Federal Court of Australia

Kaso (Administrator), in the matter of Cairnlea Pty Ltd (Administrators Appointed) [2025] FCA 483

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to section 447A(1) of the Corporations Act 2001 (Cth) (Act), Part 5.3A of the Act is to operate in relation to each of the Second to Fifth named Plaintiffs (Companies) as if section 439A(6) of the Act provided that the period for convening the second meeting of creditors of each of the Companies, be extended (from 30 April 2025) to midnight on 30 July 2025.

2.    Pursuant to section 447A(1) of the Act, and further or alternatively section 90-15 of the Insolvency Practice Schedule (Corporations), Part 5.3A of the Act operates in relation to the Companies such that, notwithstanding s 439A(2) of the Act, the meetings of the creditors of the Companies pursuant to section 439A of the Act may be held at any time during the period up to, or within 5 business days after the end of, the convening period as extended by the Court in paragraph 1, provided that the First named Plaintiffs give notice of the Second Meeting in accordance with rule 75-225(1) and rule 75-15 of the Insolvency Practice Rules (Corporations) 2016 (Cth).

3.    The First named Plaintiffs provide a sealed copy of this order within 7 days from the date of the orders made in paragraphs 1 and 2 above, to:

(a)    the Australian Securities and Investments Commission; and

(b)    all creditors of the Companies.

4.    The First named Plaintiffs’ costs of this application be the costs in the administration of the Companies.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

WHEATLEY J:

Introduction

1    This is an interlocutory application to further extend the convening period of the second meeting of creditors. It is appropriately brought pursuant to s 447A of the Corporations Act 2001 (Cth) (Act) rather than s 439A(6) of the Act: see Mentha, Re The Griffin Coal Mining Company Pty Ltd (Administrators Appointed) (No 2)[2010] FCA 499 at [35] to [36]. Also, see the more recent decision of McEvoy J in Warwick, in the matter of BWX Ltd (Receivers and Managers Appointed) (Administrators Appointed) (No 2) [2023] FCA 1395 at [14] and the authorities referred to therein.

2    The voluntary administrators (Administrators) seek what they describe as a “Daisytek Order”, following the decision in Re Daisytek Australia Pty Limited (2003) 45 ACSR 446; [2003] FCA 575 (Daisytek). Section 439A(1) of the Act requires the administrators of a company under administration to convene a meeting of the company’s creditors within the convening period as fixed by subs (5) or extended under subs (6) of s 439A. The Administrators have made a previous application to extend the convening period under s 439A, which was heard by McElwaine J on 19 December 2024. Amongst other orders, McElwaine J ordered, pursuant to s 439A, that the convening period be extended to midnight on 30 April 2025 (the Initial Extension).

3    The Administrators now make this second application, under s 447A of the Act, to extend the convening period until 30 July 2025. For the reasons provided below, I am satisfied that the convening period should again be extended and although I raised concern during the hearing about the time sought, I am persuaded that the orders sought are appropriate.

Background

4    The Administrators were appointed to:

    Cairnlea Pty Ltd (Administrators Appointed) ACN 603 985 780 (Cairnlea);

    Makshaq Pty Ltd (Administrators Appointed) ACN 163 920 705 (Makshaq);

    Shaq City Pty Ltd (Administrators Appointed) ACN 630 221 117 (Shaq City); and

    8 Lygon Pty Ltd (Administrators Appointed) ACN 605 724 945 (8 Lygon).

(together, the Companies).

5    The Administrators, which are Mr Sam Kaso and Mr Daniel Juratowitch, were appointed on 28 November 2024 pursuant to s 436A of the Act.

6    For the purposes of this application for the further extension, the Administrators rely on an affidavit of Mr Kaso, but he provides that affidavit on behalf of both of the administrators. The Initial Extension was granted in reliance on an earlier affidavit of Mr Kaso, which was on the basis of the investigations as at December 2024.

7    The pre-appointment conduct of the Companies was described in the submissions advanced on behalf of the Administrators as being characterised by relative delinquency. Further, financial accounts had not been prepared for many years, nor had tax returns been filed. Since December, the Administrators’ work has continued. It is not necessary to detail all of those matters. It is sufficient to observe the following:

(a)    The Administrators have reviewed the pre-appointment transfers of properties and companies related to various parties.

(b)    A preliminary solvency review has been undertaken.

(c)    The assessment of potential voidable transactions has materially progressed.

