Anderson, in the matter of NT Port and Marine Pty Ltd (Administrators Appointed) [2023] FCA 3

CHARLESWORTH J 1 This is an application pursuant to s 439A(6) of the Corporations Act 2001 (Cth) for an order extending the convening period for the second meeting of creditors to decide the future of NT Port and Marine Pty Ltd (Administrators Appointed) ACN 146 391 219 (the Company), and ancillary orders under s 447A(1) of the Act. The application was filed on 18 January 2023 and a hearing was urgently convened on 19 January 2023. On that day, the Court made orders substantially in the terms sought and delivered reason orally with a view to publishing written reasons in due course. These are those written reasons. 2 The plaintiff, is defined to include Mr Travis Adrian Anderson and Mr Matthew James Donnelly. They are the voluntary administrators jointly and severally appointed to the Company on 16 December 2022 under s 436A of the Act. Their appointment was by way of a resolution passed by the Company's sole director Mr Easwaran Puvanendran. 3 The Court has read the affidavit of Mr Anderson sworn on 18 January 2023 and the affidavit of Mr Benjamin Renfrey filed on 19 January 2023. The factual matters referred to in these reasons may be understood as findings largely based on that material. I am satisfied that the Australian Securities and Investments Commission (ASIC) has been notified of the application, albeit within a short time of the hearing. 4 The Company is the operator and sublessee of a deep water port situated on the north west coast of Melville Island (Port). Meville Island forms part of the Tiwi Islands which lie directly north of Darwin in the Northern Territory. The Port includes a fuel storage facility with the capacity to hold 30 million litres of fuel, an accommodation village and 10 hectares of cleared adjacent land suitable for ancillary services. 5 The Port supports a number of industries on the island including oil and gas, marine transport and forestry and is clearly important to the local economy. It is the only outlet from which woodchips can be exported from the Tiwi Islands. Its sources of income include the loading and unloading of vessels, as well as accommodation, office and related maritime services. 6 The Company also leases a supply base at East Arm, a suburb of Darwin. However the administrators have formally notified the lessor that they do not intend to exercise property rights in relation to that lease. 7 Section 436E(1) of the Act provides that the administrator of a company under administration must convene a meeting of the company's creditors in order to determine whether to appoint a committee of inspection and, if so, who the committee's members are to be. A first meeting of creditors was held on 29 December 2022. 8 The Court has before it copy of an ASIC search related to the Company dated 18 January 2023. It shows that the Company's sole shareholder is Ezion Offshore Logistics Hub Pte Ltd. Ezion's sole shareholder is Ausgroup Limited. Ezion and Ausgroup are Singaporean entities. 9 On 30 November 2022, Interim Judicial Managers (IJM's) were appointed to Ausgroup. For present purposes I accept that the role of an IJM is similar to that of the role of an administrator in Australia. The IJM's included Mr Tan Wei Cheong. 10 Part 5.3A of the Act is headed "Administration of a company's affairs with a view to executing a deed of company arrangement". Division 5 contains provisions concerning the meeting of creditors to decide a company's future. Section 439A(1) provides that the administrator of a company under administration must convene a meeting of the company's creditors within the "convening period" as fixed by subs (5) or as extended under subs (6). Under s 439A(2), the meeting must be held within five business days before, or within five business days after, the end of the convening period. 11 At a meeting convened under s 439A, the creditors may resolve that the company execute a deed of company arrangement, or that the administration should end or that the company should be wound up: Act, s 439C. If the creditors resolve that the company execute a deed of company arrangement, the provisions of Div 10 apply with respect to the deed and its effect on the company's creditors and property. 12 The phrase "Convening period" is defined in s 439A(5) of the Act. In the present case, it is 25 business days beginning on 16 December 2022. As such, the convening period ends on 25 January 2023 and any meeting convened in that period must be held by 1 February 2023. 13 Section 439A(6) of the Act provides: The Court may extend the convening period on an application made during or after the period referred to in paragraph (5)(a) or (b), as the case requires. 14 This application has been made before the expiry of the convening period. 