Solicitors:
Ashurst Australia (plaintiffs)
File Number(s): 2015/150037
[2]
Judgment (ex tempore)
HIS HONOUR: The first plaintiffs Stephen Ernest Vaughan and Ian Richard Hall are the voluntary administrators of the second plaintiff BBY Limited and nine related entities which are the third through eleventh plaintiffs, having been appointed pursuant to (Cth) Corporations Act 2001, s 436A, on 17 May 2015. Pursuant to Corporations Act, s 436E, they are required to convene the first meeting of the creditors of each company by 27 May 2015 and to give notice of that meeting, and of their disclosure of indemnities and relevant relationships, to as many of the creditors as reasonably practical at least five business days before that meeting, which is 20 May 2015.
The companies together constitute the BBY Group, a broking and financial services firm based in Australia and New Zealand, although their ultimate holding company Olive Pacific Pty Limited is not currently subject to external administration and is not one of the plaintiffs. The group has, so far as can presently be ascertained on the limited available material, in excess of $2 billion in assets under administration and approximately 55,000 private client accounts ranging from retail to high net worth clients, although some clients may well hold multiple accounts. The potential creditors of the company include employees, of whom there may be about 189; clients in respect of the 55,000 accounts to which I have referred, some of which will presumably be in credit and some of which will presumably be in debit and which, as I have said, may include multiple accounts in respect of a single client; trade creditors, of whom there are approximately 147; tax creditors, which are likely to include the Australian Tax Office and the NSW Office of State Revenue; the landlord of the premises from which the company operates in Sydney; and a secured creditor, St George Bank.
The evidence indicates that, in the usual course, communications between BBY Group and its clients have been by e-mail rather than by hard copy letter due to the nature of its business and in particular the time-sensitive trading instructions that are involved. As a result, there is a comprehensive electronic database of client e-mail addresses which enable e-mail communications to be dispatched to broking and financial services clients.
The evidence also indicates that, based on a quote obtained from the registry provider Link Market Services, the printing and distribution of notices of the first meeting to clients will take approximately three days and cost approximately $150,000, whereas if the notices were sent in electronic form, that could be achieved at a much reduced cost and much more speedily and, in addition, would have the benefit of providing instantaneous notice rather than notice received some days after posting. In addition, there will be considerable difficulty in completing the printing and distribution of 55,000 notices by post before close of business on 20 May 2015.
For this reason, by originating process, leave to file which in Court has been granted this morning, the administrators seek orders pursuant to Corporations Act, s 447A(1), providing for the sending of notices to the e-mail addresses of creditors for whom an e-mail address is held, and otherwise by post or fax. In addition, it is proposed to publish a notice in a national newspaper, The Australian. It is also sought that such provisions apply until further order in respect of subsequent notices, reports and communications.
As has been discussed in the course of submissions, there may be difficulty in complying with the orders in so far as reports to be attached to or included with notices are too large to be sent as e-mail attachments. One solution often adopted in such a case is for the administrators to provide a website on which such documents can be accessed. At this stage that is not proposed, and if some further relief is sought in that respect, then it will be necessary for the administrators to make a further application to the Court.
Courts have become increasingly willing to make orders such as those sought in this case in respect of the manner in which notices may be given of meetings of creditors of companies under external administration, both to save costs and to save time, and thus to conserve the limited available assets for the benefit of creditors. As Black J has pointed out, most recently in In the matter of Creative Memories Australia Pty Limited (administrators appointed) [2013] NSWSC 732 (at [8]), this no doubt reflects, amongst other things, the fact that electronic means of communication are now widely accepted in the investing and commercial communities. There are now many decisions in which the Courts have made orders in respect of meetings of creditors permitting notice to be given by electronic means to those for whom e-mail addresses are available and otherwise by notice, for example, on an administrator's website, or by newspaper advertisement: [see ABC Learning Centres Ltd (Administrators Appointed) (Receivers & Managers Appointed) ACN 079 736 664 v Honey [2010] FCA 353; Silvia, in the matter of FEA Plantations Ltd (Administrators Appointed) [2010] FCA 468; Carson, in the matter of Hastie Group Limited [2012] FCA 626; Carson, in the matter of Hastie Group Limited (No 2) [2012] FCA 717; In the matter of Mothercare Australia Limited (administrators appointed) [2013] NSWSC 263, [8] (Black J); In the matter of Creative Memories Australia Pty Limited (administrators appointed) [2013] NSWSC 732].
The modification sought in this case will have the effect that the notice and any attachments must be sent by e-mail to creditors for whom an e-mail address is held. Thus creditors who are in any event accustomed to dealing with the company by electronic means will receive not just formal notice of the meeting in that way, but also any relevant attachments or enclosures. Other creditors will receive all relevant documentation either by post or by facsimile transmission. They will also have the opportunity to request hard copies by contacting a telephone hot line number. In addition, notice of the meetings will be published in The Australian.
I am satisfied that the course proposed is calculated to bring notice of the meeting to the attention of the maximum number of creditors at the earliest possible time and more economically than would be achieved by postal distribution of notices to all of them.
The Court therefore orders that:
1. Pursuant to Corporations Act, s 447A(1), Part 5.3A of that Act is to operate in relation to each of the second to eleventh plaintiffs such that notice of the first meeting of the creditors to be convened pursuant to Corporations Act, s 436E, and a copy of each declaration required by s 436DA(2), may be validly given to creditors of each of the second to eleventh plaintiffs by:
1. sending such notice to the e-mail address of any creditor who was provided with a financial service by any of the second to eleventh plaintiffs for whom or which the first plaintiffs have an e-mail address;
2. sending such notice to the postal address or facsimile number, or otherwise as provided for by Corporations Act or (Cth) Corporations Regulations 2001 to any creditors not being a creditor referred to in sub paragraph (a);
3. causing a notice of the first meeting of creditors to be published in The Australian newspaper on 21 May 2015; and
4. providing a telephone hot line number in any notice published with ASIC, in any advertisement in The Australian newspaper and in any e-mail notice by which the creditor may request a paper or electronic copy of the notice and any report issued by the first plaintiffs.
1. Pursuant to Corporations Act, s 447A(1), and subject to further order, Part 5.3 of that Act is to operate in relation to each of the second to eleventh plaintiffs such that all further notices, reports and communications, including a notice of meeting under s 439A(3) and any documents required to accompany such notice which the first plaintiffs may or must give or send to creditors to the second to eleventh plaintiffs, may be validly given or sent in accordance with the procedure described in order 1 above.
2. The costs of this application be costs and expenses in the administrations.
These orders are to be entered forthwith
[3]
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Decision last updated: 20 July 2015