(d)    Numerous outstanding tax lodgements have been filed – 18 income tax returns and 41 business activity statements, which occurred on 10 April 2025 following reconciliation of the company’s management accounts.

(e)    The Deputy Commissioner of Taxation has submitted on 16 or 17 April 2025 amended proofs of debt, increasing total claims against the companies from approximately $17 million to approximately $57 million. A number of apartments owned by Cairnlea have been sold and settled and expect to generate net proceeds of approximately $5.3 million.

Relevant legal principles

8    I adopt the observations of Middleton J, helpfully referred to me in the outline of submissions by counsel for the Administrators, in Strawbridge, in the matter of Virgin Australia Holdings Limited (administrators appointed) (No 7) [2020] FCA 1182 at [12] to [14]:

FURTHER EXTENSION OF THE CONVENING PERIOD

12    The Court has power to make orders under s 447A(1) of the Corporations Act to extend, on a subsequent occasion, the convening period for the second meeting of creditors of a company: Lombe re Australian Discount Retail Pty Ltd [2009] NSWSC 110 at [32]; Chamberlain, in the matter of South Wagga Sports and Bowling Club Ltd (Administrator Appointed) [2009] FCA 25 (‘South Wagga Sports and Bowling Club’); ABC Learning Centres Limited, in the matter of ABC Learning Centres Limited; application by Walker (No 8) [2009] FCA 994 at [53].

13    There are many occasions in which Courts have granted further extensions of the convening period (that is, after an initial extension): eg, Mentha, in the matter of The Griffin Coal Mining Company Pty Ltd (administrators appointed) (No 2) [2010] FCA 499 at [36]; In the matter of Harrisons Pharmacy Pty Limited (Administrators Appointed) (Recs and Mngrs Apptd) [2013] FCA 1102; Owen, in the matter of RiverCity Motorway Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) v Madden (No 5) [2013] FCA 1443; Gothard, in the matter of Sherwin Iron Ltd (Administrators Appointed) (Receivers and Managers Appointed) (No 2) [2015] FCA 401 at [33]; In the matter of Acquire Learning Pty Ltd (ACN 168 523 279) (administrators appointed), Acquire Learning & Careers Pty Ltd (ACN 159 509 323) (administrators appointed) and Acquire Retail Pty Ltd (ACN 167 927 693) (administrators appointed) [2017] VSC 572 (‘Acquire Learning’); Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 4) [2020] FCA 671 (‘CBCH Group’); Billingsley (Administrator), in the matter of B K Chemists Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 1059.

14    The principles that apply when considering a further extension are the same as those that apply for any extension of the convening period: South Wagga Sports and Bowling Club at [9]; Acquire Learning at [12]; Kaso, in the matter of Speedpanel Australia Ltd (Administrators Appointed) (No 2) [2017] FCA 862 at [19]; CBCH Group at [25]. These principles are summarised in Virgin No 2 at [64]-[68].

9    The appropriate approach has also been summarised by Thawley J in Farnsworth v About Life Pty Ltd (Administrator Appointed), in the matter of About Life Pty Limited (Administrator Appointed) [2019] FCA 11 at [3] to [8], which I also adopt:

3    The purpose of the power to grant an extension is to enable the Court to allow further time where to do so is appropriate to advance the purposes of the administration. Extensions should generally be brief, although substantial extensions may be appropriate in complex cases. Extensions are not to be granted where doing so undermines the statutory object of a quick and summary consideration of the alternatives or if to do so has the effect of creating an administration of a different nature to that contemplated by the Act.

4    The Court balances the expectation that an administration will be undertaken in a relatively speedy and summary manner with the need to ensure that the administration is not concluded without consideration of sensible and constructive options that may provide better returns for creditors and any return to shareholders, or to enable the company to return to trading in the interests of creditors and shareholders: Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10] (Barrett J); Re Dimidium Group Pty Ltd [2010] NSWSC 1086 at [15] (Barrett J); Mighty River International Limited v Hughes; Mighty River International Limited v Mineral Resources Limited [2018] HCA 38; 92 ALJR 822 at [73] (Nettle and Gordon JJ); Jones, in the matter of Eastern Goldfields Limited (Administrators Appointed) [2018] FCA 2081 at [3] (Colvin J).

