Federal Court of Australia

Dickerson, in the matter of McWilliam’s Wines Group Ltd (subject to Deed of Company Arrangement) (No 4) [2021] FCA 139

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 447A of the Corporations Act 2001 (Cth) (Act) and/or s 90-15(1) of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Act, s 75-140 of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR) is to operate with respect to the meeting of the creditors of each of McWilliam’s Wines Group Ltd (Subject to Deed of Company Arrangement) ACN 000 024 108 and Mount Pleasant Wines Pty Ltd (Subject to Deed of Company Arrangement) ACN 000 024 813 (together, the Companies) held concurrently on 2 February 2021 (Meeting) as if:

(a)    s 75-140(2) of the IPR omitted the phrase “15 business days” and included, instead of those words, the phrase “61 business days”, to the intent that the last business day is Friday, 30 April 2021; and

(b)    notwithstanding s 75-140(6) of the IPR, the Meeting, as adjourned, may be resumed at any time before, or within, the period of 61 business days from 2 February 2021, provided that the first applicants give notice of the time and date of the resumption of the Meeting to all persons to whom notice must be given under s 75-10 of the IPR no less than five (5) business days before the resumption of the Meeting.

2.    The first applicants are to provide notice of these orders:

(a)    to all creditors of the Companies (including the persons claiming to be creditors of the Companies) in the following manner:

(i)    within four (4) hours after the making of these orders, by email to each such creditor who has provided an email address to the first applicants for the purposes of receiving notices in the external administration of the companies;

(ii)    where the first applicants do not have an email address for a creditor (or have received notification of non-delivery of a notice sent in reliance on sub-paragraph (i) above) but have a postal address for the creditor, by post to the postal address for each such creditor within two (2) business days after the making of these orders;

(iii)    by informing creditors of these orders at the resumption of the adjourned Meeting on 23 February 2021;

(iv)    within four (4) hours after the making of these orders, by publishing a notice on the KPMG website at https://home.kpmg/au/en/home/services/advisory/deal-advisory/services/restructuring/creditors-shareholders/mcwilliams-wines-group.html; and

(b)    by 5 pm (AEDT) on Monday, 22 February 2021 to the Australian Securities and Investments Commission (ASIC).

3.    Liberty to apply be granted to any person who can demonstrate sufficient interest, including any creditor of the Companies or ASIC, to make any application as he, she or it may be advised to vary or discharge these orders on three (3) business days’ notice to the applicants and to the Court.

4.    The applicants’ costs of and incidental to this application be costs in the deed administration of each of the Companies, jointly and severally.

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

REASONS FOR JUDGMENT

FARRELL J:

Introduction

1    The first applicants, Gayle Dickerson, Timothy David Mableson and Ryan Reginald Eagle, are the joint and several deed administrators of the second and third applicants, McWilliam’s Wines Group Limited (subject to deed of company arrangement) (McWilliam’s) and Mount Pleasant Wines Pty Limited (subject to deed of company arrangement) (together the Companies). A deed of company arrangement was executed on 3 August 2020 (DOCA) between the Companies, the deed administrators in their capacity as administrators of the Companies and MCW BidCo Pty Ltd ACN 642 488 524 (MCW). MCW was the deed proponent. The deed administrators had been appointed as administrators of the Companies on 8 January 2020.

2    The nature of the Companies’ business and the course of the external administration culminating in the execution of the DOCA and its proposed completion have been considered by three decisions of this Court: Dickerson (Administrator), in the matter of McWilliam’s Wines Group Ltd (Administrators Appointed) [2020] FCA 57 (Yates J) (Dickerson No 1); Dickerson, in the matter of McWilliam’s Wines Group Ltd (Administrators Appointed) (No 2) [2020] FCA 417 (Gleeson J) (Dickerson No 2); and Dickerson, in the matter of McWilliam’s Wines Group Ltd (subject to Deed of Company Arrangement) (No 3) [2020] FCA 1564 (Farrell J).

