notified, in which case notice to that address will be sufficient.  The Administrators are concerned that there is not sufficient time to obtain responses from all employee creditors confirming that they are willing to be notified by email and thus for s 600G to apply.

8                     Because of the appointment of the Receivers to the Second Plaintiffs, there are only limited funds available to the Administrators to fund the administration of the Second Plaintiffs.  The administrators have estimated that the cost of mailing circulars giving notice to the permanent employees of the first meeting of creditors would be between $42,600 and $47,600.  In the circumstances, the Administrators have asked the Court to order, pursuant to s 447A, that Part 5.3A is to operate in relation to each of the Second Plaintiffs, such that notice of the first meeting of creditors will be validly given to any creditors who appear in the books and records of the second plaintiffs as employees, by sending notice of the meeting to the personal electronic addresses to which I have referred, and having each director of a childcare centre distribute the notice to each employee by using the employee’s pigeonhole.  It is also proposed to cause notice of the meeting to be published in The Australian newspaper, which circulates throughout Australia, and by placing notice of the meeting on the website maintained by the Administrators.

9                     In all of the circumstances, having regard to the nature of the functions to be performed at the first meeting, it is appropriate to accede to the Administrators’ application. 

Associate:

Dated:         9 December 2008