5    In Silvia, in the matter of Austcorp Group Limited (Administrators Appointed) [2009] FCA 636 at [18], Lindgren J summarised relevant considerations in the following way:

The overlapping considerations affecting the exercise of the discretion whether to extend the convening period may be summarised as follows:

(a)    the Court should recognise the objective of speed of administration that was associated with the introduction of Part 5.3A by the Corporate Law Reform Act 1992 (Cth) as from 23 June 1993. The Court should also recognise the objectives stated in para 507 of the explanatory memorandum associated with the Bill for that Act, that it was expected that the power to extend the period would be exercised infrequently since it is an important objective of Part 5.3A that creditors be fully informed about the company’s position as early as possible and have an opportunity to vote on its future as soon as possible: Mann v Abruzzi Sports Club Ltd (1994) 12 ACSR 611 (Young J) at 612; Re Geraldton Building Co Pty Ltd (Administrators Appointed); ex parte Trevor [2000] WASC 320 (Owen J) at [5];

(b)    the function of the Court is to strike an appropriate balance between the legislature’s expectation that the administration will be a relatively swift and summary procedure, and the requirement that undue speed should not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders: Re Diamond Press Australia Pty Limited [2001] NSWSC 313 (Barrett J) at [10]; Re Pan Pharmaceuticals Ltd [2003] FCA 598; (2003) 46 ACSR 77 (Lindgren J) (Pan Pharmaceuticals) at [42]; Re New Horizons Corporation; ex parte De Vries [2004] NSWSC 253 (Austin J) at [5];

(c)    the prospects of a better outcome for creditors through a longer period of administration may outweigh the general expectation of a prompt resolution of the administration: Re Fincorp Group Holdings Pty Ltd (2007) 62 ACSR 192 (Barrett J) (Fincorp) at [18];

(d)    a particular consideration against the too ready grant of an extension is the fact that while the voluntary administration continues there is an embargo or moratorium on the enforcement of remedies by secured creditors, lessors and others: Fincorp 62 ACSR 192 at [4]; Chamberlain, in the matter of South Wagga Sports and Bowling Club Ltd (Administrator Appointed) [2009] FCA 25 (Jacobson J) at [9];

(e)    the application is to be assessed by reference to whether an extension is necessary to enable the administrators to prepare and provide the report and statements, and, in particular, to arrive at the opinion referred to in s 439A(4), in order to inform creditors adequately so that they will be in a position to decide whether to terminate the administration, execute a deed of company arrangement or place the company in liquidation: Pan Pharmaceuticals [2003] FCA 598; (2003) 46 ACSR 77 at [41]; ABC Learning Centres Limited, in the matter of ABC Learning Centres Limited; application by Walker (No.7) [2009] FCA 454 (Emmett J) (ABC Learning Centres)at [28];

(f)    it is often desirable that any extension be accompanied by an order under s 447A, permitting the meeting to be held at any time during the convening period as extended: see the order made in Re Daisytek Australia Pty Ltd [2003] FCA 575; (2003) 45 ACSR 446 (Daisytek) at [10]–[18].

6    In Re Riviera Group Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2009] NSWSC 585 at [13], Austin J identified the following categories of cases in which an extension had been granted:

•    the size and scope of the business: Lombe, Re Babcock & Brown Ltd (Administrators Appointed) [2009] FCA 349; Worrell; Re Storm Financial Ltd (Receivers and Managers Appointed) [2009] FCA 70; ABC Learning Centres Ltd, in the matter of ABC Learning Centres Ltd; application by Walker (No 5) [2008] FCA 1947;

•    substantial offshore activities: Lehman Bros Australia Ltd [2008] NSWSC 1132;

•    large number of employees with complex entitlements: Re S & D International Pty Ltd (in liq); Malhotra v Tiwari [2005] VSC 496; Re Ansett Australia & Ors (All Admin Appointed) and Korda and Anor (As Administrators) [2002] FCA 90;

•    complex corporate group structure and intercompany loans: Lombe, Re Babcock & Brown Ltd (Administrators Appointed) [2009] FCA 349; Re Octaviar Limited (Administrators Appointed) (Receivers and Managers Appointed (ACN 107 863 436) [2008] QSC 272; In the matter of LED Builders Pty Ltd (Administrators Appointed); LED Builders Pty Ltd (Administrators Appointed) and Ors [2008] NSWSC 633; Hall, in the matter of Australian Capital Reserve Limited (Administrators Appointed) [2007] FCA 1328;

•    complex transactions entered into by the company (e.g. securities lending or derivatives transactions): In the matter of Lift Capital Partners Ltd (Administrators Appointed) [2008] NSWSC 446;

