Federal Court of Australia

Dixon, in the matter of Right Fast Capital Pty Ltd (administrators appointed) [2021] FCA 1638

File number:

NSD 1322 of 2021

Judgment of:

YATES J

Date of judgment:

17 December 2021

Catchwords:

CORPORATIONS – applications for extension of the convening period for the holding of the second meeting of creditors required by s 439A(2) of the Corporations Act 2001 (Cth)

Legislation:

Corporations Act 2001 (Cth) s 439A(2)

Division:

General Division

Registry:

New South Wales

National Practice Area:

Commercial and Corporations

Sub-area:

Corporations and Corporate Insolvency

Number of paragraphs:

13

Date of hearing:

17 December 2021

Solicitor for the Plaintiffs:

Mr P Duffy of Duffy Group Lawyers

ORDERS

NSD 1322 of 2021

IN THE MATTER OF RIGHT FAST CAPITAL PTY LTD (ADMINISTRATORS APPOINTED) ACN 620 894 948

STEPHEN DIXON AND GEOFFREY TRENT HANCOCK IN THEIR CAPACITY AS JOINT AND SEVERAL VOLUNTARY ADMINISTRATORS OF EACH OF THE COMPANIES NAMED IN THE SECOND TO FIFTH PLAINTIFFS (ADMINISTRATORS APPOINTED) (“THE COMPANIES”)

First Plaintiff

RIGHT FAST CAPITAL PTY LTD (ADMINISTRATORS APPOINTED) ACN 620 894 948

Second Plaintiff

RIGHT PLAN CAPITAL PTY LTD (ADMINISTRATORS APPOINTED) ACN 620 870 822 (and others named in the Schedule)

Third Plaintiff

order made by:

YATES J

DATE OF ORDER:

17 DECEMBER 2021

THE COURT ORDERS THAT:

1.    Pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (the Act), the convening period defined in s 439A(5) of the Act be extended in respect of the meetings of creditors to be held pursuant to s 439A(2) of the Act for each of the second, third, fourth, and fifth plaintiffs.

2.    Pursuant to s 447A(1) of the Act, s 439A of the Act operate in respect of the second, third, fourth, and fifth plaintiffs, such that the meetings of creditors to be held pursuant to s 439A(2) thereof be held at any time during the period up to, or within five business days after, the end of the convening period as extended by Order 1, notwithstanding the provisions of s 439A(2) of the Act.

3.    Within seven days, the first plaintiffs take all reasonable steps to give notice of these orders to the creditors of each of the second, third, fourth, and fifth defendants, including to any person claiming to be a creditor.

4.    Liberty be granted to any person, who can demonstrate sufficient interest, to apply to the Court to discharge or modify these orders, on giving not less than three business days’ written notice to the first plaintiffs and the Court.

5.    The first plaintiffs’ costs of this application be costs in the administrations of the second, third, fourth, and fifth plaintiffs.

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

REASONS FOR JUDGMENT

YATES J:

1    The first plaintiffs are the joint and several administrators of the second, third, fourth, and fifth plaintiffs (the administrators). They were appointed on 24 November 2021. They seek orders extending the convening period for the holding of the second meeting of creditors, required by s 439A(2) of the Corporations Act 2001 (Cth) (the Act)), of each of the second, third, fourth, and fifth plaintiffs to 31 January 2022—a period of 27 business days. Unless extended, the convening period, for each meeting, will expire on 22 December 2021.

2    The application is supported by an affidavit made by Stephen Dixon, who is one of the administrators. Mr Dixon has given an account of the present state of the administrations, including a timeline of key events; communications with the sole director and shareholder of the second, third, fourth, and fifth plaintiffs (the Director) and his spouse; and requests made to third parties for information and records. He has also summarised the work undertaken by the administrators since their appointment. I note that the Director is currently residing in a medical institution, with limited access to electronic communications with the administrators and their staff.

3    The essential reason for the extensions is that, based on the investigations undertaken by the administrators to date, they have formed the view that it is impossible to complete their investigations properly and to reach a fully informed opinion as to the recommendations they should make to creditors with respect to the outcome of the administrations, within the timeframe specified in s 439A(2). I am satisfied that this is the case having regard to the various matters discussed in Mr Dixon’s affidavit. I note Mr Dixon’s evidence that creditors were advised of the administrators’ intention to seek these extensions at the first meetings of creditors, and in a subsequent informal teleconference. Mr Dixon says that no objections were raised to the extensions being sought. He has expressed the view that the extensions will not cause material prejudice to any creditor or other interested stakeholder.

