Federal Court of Australia

Algeri (Administrator), in the matter of Murray & Roberts Pty Ltd (Administrators Appointed) (No 4) [2023] FCA 313

ORDERS

THE COURT ORDERS THAT:

Further extension of convening period

1.    Pursuant to s 447A(1) of the Corporations Act 2001 (Cth), s 439A operate as if the period within which the first plaintiffs must convene the second meetings of creditors of:

(a)    Murray & Roberts Pty Ltd (Administrators Appointed) (ACN 105 617 865), the second plaintiff in these proceedings,

(b)    Clough Limited (Administrators Appointed) (ACN 008 678 813), the third plaintiff in these proceedings;

(c)    Clough Operations Pty Ltd (Administrators Appointed) (ACN 109 444 279), the fourth plaintiff in these proceedings;

(d)    Clough Overseas Pty Ltd (Administrators Appointed) (ACN 067 272 182), the fifth plaintiff in these proceedings;

(e)    Clough Seam Gas Pty Ltd (Administrators Appointed) (ACN 139 610 656), the sixth plaintiff in these proceedings;

(f)    Clough Engineering Pty Ltd (Administrators Appointed) (ACN 009 093 869), the eleventh plaintiff in these proceedings; and

(g)    Clough Projects International Pty Ltd (Administrators Appointed) (ACN 109 444 902), the twelfth plaintiff in these proceedings,

(together Non-DOCA Companies) under s 439A of the Corporations Act be further extended from 6 April 2023 (as ordered by the Court on 15 February 2023) to midnight on 30 June 2023.

2.    Pursuant to s 447A(1) of the Corporations Act, Part 5.3A of the Corporations Act is to operate in relation to each of the Non-DOCA Companies such that, notwithstanding s 439A(2) of the Corporations Act, the second meeting of creditors of each of the Non-DOCA Companies may be held at any time during, or within five (5) business days after the end of, the convening period as extended by order 1 above.

Ancillary orders

3.    The first plaintiffs must take all reasonable steps to cause notice of these orders to be given, within one business day after the making of these orders, to:

(a)    the creditors (including persons or entities claiming to be creditors) of each of the Non-DOCA Companies, in the following manner:

(i)    where the creditor is a registered user on the Halo platform, by publishing a notice via the Halo platform;

(ii)    where the creditor is not a registered user on the Halo platform, but the first plaintiffs have an email address for a creditor, notifying each such creditor, via email, of the making of the orders and providing a link to a website where the creditor may download the orders and this interlocutory process;

(iii)    where a creditor is not a registered user on the Halo platform and the first plaintiffs do not have an email address for a creditor but have a postal address for that creditor (or have received notification of non-delivery of a notice sent by email in accordance with (a)(ii) above), notifying each such creditor, via post, of the making of the orders and providing a link to a website where the creditor may download the orders and this interlocutory process; and

(iv)    placing scanned, sealed copies of the orders and this interlocutory process on the website maintained by the first plaintiffs at https://aurestructuring.deloitte-halo.com/clough;

(b)    the Australian Securities and Investments Commission;

(c)    the Deputy Commissioner of Taxation; and

(d)    the Department of Employment and Workplace Relations (administering the Fair Entitlements Guarantee Scheme).

4.    Any person who can demonstrate a sufficient interest has liberty to apply to the Court to vary or discharge any of the above orders on three business days' notice to the first plaintiffs.

5.    The first plaintiffs' costs of and incidental to this application be costs in the administration of the Non-DOCA Companies, jointly and severally.

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

REASONS FOR JUDGMENT

BANKS-SMITH J:

1    This is the fourth application relating to the administration of the Clough Companies.

2    On 13 December 2022 I made a range of orders, including orders limiting the liability of the Administrators under certain agreements and facilitating the use of the Halo platform as a means of communications with creditors: Algeri (Administrator), in the matter of Murray & Roberts Pty Ltd (Administrators Appointed) [2022] FCA 1506 (Algeri (No 1)).

3    On 21 December 2022 I made orders extending the statutory convening period for the second meeting of creditors of each of the Clough Companies, required by s 439A of the Corporations Act 2001 (Cth), from 12 January 2023 to midnight on 17 February 2023: Algeri (Administrator), in the matter of Murray & Roberts Pty Ltd (Administrators Appointed) (No 2) [2022] FCA 1563 (Algeri (No 2)).