3    The deed administrators and the Companies now seek orders under s 447A of the Corporations Act 2001 (Cth) and/or s 90-15 of the Insolvency Practice Schedule (Corporations) (Sch 2 to the Corporations Act) (IP Schedule) to vary the operation of s 75-140 of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IP Rules) to permit a further adjournment of a meeting of the Companies’ creditors convened for 2 February 2021 for a period up to 30 April 2021, it having previously been adjourned to 23 February 2021. Without such an order, s 75-140(2) of the IP Rules would prevent the meeting from being further adjourned.

4    The applicant’s interlocutory process dated 19 February 2021 (application) is supported by an affidavit sworn by Ms Dickerson on 19 February 2021 and exhibit GD-5 and an affidavit of service of Joseph Beau Dean affirmed on 19 February 2021 in relation to the email service of the application and Ms Dickerson’s affidavit and the exhibit on the Australian Securities and Investments Commission (ASIC) by email at 7.30 pm on that date.

5    These are the reasons for making the orders sought by the deed administrators.

Background

6    It is appropriate to set out the following short background derived from the applicants’ counsel’s written submissions and Ms Dickerson’s affidavit.

7    At the first meeting of creditors held on 20 January 2020, the creditors of McWilliam’s appointed a committee of inspection comprising representatives of key stakeholder groups, namely trade creditors, lessors and employees of the Companies. They were QWIL Investments Pty Ltd (QWIL), Maxsons Pty Ltd, SMYP Pty Ltd, David Pitt, Pipeclay Lawson Ltd as trustee for Chullora Land Trust (Pipeclay Lawson) and April5 Pty Ltd.

8    On 4 February 2020, the Court made orders extending the period for convening the second meeting of creditors of the Companies under s 439A of the Corporations Act to 31 July 2020. One of the principal reasons sought for the extension was to enable the administrators to undertake a sale or restructure of the Companies’ assets as a going concern: see Dickerson No 1.

9    Shortly thereafter, on 14 February 2020, Margaret River Wine Production Pty Ltd (MRWP), a secured creditor of the Companies, enforced its security interest and appointed receivers and managers to the assets and undertaking of each of the Companies. The administrators took the view that discharging the Companies’ indebtedness to MRWP was in the best interests of the Companies’ creditors and borrowed funds from Gordon Brothers Pty Ltd (Gordon Brothers) to repay the amount owing to MRWP and to cause the receivers and managers to retire, which occurred on 18 February 2020: see Dickerson No 2.

10    Following their appointment, the administrators continued to trade the business of the Companies (including the harvest and production of the 2020 wine vintage) with a view to offering the business for sale as a going concern and/or to explore a possible deed of company arrangement or recapitalisation. Colliers International (NSW) Pty Ltd (Colliers) was engaged to act as sale agents and advisers in relation to the sale of the Companies’ business.

11    This sale process culminated in a proposal for a deed of company arrangement and associated creditors’ trust deed put forward by MCW on 30 June 2020 (DOCA Proposal). The administrators formed the view that, for a number of reasons (including because it would likely result in the highest return to creditors), the DOCA Proposal was more favourable than all other final offers received during the sale process.

12    On 24 July 2020, the second meeting of creditors of the Companies was held and the creditors resolved (among other things) that the Companies should execute the DOCA. This occurred on 3 August 2020.

13    The conditions precedent to the DOCA were required to be satisfied (or waived by MCW) on or before 30 November 2020 or such later date as may be agreed in writing by MCW and the deed administrators. The conditions precedent were satisfied by 27 November 2021, as acknowledged by an email from MCW’s solicitors on that date.

14    It is Ms Dickerson’s evidence that:

(a)    The “Implementation Date” as defined in the DOCA, being the date on which the DOCA would complete, was five business days after satisfaction of the conditions precedent or such other date as is agreed in writing by the deed administrators and MCW before the end of that period. Accordingly, the Implementation Date would be 4 December 2020 unless another date was agreed.

