Federal Court of Australia

Australian Prudential Regulation Authority v Eric Insurance Limited [2025] FCA 1061

ORDERS

THE COURT ORDERS THAT:

1.    Orders 4 to 6 of the orders made on 12 August 2025 be vacated.

2.    The hearing of the Plaintiff’s winding up application filed 23 July 2025, be adjourned to a case management hearing on 25 September 2025.

3.    Pursuant to section 447A of the Corporations Act 2001 (Cth) (Corporations Act), Part 5.3A of the Corporations Act is to operate in relation to the administration of Eric Insurance Limited (Administrators Appointed) ACN 009 129 793 (Company) such that:

(a)    section 436E of the Corporations Act does not apply to the administration of the Company, such that there is no requirement that a first meeting of creditors in the administration of the Company be held; and

(b)    section 439A(2) of the Corporations Act provides that the meeting may be convened at any time before, or within 5 business days after, the end of the convening period.

4.    Liberty to apply on 1 business days’ notice.

5.    The orders made by the Court be entered forthwith.

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

REASONS FOR JUDGMENT

Delivered ex tempore, revised from transcript

JACKMAN J:

1    These proceedings were commenced on 23 July 2025, in which the applicant (APRA) seeks orders for the winding up of the respondent (Eric). On 28 July 2025, Ms Sozou and Mr Fraser of McGrathNicol (the Administrators) were appointed as joint and several administrators of Eric.

2    Eric is a general insurer, which prior to entering into a voluntary runoff in October 2023, sold what is generally described as "add-on" motor vehicle insurance to consumers, dealers and manufacturers.

3    Since their appointment, the Administrators have engaged with APRA, AFCA and ASIC in relation to a proposed deed of company arrangement (the Proposed DOCA) and the administration of Eric more generally.

4    On 30 July 2025, I made orders, which were subsequently varied on 12 August 2025, to the effect that the convening period under s 439A of the Corporations Act 2001 (Cth) (the Act) will begin on the next business day after 29 August 2025. At that time, I contemplated that I would hear APRA's winding up application on 29 August 2025.

5    Following the service of Ms Sozou's affidavit of 22 August 2025, the parties consented to an adjournment of the hearing listed for today in order to allow the Administrators to issue a report to creditors recommending that Eric enter into the Proposed DOCA as outlined in that affidavit, and convene a meeting of creditors to allow the creditors to vote on the Proposed DOCA or whether it should be wound up.

6    The parties now contemplate a hearing of APRA's winding up application after the second meeting of creditors has occurred, if that should prove to be necessary.

7    In conjunction with that agreement, Eric seeks relief under s 447A of the Act so that:

(a)    section 436E of the Act does not apply to the administration of Eric, such that there is no requirement that a first meeting of creditors be held; and

(b)    section 439A(2) of the Act provides that the meeting may be convened at any time before, or within five business days after, the end of the convening period.

APRA neither consents to, nor opposes, those orders.

8    The Court has power to make the orders sought under s 447A of the Act, which gives the Court plenary powers to do whatever it thinks is just in all of the circumstances, that discretion to be exercised in accordance with the objects of Pt 5.3A.

9    As to the first of the proposed orders, the Administrators seek an order dispensing with the requirement to hold a first meeting of creditors under s 436E of the Act on the grounds that there is now no real utility in such a meeting, and also because of the cost of convening the meeting and the delay it would occasion to the creditors considering the Proposed DOCA.

10    Ms Sozou expresses the view in her second affidavit (at [42]–[46]) that, in the Eric’s circumstances, a first meeting of creditors would not now serve any useful purpose and would increase the costs of the administration without commensurate benefit to creditors. If the order is not made, the first meeting must be held by 10 September 2025, being eight business days after 29 August 2025. It is evident that matters have progressed so that the Administrators can now convene what would usually be the second meeting, so that the creditors can consider whether to enter into a deed of company arrangement, which is recommended as in their interest by the Administrators. Further, the matters identified in s 436E of the Act can, as Ms Sozou suggests, in practical effect be addressed at the second meeting of creditors.

11    In this regard, it is proposed that the second meeting of creditors be asked to vote on a committee of creditors, and the creditors may at the second meeting resolve, if they wish, to appoint an administrator of the deed of company arrangement or, if the company is resolved to be wound up, a liquidator, who is different to the current Administrators.

12    Though in different contexts, orders have been made for the dispensing of the first meeting of creditors where the meeting would not serve a useful purpose and/or involve disproportionate or unnecessary costs: Sims; Re Destra Corporation Limited [2009] FCA 1199 at [24] (Lindgren J); Kukulovski; Re Corrimal Leagues Club Limited (in liq) [2013] FCA 697 at [24]–[26] (Farrell J); Brooks; Re 351 Property Management & Maintenance Pty Ltd (in liq) [2023] FCA 1426 at [32] (O’Bryan J). Such orders for truncating the administration are usually made in the context of a company which was in liquidation when the administrator was appointed, after an earlier administrator in which a first meeting of creditors was held, and are regarded as generally appropriate where creditors have already had the chance to familiarise themselves with the affairs of the company.

13    That is not the case here. However, Eric submits and I accept that though the effect of such an order will be to deprive the creditors of a formal first meeting of creditors, this is to be balanced against the factors identified by Ms Sozou that it is in the interest of creditors to consider the Proposed DOCA as soon as possible and that the holding of a separate first meeting would involve the incurring of further costs and delay in the creditors considering the Proposed DOCA. Accordingly, it is appropriate in this case to dispense with the meeting to allow the creditors to consider the Proposed DOCA as soon as practicable.

14    The second order is sought in accordance with Re Daisytek Australia Pty Limited [2003] FCA 575; (2003) 45 ACSR 446 at [10]–[18] (Lindgren J), permitting the Administrators to hold the second meeting at any time during the extended period, the desirability of which is clear insofar as it provides the Administrators with flexibility with respect to timing of the meeting, so that it may be called earlier than within five business days before the end of the convening period. That saves the Administrators having to sit on their hands until that time arrives.

15    Accordingly, I make orders as sought by Eric in Order 3 of the draft orders which have been provided to me.

Associate:

Dated:    2 September 2025