Anmi Pty Ltd v Williams

CATCHWORDS : CORPORATIONS - winding up as sequel to voluntary administration - two companies with common characteristics carrying on business in succession - whether assets and liabilities may be pooled in what is effectively single winding up - need for statutory basis - use of s.447A - analogy with arrangement under s.510 - relevance of dissent by one creditor of one company LEGISLATION CITED : Corporations Act 2001 (Cth) Part 5.3A, ss.439A, 447A, 477, 510, 556 Anmi Pty Ltd v Williams [1981] 2 NSWLR 138 Application of Walker [2002] NSWSC 705 Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 Bank of Hindustan, China & Japan Ltd v Eastern Financial Association Ltd (1869) LR 2 PC 489 Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd [1997] 42 NSWLR 209 Gibbons v Liberty One Ltd (2002) 41 ACSR 442 Mentha v GE Capital Ltd (1997) 27 ACSR 696 CASES CITED : Re ACN 004 987 866 Pty Ltd (2003) 21 ACLC 1474 In Re Albert Life Assurance Co (1871) LR 6 Ch App 381 Re Bank of Credit and Commerce International SA (No 2) [1992] BCC 715 Re Centaur Mining & Exploration Ltd (2003) 48 ACSR 1 Re Charter Travel Co Ltd (1997) 25 ACSR 337 Re Chevron (Sydney) Ltd [1963] VR 249 Re Commercial Bank Corporation of India and The East (1869) LR 8 Eq 241 Re One.Tel Ltd (2002) 43 ACSR 305 Re Switch Telecommunications Pty Ltd; Ex parte Sherman (2000) 35 ACSR 172 PARTIES : Ronald John Dean-Willcocks and Nicholas Craig Malanos - Plaintiffs FILE NUMBER(S) : SC 3526/04 COUNSEL : Mr G E Cussen, Solicitor - Plaintiffs SOLICITORS : Kemp Strang - Plaintiffs

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

3526/04 - RONALD JOHN DEAN-WILLCOCKS & ANOR RE ALPHA TELECOM (AUST) PTY LIMITED (IN LIQUIDATION) & ANOR JUDGMENT 1 The present applicants, Mr Dean-Willcocks and Mr Malanos, are liquidators of ACN 099 627 362 Pty Limited ("Alpha") and Alpha Telecom (Aust) Pty Limited "Alpha (Aust)"). Each company is subject to the form of creditors voluntary winding up that follows on from voluntary administration under Part 5.3A of the Corporations Act 2001 (Cth). 2 On 21 June 2004, Austin J directed that the applicants, as administrators, (then administrators) were justified in putting resolutions to the creditors of each company at the s.439A meeting to the effect that the assets and liabilities of the companies be consolidated so that the windings up might proceed as if the two together were a single company. At each s.439A meeting (a meeting held on 30 June 2004 in the case of Alpha and a meeting held on 12 July 2004 in the case of Alpha (Aust)), it was resolved by creditors that the company be wound up. There was also, in each case, a resolution that, subject to the passing of a like resolution of the creditors of the other company, the assets and liabilities be consolidated in the way I have described. 3 The liquidators of each company now seek an order that they act upon the resolutions of the creditors as to consolidation of the assets and liabilities of the two companies and that the windings up proceed as if they were the winding up of a single company. 4 When that aspect first came before me on 19 July 2004, I was informed that one creditor of one company and one creditor of the other company had dissented when the consolidation proposal was put to a vote at the relevant creditors' meeting. I directed that the liquidators contact those two creditors with a view to obtaining and placing before the court such statement as the creditor might wish to make as to the grounds of its opposition - or so that either creditor might seek leave to be heard upon the liquidators' application if minded to do so. 5 Following such notification, one of the creditors (being a creditor of Alpha (Aust)) wrote to the liquidators stating that it no longer maintained its objection to consolidation. In the other case (being MC World Com Pty Ltd - "MCI" - a creditor of Alpha), the response was that the objection was maintained. A letter of 22 July 2004 from MCI's solicitors to the solicitors for the liquidators read in part as follows: "MCI's reasons for voting against the consolidation are as follows: 1. The administrator has failed to demonstrate that there will be any benefit to MCI or any creditor resulting from the consolidation. In fact, the administrator has stated that 'it is very unlikely that any benefit will result from the consolidation of the winding up of Alpha and Aust unless monies are recovered from investigatory matters' (refer to page 6 of the Report as to Creditors). 