FEDERAL COURT OF AUSTRALIA

Hayes, in the matter of Parcelpoint Pty Ltd (Administrator Appointed) [2022] FCA 1136

ORDERS

THE COURT ORDERS THAT:

1.    The time for the hearing of the application be abridged and the Originating Process be returnable instanter.

2.    Pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (Act), the convening period within which the first plaintiff (Administrator) must convene a second meeting of the creditors of Parcelpoint Pty Ltd ACN 614 602 336 (Administrator Appointed) (Company) as fixed by s 439A(5) of the Act be extended by 56 days, that is, until 18 November 2022.

3.    Pursuant to s 447A of the Act, the meeting of the Company required under s 439A of the Act may be held at any time during or within 5 business days after the end of the convening period as extended by Order 2 above, notwithstanding the provisions of s 439A(2) of the Act.

4.    The Administrator has liberty to apply in relation to any further extensions of the convening period referred to in Order 2 above at any time prior to 18 November 2022.

5.    Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and on the ground that it is necessary to prevent prejudice to the proper administration of justice for the purposes of s 37AG of the FCA Act, the following material is not to be disclosed or made available for inspection by any person until any sales process with respect to the business or assets of the Company has completed, other than any Judge of the Court, any member of any Judge's staff or any officer of the Court, the Plaintiffs, their staff and their legal representatives and any other person who signs an undertaking in a form acceptable to the Administrator agreeing to keep secure and confidential each and every document identified as confidential:

(a)    Confidential Exhibit AJH-1 to the affidavit of Alan John Hayes sworn on 20 September 2022.

6.    The Administrator take all reasonable steps to cause notice of the Court’s orders to be given, within one business day of the making of those orders, to the creditors of the Company.

7.    Any person who can demonstrate sufficient interest (including any creditor of the Company) for the purposes of modifying or discharging any order may have liberty to apply to the Court on three business days’ notice to the Administrator.

8.    The costs and expenses of the application be costs in the administration of the Company.

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

REASONS FOR JUDGMENT

HALLEY J:

INTRODUCTION

1    On 20 September 2022 I made an order pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (Act) that the period within which the administrator of Parcelpoint Pty Ltd (Administrator Appointed) (Company) must convene a meeting of the creditors of the Company, as fixed by s 439A(5) of the Act, be extended by 56 days, that is, until 18 November 2022. The administrator of the Company is the first plaintiff, Mr Alan John Hayes (Administrator).

2    I also made an order pursuant to s 447A of the Act that the meeting of the Company required under s 439A of the Act may be held at any time during or within five business days after the end of the convening period, notwithstanding the provisions of s 439A(2) of the Act.

3    These are my reasons for making those orders.

4    Mr Robertson of counsel appeared for the Administrator and provided comprehensive written and oral submissions.

5    The Administrator moved on an originating process filed on 20 September 2022 and relied on the affidavit of the Administrator, sworn on 20 September 2022, and two exhibits to that affidavit, being Exhibit AJH-1 and Confidential Exhibit AJH-1.

LEGAL PRINCIPLES

6    The Court has the power to extend the convening period and further order that the meeting may take place within the extended period as an Administrator sees fit, pursuant to ss 439A(6) and 447A(1) of the Act respectively.

7    Section 439A(6) of the Act provides that the Court may extend the convening period on an application made during or after the convening period, “as the case requires”.

8    Section 439A(7) of the Act stipulates that the Court may only grant an extension if it is satisfied that it is in the best interests of the creditors that the convening period be extended. In exercising its discretion to extend the convening period, the Court must reach an appropriate balance between an expectation that the administration will be relatively speedy and summary in nature, and the countervailing factor that undue speed should not be allowed to prejudice sensible and constructive actions directed to maximising the return for creditors: Strawbridge, in the matter of Virgin Australia Holdings Ltd (Administrators appointed) (No 2) (2020) 144 ACSR 347; [2020] FCA 717 (Strawbridge) at [64] (Middleton J); see also Algeri, in the matter of WBHO Australia Pty Ltd (admins appointed) (No 2) [2022] FCA 234 at [16] (Beach J).