4    On 15 February 2023 I made orders further extending the convening period for a group of companies defined as the Non-DOCA Companies from 17 February 2023 to midnight on 6 April 2023: Algeri (Administrator), in the matter of Murray & Roberts Pty Ltd (Administrators Appointed) (No 3) [2023] FCA 98 (Algeri (No 3)).

5    These reasons assume familiarity with those reasons and adopt the same defined terms.

6    The Administrators now seek a further extension of the convening period to 30 June 2023, again with respect to the Non-DOCA Companies. The application is supported by a fifth affidavit of one of the Administrators, David Orr, and an affidavit of Patrick Mackenzie, a solicitor employed by King & Wood Mallesons, who deposes to the manner in which notice of this application has been given to stakeholders.

Progress since last extension

7    The background to the Clough Companies' administration is set out in the previous decisions, together with a summary of the work undertaken over the course of the administrations to the date of the respective hearings.

8    It was anticipated in Algeri (No 3) that during the extended time period that was permitted, a pooled single deed of company arrangement proposed by Webuild and Webuild Australia (Webuild DOCA) would be entered into with respect to a group of Clough Companies, being the seventh, eighth, ninth, tenth and thirteenth plaintiffs (DOCA Companies).

9    The circumstances of a Sale and Implementation Deed with Webuild and Webuild Australia and the proposal anticipated by the Webuild DOCA were summarised in Algeri (No 3) at [14]-[17].

10    On 15 February 2023 the Administrators conducted meetings of the creditors of the DOCA Companies. The creditors resolved that the respective companies would execute the Webuild DOCA and associated Creditors' Trust Deed. The Webuild DOCA is a pooled DOCA covering the DOCA Companies. Following its execution, the Administrators became the deed administrators. The Webuild DOCA was completed on 16 February 2023, converting the creditors' claims against the DOCA Companies into claims against a creditors' trust, save that separate arrangements were implemented with respect to employees. The completion of the Webuild DOCA meant that the DOCA Companies were no longer subject to external administration, and the deed administrators became the trustees of the creditors' trust.

11    Whilst facilitating execution and completion of the Webuild DOCA, the Administrators have continued to assess options with respect to the Non-DOCA Companies, being the second, third, fourth, fifth, sixth, eleventh and twelfth plaintiffs.

12    As to MRPL (second plaintiff), the Administrators (together with Houlihan Lokey) conducted a comprehensive sales process in respect of MRPL and the shares of MRPL's subsidiary, RUC Cementation Mining Contractors Pty Ltd. On 24 March 2023, MRPL and the Administrators entered into a binding DOCA terms sheet with the preferred bidder, M&R Limited. If the conditions precedent to the DOCA are met, the Administrators expect the DOCA will be implemented by 30 June 2023, at which point MRPL will come out of external administration and control will be assumed by M&R Limited.

13    The Administrators have continued to investigate sale opportunities in respect of the assets of the other Non-DOCA Companies' businesses, projects and assets in Australia and overseas. Mr Orr in his fifth affidavit has disclosed details of such attempts. Steps undertaken include negotiating with potential bidders who have expressed interest in identified projects or assets; conducting numerous meetings and discussions with respect to the future of the Clough USA and Clough Canada businesses; travelling to New York for six days to progress the sale of certain US based projects and businesses and meeting with clients and advisors in that regard; and attending to the completion of a share sale of Clough UK Limited, a wholly-owned subsidiary of Clough Overseas Pty Ltd (the fifth plaintiff), and holding company of the Clough Group's business based in the United Kingdom.

Further extension of the convening period

Relevant legal principles

14    In Algeri (No 2) at [7]-[14], I summarised the principles that apply on an application to extend the time for convening the meeting of creditors under s 439A(6) and s 447A(1) of the Corporations Act, and noted relevantly that s 439A(6) of the Corporations Act provides only for one extension of time. However, the power under s 447A(1) of the Corporations Act extends to further extending the convening period notwithstanding that the Court may have already granted earlier extensions. The principles that inform the exercise of the power to extend time to convene a meeting under s 439A also inform the exercise of the power under s 447A(1) to further extend that time. Accordingly, to paraphrase what was said at [12] of Algeri (No 3), I am to take into account the desirability of reaching an appropriate balance between the expectation that an administration will be undertaken in a relatively speedy and summary manner with the need on the part of the Administrators to consider sensible and constructive options directed towards maximising the returns for creditors and other stakeholders.