2. Further, the administrator has acknowledged that it 'remains possible notwithstanding such recoveries that no benefit from the consolidation will accrue to the creditors of Aust' (refer to page 6 of the Report as to Creditors). 3. Given the estimated realisable value of physical assets available in Aust total $80,040 and in Alpha total $37,226 and the entitlement of employee priority claims are $171,160 and $62,234 respectively, and taking into account the administrator's/liquidator's remuneration and costs, it appears highly unlikely that there could be any benefit to creditors resulting from the consolidation. 4. One of the investigatory matters the administrator refers to as a possible area of recovery of monies is the alleged potentially voidable transaction made by Aust to MCI in the sum of $180,006.50. MCI strongly disputes this claim. 5. It remains unclear to MCI whether the proposed consolidation will result, or is likely to result, in reduced dividend(s) being payable to MCI. 6. Based on the information contained in the Report to Creditors, MCI considers that there is no realistic benefit to creditors generally, or to MCI specifically, in consolidating Aust. and Alpha or even to incur further administrator/liquidator remuneration and costs in dealing with this issue. With no advantage to MCI identified in your client's report(s), or your letters, it does therefore seem open to MCI not to agree to any consolidation. We would expect that comment is uncontroversial. We trust this sufficiently sets out MCI's position, and note that you will tender this letter at the hearing on 26 July 2004." 6 The course in respect of which the liquidators seek the guidance of the court is one that has been recognised in a few cases concerning winding up. It has its origin in - or is a variant of - an approach in bankruptcy under which differentiation between and separate distribution of joint and separate estates might be relaxed where the two were so inextricably blended that it was impracticable to keep them separate. The bankruptcy exception was described thus in an extract from the eleventh edition of Archbold on Bankruptcy (at p.598) quoted by Powell J in Anmi Pty Ltd v Williams [1981] 2 NSWLR 138 at p.164: " Where (the joint and separate) estates are so blended together as to render it impracticable to keep them separate, they may be consolidated; but not where the accounts can be kept distinct, and a single creditor objects ( In re Buliver; Ex p Sheppard (1833) Mon & B 415; 3 Dea & C 190); and even if the creditors at a general meeting agree to consolidate the estates, they will not be consolidated without it is ascertained that the proposed consolidation will be for the benefit of creditors generally ( In re Higton and Breever; Ex p. Strutt (1821) 1 G1 & J29)." 7 Powell J then said: "To this must be added, as a gloss, that the mere fact that proofs may be difficult of investigation or that difficult questions may arise as to whether creditors are joint or separate creditors seems not to be sufficient to bring a case within the exception: Re Kriegel; Waring & Co; Ex parte Trotman (1893) 68 LT 588; 10 Morr 99; Re Sydney Barker & Co (1914) 21 Mans 238." 8 In the context of company winding up, Young J was asked in Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd [1997] 42 NSWLR 209 to sanction an approach to consolidation corresponding with that sought by the liquidators in this case. The circumstances were, in a structural sense, identical with those of the present case in that the applicant was the liquidator of each of two companies in the course of creditors voluntary winding up as a sequel to Part 5.3A administration. At the s.439A meeting of creditors of each company, resolutions had been passed without dissent (a point of distinction from the present case) that the company be wound up and that "combining recoveries, costs and distribution to creditors" of the two companies be approved. It appears that every creditor of each company (except, in each case, the Commissioner of Taxation) was present or represented at the relevant meeting. 9 Young J identified four procedural possibilities for giving effect to such a consolidation, assuming a case for consolidation was established. They were: (a) a scheme of arrangement between each company and its creditors under Part 5.1; (b) a compromise under s.477(1)(c) which is made applicable to voluntary winding up by s.506(1)(b); (c) an arrangement under s.510 between a company in the course of winding up and its creditors; and (d) by resort to the extensive jurisdiction created by s.447A.