15 The orders sought on the originating process are as follows: 1. An order pursuant to section 439A(6) of the Act that the period within which the Plaintiffs must convene the second meeting of creditors of NT Port and Marine Pty Ltd (Administrators Appointed) ACN 146 391 219 (Company) as fixed by section 439A(5) of the Act, be extended up to and including 25 July 2023. 2. An order pursuant to section 447A(1) of the Act, that Part 5.3A of the Act is to operate in relation to the Company as if the second meeting of creditors of the Company, required by section 439A of the Act, may be convened and held at any time during the period as extended under order 1 above or within the period of five (5) business days after that period, notwithstanding the provisions of section 439A(2) of the Act. 3. The Plaintiffs take all reasonable steps to cause a copy of the Court's orders (Orders) to be given with sealed copies of the Originating Process filed on 18 January 2023 (Application), within three (3) business days of the making of the Orders, to creditors (including persons or entities claiming to be creditors) of the Company, including notifying creditors that documents relied upon in support of the Application will be provided by the Plaintiffs, by way of an electronic link, upon request to a nominated email address, and so making the documents available. 4. An order that any person who can demonstrate a sufficient interest has liberty to apply to vary or discharge any orders made pursuant to paragraphs 1 and 2 above on three (3) business days' written notice to the Plaintiffs and the Court. 5. The Plaintiffs' costs of and incidental to this Application be costs in the administration of the Company, jointly and severally. 6. An order that the Court's orders be entered forthwith. 7. Any other order that the Court deems fit. 16 The principles underpinning the making of an order under s 439A(6) to extend a convening period were recently outlined in Byrnes, in the matter of Murray River Organics Proprietary Limited (Administrators Appointed) (Receivers and Managers Appointed) [2022] FCA 232. O'Callaghan J said: 13 The principles for making an order to extend a convening period under s 439A(6) are well established, and are usefully set out in Strawbridge; Re Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717; (2020) 144 ACSR 347 at 370-371 [64]-[68] (Middleton J). In exercising its discretion to extend the convening period, 'the Court must reach an appropriate balance between an expectation that the administration will be relatively speedy and summary, and the countervailing factor that undue speed should not be allowed to prejudice sensible and constructive actions directed to maximising a return for creditors'. See Strawbridge [2020] FCA 717; (2020) 144 ACSR 347 at 370 [64]. 14 Whether an extension is appropriate turns on the particular circumstances of a case. Such circumstances include, by way of example only and relevantly to this case, 'where the extension will allow sale of the business as a going concern' and where 'that additional time is likely to enhance the return for unsecured creditors'. See Farnsworth v About Life Pty Limited (Administrator Appointed); Re About Life Pty Limited (Administrator Appointed) [2019] FCA 11 at [6] (Thawley J), and the cases cited therein. 17 Having regard to those principles, and on the basis of the matters set out in the affidavits of Mr Anderson and Mr Renfrey,, I am satisfied that there should be orders made in the terms sought. In particular, I am satisfied of the following matters. 18 In 1978, the land comprising the Tiwi Islands was granted to the Tiwi Aboriginal Land Trust (TAL Trust), being a land trust established under the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) and presently having eight individuals as Trustees. The TAL Trust acts upon directions given by the Tiwi Land Council, a body of 31 members representing Tiwi Islands' traditional owners. 19 On 11 August 2004, the TAL Trust, and the Council granted a lease (Head Lease) to Port Melville Pty Ltd (PM) with respect to the land now comprising the Port. Clause 5 of the Head Lease specified permitted uses of the land to include the construction and conduct of port operations. 20 On 23 September 2010, the Company entered into a 10 year sublease (Sublease) with PM over the land comprising the Port. The permitted uses under the Sublease include the operation of a ship loading warehousing and storage facility. 21 The Company's interests pursuant to the Sublease are subject to a registered mortgage in favour of P.T. Limited (Perpetual). 