•    complex prospects of recovery proceedings: Worrel, Re Storm Financial Ltd (Receivers and Managers Appointed) [2009] FCA 70; Deputy Commissioner of Taxation v Wellnora Pty Limited [2007] FCA 1324 ;

•    lack of access to corporate financial records: Sims, in the matter of Destra Corporation Ltd [2008] FCA 2002; Fincorp Group Holdings Pty Ltd & Ors [2007] NSWSC 363;

•    the time needed to execute an orderly process of disposal of assets: Carter, in the matter of SFM Australasia Pty Ltd (Administrators Appointed) ACN 105 317 333 (No 2) [2009] FCA 419; ABC Learning Centres Ltd, in the matter of ABC Learning Centres Ltd; application by Walker (No 7) [2009] FCA 454;

•    the time needed for thorough assessment of a proposal for a deed of company arrangement: Silvia, in the matter of Austcorp Group Ltd (Administrators Appointed) [2009] FCA 636;

•    where the extension will allow sale of the business as a going concern: Lombe Re Australian Discount Retail Pty Ltd [2009] NSWSC 110; Stewart, in the matter of Kleins Franchising Pty Ltd (Administrators Appointed) (ACN 007 348 236) [2008] FCA 721; Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619, in the matter of Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619 [2006] FCA 1423;

•    more generally, that additional time is likely to enhance the return for unsecured creditors: Deputy Commissioner of Taxation v Scottsdale Homes No 3 Pty Ltd (No 2) [2009] FCA 190; Fitzgerald, in the matter of Primebroker Securities Limited (Administrator Appointed) (Receivers and Managers Appointed) [2008] FCA 1247; Ex parte Vouris; in the matter of Marrickville Bowling and Recreation Club Ltd (under Administration) [2008] FCA 622.

7    These are not exhaustive and serve merely as examples. Whether an extension is appropriate turns on the particular circumstances of the case.

8    In Mighty River at [73], Nettle and Gordon JJ (in dissent, but not relevantly in this respect) referred to a number of cases including Re Riviera and observed:

… Generally speaking, courts have been disposed to grant substantial extensions in cases where the administration has been complicated by, for example, the size and scope of the business, substantial offshore activities, large numbers of employees with complex entitlements, complex corporate structures and intercompany loans, and complex recovery proceedings, and, more generally, where the additional time is likely to enhance the return to unsecured creditors. Provided the evidentiary case for extension has been properly prepared, there has been no evidence of material prejudice to those affected by the moratorium imposed by the administration, and the administrator’s estimate of time has had a reasonable basis, the courts have tended to grant extensions for the periods sought by administrators ...

10    The authorities therein referred also include that of Daisytek and Re Riviera Group Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (2009) 72 ACSR 352; [2009] NSWSC 585 (Re Riviera Group).

11    Ultimately, it is necessary to consider the best interests of the creditors as a whole, having regard to the purpose of Pt 5.3A of the Act.

12    To this, given the terms of the orders sought by the Administrators, should be added the principles as were explained by Lindgren J in Daisytek from [10] to [17]. It is not necessary to set those paragraphs out in full. A Daisytek order can be summarised as allowing administrators to hold the second meeting of creditors prior to the expiration of the extended convening period if desirable, so as to avoid requiring the administrators to have to wait until the end of the convening period in circumstances where they may be in a position to hold the meeting earlier.

Consideration

13    The first meeting of creditors took place on 10 December 2024. The convening period has already been extended by an order of the Court to 30 April 2025. The Initial Extension was for four months. The original convening period would have ended on 30 December 2024. The extension now sought is for an additional three months. That will mean the convening period will have been extended by approximately seven months.

14    Although it is possible to find authorities which have granted such extensions or even longer extensions, each case, of course, must turn on its own facts and considerations. A balancing approach must be taken, in the context of those facts.

15    In the context of considering an application to extend the convening period, the objects of Pt 5.3A, as set out in s 435A, are relevant – that is, to reach an appropriate balance between the expectation that an administration will be undertaken in a relatively speedy and summary manner with the need to ensure that the administration is not concluded without consideration of sensible and constructive options directed towards maximising the returns for creditors and any return for shareholders.

16    As explained in the principles set out above, extensions should generally be brief and are not to be granted where doing so undermines the statutory object of a quick and summary consideration of the alternatives. However, greater extensions can be appropriate where the matter is complex.