To this list might be added the possibility of a deed of company arrangement under Division 10 of Part 5.3A in respect of each company, preceded by appointment of an administrator pursuant to s.436B. 10 In the result, Young J made orders under s.447A in the Hydroponic Solutions case. As to substance (as distinct from procedure) I refer to two aspects of his Honour's judgment. First, he accepted the assessment of the liquidator as to the commingling of assets and liabilities: "The liquidator informs the Court that he has had great difficulties in administering the companies which difficulties have been exacerbated by the death of Mr Levy. It appears from the books and records that the liquidator holds, that Mr Levy was indiscriminate in his ordering process, sometimes using order forms from one company when the stock was to be recorded as an asset of the other company. The affairs of the companies were interdependent. However, theoretically 'Wholesale' operated as a manufacturer, wholesaling to customers including Hydroponics, whilst Hydroponics operated as retailer. Various creditors claimed to be a creditor of one or other of the companies in circumstances not supported by the companies' records. Furthermore, the companies did not operate separate bank accounts." 11 The second aspect of Young J's judgment calling for comment in the present context is an obvious concern about the fact that one creditor (the Commissioner of Taxation, a creditor of both companies) had not expressed any opinion on the pooling proposal. That caused Young J to say: "On the evidence there is only one creditor who did not participate in the resolution and that is the Deputy Commissioner of Taxation. It would be in the spirit of the Corporations Law that the Deputy Commissioner should be notified of the order I propose to make and that the order not be formally taken out until the Deputy Commissioner has an opportunity to acquiesce in the order or to move the Court to discharge it."

There is in the report no record of anything subsequently done by the Commissioner of Taxation. 12 In the later case of Re Charter Travel Co Ltd (1997) 25 ACSR 337, Young J referred to his decision in Soluble Solutions as follows: "As I indicated in my judgment in Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 24 ACSR 79, administration of two companies in insolvency conjointly is something that can occur only in exceptional cases. As I said at 85, this normally means a scheme of arrangement, but if no creditor objects and it is impracticable to keep the assets and liabilities of different companies separate, and the consolidation is for the benefit of creditors generally, then the court might advise the liquidators concerned that they would be justified in consolidating the administration." 13 The advice his Honour considered the court might give was said to be available, if at all, where "no creditor objects". The Charter Travel case itself involved only an application for directions as to the convening of creditors' meetings to consider the possibility of consolidation or pooling in two windings up. 14 In Mentha v GE Capital Ltd (1997) 27 ACSR 696, Finkelstein J acknowledged that pooling of assets and liabilities might, in some insolvencies, be "both just and equitable if not essential": "Take for example the case of a group of companies where the assets have been so intermingled that their separation is practically impossible. In bankruptcy where estates are inextricably blended as to render it impracticable to keep them distinct the court has power to order the estates to be administered in consolidation: see Anmi Pty Ltd v Williams [1981] 2 NSWLR 138 ; (1981) 52 FLR 309. One day it will be necessary to determine to what extent, if at all, a court can make a similar order in the case of insolvent companies: in Re Charter Travel Co Ltd (1997) 25 ACSR 337 Young J expressed the obiter opinion that such an order could be made. There is no doubt that "pooling" is permitted in a scheme of arrangement approved by the court under s 411 of the Corporations Law . That section enables the court to approve any arrangement between a company and its creditors which could be agreed between them: see Re Guardian Assurance Co [1917] 1 Ch 431; Re International Harvester Co of Australia Pty Ltd [1953] VLR 669; ASC v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 500-11; 112 ALR 627. Schemes of arrangement which have consolidated assets and creditors have been approved under this provision or the equivalent provision in the United Kingdom: see for example Re Trix Ltd; Re Ewart Holdings Ltd [1970] 3 All ER 397; Re Bank of Credit and Commerce International SA (No 3) [1993] BCLC 1490 and see generally Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 24 ACSR 79; 15 ACLC 833. In my opinion the power to enter into a deed of company arrangement under Pt 5.3A is sufficiently broad to permit an arrangement binding on two or more insolvent companies pursuant to which their respective assets and creditors will be consolidated. There is no justification for a construction of this part of the Corporations Law that would lead to the conclusion that arrangements made pursuant to Pt 5.3A must be more narrowly confined than arrangements made under s 411." 