FEDERAL COURT OF AUSTRALIA

In the Matter of KASH Aboriginal Corporation ICN 108 (Administrators Appointed) [2012] FCA 571

IN THE MATTER OF KASH ABORIGINAL CORPORATION ICN 108

THE COURT ORDERS THAT:

1.    Pursuant to s 521.1 of the Corporations (Aboriginal and Torres Straight Islander) Act 2006 (Cth) (“the CATSI Act”) and s 439A(6) of the Corporations Act 2001 (Cth) (“the Act”), the period within which the first applicants must convene a meeting of creditors of the second applicant pursuant to s 439A of the Act is extended up to and including 4 September 2012.

2.    Pursuant to s 521.1 of the CATSI Act and s 447A(1) of the Act, Pt 5.3A of the Act is to have effect in relation to the second applicant such that the meetings of the creditors of the second applicant 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 1 above notwithstanding the provisions of s 439A(2) of the Act.

3.    Liberty is granted to the first applicants to apply to the Court for any further extensions or variation of the convening period referred to in order 1 at any time prior to 4 September 2012.

4.    Liberty to apply is granted to any person including any creditor who can demonstrate sufficient interest to make such application as he, she or it may be advised, to vary or discharge these orders upon three (3) business days’ written notice being given to the applicants and/or the applicants’ solicitors on the record and to the Court.

5.    The first applicant cause notice of these orders, within two business days after the making of these orders:

(a)    to be sent by email to all creditors of the second applicant who have provided the first applicant with an email address;

(b)    to all other creditors of the second applicant who have provided the first applicant with a mailing address, by mail; and

(c)    to all members of the second applicant identified in exhibit “GDM-12” to the affidavit of Ginette Dawn Muller filed 28 May 2012.

6.    These orders be entered forthwith.

7.    The costs and expenses of this application in respect of the first and second applicant are costs and expenses of the administration of the second applicant.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

IN THE MATTER OF KASH ABORIGINAL CORPORATION ICN 108

EX TEMPORE REASONS FOR JUDGMENT

1    This is an application for an order for an extension of the period within which the Administrators of KASH Aboriginal Corporation ICN 108 (Administrators Appointed) (“KASH”) must convene a meeting of the company’s creditors, pursuant to s 521.1 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) and s 439A of the Corporations Act 2001 (Cth).

2    KASH is an indigenous corporation incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth).

3    Section 521.1 of that Act has the effect of applying the “Corporations Act administration provisions” to an Aboriginal and Torres Straight Islander corporation with particular substitutions. Notably, the term “company” is substituted with the reference to an Aboriginal and Torres Straight Islander “corporation”. Similarly, the Registrar becomes the Regulator of such a corporation. A Deed of Company Arrangement becomes a Deed of Corporation Arrangement. There are other substitutions made by s 521.1. Section 521.1(2) provides that the “Corporations Act administration provisions” apply to an Aboriginal and Torres Straight Islander corporation only to the extent to which they are capable of applying to such a corporation with appropriate modifications by the Regulations.

4    Particularly important is s 521.1(4) which defines the reference to “Corporations Act administration provisions” for the purposes of s 521. Of immediate importance is the reference to Pt 5.3A of the Corporations Act and other provisions of that Act to the extent to which they relate to Pt 5.3A, and relevant Regulations. Those provisions are important because they bring into play, by reference, matters relating to the very subject matter of this application, which concerns an application for an extension of the convening period.

5    I accept that the principles governing the matter are that the function of the Court is to strike an appropriate balance between the expectation that the administration will be relatively speedy and a summary matter, on the one hand, and that the requirements of undue speed should not be allowed to prejudice “sensible and constructive actions” directed to maximising the return to creditors and any return to shareholders where that might be relevant, on the other hand: Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 per Barrett J. I also accept that there is no clear leaning against granting an extension provided that adequate reasons are given in support of the application for extra time: Re Riviera Group Pty Ltd (admins apptd) (recs and mgrs Apptd) [2009] NSWSC 585 per Austin J. Moreover, any predisposition in favour of a speedy administration may have the effect of skewing the balancing process. Thus, what is required by the authorities is that the administrators must prove a substantial ground for the exercise of the Court’s jurisdiction to grant the extension: Lord; in the matter of Tallwood Nominees Pty Ltd (Administrators Appointed) [2011] FCA 1118 per Jacobson J.

6    I have had the benefit of considering the affidavit of Ms Ginette Dawn Muller, and I note the factual matters set out in her affidavit concerning the history of the administration and the issues confronting the administrator in the future conduct of the administration. I also note the opinions expressed by Ms Muller in that affidavit. I accept the propositions put forward by her and I regard both the propositions and the opinions she puts forward as “sensible and constructive actions” (using the language of Barrett J) in the administration and future administration of the corporation.

7    I am satisfied that appropriate grounds have been made out for an extension of the convening period and that the period of time sought for the extension is not unduly lengthy. The affidavit material demonstrates that investigations are continuing, particularly in relation to matters concerning the calculation of potential GST tax credits which might be forthcoming, once properly analysed and properly calculated. Further, the additional time is necessary to enable a continuation of the services (and important services they are) to be maintained throughout the period and potentially after the conclusion of the administration having regard to whatever Deed of Corporation Arrangement might be put in place.

8    Moreover, the administrators need time to prepare their report and make appropriate recommendations to the creditors. The principal asset of the entity is a property referred to in para 22 of Ms Muller’s affidavit. There are other assets which have been realised and those steps are deposed to in Ms Muller’s affidavit. A valuation has not yet been obtained for the property, but that is forthcoming. I am also satisfied that the extension is not going to unduly prejudice creditors. The major creditors have been consulted in relation to this application. A committee of creditors has also been formed and they have resolved to support the application.

9    I take the view that given the nature of the corporation and its fundamental activities that it is important that the members of the corporation also be advised of the orders and given an opportunity to make any further application in relation to the matter that they may feel is appropriate on advice or otherwise. Having regard to all of these factors and the matters deposed to by Ms Muller, I am satisfied that the discretion favours granting an extension of the convening period for the time requested which, in my view, is not unduly long in all circumstances and serves the objective to which the discretion is directed. Accordingly, I will make orders in terms of version 2 of the draft orders provided to me.

Associate:

Dated:    29 May 2012