Consideration

15    I note that it is not uncommon for administrators of complex administrations to seek lengthy extensions for convening the second meeting of creditors, sometimes by way of an application that seeks a first extension in the range of six months.

16    Whilst that may be an appropriate course depending on the circumstances, it has not been the approach of the Administrators in this case. Rather, they have sought shorter periods by way of extensions, have continued to report to the creditors and have applied to the Court when they considered further extensions were required and considered justifiable. The fact that this is a third application reflects the relatively shorter periods that have been sought on each occasion. In the circumstances of this group, that course has encouraged transparency and I have been satisfied that the Administrators have maintained a sense of urgency and diligence with respect to the tasks at hand. The administrations have many moving parts and results have already been achieved through, for example, the execution and completion of the Webuild DOCA. According to a media release of 17 February 2023 tendered by Mr Orr:

Clough is pleased to announce that from February 16, 2023, Webuild has acquired 100% of the ownership of Clough in Australia and Papua New Guinea.

The final acquisition perimeter comprises Clough's organisation, offices, trademarks, credentials, business references, senior management, and office personnel and more than AUD$6 billion worth of projects in backlog (as of end 2022), and the related project workforce in Australia and PNG.

In terms of projects, the transaction includes Snowy 2.0 and Inland Rail Gowrie-Kagaru Section, which are joint projects with Webuild, Tallawarra Stage B, Waitsia Gas Project Stage 2 and Lombrum Naval Base, as well as the projects in which Clough is preferred bidder, such as Ceres Urea Plant, Mt Keith Debottle-necking, Woodman Point Treatment Plant, and Darwin Shiplift.

17    I consider it is appropriate to grant the further extension sought on this occasion, for the following reasons.

18    Unless a further extension is granted, the convening period for the second meeting of creditors of the Non-DOCA Companies will expire at midnight on 6 April 2023.

19    The Administrators do not anticipate that the conditions precedent to the DOCA proposal in respect of MRPL, or any sale or other process in relation to the other Non-DOCA Companies, will be completed until after expiration of the current convening period.

20    Mr Orr states that the Administrators are of the opinion that the additional time would enable the Administrators to continue to undertake a proper process to negotiate the sale of the assets of the other Non-DOCA Companies. They consider that given the scale and complexity of the administrations and the progress made to date, despite the statutory moratorium provided by Part 5.3A of the Corporations Act, the proposed further extension of the convening period will not unduly prejudice the Non-DOCA Companies' creditors.

21    The Administrators consider that immediate liquidation, as opposed to further extending the convening period, would not produce a better outcome for the Non-DOCA Companies' creditors, particularly as the Non-DOCA Companies do not presently employ any staff. All outstanding employee entitlements of previous employees of the Non-DOCA Companies have been satisfied. Further, the Non-DOCA Companies are not operating companies within the Clough Group, and therefore will not incur ongoing trade and operational expenses if an extension of the convening period is granted. Therefore, the Administrators contend, any prejudice that may be caused to creditors of the Non-DOCA Companies by a further extension of the convening period is greatly outweighed by the benefits to creditors as a whole conferred by the additional time available to complete any sale or other process.

22    I accept that in those circumstances, and giving appropriate weight to the Administrators' opinions, it would be in the best interests of the creditors of the Non-DOCA Companies for the convening period to be extended until 30 June 2023.

23    Further, it is notable that the Administrators intend to convene the second meetings of creditors of the Non-DOCA Companies as soon as practicable depending on developments, so that these meetings may be held earlier than the latest possible time during the extended time for the convening of the meetings as sought by the Administrators. Accordingly, they also seek a 'Daisytek' order (named for the approach taken in In the matter of Daisytek Australia Pty Limited [2003] FCA 575) permitting them to hold the meetings at any time during the extended convening period, or within five business days after it, notwithstanding the terms of s 439A(2). Such an order gives administrators greater flexibility in that they can convene a meeting earlier if appropriate in the circumstances: Re Grocon Pty Ltd (Admins Apptd) (No 2) [2020] VSC 859 at [22] (Gardiner AsJ).

Ancillary orders

24    Ancillary orders are also sought by the interlocutory process but are largely administrative and standard in nature. They are appropriate in the circumstances, and accommodate any person who can demonstrate a sufficient interest to approach the Court by way of liberty to apply.

Orders

25    Accordingly, at the conclusion of the hearing orders were made largely in terms of those sought in the interlocutory application.

Associate:

Dated:    5 April 2023

SCHEDULE OF PARTIES