4    The second plaintiff, Right First Capital Pty Ltd (administrators appointed), was incorporated on 4 August 2017. Its business was to raise money from investors by way of unsecured loans. It would then on-lend the funds on an unsecured basis to third parties. The administrators understand that a majority of investor agreements have reached maturity and are overdue.

5    The third plaintiff, Right Plan Capital Pty Ltd (administrators appointed), was incorporated on 3 August 2017. Its business was to purchase a plan book from a New South Wales-based financial planner, Holt Partners Pty Ltd, which was being administered by a financial planner, who was a former director of the second plaintiff.

6    The fourth plaintiff, Acuitas Investire Pty Ltd (administrators appointed), was incorporated on 27 March 2003. Its business was also to raise money from investors by way of unsecured loans which it would then on-lend on an unsecured basis to third parties. The administrators understand that a majority of investor agreements with the fourth plaintiff have reached maturity and are overdue.

7    The fifth plaintiff, Tanbill Homes Pty Ltd (administrators appointed), was incorporated on 12 November 2018. Its business was to buy and build housing in Victoria for high-net-worth individuals in Singapore for rental. A number of the houses are located in Point Cook, Victoria.

8    The only personal property security interests are registered against the fifth plaintiff. To date, two motor vehicle security interests have been identified. The Director has informed the administrators that the fifth plaintiff has one employee, however the administrators have been unable to verify that fact.

9    The administrators’ investigations to date have identified 58 unsecured creditors across the plaintiff companies. The Director has indicated that, in aggregate, there may be unsecured debts of $4.7 million. The Director has also indicated that the unsecured loans obtained from investors were used by Mr Niteen Doolub (an external party), and entities related to him, in several property developments in Melbourne and in the Maldives. According to the Director, funds of approximately $4 million may have been advanced in this way.

10    Mr Dixon’s evidence is that the administrations of the companies are complex. He has deposed that an extension of the convening periods is required because:

(a)    the administrators have undertaken extensive investigations to date, but there is a need for further investigative work;

(b)    the administrators require sufficient time to conduct a bank statement review and detailed tracing exercise to confirm the funds received by the plaintiff companies and to identify where the majority of these funds were disbursed;

(c)    sufficient time is required for the administrators to obtain information from Mr  Doolub in respect of his receipt of funds from the plaintiff companies. In the past, Mr Doolub has declined to be interviewed. However, on 7 December 2021, he agreed to attend a meeting with the administrators;

(d)    sufficient time is needed for the administrators to determine the location and value of the third plaintiff’s plan book, and to consider the merits of selling the plan book for the benefit of creditors;

(e)    sufficient time is needed to allow the administrators to properly assess any deed of company arrangement that might be proposed;

(f)    the plaintiff companies have not maintained accounting management systems or have had any externally-prepared financial statements over the last three years. Sufficient time is needed for the administrators to consider and assess their present financial position;

(g)    the administrators require time to review the validity of the claims made by the creditors in relation to the principal amounts lent to the plaintiff companies and the interest accrued on the loans; and

(h)    the collation of the plaintiff companies’ documents is difficult because they are saved in multiple Google drives.

11    Mr Dixon has also deposed that the administrators require additional time to investigate and consider a number of matters that will be relevant to the preparation of their reports to the creditors. Amongst other things, the administrators wish to review and evaluate the basis on which the Director resolved that the plaintiff companies were insolvent and that they be placed in administration. They also wish to investigate whether there are transactions that might be voidable transactions.

12    The alternative to extending the convening periods would be to convene the meetings within the current timeframe but then adjourn them to a later date. On the basis of Mr Dixon’s evidence, I am persuaded that this alternative course would be inefficient and costly. The extensions that are sought are relatively modest, bearing in mind the intervening Christmas and New Year periods.

13    After considering Mr Dixon’s evidence, and receiving submissions from the first plaintiffs’ solicitor Mr Duffy, I am persuaded that the convening periods should be extended, as sought. Orders will be made accordingly.

I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.

Associate:

Dated:    17 December 2021

SCHEDULE OF PARTIES

NSD 1322 of 2021

Plaintiffs

Fourth Plaintiff:

ACUITAS INVESTIRE PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 103 925 793

Fifth Plaintiff:

TANBILL HOMES PTY LTD (ADMINISTRATORS APPOINTED) ACN 159 734 531