Federal Court of Australia

Johnston (Administrator), in the matter of Machos Pty Ltd (Administrator Appointed) [2025] FCA 485

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 439A(6) of Corporations Act 2001 (Cth) (the Act), the date of the convening period as defined by s 439A(5) of the Act, for the second meeting of creditors (Second Meeting) of:

(a)    Machos Pty Ltd (ACN 122 088 368) (administrator appointed) (Machos); and

(b)    Lake Meadow B Pty Ltd (ACN 646 493 923) (administrator appointed) (Lake Meadow);

(together, the Companies), be extended up to and including Tuesday, 1 July 2025.

2.    Pursuant to section 447A of the Act, Pt 5.3A of the Act is to operate in relation to the Companies as if the Second Meeting may be convened and held at any time during the convening period or within 5 business days after the end of the convening period, as extended by Order 1, notwithstanding the provision of s 439A(2) of the Act.

3.    The Plaintiffs must inform all known creditors of the Companies (including persons claiming to be creditors) of these orders by 4pm on Friday, 2 May 2025 by means of:

(a)    circular posted on any website maintained by the Plaintiff;

(b)    sending such information electronically to the email addresses of the creditors for whom the Plaintiffs have an email address; and

(c)    sending such information to the postal address or facsimile number or otherwise as provided for by the Act or the Insolvency Practice Rules (Corporations) 2016 (Cth), to creditors in respect of whom the Plaintiffs do not have an email address.

4.    Liberty to apply is granted to:

(a)    the Plaintiffs to apply to the Court for any further extensions or variation of the convening period under Order 1 above at any time before that period expires; and

(b)    any creditor who can demonstrate sufficient interest to make an application to vary or discharge these orders no later than three business days prior to the last day of the convening period as extended by Order 1.

5.    The costs of and incidental to this originating application are costs and expenses 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    The Administrator filed an originating application on 28 April 2025 which seeks to extend the convening period of the second meeting of creditors. The application relies on s 439A(6) and s 439A(7) of the Corporations Act 2001 (Cth) (Corporations Act). This application for an extension of the convening period is the first such application in relation to the administration of the relevant companies, which I define below. Further, the plaintiff, being the voluntary administrator, seeks what is commonly known as a Daisytek order, following the decision in Re Daisytek Australia Pty Ltd (2003) 45 ACSR 446; [2003] FCA 575.

2    The Administrator seeks an additional three months within which to convene the second meeting of creditors, being until 1 August 2025. The Administrator, Mr Johnston, has filed an affidavit in support of this application.

3    Section 439A(1) of the Corporations Act requires the administrator of a company under administration to convene a meeting of the company’s creditors within the convening period as fixed by s 439A(5) or as extended under s 439A(6). For the reasons given below, I am satisfied that the convening period should be extended. However, in balancing all of the relevant matters, the three-month period which is sought, in my view, is too long. On the basis of the evidence available to support this application, it is appropriate to extend the convening period for two months, being until 1 July 2025.

Background

4    The Administrator was appointed to Machos Pty Ltd (ACN 122 088 368) (administrator appointed) (Machos), and Lake Meadow B Pty Ltd (ACN 646 493 923) (administrator appointed) (Lake Meadow) (together, the Companies). The Administrator was appointed on 24 March 2025, pursuant to s 436A of the Corporations Act, to each of the Companies. The convening period currently ends on 1 May 2025.

5    The Administrator has provided an affidavit in support of this application. The Administrator has over 12 years’ experience in insolvency and reconstruction services and has been a registered liquidator since 1 December 2020.

6    Machos was registered on 6 October 2006 and trades as Nu-Jet which operates a drainage business, which also includes domestic and commercial closed-circuit television matters, traffic control as well as piping work, cleaning and drain plumbing services.

7    Mr Michael John Belcher is the sole director of Machos. The sole shareholder of Machos is the other company the subject of this Administration and application, Lake Meadow, and it holds the share in Machos as trustee of The Belcher Family Trust. Mr Belcher is also the sole director and shareholder of Lake Meadow. Lake Meadow was registered on 9 December 2020.

