FEDERAL COURT OF AUSTRALIA

Cronin, in the matter of Cubbie Group Limited [2009] FCA 1419

CORPORATIONS - consideration of an application by the administrators of the Cubbie Group of Companies for an order under s 439A(6) of the Corporations Act 2001 (Cth) to extend the convening period  

Corporations Act 2001 (Cth) s 439A

JOHN PATRIC CRONIN, WILLIAM JAMES HARRIS AND COLIN MCINTOSH NICOL AS ADMINISTRATORS OF CUBBIE GROUP LIMITED (ADMINISTRATORS APPOINTED) (ACN 116 808 694) 

QUD 278 of 2009

GREENWOOD J

24 NOVEMBER 2009

BRISBANE

 IN THE MATTER OF CUBBIE GROUP LIMITED (ADMINISTRATORS APPOINTED) & ORS (ACN 116 808 694)

THE COURT ORDERS THAT:

1.         Orders are made in terms of draft Orders initialled by Justice Greenwood.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

SCHEDULE OF PARTIES

1.         CUBBIE GROUP LIMITED (ADMINISTRATORS APPOINTED)

            (ACN 116 808 694)

2.         CUBBIE GROUP BRISBANE PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 107 458 391)

3.         CUBBIE ST GEORGE PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 116 498 876)

4.         CUBBIE GROUP ST GEORGE PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 116 498 867)

5.         CUBBIE DIRRANBANDI 1 PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 116 335 490)

6.         CUBBIE DIRRANBANDI 2 PTY LIMITED) (ADMINISTRATORS APPOINTED (ACN 116 330 673)

7.         CUBBIE DIRRANBANDI 3 PTY LIMITED) (ADMINISTRATORS APPOINTED) (ACN 116 330 708)

8.         CUBBIE STATION PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 009 772 150)

9.         CUBBIE GROUP 1 PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 009 772 132)

10.       CUBBIE GROUP 2 PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 009 772 141)

11.       CUBBIE GROUP 3 PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 009 772 123)

IN THE MATTER OF CUBBIE GROUP LIMITED (ADMINISTRATORS APPOINTED) & ORS (ACN 116 808 694)

EXTEMPORE REASONS FOR JUDGMENT

1                          This is an application by John Patrick Cronin, William James Harris and Colin McIntosh Nicol who were appointed joint and several administrators of 11 companies in the Cubbie Group of companies, all of which are identified at para 2 of the affidavit of John Patrick Cronin sworn 23 November 2009.  The first meeting of creditors was convened on 11 November 2009 and by operation of s 439A of the Corporations Act 2001 (Cth), the second meeting of creditors is to be convened by 27 November 2009 and held on or before 4 December 2009.

2                          The administrators seek an extension of time for the convening of the second meeting, and the application is made pursuant to s 439A(6) of the Corporations Act.  The applicants seek an extension of the convening period until 31 March 2010 having regard to the range of circumstances identified in Mr Cronin’s affidavit.  Briefly, those circumstances are that the group of companies comprising the Cubbie Group undertake a diversified range of agricultural activities and do so from five separate sites, three of which involve significant agricultural properties.  The scope of the undertaking of the group of companies is identified clearly in the affidavit, and the circumstances which led to the appointment of the administrators is also identified.  I do not propose to recite those factors in these brief reasons.

3                          The administrators are required to conduct investigations and form a view as to whether or not the assets of the companies can be realised and if so the method which is most advantageous to the creditors.  The administrators are required to prepare a report concerning the business, property, affairs and financial circumstances of the Cubbie group of companies and form an opinion about whether it would be in the creditors’ interests for each company to execute a deed of company arrangement; whether it would be in the creditors’ interests for the administration to end; or whether it would be in the creditors’ interests for each company to be wound up.  The administrators wish to consider possible restructure or sale proposals which might be productive of an efficient realisation of the assets.  Mr Cronin in his affidavit identifies that a number of steps have been put in place to preserve insurances and undertake an assessment of workplace and environmental risks (through Parsons Brinkerhoff Australia Pty Ltd) in relation to the five sites; and Taylor Byrne Valuers have been appointed to conduct a valuation of the real property, improvements, water entitlements, and other assets owned and operated by the Cubbie Group of companies.  The valuation report is not expected to be delivered to the administrators until 20 December 2009.  The workplace assessment is not expected to be delivered until 27 November 2009.  The valuation of the other significant conglomeration of assets is not expected to be provided by Grays (Aust) Holdings Pty Ltd until 18 December 2009.

4                          Apart from those matters, the administrators wish to undertake an analysis which is described in the affidavit as a “realisation strategy”.  That strategy involves the appointment of exclusive joint marketing advisers to undertake an international marketing campaign in connection with the sale of the Cubbie Group assets.  The realisation strategy involves establishing a documents room and undertaking a series of steps for the calling of expressions of interest, shortlisting those parties who have responded, conducting an investigation of the various sites, and other related matters.  The sequence of steps involved in the realisation strategy will not be completed until December 2009, and ultimately, bidders will be shortlisted by January 2010.  It is anticipated that the negotiation of transaction documents with the preferred bidder or bidders will take place during February 2010.

5                          The outcome of the realisation strategy is, plainly enough, regarded as essential to the analysis which the administrators are required to perform for the purpose of expressing their opinion in the report to be provided to creditors at the second meeting, in accordance with s 439A(4) of the Corporations Act.  It seems to me to be plainly in the interests of the creditors that the realisation strategy be implemented in an orthodox and timely way and having done so, the administrators will be in a position to form the relevant opinion for the purposes of the report, and provide an informed assessment to the creditors of each of the 11 companies in the Cubbie Group.

6                          Apart from those matters, it may well be that a restructure emerges of the entities if a sale is not able to be achieved.  A restructure might result in tax losses being available to entities participating in the restructure.  Those tax losses have accumulated over recent years.  That, in itself, is a matter which requires careful analysis and assessment by the administrators. 

7                          Accordingly, having regard to all of these factors, I am satisfied that it is appropriate to extend the convening period until 31 March 2010.  I also note that the proposal to extend the convening period is supported by the creditors, and that committees of creditors of the Cubbie Group of companies have passed resolutions supporting the application by the administrators.  I also note that there are various lease arrangements in relation to particular chattels and assets and the administrators have given an undertaking to pay the lease payments under those documents.  In that sense, the lessors of those assets are properly protected. 

8                          Accordingly, I make orders in terms of the draft initialled by me today.

Associate:

Dated:         24 November 2009

SCHEDULE OF PARTIES

1.         CUBBIE GROUP LIMITED (ADMINISTRATORS APPOINTED)

            (ACN 116 808 694)

2.         CUBBIE GROUP BRISBANE PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 107 458 391)

3.         CUBBIE ST GEORGE PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 116 498 876)

4.         CUBBIE GROUP ST GEORGE PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 116 498 867)

5.         CUBBIE DIRRANBANDI 1 PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 116 335 490)

6.         CUBBIE DIRRANBANDI 2 PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 116 330 673)

7.         CUBBIE DIRRANBANDI 3 PTY LIMITED) (ADMINISTRATORS APPOINTED) (ACN 116 330 708)

8.         CUBBIE STATION PTY LIMITED (ADMINISTRATORS APPOINTED)

(ACN 009 772 150)

9.         CUBBIE GROUP 1 PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 009 772 132)

10.       CUBBIE GROUP 2 PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 009 772 141)

11.       CUBBIE GROUP 3 PTY LIMITED (ADMINISTRATORS APPOINTED) (ACN 009 772 123)