(b)    The parties agreed that the Implementation Date was 30 November 2020. However, completion of the transfer of all of the McWilliam’s shares under the DOCA did not proceed on that date because MCW did not make the payments it was then required to make under cl 7.2 of the DOCA. On 4 December 2020, MCW (through its solicitors) requested an extension of time for completion of the DOCA until 5 pm on 8 December 2020, to which the deed administrators agreed subject to MCW making a non-refundable payment of $500,000 by 10 am on Monday, 7 December 2020, on account of the payments required under cl 7.2 of the DOCA (extension payment). At 9.29 am on 7 December 2020, MCW’s solicitors advised the deed administrators’ solicitors by email that MCW would be unable to make the extension payment. After consultation with the committee of inspection at a meeting held at 10.30 am on 7 December 2020, the deed administrators did not press the request for the extension payment and their solicitors advised the solicitors for MCW that the extension to 8 December 2020 had been granted.

(c)    Completion of the DOCA did not occur on 8 December 2020. Instead, MCW requested an extension of the Implementation Date until 15 December 2020. The deed administrators consulted with the committee of inspection at a meeting held at 2 pm on 9 December 2020. After the meeting, the deed administrators (through their solicitors) offered to extend the date for implementation of the DOCA to 15 December 2020 subject to receipt of the extension payment and confirmation from MCW’s investors that they would release the funds to enable the payments required by cl 7.2 of the DOCA to be made by close of business on 9 December 2020. On 10 December 2020, MCW’s solicitors indicated that it could not meet the deed administrators’ requirements for an extension of the time for completion of the DOCA to 15 December 2020. They acknowledged that there would be no further extensions of time provided but indicated MCW would continue “... to work towards being able to complete as a matter of urgency.”

(d)    On 10 December 2020, the deed administrator’s solicitors sent a letter to MCW’s solicitors (described as a “breach notice”):

(i)    giving notice that MCW had breached its obligations under cl 7.2 of the DOCA and that the deed administrators had determined that it was no longer practicable or desirable to implement the DOCA as a result of the damage and loss being suffered by the business as a result of the delay;

(ii)    stating that as a result of MCW’s breach and the deed administrators’ determination, the deed administrators would be convening a meeting of creditors in accordance with the terms of the DOCA (and pursuant to cll 7.8, 21.2 and 21.7 of the DOCA) for the purposes of, amongst other things, the creditors passing a resolution to either enforce the terms of the DOCA by way of court proceeding or that the DOCA be terminated; and

(iii)    demanding that MCW immediately complete the DOCA and pay the amounts payable under cl 7.2 of the DOCA.

(e)    Since then, MCW has not taken any steps to complete the DOCA and neither the deed administrators nor their solicitors have received any response to the breach notice. The deed administrators consider that there is no reasonable prospect that MCW will complete the DOCA by making the payments required by cl 7.2 of the DOCA.

(f)    As a consequence of MCW’s failure to complete the DOCA, the deed administrators recommenced the sale process for the business and assets of the Companies on 10 December 2020. This included: re-engaging Colliers as the sales agent; re-opening the electronic data room used in the previous sales campaign; advertising the business for sale; and contacting the under-bidders in the previous sale campaign.

(g)    At the conclusion of the sale campaign, the deed administrators received six offers to acquire all of the assets and operations of the Companies. These offers included both business sale proposals and deed of company arrangement proposals. Six additional offers were received for parts of the business or specific assets. On 9 February 2021, the deed administrators entered into a short period of exclusive negotiations with a preferred bidder. That exclusivity period expired on 15 February 2021 and has not been extended but the negotiation of a draft business sale agreement with the preferred bidder is ongoing. A completion date of 30 April 2021 is contemplated. However, there are no assurances of an agreement being entered into with the preferred bidder and the structure of any transaction is not settled. It could take the form of the sale of all or part of the business as a going concern or a restructure through a deed of company arrangement.