Legal principles

8    The principles to be applied and the circumstances in which the Court will extend a convening period are well-established. I gratefully adopt the observations of Thawley J in Farnsworth v About Life Pty Limited (Administrator Appointed), in the matter of About Life Pty Ltd (Administrator Appointed) [2019] FCA 11 at [3] to [7] as follows:

PRINCIPLES

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.

9    To those principles can be added the observations of Middleton J in Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) (2020) 144 ACSR 347; [2020] FCA 717 at [66] to [68]:

66    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: Mentha, in the matter of Hans Continental Smallgoods Pty Ltd (Administrators Appointed) [2008] FCA 1933 (Jacobson J); Re Riviera (Austin J); Silvia, in the matter of Austcorp Group Ltd (Administrators Appointed) [2009] FCA 636 (Lindgren J) (‘Re Austcorp’); and In the matter of Kavia Holdings Pty Limited (administrators appointed) (receivers and managers appointed) [2013] NSWSC 737 (Black J).

67    In Mighty River International Ltd v Hughes (as deed administrators of Mesa Minerals Ltd) (2018) 359 ALR 181 at 201-202, [73], Nettle and Gordon JJ (in dissent, but not relevantly in this respect) referred to a number of cases including Re Riviera and concluded:

… 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. …

68    Finally, the administrator’s own opinion as to the need for an extension will be given weight in an application of this kind: Owen and Others in their capacity as joint and several administrators of Rivercity Motorway Pty Ltd (ACN 116 665 304) (admins apptd) (recs and mgrs. Apptd)) v Madden (No 4) (2012) 92 ACSR 255 at [26] (Logan J); In the matter of Belmont Sportsmans Club Co-Operative Limited (Administrators Appointed) [2015] NSWSC 543 at [9] (Black J); Jahani, in the matter of Northern Energy Corporation Ltd (Administrators Appointed) (No 2) [2019] FCA 382 at [67] (Farrell J); Bumbak (Administrator), in the matter of Duro Felguera Australia Pty Limited (Administrators Appointed) [2020] FCA 422 at [32] (Gleeson J).

[emphasis in original]

10    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 Corporations Act: Freeman, in the matter of Regional Express Holdings Limited (administrators appointed) (No 2) [2024] FCA 968 at [40].

11    To these principles, given the terms of the orders sought by the Administrator, should be added those explained by Lindgren J in Daisytek at [10] to [17]. A Daisytek order allows an administrator to hold the second meeting of creditors prior to the expiration of the extended convening period, if desirable and if able to do so, so as to avoid requiring an administrator to wait until the end of the convening period in circumstances where they may be in a position to hold the meeting earlier.

Consideration

12    The first meeting of creditors was held on 3 April 2025. The original convening period will end on 1 May 2025 and the Administrator is currently required to hold the second meeting of creditors for the Companies by 8 May 2025. The extension now sought is for an additional three months. Although it is possible to find authorities which have granted such extensions, or even longer extensions, each case must, of course, turn on its own facts and on the evidence that is before the Court at the time of the application.

13    In the context of considering an application to extend the convening period, the objects of Pt 5.3A of the Corporations Act, as set out in s 435A, must be kept in mind. An insolvent company is to be administered in a way that, firstly, maximises the chances of the company or as much as possible of its business continuing in existence, or, secondly, if 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.

14    Furthermore, in this context, it is to reach an appropriate balance between the expectation that an administration will be undertaken in a relatively speedy and summary manner as against 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.

15    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. Of course, as is also recognised in those authorities, greater extensions can be appropriate where the matter is complex.

16    It should be noted that the reference to the Companies is a reference to two companies which does increase somewhat the complexity and work involved. However, in the circumstances of this case, the second company is a trustee company and shareholder of the first company. The second company, Lake Meadow does not trade but is merely incorporated as a service entity to Machos that now employs the director of Machos and one other administrative staff member.