17    The Initial Extension enabled the Administrators to obtain historical bank statements not previously available and further relevant financial information of related corporate parties, loan accounts and the like. It also permitted the commencement of the assessment of the recoverability of loan accounts then identified in the balance sheets of the Companies.

18    It should be remembered that the reference to “Companies” is a reference to four companies, which increases the complexity of, and the work involved in, carrying out the administration. The Administrators have identified 53 properties owned by related entities which are connected to related parties that have loan accounts in the balance sheets of the Companies. The Administrators are of the view that valuations of at least some, or perhaps all, of those properties are required to consider and assess potential recoveries.

19    Such a course is reasonable and will take some time. Submissions today were advanced that a period of one month was a reasonable period of time in the circumstances to undertake such a significant number of valuations. In my view, that is a reasonable period of time to obtain such valuations.

20    The Administrators have produced what are described as flowcharts of the tiered loan structure, which involves three or four levels of loans amongst the various entities of the Companies. This is effectively a diagrammatical representation of the loan accounts amongst the Companies that are the subject of the administration and the relevant related entities.

21    It is clear from those flowcharts that the administration is complex and multitiered. Mr Kaso, on behalf of both of the Administrators, gives evidence that, given this high level of complexity, further time is required to complete the assessment of potential recoverability of the loan accounts.

22    Mr Kaso has also given evidence that one matter which did require significant investigation was the subject of a freedom of information request to ascertain the taxation position and dealings. That freedom of information request to the ATO was made on 29 November 2024. It sought information regarding historical dealings of the Companies with the Commissioner. The response to that request was received on 10 April 2025.

23    The purpose of the second meeting of creditors, by s 439A, as required by s 439C, is for the creditors to consider the future of the Companies. In oral submissions, it was described as what is to take place at that second meeting of creditors is to decide “the fate of the Companies”. I accept that submission as an apt description of what takes place at the second meeting. At that meeting, the creditors may resolve that the Companies each execute a deed of company arrangement, that the Administrations should come to an end, or that the Companies should be wound up. To assist the creditors to make this decision at the second meeting of creditors, the Administrators must provide a report to creditors.

24    The report that the Administrators provide, which is pursuant to r 75-225(3) of the Insolvency Practice Rules (Corporations) 2016 (Cth) (the Rules), must provide information about each of the Companies’ business, property, affairs and financial circumstances, and set out a statement whether:

    in the opinion of the administrators, it would be in the interests of creditors for the company to execute a deed of company arrangement;

    in the opinion of the administrators, it would be in the interests of creditors for the administration to end;

    in the opinion of the administrators, it would be in the interests of creditors for the company to be wound up,

as well as the reasons for that opinion.

25    The Administrators are also required to provide such other information known to them as will enable the creditors to make an informed decision – whether there are any transactions that appear to the Administrators to be voidable transactions in respect of which money, property or other benefits may be recoverable by a liquidator under Pt 5.7B, and, if a deed of company arrangement is proposed, the details of that deed.

26    Of course, to r 75-225(3) of the Rules should be added s 438A and the matters therein required by the Administrators. Mr Kaso, on behalf of the Administrators, deposes that additional time is required to complete the following matters, which are not exhaustive but are a summary of the matters deposed to by Mr Kaso at [35] of his affidavit in support of this application:

(a)    complete the assessment of the value and recoverability of receivables disclosed, particularly by means of obtaining further financial information concerning related party debtors;

(b)    further investigate the pre-appointment transfers of properties to related parties where the administrators are awaiting the provision of further documents from the directors;

(c)    consider the material provided by the Deputy Commissioner on 10 April 2025, including to assess the insolvency date for each of the companies; and

(d)    assess any proposal for a deed of company arrangement, including by reference to the potential returns in a liquidation scenario.

27    These matters require completion so that the Administrators can properly report to creditors ahead of the second meeting and provide their opinion about whether each of the four Companies should execute a deed of company arrangement, have the administration come to an end, or be wound up.

28    The Administrators now accept that it is now apparent that the tasks involved in this administration are much bigger than were initially anticipated. This is on the basis of the sheer volume of transactions, information required to be reviewed and assessed, as well as the intertwined and complex nature of the dealings between all of the related parties.