9    In Caddy, in the matter of Khaled El-Sheikh Pty Ltd (Administrators Appointed) [2022] FCA 703 (Caddy) at [17], Anderson J summarised the principles and authorities governing an application for an extension of convening periods, and, in that paragraph, referred to the explanation of those principles by Middleton J in Strawbridge, including at [66] of that case, in which his Honour explained:

An extension of the administration period to facilitate either (or both) of: (a) the sale of the business of the company as a going concern, so as to maximise the value of the company’s assets; or (b) the progression and assessment of a DOCA proposal that may provide a better return to creditors than a winding up, are well-recognised examples of situations where the Court has extended the convening period …

10    Further, Anderson J stated at [18]-[19]:

To discharge their function properly, Administrators should have sufficient time to investigate the affairs of the company under administration and provide considered and informed opinions to the creditors as to the company’s future. As was observed in In the matter of Gunns Plantations Limited (Administrators Appointed) (Receivers and Managers Appointed) [2012] VSC 513, [23]:

It has been recognised...that the interests of creditors can be prejudiced not only by delay but also by the convening of premature meetings where the administrator has been unable to obtain information for the preparation of the report and statements required by s 439A(4) in the form on which creditors can make an informed decision.

11    In order to discharge their functions properly, it has been said that administrators should be given sufficient time to investigate the affairs of the company and provide considered and informed opinions to the creditors as to the company’s future: In the matter of Gunns Plantations Limited (Administrators Appointed) (Receivers and Managers Appointed) (ACN 091 232 209) [2012] VSC 513 at [23] (Gardiner AsJ).

12    It has also been stated that, provided an evidentiary case for an extension of convening periods is properly prepared and there is no evidence of material prejudice to those affected by the moratorium proposed by administration, and the estimate of time has a reasonable basis, the Courts have tended to grant the extensions sought: In the matter of Riviera Group Pty Ltd (admins apptd)(recrs & mgrs apptd) (2009) 72 ACSR 35; [2009] NSWSC 585 at [14] (Austin J); see also Kaso, in the matter of Speedpanel Australia Ltd (Administrators Appointed) (No 2) [2017] FCA 862 at [21] (Moshinsky J).

BACKGROUND

13    The Company, which was incorporated on 2 September 2016, is a “start-up” that operates a network of approximately 1,400 local parcel delivery, pickup and return locations around Australia (including in convenience stores, pharmacies and service stations). The Company also offers a doorstep delivery service to customers, known as a “last mile” service. The Company employs 21 employees, with 13 employed on a full-time basis and eight employed on a casual basis (Employees).

14    On 25 August 2022, the Administrator was appointed by way of a resolution of the Company’s directors.

15    On 6 September 2022, the first meeting of creditors pursuant to s 436E of the Act was held. No resolution was passed to appoint a Committee of Inspection of creditors.

16    The 20-day convening period under s 439A(5) of the Act ends on Friday, 23 September 2022 and the second meeting of creditors must be held on or before Friday 30 September 2022.

17    The only secured creditor of the Company is Global Credit Investments Pty Ltd as trustee for the GCI Leap Capital Growth Fund (Secured Creditor). The Secured Creditor is owed approximately $3.2 million.

18    The Company has 11 convertible noteholders (Convertible Noteholders) who are owed in aggregate approximately $917,500.

19    The Company also has 1,100 agents (such as newsagents and convenience stores) owed approximately $180,000, seven contractors owed approximately $10,000, six key suppliers owed approximately $1.1 million and 17 statutory and other creditors owed approximately $370,000 (together, Non-Priority Unsecured Creditors).

20    The Employees are owed in aggregate approximately $380,000 in entitlements (Priority Unsecured Creditors).

REASONS FOR EXTENSION

21    The Administrator seeks an extension of the convening period under s 439A(6) of the Corporations Act for a period of 56 days, that is, until 18 November 2022, for the following reasons.

22    First, the Administrator has received two offers to purchase the Company’s business and/or assets as a going concern. The most recent offer was only received on 16 September 2022. The Administrator considers that he needs further time to assess the offers and negotiate possible counter-offers to seek to improve the possible outcome of the administration for the Company’s creditors.

23    Second, the Administrator is also considering a proposal from some of the Company’s shareholders for a possible Deed of Company Arrangement (DOCA).

24    Third, given these matters, the Administrator seeks an extension of the convening period to ensure that all avenues for the possible sale, restructure and recapitalisation of the Company have been explored and that he has sufficient time to consider and formulate any sale process or restructure.