17    The Administrator has already been able to form the view that the main contributing factor which led to the Companies being placed into voluntary administration appears to be:

(a)    poor strategic management of the business;

(b)    inadequate cashflow;

(c)    a lack of business acumen; and

(d)    a breakdown in the relationship with Machos’ largest customer.

18    The Companies do not own land and operate from leased premises, which is an office and warehouse. The Administrator has already entered into a month-to-month lease at the same premises to allow Machos to continue to trade and operate. Machos’ largest secured creditor is the ANZ Bank (ANZ), who is currently owed approximately $530,000 by Machos.

19    There are other secured creditors and the Court’s attention was specifically drawn to a lengthy Personal Property Securities Register (PPSR) search provided by the Administrator. That search provides an extensive list of more than 50 pages and records around 58 total interests over 23 motor vehicles and 29 other goods. It does appear, and it was submitted, that there is some overlap in relation to those matters.

20    Machos currently has 20 employees. Unpaid employee entitlements will total approximately $345,000 in the event of an immediate liquidation. In this balancing exercise, it is necessary to keep the position of the employees in mind. The Administrator has provided an organisational chart to assist in the understanding of the positions of the employees. It was submitted that the continuation of the Administration is beneficial to the employees as it preserves their employment. It was also submitted that given the scope of this business’s operations, that there was some risk that there was no other similar work for them in Tasmania. Although that submission was made, there was no evidence in relation to different kinds of employment opportunities which might have been available to the 20 employees.

21    In weighing and balancing the position of the employees, I am conscious that they are in a somewhat uncertain position at present while the Administration continues. At the time of entering the administration, Lake Meadow had six employees. However, three have resigned and one has been terminated. Unpaid employee entitlements will total approximately $100,000 in the event of an immediate liquidation of Lake Meadow. Again, it is necessary in the balancing exercise to keep the position of the employees in mind.

22    The Administrator has provided the tax returns and financial statements of Machos, particularly noting the 2024 financial year. The versions that are exhibited do not appear to have been signed by the director. The 2024 financials disclose trading income of Machos of just over $6.4 million, up from the 2023 year, of almost $4.6 million. However, after the cost of sales and expenses, that resulted in a net loss for 2024 of $350,000 and a net loss for 2023 of approximately $100,000, respectively.

23    The Machos balance sheet, as at 30 June 2024, records total current assets of around $2.27 million. That amount includes loans to associates of approximately $432,000. The balance sheet also records total non-current assets, including plant and equipment, of almost $1.85 million. This results in a total asset position of approximately $4.133 million.

24    On the liability side, which includes the debt with ANZ and taxation liabilities, including GST and PAYG for almost $800,000, total liabilities are stated to be $3.85 million. However, that was the position as at 30 June 2024. The Administrator has given evidence that the current position is that there is $2.4 million owing to unsecured creditors, $80,000 owing to employee creditors, $1.385 million owing to secured creditors, and $89,000 owing to related party unsecured creditors in the form of an intercompany loan payable by Lake Meadow to Machos and a loan payable to Mr Belcher. In the Administrator’s opinion, he is of the view that each of Lake Meadow and Machos are insolvent.

25    The Administrator has listed the initial tasks that he has been able to undertake during the period of the administration so far to include the following (in summary):

    First, taking control, managing the affairs and understanding the financial position, business and property of the Companies.

    Second, formulating a trading strategy and engaging with employees of the Companies.

    Third, investigating the basis for the Companies’ failure.

    Fourth, addressing queries from various creditors.

    Fifth, seeking relevant advice from third party services including legal providers.

    Sixth, trading the business of Machos with a view to maintaining those employees and preserving the value of the business.

    Seventh, seeking proposals from prospective sale agents and advisors regarding an expression of interest campaign in respect of a potential sale of the business.

    Eighth, arranging a valuation of the assets of the business.