15 Subsequently, in Re Switch Telecommunications Pty Ltd; Ex parte Sherman (2000) 35 ACSR 172, Santow J had occasion to comment on ways in which pooling might be achieved if found to be necessary or desirable. He referred to the s.447A possibility (the case being one, as here, of creditors voluntary winding up following on from Part 5.3A administration) coupled with ss.477(1)(c), 477(2A) and 479(3). Another possibility identified was resort to s.510. In the result, his Honour resorted to s.510, with assistance from ss.1322(4) and 477(2A). 16 An alternative approach was taken in Re ACN 004 987 866 Pty Ltd (2003) 21 ACLC 1474. The deed of company arrangement process made available by Part 5.3A was held by Goldberg J to be an appropriate means by which two companies in voluntary administration might pool assets and liabilities for the purposes of what was a compromise or arrangement founded upon deeds of company arrangement entered into by both companies. 17 Reference should also be made to the decision of the English Court of Appeal in Re Bank of Credit and Commerce International SA (No 2) [1992] BCC 715. The Court of Appeal affirmed a decision at first instance approving the making by a liquidator of "pooling agreements" the effect of which was to depart from the pari passu rule applicable in a winding up. A significant factor, in my view, is that the agreements could not be effective except among the parties to them and that the decision was, in effect, that the liquidator's power under items 2 and 3 of Schedule 4 to the Insolvency Act 1986 (UK) (in terms similar to those of ss.477(1)(c) and (d) of the Corporations Act 2001 (Cth), although with a requirement for approval by the court or the creditors' committee) was sufficient to support the particular inter-partes arrangements; also that those arrangements warranted the kind of court approval without which the particular powers of the liquidator could not be exercised. As I read that decision, the rights of non-contracting parties were not altered. 18 The first principle to be applied to the case before me is, in my opinion, that the court has no power to sanction or recognise departure by the liquidators from the pari passu rule in s.556 of the Corporations Act, as it applies separately in the winding up of each relevant company, except insofar as some express statutory warrant to do so is found. In the circumstances as they presently stand, the liquidators have not taken procedural steps with a view to attracting the operation of any of the provisions by which the views of a majority of creditors may bind a non-assenting minority. In particular, there has been no resort to the scheme of arrangement procedure under Part 5.1 by way of application to the court under s.411(1), no special resolution of members and resolution of creditors as envisaged by s.510 and no attempt to have each company re-enter Part 5.3A administration and become party to an appropriate deed of company arrangement. Nor has there been any move to create with any creditor or creditors a "compromise" in exercise of the liquidators' powers under s.477(1)(c) and (d). 19 It is important to emphasise one thing about the lastmentioned possibility. Sections 477(1)(c) and (d) are concerned with the form of compromise by which a particular creditor or particular creditors agree to a particular regime with respect to their debts alone. The provisions do not entail any ability for a majority to bind a minority. In the Companies Act 1862 (UK), the general equivalents of today's ss.477(1)(c) and (d) were ss.159 and 160. Those provisions were supplemented eight years later by s.2 of the Joint Stock Companies Arrangement Act 1870 (UK) the effect of which was to cause to be binding on creditors (or a class of creditors), as well as the liquidator and contributories, any compromise or arrangement proposed between a company in the course of winding up and it creditors (or the class) and approved both by a majority in number (representing at least 75% by value) of the relevant creditors voting on the matter and by the court. This 1870 provision was the forerunner of the present Part 5.1. 