(h)    The deed administrators have also continued to carry on and actively trade the business of the Companies. In conjunction with the Companies’ senior management personnel and external grape growers, and on the advice of Colliers, the deed administrators decided to proceed with the harvesting and production of the 2021 wine vintage. Had they not determined to proceed with the 2021 vintage, the deed administrators would have had no alternative but to dramatically scale back the business operations and retrench or stand down a significant portion of the Companies’ employees, particularly those based at the corporate head office. The Companies would also have risked losing their grower base into the future, as these growers would likely have found other wineries for their 2021 grape harvest. It was the deed administrators’ assessment, supported by Colliers, that committing to the 2021 vintage and retaining as much of the existing grower base as possible would maximise the prospects of achieving a sale of business as a going concern. To facilitate the conduct of the Companies’ businesses as a going concern, the deed administrators have re-drawn funding from Gordon Brothers.

(i)    The harvest for the 2021 vintage commenced in late January 2021 and the 2021 vintage process (including wine production) is now expected to be completed by early April 2021 given that weather related factors have pushed back harvest planning. As a result, discussions with potential purchasers have focused on 30 April 2021 as the proposed completion date for a going concern sale to enable the final cost of the vintage to be determined, including allocation of overheads, and to align with the month end following the completion of the vintage from an ease of transition of business ownership perspective.

(j)    Following the failure of the DOCA to complete, the deed administrators were obliged to call a meeting of the creditors of the Companies under cll 6.4, 21.6 and 21.7 of the DOCA. On 14 January 2021, the deed administrators convened a meeting of the creditors of the Companies to be held on 2 February 2021 for the purpose (among others) of considering resolutions that the DOCA be terminated and the Companies be wound up, there being no other viable alternative at that time. At the meeting, the creditors were provided with detail as to the failure of the DOCA to complete and the progress of the further sale process that had been undertaken. As chairperson and without opposition from the creditors, Ms Dickerson then adjourned the meeting for 15 business days until 23 February 2021. On 15 February 2021, the deed administrators issued a notice for the adjourned meeting of creditors to be resumed on 23 February 2021. That notice reflected the fact that, as matters presently stood (because of the absence of any binding transaction for the sale or restructure of the business and assets of the Companies), the only option available to creditors was the termination of the DOCA and winding up of the Companies.

15    Having regard to the current status of the sale process, including negotiations with the preferred bidder, the deed administrators have formed the view that the optimal outcome for the creditors of the Companies is to maintain flexibility in the sale process to preserve the possibility of a sale transaction without the Companies being wound up immediately.

16    The deed administrators have concerns that if, following resumption of the creditors’ meeting on 23 February 2021, the Companies were to move immediately into liquidation:

(a)    It would have a negative impact on their ability to finalise the current sale process and on the value which can be obtained.

(b)    It is likely to increase uncertainty of the Companies’ customers, employees and suppliers thereby destabilising the Companies.

(c)    It would have an impact on staff morale and the Companies’ ability to retain staff. If a sale can be completed without liquidation, it will avoid redundancies and termination payments which would have the effect of reducing the pool of assets available to other creditors. There is no certainty that key staff would be willing to be re-hired, affecting the Companies’ trading and a liquidator’s ability to complete a going concern sale.

(d)    It would have an adverse impact on the Companies’ capacity to obtain future sales of their products through major outlets, such as Woolworths and Coles. That view is shared by the Companies’ senior management.

17    Based on ongoing analysis conducted by the deed administrators and their staff, which is regularly updated as the sales process continues, in Ms Dickerson’s opinion the completion of the sale process outside of a liquidation is more likely to produce a superior return to creditors than what would be available in a liquidation scenario. It is her view that the sale or restructure of the business and assets of the Companies as a going concern outside of a winding up is consistent with the objectives of Part 5.3A of the Corporations Act as it is likely to preserve as much of the business of the Companies as possible (and therefore maintain continuity of employment for as many of the Companies’ employees as possible) and otherwise maximise the return to creditors from the Companies’ external administration of the Companies. The deed administrators consider that avoiding liquidation and continuing the deed administration process at this stage is in the best interests of creditors.

18    It is for these reasons that the administrators seek orders from the Court permitting them further to adjourn the meeting to 30 April 2021.

