ABC Learning Centres Ltd (Administrators Appointed) (Receivers & Managers... [2010] FCA 353 | Case summary

Judgment (8 paragraphs)

[1]

Pursuant to s 447A(1) of the Corporations Act 2001 ("the Act"), Part 5.3A of the Act operates in relation to each of the second plaintiffs such that notice of the second meeting of creditors of the second plaintiffs convened by the first plaintiffs pursuant to s 439A of the Act, or any adjourned or subsequent meeting, will be validly given to creditors of any of the second plaintiffs by the first plaintiffs, in accordance with ss 439A(3) and 439A(4) of the Act, by: (a) causing a combined notice of the meeting to be published in The Australian newspaper; (b) placing a copy of the combined notice of the meeting and the Report by the first plaintiffs prepared pursuant to s 439A(4) of the Act ("the Report"), on the website of the firm Ferrier Hodgson, ; (c) sending a combined notice of the meeting to any creditor who has notified the first plaintiffs of a fax number or electronic address, to that fax number or electronic address; (d) subject to Order 1(c), sending a combined notice of the meeting to any person that is recorded on the Report as to Affairs in respect of any of the second plaintiffs as being a creditor or has lodged a proof of debt with the first plaintiffs or has expressly notified the first plaintiffs, in writing or electronically, that that person claims to be a creditor, by prepaid post to any address of which the first plaintiffs are aware in respect of that creditor; and (e) by each Director of each Child Care Centre operated by any of the second plaintiffs being directed to distribute the combined notice of the meeting to each employee using each employee's pigeon hole located at the centre at which the employee works, at least 5 business days before the second meeting of creditors or any adjourned or subsequent meeting.

REASONS FOR JUDGMENT 1 I have before me a further interlocutory process filed in relation to the administration of the ABC group of companies (the ABC Group). The first plaintiffs in the proceeding, Peter Walker and Gregory Maloney (the Administrators), were appointed administrators of each of the companies in the ABC Group. On the same day, Christopher Honey, Murray Smith and John Crone (the Receivers) were appointed receivers and managers of the same companies. At the time of the appointments, ABC Learning Centres Limited, the holding company, was a listed company. The group provides early childhood development day care and education programs to children throughout Australia and overseas. 2 Since their appointment, the Receivers have had control of the business of the ABC Group and only limited funds have been made available to the Administrators by the Receivers. On 21 August 2009 I made orders extending the convening period for the second meeting of the creditors of each of the companies in the ABC Group to 31 March 2010. The principal reason for making those orders was to facilitate the disposal of the businesses of the ABC Group as a going concern. 3 On 8 March 2010, the Receivers requested the Administrators convene the second meetings of creditors of the ABC Group. It is proposed to hold the second meetings on 26 March 2010. However, on 3 February 2010 summonses for the public examination of various persons were issued by the Court. The examinations are to begin on 12 April 2010. To ensure that sufficient time was available to have the summonses reissued, should a liquidator be appointed at the second meetings, it is necessary that the Administrators convene the meetings as soon as possible. It is proposed that the Administrators will recommend that the second meetings of creditors be adjourned to avoid the complications that might arise if the companies proceed to liquidation before the examinations have been completed. At this stage no deed of company arrangement has been proposed in relation to any of the companies. 4 Several orders for public examination had been made prior to the orders of 3 February 2010. On 9 November 2009 orders for the examination of seven persons were made and on 8, 9 and 10 December 2009 the Administrators conducted examination of those seven persons in Brisbane. On 30 November 2009, further orders were made for examination of other individuals and for the production of documents by various individuals. The orders made on 30 November 2009 required the persons to be examined to appear in Sydney on 1 March 2010. However, it was not possible to review and analyse all of the documents produced in answer to the summonses by 1 March 2010. 5 The Administrators, therefore, considered that it was appropriate to have the orders for examination vacated and for fresh summonses to be issued, returnable at later dates so that sufficient time would be available for the production and review of documents produced pursuant to the orders made on 30 November 2009. The Administrators consider that the most effective and efficient manner in which to proceed with the examination is to divide the further examinations into two tranches. The first tranche consists of the examination of certain management staff. The second consists of the examination of directors, further senior management staff, banking syndicate representatives and third party representatives who have had dealings with the ABC Group. The orders made on 3 February 2010 were for the first tranche of examinations. Those examinations were conducted in Brisbane in the week of 8 March 2010. The examinations in the second tranche are proposed to be conducted in Sydney in the period commencing 12 April 2010. 6 The Administrators have formed the view that at the second meetings of creditors the companies in the ABC Group will be placed into liquidation. It is because of that possibility that it is proposed to recommend the adjournment of those meetings, lest the summonses for examination cease to be valid, following the appointment of liquidators. 7 There are 39 companies in the ABC Group. It is impracticable to conduct creditors meetings of such a large number of related companies separately. To do so often leads to confusion in the minds of creditors, as well as to an increase in the costs involved, in that the meetings invariably take much more time to conduct. The Administrators, therefore, propose that the second meetings of the members of the ABC Group be combined, and held, concurrently, without the need for the creditors of each company resolving to that effect. 8 Since it is proposed that the meetings be adjourned, the Administrators consider that it would be convenient for a facility to be put in place, whereby the second meetings of each of the companies in the ABC Group might be adjourned by a single resolution. However, it is proposed that, if the creditors of any single company wish to have a separate vote, then a separate vote would be conducted in relation to that company. 9 The Administrators are aware of more than 650 creditors of the ABC Group. That information has been gleaned from the report as to affairs, lodged with the Administrators, together with proofs of debt. The total number of potential employee creditors still employed by the members of the ABC Group is in excess of 10,000. ABC Learning Centres Limited continues to maintain an internal email communications system, by which communication is maintained with each centre director. The Administrators propose that notice of the second meetings of creditors be sent by email to each centre, by means of that internal email system. Each centre director would be instructed to place a copy of the notification in each employee's pigeon hole, located at the centre in which the employee works. 10 The notification would state that a copy of the Administrator's report may be obtained, either from the Administrator's web site, or by making a request for a copy to be sent by post. The Administrators have estimated that the cost saving, by notification of the meetings in the manner proposed, would be between approximately $15,000 and $35,000. 11 The application before me is for an order, under s 447A of the Corporations Act 2001 (Cth) (the Act), that Part 5.3A of the Act operate, in relation to the second meetings of creditors, in the following way: (1) There will be a combined notice of meeting for all companies. (2) Creditors will only be notified individually if the creditor has notified the Administrators of a fax number or email address, or has lodged a proof of debt, or is otherwise known to the Administrators. (3) Notification of the meetings to creditors will otherwise be by way of advertisement in daily newspapers and on the Administrators' web site. (4) Notification to current employees will be by the means already described. (5) The notices of meeting will not be accompanied by the Administrators' report but the notice will state that it can be seen on the Administrators' web site or can be made available in hard copy, by post, on request. (6) The meetings of all 39 companies will be combined and held concurrently. (7) If an adjournment resolution is moved, it may be passed by a single resolution of all creditors present, with the safeguard that any creditor of a particular company may request that a separate resolution be passed in relation to that company. 12 In all of the circumstances I am satisfied that the order under s 447A sought by the Administrators is appropriate and, accordingly, I propose to make the order sought.

ABC Learning Centres Ltd (Administrators Appointed) (Receivers & Managers Appointed) ACN 079 736 664 v Honey

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