20 The effect of the provisions as they existed in 1871 was described by Sir W M James LJ in In Re Albert Life Assurance Co (1871) LR 6 Ch App 381: "The 159th and 160th sections seem to me to provide that a company by its official liquidators, with the sanction of the Court, is to have exactly the same power of compromising both with its creditors and its debtors as an individual would have. It has the power of saying to any class of creditors, 'If you will take so much less than your claim, we will pay you that without raising any question'. And it has a right to say to the contributories who are the companies' debtors as to unpaid calls, 'Pay us so much of your debt, and we will put an end to all questions between us'. But that is a compromise, in the one case, between the company and its creditors who choose to accept it, and in the other between the company and its debtors who choose to accept it. There is nothing in the Act which enables one creditor to bind another creditor to accept a compromise, or which enables one debtor to bind another debtor with respect to paying a composition. And that was the difficulty which was felt when the Act of last session, the Joint Stock Companies Arrangement Act , 1870, was passed, which I cannot help thinking was passed with a view to this and other companies which were being wound up. That Act says that there shall be a power in the majority to bind the minority. But that majority must be a majority of creditors of each company which is compromising, and in order to enable the majority to bind the minority the Court must be satisfied that there is a meeting of creditors the amount of whose debts can be estimated, and that there are three-fourths of the creditors who have assented, before it will interfere to enforce that which the large majority think the most beneficial way for them to get their claims satisfied - merely applying to a winding-up in this Court the same principles as are applied in Bankruptcy to dealings between a bankrupt and his creditors." 21 This analysis - coupled with the enactment of the 1870 legislation - must, in my opinion, make unreliable earlier cases in which ss.159 and 160 of the 1862 Act (present ss.477(1)(c) and (d)) were seen as possessing some compelling force as against non-assenting creditors: eg, Bank of Hindustan, China & Japan Ltd v Eastern Financial Association Ltd (1869) LR 2 PC 489, Re Commercial Bank Corporation of India and The East (1869) LR 8 Eq 241. To the extent that there are, in some of the modern cases, suggestions that ss.477(1)(c) and (d) may facilitate compromise of the claims of persons who do not actually assent to the compromise, there is, in my view, an attempt to afford to those provisions an operation they are incapable of having. 22 In view of what is said at paragraph [18] above, it remains to consider whether s.447A might be used to achieve the result the liquidators seek and, if so, whether a case has been shown for the making of orders under that section. 23 As to the abstract capacity of s.447A, the fact that this winding up is a creditors voluntary winding up resulting from s.446A, in consequence of Part 5.3A administration, means that the comprehensive jurisdiction created by s.447A (see Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270) is available to alter statutory incidents of the winding up: see Gibbons v Liberty One Ltd (2002) 41 ACSR 442, Application of Walker [2002] NSWSC 705, Re One.Tel Ltd (2002) 43 ACSR 305, Re Centaur Mining & Exploration Ltd (2003) 48 ACSR 1. The alteration might be effected by modifying the way in which s.446A itself (being a provision within Part 5.3A) is to apply in the particular case. 24 The cases to which I have just referred also show a willingness of courts to alter the operation of Part 5.3A provisions so as to remove the need for certain procedural steps where the ends to which those steps are directed have already been met in other ways. 25 Should s.447A be employed to alter the operation of s.446A in this case? There is, in my view, a sound basis for giving a positive answer to this question. Those creditors of Alpha who saw fit to express an opinion on the consolidation proposal at the forum created by the liquidators (then administrators) were unanimous in favouring the proposal. But for the dissent of MCI, the position in relation to creditors of Alpha (Aust) was the same. To that extent, there has been action and assent generally of the kind contemplated by s.510(1)(b), in that a resolution of creditors of each company has approved the pooling proposal. 