29    The Administrators observe that approximately 14,600 transactions have been considered, with a total transaction value of $465 million. Further, the related party debtor claims equate to approximately $142 million, whilst related party creditor claims owed to related parties by the company equate to approximately $107 million. The matters identified by Austin J in the principles outlined above from Re Riviera Group, being the size and scope of the business, the complex corporate structure and inter-company loans and the complex transactions entered into by the company, all support granting a further extension of the convening period.

30    The Administrators also wish to further explore any proposed deed of company arrangement. At this stage, the Administrators have had some discussions with the advisers of two of the directors. At the time of swearing the affidavit, the Administrators have not identified any other potential deed of company arrangement proponents. However, it is fair to say that the Administrators are cautious as to whether any liquidation would provide a return to creditors, and, as such, the preference – again, noting that it is at a stage of the administration where investigations are continuing – it is their preference to fully explore any deed of company arrangement proposal.

31    For the Administrators to be able to properly report to creditors ahead of the second meeting and provide their opinion about the matters described above, additional time, as is sought by the application for a further extension of the convening period, is required and appropriate.

32    On 11 April 2025, the Administrators sent a circular to all creditors of the need to seek a further extension of time until 30 July 2025. Further to this, in an additional affidavit relied on, is notice of today’s hearing being provided to creditors. That notice was provided on 23 April 2025. In response to the 11 April 2025 circular, the Deputy Commissioner of Taxation was the only creditor to object to the further extension. The Deputy Commissioner is the single largest unrelated creditor of the Companies and is owed a significant debt.

33    The Deputy Commissioner was, it is fair to say, critical of the four months taken so far with no deed of company arrangement proposal forthcoming. The Deputy Commissioner observed that there was no explanation of whether the costs of the extended periods have been funded by the directors or the creditors, and separately observed that if an extension was granted, this would mean a period of approximately eight months would be taken in a context where a voluntary administration process is meant to be a quick process. The Deputy Commissioner’s view was, although this matter might be complex, four months should have been sufficient time. The Deputy Commissioner expressed a view that he would have been willing to support a shorter extension of a two-week period and requested that his letter be “tabled”.

34    The Administrators, at the hearing, have quite properly brought this letter to the Court’s attention, not only by way of the affidavit of Mr Kaso filed in support of the application, but expressly in oral submissions.

35    In response to the issues raised by the Deputy Commissioner, the Administrators note the significant increase of the tax debt from the original estimate of $17 million – then, on lodgement of the outstanding matters, was estimated to be $47 million. However, then the Deputy Commissioner has lodged a proof of debt of approximately $57 million on 17 April 2025. That has had a material impact on the considerations of the Administrators.

36    The Administrators advise that the costs were not being borne by any directors or deed of company arrangement proponents. The Administrators were of the view that the costs being incurred were in the best interests of creditors to ensure any return is maximised.

37    The Administrators also observe that it is incumbent upon them to ensure that they discharge their duties under the Act and, particularly, noting those under s 438A.

38    Finally, the Administrators do note that the material received from the Deputy Commissioner was only received on 10 April 2025, and it was necessary to assess various matters in the administration on the receipt of that information.

39    Although I take into account the views of the Deputy Commissioner as the largest unsecured unrelated creditor, these are not determinative of the outcome of whether, in the particular circumstances of this case, an extension to the convening period to hold the second meeting is appropriate. It is important, as the principles outlined above consider, to balance the interests of speed with the interests of the creditors as a whole.

40    It is clear that the investigations are not complete. The matter is also complex and larger than originally anticipated. This is likely due to the paucity of the information which was originally available to the Administrators. Further, the Companies have not traded in any meaningful way for a number of years, and it is not suggested that the Companies occupy leased or secured property. Further, although there is recorded in the liabilities of at least one of the Companies (Makshaq) that there is a liability for a superannuation guarantee charge, that amount, as is disclosed by the Deputy Commissioner’s proof of debt, relates to a period from January to December of 2019 and some interest on that amount up to November 2024.

41    That debt is specifically noted because it is submitted that there are no current employees of the Companies, and that that is a relevant factor to take into account, together with the other matters that I have mentioned in relation to trading, in balancing both the speed and the investigations to date so that the creditors are able to make an informed decision. It was submitted, and I accept, that there is no apparent prospect that prolongation of the voluntary administration will delay any employees’ access to recovery of entitlements for the Fair Entitlement Guarantee scheme due to the lack of employees.