22 In 2012, the Company entered into agreements referred to as a Facility Agreement and Deed of Variation of the Facility Agreement by which it gave rights to Tiwi Plantations Corporation Pty Ltd (TPC) to utilise the Port for loading woodchips and other products for export. The five directors of TPC are members of the Council and three of them are also Trustees. The five directors are also directors of PM. Four of the eight shareholders of TPC are Trustees and one is a former Chairman of the Council. Of the twelve persons who are directors or shareholders of TPC, six are either directors or shareholders of PM's sole shareholder, Pirntubula Pty Ltd. Of the eight shareholders of Pirntubula, five are members of the Council and are also Trustees. It is because of that corporate structure that Mr Anderson asserts, and I accept, that both TPC and Pirntubula are entities that are effectively owned, operated or controlled by the traditional owners of the Tiwi Islands. 23 Upon their appointment, the administrators commenced initial enquiries and investigations into the Company and took control of its business and its liquid assets including its bank account. As at 16 December 2022 the balance of the account was $103,264.63. 24 The Company's sole director provided the administrators with a Report on Company Activities and Property on 23 December 2022. It contains a table of fixed assets which the administrators are presently investigating. 25 At the time of the administrators' appointment, a woodchip transport vessel, the MV Thor Brave, was scheduled to arrive at the Port in mid January 2023 for the loading of woodchips. It is now likely to arrive in early February 2023. The receiving of the MV Thor Brave involves significant advance planning including the arrangement of labour. 26 Mr Anderson has travelled to Darwin and the Tiwi Islands and met with a number of persons interested in the affairs of the Company including representatives of the traditional owners of the Tiwi Islands, representatives of the Department of the Northern Territory Chief Minister and Cabinet as well as the Office of Township Leasing. As a result of his enquiries, Mr Anderson has ascertained that timber products are the Tiwi Islands' main export and that the Port underpins the Tiwi Islands' economy. There is no alternative other than the Port for the export of woodchips. Accordingly, the Port's continued viability is a priority for the Northern Territory Government and the Australian Government as well as the Tiwi Islands resident's themselves 27 At [41] of his affidavit, Mr Anderson deposes that he and Mr Donnelly have undertaken the following additional tasks: a) facilitated the continuing operation of the Port after assessing its viability, including liaising with existing customers, suppliers and staff, and instigating an occupational health and safety review; b) held meetings and maintained ongoing communications with key stakeholders, such as PM, TPC, Midway Limited (Midway), members of the TL Council, some of the Trustees, representatives of the Northern Territory and the Australian Government; c) maintained ongoing discussions with Midway in order to facilitate the loading of woodchip onto the MV Thor Brave; d) collected various trade debtors; e) negotiated and secured the ongoing support of key employees, suppliers and contractors; f) engaged a valuer to provide market valuations on the Company's assets; g) secured Company assets at East Arm, with a view to their potential realisation; h) engaged in discussions with the Northern Territory Government, the Australian Government and P.T. Limited (a secured creditor of the Company) (Perpetual) with a view to seeking funding to conduct the administration. This process is ongoing, but we currently expect these stakeholders to support the funding requirements of the administration process given the importance of the continued operation of the Port to the Tiwi Islands communities; i) commenced a review of the Company's operating costs. In this respect, the Administrators exited the Company's leased premises at East Arm in order to reduce trading overheads; j) commenced investigations into potential voidable transactions, in the event that the Company is placed into liquidation: k) commenced verifying employee entitlements: I) begun pre-planning for a sales campaign; and m) held the first meeting of creditors on 29 December 2022. 28 The administrators have sought funding from Perpetual for an extended administration and sale process. They also notified Perpetual of their intention to make the present application in order to facilitate that process. Mr Anderson has met with a representative of Perpetual to reiterate the matters raised in his correspondence. At that meeting, Perpetual's representative raised no questions or objections in relation to the proposal to extend the convening period. 29 At the first meeting of creditors, two creditors and at least one employee was present. The administrators foreshadowed to the creditors that an extension of the convening period would be required. No comments, questions or objections were raised by those creditors who were present at that meeting. No motion was proposed at that meeting for the appointment of a committee of inspection nor was there any proposal for the replacement of administrators. 