26    The Administrator has continued to trade the business of Machos. This is a preferable position and may result in a better return to creditors. By continuing to trade, the Administrator has maintained most of the employees and continued to pay those employees, which has been assisted by the realisation of circulating assets. The Administrator has also been able to pay down some financiers and generate sufficient cashflow to meet the Companies’ immediate payment obligations to allow it to continue to trade.

27    Continuing to trade increases the saleability of the business. The Administrator has compiled an expression of interest campaign, which includes a letter dated 13 April 2025, a flyer and a confidential agreement to share confidential information of the business to interested parties (together, the EOI Documents).

28    The EOI Documents set out the following timetable for the sale process:

(a)    the marketing campaign of the business commenced on 24 March 2025;

(b)    expressions of interest, being non-binding indicative offers, were required by 25 April 2025. The EOI Documents provided details of what was required in those non-binding indicative offers;

(c)    binding offer submissions were initially required by 12 or 16 May 2025.

29    The requirements of any binding offer were also specified and included details of the final purchase price, payment terms, proposed transaction structure, employees of the company that are intended to be employed, any conditions on the offer, timeline for completion and proof of financing or other evidence demonstrating the bidder’s capacity to complete the transaction. The EOI Documents also observed that the estimated date for the second meeting of creditors was “TBC”, and the completion date for any business sale was scheduled for “as soon as practicable following acceptance by creditors”.

30    The Administrators state that although the non-binding indicative offer was initially proposed by 25 April, that has been extended to 2 May 2025, to accommodate several late parties which expressed an interest in making a non-binding indicative offer. The Administrator also proposes to extend the timeline also for the binding offers to 23 May 2025.

31    It was addressed in submissions that although there may be some discrepancy in the initial date by which binding offers were required, being either 12 or 16 May 2025, that was likely to be a typographical error and that it should be taken as 12 May 2025. In that regard, the evidence of the Administrator is that binding offers were initially required by 12 May 2025.

32    At the time the Administrator provided his affidavit for the purposes of this application, he had received three signed confidentiality agreements from several potential purchasers of the business. By having those three signed confidentiality agreements, it is apparent that the Administrator has entered into negotiations with those potential purchasers because that would be the basis upon which such confidentiality agreements would be required.

33    The Administrator has provided an amended indicative timetable of the expression of interest campaign and sale process as follows:

(a)    non-binding indicative offers by 2 May 2025;

(b)    binding offers by 12 or 23 May 2025.

34    Again, there seems to be some inconsistency in the evidence as to the extended date. However, I assume it should be 23 May 2025.

35    The Administrator has then given evidence that he may need until 1 August 2025 to evaluate any binding offers based on their financial merits, conditions, and ability to complete the transactions, and then to provide his opinion and any Deed of Company Arrangement (DOCA) proposal at the second meeting of creditors.

36    The purpose of the second meeting of creditors, by s 439A, as required by s 439C, is for the creditors to consider the Companies’ future. At that meeting, the creditors may resolve that the Companies each execute a DOCA, 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 Administrator must provide a report to creditors. The Administrator states that he has not yet formed a view about the appropriate outcome of the Companies. In the circumstances and given the matters that are outstanding, that is an understandable position.

37    Prior to the second meeting, the Administrator must also complete a report. That report, pursuant to r 75-225(3) of the Insolvency Practice Rules (Corporations) 2016 (Cth), must provide information about each company’s business, property, affairs and financial circumstances, as well as a statement setting out the matters that are required by that rule. In addition to that rule, consideration should also be given to s 438A of the Corporations Act and the matters required by the Administrator.

38    The Administrator deposes that additional time is required because the Companies’ interests are complex for reasons that include dealing with its ongoing contract with the local water authority and numerous local councils and dealing with the EOI campaign, potential DOCA proposals and leases, and having to coordinate all of those matters with the ongoing trade of the business. The Administrator gives his opinion, which is based on his experience and information available to him, that he estimates he will need that period of three months to complete the potential sale of the business, compare the most attractive offers from the EOI campaign with any DOCA proposal, coordinate the potential business sale and potential DOCA proposals in a way that will maximise the value of the business for the benefit of creditors, and finalise his opinion under s 438A at the end of that process.