19    The deed administrators have also assessed the potential impact on certain stakeholders of the Companies if the orders they seek are made. They note that:

(a)    Under cll 12.1 and 13.1 of the DOCA:

(i)    any secured creditor who voted in favour of the resolution to approve the DOCA is prevented from realising or otherwise dealing with its security interest until, relevantly, the termination of the DOCA; and

(ii)    an owner or lessor of property in the Companies’ possession who is a party to a Non-Releasing Security (as defined in the DOCA) and who voted in favour of the resolution to approved the DOCA waives any event of default or breach that would entitle that person to take possession of or otherwise recover the property.

(b)    The current position regarding property leases is:

(i)    the extension of time will not cause detriment in respect of the leased warehouse property at Chullora owned by Pipeclay Lawson as this lease was the subject of a notice given by the administrators pursuant to s 443B of the Corporations Act on 15  January 2020 and the property is no longer used or occupied by the Companies;

(ii)    the Companies’ head office property at Pyrmont owned by Australia Brilliance Investment Group Pty Ltd (ABIG) has been subject to a month to month arrangement and the deed administrators continue to meet the monthly rental obligations during their appointment. In addition, ABIG did not participate in the second meeting of creditors which resolved to enter into the DOCA and is, therefore, not bound by any restrictions on the exercise of its property rights contained in the DOCA;

(iii)    in relation to the Hanwood vineyard, the deed administrators, McWilliam’s and QWIL (the owners have the vineyard) have an arrangement whereby the deed administrators have prepaid rent for the period 1 March 2021 to 31 July 2021 and QWIL has agreed not to exercise any existing default rights which might have accrued under the lease; and

(iv)    in relation to the Barwang vineyard, the owner, Mooremc Pty Ltd has no right of termination of the lease as McWilliam’s insolvency is not an event of default under the lease and the deed administrators are continuing to pay rent.

(c)    In relation to a number of secured creditors who hold PPSR registrations of specific assets leased or otherwise held by the Companies, the extension of the adjournment period will not have a detrimental effect as the deed administrators are continuing to meet payments as part of ongoing trading activities and it is anticipated that these leases will be novated to an incoming purchaser in a sale of the Companies or their businesses on a going concern basis.

(d)    If the orders sought in these proceedings are made, the employment of the Companies’ employees will continue during the extended adjournment period with the prospect that a substantial number will be offered continuing employment by a purchaser of the Companies or their businesses on a going concern basis.

(e)    A meeting of the committee of inspection was held on 18 February 2021. The members present and voting represented an estimated 56% of the value of all creditors’ votes. The members of the committee were advised of the proposed application and the meeting unanimously passed the following resolution:

That the Committee of Inspection approve the Deed Administrators making an urgent application to the Federal Court for an order extending the maximum period for which the meetings of creditors of that were held and adjourned on 2 February 2021, may be adjourned in accordance with Insolvency Practice Rule 75-140, from 15 business days to the period ending on 30 April 2021.

20    The deed administrators say that, although the proposed adjournment period will end on 30 April 2021, if the sale process can be concluded sufficiently before that time, they will endeavour to resume the creditors’ meeting before that date. The proposed orders are therefore cast in such a way as the meeting may be resumed on any day in the period up to 30 April 2021 upon the deed administrators giving at least five business days’ notice to creditors.

Legal principles.

21    Section 75-140 of the IP Rules provides as follows:

75-140 Adjournment of meetings of creditors

(1)    A meeting may be adjourned from time to time and from place to place:

(a)    by resolution; or

(b)    by the person presiding at the meeting.

(2)    The meeting must not be adjourned to a day that is more than 15 business days after the first day on which the original meeting was held.

(3)    Despite subsection (2), a meeting convened under section 439A of the Act must not be adjourned to a day that is more than 45 business days after the first day on which the original meeting was held.

(4)    Unless otherwise provided by the resolution by which it is adjourned:

(a)    if any of the persons entitled to attend the adjourned meeting is entitled to physically attend the adjourned meeting—the meeting is adjourned to the same location or locations as were specified for the original meeting; and

(b)    if the original meeting was using virtual meeting technology—participation in the resumed meeting by means of the technology must be provided in the same manner as set out in the notice for the original meeting.