30 On the basis of what was said at the first meeting, the administrators are of the view that the traditional owners of the Tiwi Islands wish for the Port to continue operating. So much may also be inferred from the importance of the Port to the Tiwi Islands' economy. 31 As to the next steps, the administrators propose to engage in a process for the sale of the Port as a going concern or the recapitalisation of the Company by way of a Deed of Company Arrangement. They are not presently in a position to assess or make any recommendations to creditors with respect to which course of action is preferred. They consider that the first priority of the administration should be to commence a proper marketing and sale process to maximise the prospects of its business continuing. 32 The administrators assert, and I accept, that they have already carried out a significant amount of work. However, they have not been able to materially progress the sale process given the time of year that they were appointed and because it has been uncertain as to whether the Company will have sufficient funds to continue its operations during the sale process. They continue in their efforts for the provision of funding from government and other sources with respect to the proposed extended administration process. The administrators assert, and I accept, that the extension will assist them to secure that funding on the basis that the Company remain in administration and is not wound up. 33 In his affidavit, Mr Anderson sets out the steps yet to be carried out in order for the future course of the Company to be assessed. It is not necessary in these reasons to describe them in detail. I am satisfied that the period of the extension that is sought is appropriate having regard to the nature and complexities of the tasks under contemplation. I am also satisfied that the administrators have acted appropriately in setting out a timetable by which the tasks may be achieved in a way that ensures a degree of transparency and accountability to the creditors. 34 If the second meeting of creditors is required to be held on or before 1 February 2023, it appears that the administrators would have no option but to recommend the Company be placed into liquidation because they would be in no position to properly put forward an alternative proposal. I am satisfied that the interests of the creditors of the Company will be best served by the grant of the extension. This will maximise the prospects of the Company continuing to conduct its business as a going concern during an extended administration, rather than being immediately wound up. 35 The Court has considered whether to make an order for a shorter extension to that which is sought in the originating process, namely an extension to mid May 2023. If that were to be done, it would be open to the administrators to make a further application extending the convening period if it was thought necessary to facilitate the sale process. I am satisfied that the costs and distraction associated with the making of a further extension application is not warranted and the need to minimise the administration period may be addressed by other means. In particular, the administrators have sought, and I will make, an order granting liberty to interested persons to apply to the Court for the variation or discharge of its orders. In addition, I accept that the administrators' present intention is to convene the second meeting at the earliest possible opportunity so that if an acceptable proposal can be finalised earlier than 25 July 2023, the meeting may be convened and held at that earlier time. The order sought in paragraph 2 is directed to achieve that end. 36 The Court gives particular weight to the interests of the Company's employees in avoiding the immediate winding up of the Company. It is plainly in their interests that the business of Company continue in operation until such time as the administrators can formulate a plan for its future. The effect of the Court's orders is to continue in place, a moratorium under s 440B of the Act on the enforcement of action able to be taken by lessors against property occupied by the Company. In the circumstances of the present case I consider the continuation of that the moratorium to be appropriate. 37 Orders in terms of the originating process will be made and the administrators will be directed to provide copies of the Court's order to all of the known creditors and to any other person known to meet the description of affected person who may exercise the liberty granted by the order in paragraph 5. There will also be orders requiring the administrators, on written request by a creditor, to provide a copy of these written reasons for judgment and copies of any documents upon which the plaintiff relied upon in support of the application. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Charlesworth.