39    The Administrator has given notice of seeking this proposed extension by circulars dated 23 April 2024. In that notice, the Administrator advised of his intention to seek a four-month extension of the convening period. Obviously, since that time, the Administrator’s view has changed because the Administrator now only seeks a period of three months. The Administrator emailed ANZ on 16 April 2025, informing it of his intention to apply for that four-month extension. ANZ informed the Administrator that it had no objection to the extension of the convening period.

40    The Administrator also refers to evidence of a creditor of the company, that is, a trade supplier, as it was described, being Underground Experts, who also stated that it consented to the proposed extension. At the time of the Administrator preparing his affidavit, he had not received any other substantive responses from any other creditors with admissible claims. It was submitted that as ANZ, being the largest secured creditor, did not oppose an extension, that should weigh in favour of granting the three months sought.

41    The matters identified by the Administrator will require completion so that the Administrator can properly report to creditors ahead of the second meeting and provide his opinion about whether each of the two Companies should execute a DOCA, have the administration come to an end, or be wound up. On the basis of the interest in the business that the Administrator has described, and the further interest which has been alluded to, it does appear that a sale of the business may be achievable.

42    However, having regard to the matters identified by Austin J in Re Riviera Group Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2009] NSWSC 585, (referred to in Farnsworth), being a consideration of the size and scope of any business, whether there is a complex corporate group structure, whether there are any inter-company loans, whether there are any complex transactions entered into by the company, this administration does not appear to be overly complex. In this regard, the Administrator was able to start the sales campaign on the day that the administration commenced, being 24 March 2025. The Administrator was also able to negotiate and enter into a lease of the premises for the business, from which it continues to conduct its operations, on 25 March 2025. That is, the day after his appointment.

43    Furthermore, there is only one trading entity, and although its turnover in 2024 was approximately $6.4 million, that, of itself, does not necessarily indicate an overly large and complex business structure. The two matters identified by the Administrator, which are said to support the period sought, being its ongoing contract with the local water authority and numerous local councils, and the sales campaign, again, do not appear to be overly complex or difficult. However, it is appropriate to consider each in further detail.

44    First, in relation to the ongoing contracts with the local water authority and councils. It was helpfully drawn to the Court’s attention, and submitted, that the flyer (in the EOI Documents), referred to the “Master Service Agreement held with TasWater, with the next tender round expected to be released shortly with the new contract anticipated to be awarded at the end of May”. It was submitted that those words, “expected” and “anticipated”, in the context of this matter, did mean that there was some uncertainty in relation to when that contract might be awarded.

45    Although there may be some uncertainty in relation to the reference to the Master Service Agreement, there was no other evidence before the Court which provided any other date in relation to when the Master Service Agreement might be awarded. Although time was short, it was raised with counsel for the Administrator whether or not further evidence was sought to be relied upon. The Administrators were content to rely only on the evidence as it was before the Court, without a short adjournment to obtain any further evidence.

46    The flyer also referred to significant ongoing projects with TasWater and a large number of councils statewide. At a high level of generality and noting that this is a marketing flyer for the sale of the business, that might be an apt description. However, there was no evidence in the material provided by the Administrator as to whether or not the significant ongoing projects amounted to a significant number of projects, whether it was significant by quantum of projects, whether the large number of councils statewide again supported a view that this was a complex matter, whether the contracts with the councils were each separate matters, or how such projects or contracts were to be dealt with going forward in relation to any sale under the EOI campaign. As such, the evidence before the Court does not support the position that the ongoing contracts with local water authority and councils is overly complex or difficult.

47    Secondly, the Administrator relies on the complexity of dealing with the EOI campaign, potential DOCAs, and leases. As observed above, the Administrator was able to negotiate and enter a new month-to-month arrangement of premises the day after his appointment. That does not support a submission that it was overly complex for the Administrator to deal with leases.