(5)    The convenor of the meeting or a person nominated by the convenor must, by the end of the next business day, give notice of the adjournment to the persons to whom notice of the meeting must be given under section 75-10.

(6)    If a meeting is adjourned to a day more than 6 business days after the passing of the resolution by which it is adjourned, the company must cause notice of the day, time and place of the resumption of the meeting to be lodged in accordance with subregulation 5.6.75(4) of the regulations at least 5 business days before that day.

Note: Subregulation 5.6.75(4) provides for notices to be electronically lodged and published on a website maintained by ASIC.

(7)    A resolution passed at a meeting resumed after an adjournment is passed on the day it was passed.

22    Section 447A of the Corporations Act provides as follows:

447A General power to make orders

(1)    The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company.

(2)    For example, if the Court is satisfied that the administration of a company should end:

(a)    because the company is solvent; or

(b)    because provisions of this Part are being abused; or

(c)    for some other reason;

the Court may order under subsection (1) that the administration is to end.

(3)    An order may be made subject to conditions.

(4)    An order may be made on the application of:

(a)    the company; or

(b)    a creditor of the company; or

(c)    in the case of a company under administration—the administrator of the company; or

(d)    in the case of a company that has executed a deed of company arrangement—the deed’s administrator; or

(e)    ASIC; or

(f)    any other interested person.

23    The deed administrators have standing to bring an application under s 447A(4)(d).

24    It is well settled that the Court’s powers under s 447A are wide but an order made under that section must serve the objects of Part 5.3A of the Corporations Act which are set out in s 435A as follows:

435A Object of Part

The object of this Part, and Schedule 2 to the extent that it relates to this Part, is to provide for the business, property and affairs of an insolvent company to be administered in a way that:

(a)    maximises the chances of the company, or as much as possible of its business, continuing in existence; or

(b)    if it is not possible for the company or its business to continue in existence—results in a better return for the company’s creditors and members than would result from an immediate winding up of the company.

Note: Schedule 2 contains additional rules about companies under external administration.

25    Section 90-15 of the IP Schedule relevantly provides as follows:

90-15 Court may make orders in relation to external administration

Court may make orders

(1)    The Court may make such orders as it thinks fit in relation to the external administration of a company.

Orders on own initiative or on application

 (2)    The Court may exercise the power under subsection (1):

(a)    on its own initiative, during proceedings before the Court; or

(b)    on application under section 90-20.

Examples of orders that may be made

(3)    Without limiting subsection (1), those orders may include any one or more of the following:

(a)    an order determining any question arising in the external administration of the company;

…

Section does not limit Court’s powers

(7)    This section does not limit the Court’s powers under any other provision of this Act, or under any other law.

26    Section 5-20(b) of the IP Schedule includes a deed administrator in the definition of “external administrator”; an external administrator has a “financial interest” in the external administration of a company under s 5-30(b)((iii); and s 90-20(1)(a) authorises a person with a financial interest in the external administration of a company to make an application for orders under s 90-15.

27    There are many cases in which s 447A has been used to extend the period of permitted adjournment of a second creditor’s meeting under s 439B(2) of the Corporations Act (repealed at the same time as the enactment of the IP Schedule came into effect), many of which are cited in the applicants’ written submissions at footnotes 2 and 3. One such case was Collective Olive Groves Limited, in the matter of Collective Olive Groves Limited; application by Reidy [2009] FCA 177 where Jacobson J (at [18]) noted that the principles applied in relation to the extension of a convening period should inform the decision whether to permit the further adjournment of the second meeting of creditors beyond the 45 business days then specified in s 439B(2). His Honour summarised their effect as being the need to balance the expectation that administration will be relative speedy and summary and the requirement that undue speed not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return to shareholders.