42    The Deputy Commissioner of Taxation has expressed a view as to what might be the appropriate outcome at a second meeting of creditors. However, in my view, the Deputy Commissioner’s position will be informed by the further investigations that the Administrators propose to undertake. It may be that the Deputy Commissioner’s position may change. Of course, his position may not change, and it may remain the same. Whether or not the Deputy Commissioner’s view changes or not, however, is not, as I have already noted, determinative of the outcome of this application.

43    The Administrators state that some sales have occurred resulting in, or about to result in, net proceeds of approximately $5.3 million. However, there are unrelated creditor claims of $60 million. Therefore, making a distribution on this basis is not, in the Administrators’ opinion, in the best interests of creditors. In exercising the discretion to extend the convening period, the Court will generally afford significant weight to the view of the administrators as to the needs and circumstances of the particular company or companies in considering whether it is appropriate to grant an extension having regard to the objects of Pt 5.3A: Wight, in the matter of Responsible Entity Services Ltd (Administrators Appointed) [2024] FCA 458 at [36] to [38] and the authority cited therein.

44    The Administrators have provided their opinion by way of Mr Kaso’s affidavit that further time is required to undertake the tasks that I have outlined, and that that process is in the best interests of creditors as a whole. Mr Kaso also provides his opinion from [43] and [45] of his affidavit:

43.    If the meeting of creditors of the Companies is convened on or before 30 April 2025, without an extension, supported by a Court order, the Administrators will adjourn the meeting of creditors. In my view, relative to a further extension of the convening period, that course will not be in the creditors' interests as unnecessary further costs will be incurred by the Administrators to hold two meetings and the only likely option available to the creditors will be a liquidation of the Companies, due to our inability to sufficiently explore any DOCA proposal, due to an incomplete quantification analysis of possible recoverable loans and related party claims.

44.    I do not believe that the general body of creditors as a whole, or individually, will be prejudiced by the further extension of the convening period.

45.    I intend to provide a copy of this affidavit, once filed, to the ATO. In the interim, I instructed my staff to provide a copy of the notice of hearing, received from the Court, to the ATO by email on 22 April 2025 and invited the ATO to attend the hearing of the application. The ATO replied to my staff advising that it does not intended to appear at the hearing of this application. Now produced and shown to me and marked “SK-22” is a true copy of the email my staff sent to the ATO, attaching the notice of hearing from the Court dated 22 April 2025 and the ATO’s reply to the same.

45    There the Administrators provide consideration of whether or not it would be better to adjourn the second meeting of creditors, or whether or not it was better to seek the extension as has been done pursuant to this application.

46    Although the further extension sought will see extensions granted of some seven months, it is clear that the matter is complex and investigations are ongoing. Material has not always been available to the Administrators, and some has only relatively recently been received. Of course, at least some time during this seven-month period would have been lost during the Christmas and New Year’s period and, more recently, the Easter break. In my view, it would not be in the interests of creditors to order a shorter period – say, two weeks or one month – and require the Administrators to make, potentially, a further application to the Court to seek another month in circumstances where the Administrators have put forward their best estimate as to the timeframe required.

47    It was submitted at the hearing, as I have already noted, that a reasonable period of time was one month to obtain valuations, one month to consider those and potentially discuss with the directors a proposal for a deed of company arrangement and then, potentially, call a meeting, negotiate further, complete the report and the like. In my view, given the complexities involved in this matter, those estimates do seem reasonable on the basis of the material that the Administrators have provided.

CONCLUSION

48    The extension is necessary in this complex matter to enable the Administrators to prepare and provide the report and statements and, in particular, to arrive at the opinion required and referred to in s 439A(4) in order to inform creditors adequately so that they will be in a position to decide whether to terminate the administration, execute any possible deed of company arrangement or place the company into liquidation. Such a consideration from the authorities that have been set out above, is a relevant consideration as to whether or not to extend the period.

49    However, it may also be that the Administrators are able to call the meeting earlier. As such, it is appropriate for the Administrators to be afforded the flexibility in this way by way of the Daisytek order which is sought in relation to the timing of the meeting: see Silvia, in the matter of Auscorp Group Limited (Administrators Appointed) [2009] FCA 636 at [18]. Such orders have been described as “sensible and now almost routine”: In the matter of LED Builders Pty Ltd (Administrators Appointed) [2008] NSWSC 633 at [2], referred to in Byrnes, in the matter of Murray River Organics Proprietary Limited (Administrators Appointed) (Receivers and Managers Appointed) [2022] FCA 232 at [33].

Associate:    

Dated:    14 May 2025

SCHEDULE OF PARTIES