48    In relation to the EOI campaign, the original timeframes which the Administrator anticipated being able to deal with such matters, including that the marketing commenced on the day of appointment, all support a relatively speedy and appropriate approach by the Administrator to the sale process. As that process has been undertaken, there has been some slippage and additional time required due to late interest in the business. Binding offers are required by 23 May 2025. The evidence available does not suggest that this is an overly complex business sale. However, it does support an extension to the convening period.

49    Evidence in relation to any potential deeds of company arrangement was limited at this stage. That is understandable and does support the grant of an extension to the convening period.

50    I am satisfied that extending the convening period is appropriate in the circumstances, and it is matters such as completing the EOI campaign and further exploring any DOCA proposals which do support an extension of the convening period. To those matters that were expressly deposed to by the Administrator can be added the submissions made in relation to the PPSR and the requirement for either clear title or for arrangements to be made with secured creditors in relation to those security arrangements. Each of those matters, it was submitted, would affect both the complexity of the matter and the sale process. Such a submission in relation to exercising of the discretion to extend the convening period can be accepted.

51    However, it was the period sought of three months which caused concern in the balancing exercise to be undertaken. The position of the employees weighs in favour of focusing the Administrator’s attention to trying to deal with this matter with expedition. In balancing the considerations of speed and towards maximising the return for creditors, there is evidence of some potential additional purchasers and the need for further time. Again, this does support an extension to the convening period.

52    It was also submitted that, in exercising the discretion to extend the convening period, the Court will generally afford significant weight to the view of the Administrator 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] and [38], and the authorities cited therein; see also Freeman at [35]. I do give the Administrator’s opinion in relation to this matter significant weight, but it is one matter that must be considered in the balancing exercise. None of the authorities that I was referred to provide that the Administrator’s opinion is determinative of the outcome of whether it is appropriate to grant an extension and how long that extension should be granted.

53    An extension is necessary to enable the Administrator to prepare and provide the report and, in particular, to arrive at the opinions referred to in s 439A(4) of the Corporations Act, in order to inform creditors adequately so that they will be in a position to decide whether to terminate the administration, execute a DOCA, or place the company in liquidation. This will also be informed by the EOI campaign potential sale process.

54    The Administrator has expressly observed and sought an additional order by way of a Daisytek order, as he has given evidence that he may be able to call the meeting earlier. I do accept that that evidence was in the context of seeking a three-month extension, not the two-month extension I propose to grant. Initially the Administrator was of the view a four-month extension should be sought but the application has been made for three months. In the context of submissions which described a process of a couple of weeks to negotiate after the binding offers date of 23 May 2025 and a couple of weeks for advice it is appropriate to only order two months for the extension. The binding offers are required by 23 May 2025, which is just over 5 weeks prior to 1 July 2025, whereas 1 August 2025 allows a period of almost 10 weeks, from receipt of those binding offers. In these circumstances, that does not strike the appropriate balance.

55    Finally, it was also submitted that it was almost certain that the Administrator would need to make a further application to the Court, if an extension of something less than the three months that was sought, was granted. That would, so it was submitted, be an unnecessary increase in the costs of the administration. Although it may be necessary for the Administrator to make a further application at some time in the future, on the basis of the current evidence, giving significant weight to the opinion of the Administrator, together with all of the relevant matters referred to above in the balancing exercise, particularly noting the legal principles as outlined in Farnsworth and Re Riviera Group, I am not satisfied that three months is appropriate in the particular circumstances of this matter.

56    I observe that an administrator is always required to apply to the Court for an extension of the convening period. The Court can only consider such applications on the basis of the evidence before it. If a further application to the Court in the administration is necessary, then that is the appropriate course. However, I will grant the Administrator liberty to apply to the Court for a further extension or variation of the convening period any time before that extended period expires. Whether or not such an extension is appropriate at any future time will depend on the circumstances and evidence that is then before the Court.

57    Finally, I will also make the additional Daisytek order, which has in various authorities 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].

58    Therefore, on the evidence available to the Court on this application, it is appropriate to extend the convening period until 1 July 2025.

Associate:    

Dated:    14 May 2025