25    Fourth, the Administrator considers that to require the second meeting of creditors to be held on or before 30 September 2022 would not be in the interests of the Company’s creditors, in circumstances where:

(a)    the Administrator must prepare a Voluntary Administrator Report in accordance with the requirements of s 75-225 of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR), but the Administrator is not yet in a position to make any recommendations to the creditors as to whether it is in the creditors’ interests for the Company to execute a DOCA, or for the Company to be wound up, or for the administration of the Company to end;

(b)    the preparation of the Voluntary Administrator Report will require the Administrator to disclose information about the offers he has received to purchase the Company's business and/or assets, which may result in confidential information being disclosed with the result that the offers which have been made could be withdrawn or reduced; and

(c)    the Administrator will incur costs of approximately $15,000 plus GST in convening the second meeting of creditors and seeking to adjourn the meeting to a later date.

26    Fifth, the Administrator’s application to extend the convening period is supported by the Secured Creditor as well as by the Convertible Noteholders.

27    Sixth, the Administrator submits that the extension of the convening period, and the trade-on of the Company’s business during that time, will not prejudice the Priority Unsecured Creditors and the Non-Priority Unsecured Creditors, in circumstances where:

(a)    the Administrator has quarantined an amount of the Company’s funds to ensure that the employee claims of the Priority Unsecured Creditors will be paid in full; and

(b)    at present, the Administrator estimates that there will be a nil return to Non-Priority Unsecured Creditors in a liquidation scenario. Therefore, the only possibility of these creditors receiving any return is if the Administrator can secure a better return by the sale of the Company’s business and/or assets or its recapitalisation.

CONSIDERATION

28    I have concluded that, consistent with the relevant principles outlined above, an extension of time for the convening of a second meeting of creditors is appropriate. I am satisfied from the evidence of the Administrator and the documents in the two exhibits to his affidavit, that it is in the interests of all creditors for the Administrator to be given additional time to ensure that all avenues for the possible sale, restructure or recapitalisation of the Company are explored and to ensure that the Administrator has sufficient time to consider and formulate any sale process or restructure.

29    I am satisfied that the relatively short requested further period of 56 days would provide the Administrator with sufficient time to come to a view on the matters required by s 75-225 of the IPR and would ultimately likely be of more benefit to the creditors than any likely prejudice caused by a further 56 day statutory moratorium.

30    I am also satisfied that the Administrator had taken appropriate steps to inform the Secured Creditor and the Convertible Noteholders of the application for an extension of time to hold the second creditors’ meeting and I note that each has provided their consent to the Administrator’s application.

31    Further, I am satisfied that the Administrator’s proposal to quarantine sufficient funds to pay the Priority Unsecured Creditors will ensure that they are not disadvantaged by the extension of the convening period for the second creditors’ meeting and that absent a further injection of funds into the Company, either through a DOCA or the negotiation of an improved offer for the assets of the Company, the Non-Priority Unsecured Creditors are unlikely to receive any return.

32    I also note that the orders that I made on 20 September 2022 included an order that anyone who could demonstrate a sufficient interest, including any creditor of the Company, could apply to the Court on three business days’ notice for an order modifying or discharging the orders that I made on that date.

33    In all the circumstances, I accept that the evidence weighs in favour of an extension of the convening period under s 439A(6) of the Act within which the second meeting of creditors is to take place and the making of an order under s 447A of the Act that the meeting may be held at any time during or within five business days of the extended convening period.

DISPOSITION

34    For the reasons I have outlined above, I made an order pursuant to s 439A(6) of the Act extending the convening period for the second meeting of creditors and an order pursuant to s 447A that the meeting of the Company required under s 439A of the Act may be held at any time during or within five business days after the end of the convening period, notwithstanding the provisions of s 439A(2) of the Act.

CONFIDENTIALITY

35    The Administrator also sought an order pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (FCA Act) with respect to the Confidential Exhibit AJH-1 to Mr Hayes affidavit sworn 20 September 2022 on the ground that it was necessary to prevent prejudice to the proper administration of justice for the purposes of s 37AG of the FCA Act.

36    Confidential Exhibit AJH-1 comprised copies of the two offers received by the Administrator and an estimate outcome statement comparing the possible returns to creditors of the Company if either offer was accepted compared with the returns that could be expected if the proposed DOCA was accepted or the Company was wound up. I was satisfied that the information in Confidential Exhibit AJH-1 is commercially sensitive and if it became generally or publicly available, such disclosure would likely have a detrimental effect on the potential sale process being currently being considered by the Administrator and in turn a detrimental effect on the creditors of the Company. I was therefore satisfied that it was appropriate to make the s 37AF order sought by the Administrator with respect to Confidential Exhibit AJH-1.

Associate:    

Dated:    23 September 2022