28    As I noted in GDK Projects Pty Ltd, in the matter of Umberto Pty Ltd (in liq) v Umberto Pty Ltd (in liq) [2018] FCA 541 at [33], the power in s 90-15 of the IP Schedule is, in its terms, unconstrained. However, it is notable that the objects set out in s 435A have application to the exercise of powers under the IP Schedule to the extent to which it relates to Part 5.3A and it is necessary to take this into consideration in cases such as this.

29    The extension which is sought relates to the fifteen business days period of possible adjournment specified in s 75-140(2) of the IP Rules, not a period specified in Part 5.3A. As noted by Yates J in Georges, in the matter of Vical NSW Pty Ltd (administrators appointed) [2018] FCA 1974 at [26]-[27], a similar question arose in Re Priceright Construction Pty Ltd [2006] NSWSC 324; (2006) 57 ASCR 206, where the question was whether s 447A could be invoked to operate in respect of a particular company on the basis that reg 5.6.18(2) of the Corporations Regulations 2001 (Cth) did not apply. In that case, Barret J reasoned that such an order could be made because, even though a relevant time limit was prescribed by the regulation, the orders sought were still about how Part 5.3A was to operate in relation to the company concerned. This reasoning was followed by O’Bryan J in Dixon, in the matter of Pearson Contracting Pty Ltd as trustee for Pearson Family Trust (Administrators Appointed) [2020] FCA 1505 at [22]-[23].

30    In Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571; (2020) 144 ACSR 310 at [35], Middleton J found that s 90-15 is broad enough to encompass a power to dispense with provisions of the IP Schedule and the IP Rules that include “must”. In Eagle, in the matter of Techfront Australia Pty Ltd (administrators appointed) [2020] FCA 542, I found that s 90-15 confers power to modify the operation of the IP Rules with respect to the convening and conduct of creditors’ meetings.

31    It is also notable that the application of s 75-140 of the IP Rules is generally not limited to meetings of creditors convened under s 436E (first creditors’ meeting) or s 439A (second creditors’ meeting); only s 75-140(3) has application to second creditors’ meetings.

32    Having regard to the foregoing, provided that the making of orders under s 447A of the Corporations Act and s 90-15 of the IP Schedule to extend the possible period of an adjournment under s 75-140(2) will serve the objects set out in s 453A of the Corporations Act, in my view the Court has power to make the orders sought in relation to the creditors’ meeting convened on 2 February 2021 under the terms of the DOCA.

Consideration

33    Ms Dickerson is a chartered accountant with over 19 years’ experience focusing primarily on corporate insolvency and restructuring.

34    The Court accepts the opinion which Ms Dickerson and the other deed administrators have formed for the reasons given at [15]-[17] above that, since MCW failed to complete the current DOCA in accordance with its terms, it is in the best interests of the Companies’ creditors that the meetings which they convened for the purposes of cl 21.2(b) of the DOCA, held and adjourned on 2 February 2021, should be further adjourned on 23 February 2021 for a period up to 30 April 2021 so as to maintain flexibility in the sale process and potentially avoid untimely liquidation of the Companies.

35    Of the alternatives currently available, making the proposed orders best serves the objects of Part 5.3A which is to enable the businesses, property and affairs of the Companies to be administered in a way that maximises the chances of the Companies, or as much as possible of their businesses, continuing in existence or, if it is not possible for the Companies or their businesses to continue in existence, results in a better return for the Companies’ creditors and members of McWilliam’s than would result from the Companies’ immediate winding up.

36    I am also satisfied that stakeholders generally are unlikely to be materially prejudiced by the orders being made for the reasons given at [19] above. I also note that the committee of inspection has been informed of the deed administrators’ application to the Court and they (who represent approximately 56% of creditors by value) resolved unanimously to approve the deed administrators making application for the orders. Further, while ASIC has had little time to consider its response to the application and not all creditors would have been aware of the timing of the application, the orders made permit ASIC and any aggrieved creditor to apply to the Court in relation to them.

Conclusion

37    For the reasons set out above, the Court determined to make the orders sought by the deed administrators.

Associate:

Dated:    25 February 2021