26 There are, however, other elements to s.510 and, if a case for s.447A relief is to be made by analogy with s.510, it becomes necessary to address those elements. The first is that specified in s.510(1)(a). It involves a special resolution of members. There has been no such resolution in this case. The second element is the right of a creditor or contributory to appal to the court in respect of the arrangement: s.510(4). 27 At creditor level, a protection similar to that envisaged by s.510(4) has been secured by the procedure under which the dissenting creditor was given an opportunity either to have a statement of the grounds of dissent placed before the court or to come to court and state those grounds. MCI availed itself of this opportunity by having the liquidators communicate to the court the content of the letter of 22 July 2004 set out at paragraph [5] above. 28 As far as concerns procedural steps in substance the equivalent of those contemplated by s.510, the position is thus that a special resolution as envisaged by s.510(1)(a) is lacking and it is appropriate to regard MCI, as a creditor of Alpha, as having exercised the "appeal" right provided for in s.510(4). The first of these matters may be dealt with by including as an element of the modified operation of s.446A a requirement for the unanimous assent of the contributories. I say it should be unanimous, even though s.510(1)(a) contemplates only a special resolution, because any dissent would open up the possible need to accommodate the dissenting contributory in the way envisaged by s.510(4) and I have reservations about employing s.447A to confer jurisdiction on a court, even by analogy with existing provisions. 29 It remains to consider the MCI dissent and objection. If this were a case in which the court was considering an appeal by MCI under s.510(4), its function, it seems to me, would be to approach the matter in the same way as a creditor's objection to the approval of a Part 5.1 scheme of arrangement is to be approached. The nature of that task was described by Adam J in Re Chevron (Sydney) Ltd [1963] VR 249 as follows: "The function of the court in determining whether a compromise or arrangement should be sanctioned by the court under legislation corresponding to s90 of the Companies Act 1958 was fully discussed by Maugham, J, in Re Dorman, Long and Co Ltd ., [1934] 1 Ch 635; [1933] All ER Rep 460. At p. 655 he said: 'It is plain that the duties of the Court are twofold. The first is to see that the resolutions are passed by the statutory majority in value and number in accordance with s153(2), [our s90(2)] at a meeting or meetings duly convened and held. Upon that depends the jurisdiction of the Court to confirm the scheme. The other duty is in the nature of a discretionary power...'. In relation to this other duty Maugham, J, after reviewing the leading cases of Re Alabama New Orleans Texas and Pacific Junction Rly Co , [1891] 1 Ch 213, and in Re English Scottish and Australian Chartered Bank , [1893] 3 Ch 385, adopted as a guide to the court in exercising its discretion the following observation of Lindley, Bowen and Fry, LJJ, in the foregoing cases:--

From Bowen, LJ, in the Alabama Case at p. 243: 'A reasonable compromise must be a compromise which can, by reasonable people conversant with the subject, be regarded at beneficial to those on both sides who are making it.... I have no doubt at all that it would be improper for the Court to allow an arrangement to be forced on any class of creditors, if the arrangement cannot reasonably be supposed by sensible business people to be for the benefit of that class as such...'; and per Fry, LJ, at p. 247, in the same case: '...the Court...must be satisfied that the proposal was at least so far fair and reasonable, as that an intelligent and honest man, who is a member of that class, and acting alone in respect of his interest as such a member might approve of it'. From the English, Scottish and Australian Chartered Bank Case he referred to the following statement by Lindley, LJ, at p. 409: 'If the creditors are acting on sufficient information and with time to consider what they are about, and are acting honestly, they are, I apprehend, much better judges of what is to their commercial advantage than the court can be.... While, therefore, I protest that we are not to register their decisions, but to see that they have been properly convened and have been properly consulted, and have considered the matter from a proper point of view ...the Court ought to be slow to differ from them.' See too Re AW Allen Ltd , [1930] VLR 251." 30 Consistently with that approach, I should, in proceeding by analogy with s.510(4), consider the strength, in comparative financial terms, of MCI's opposition, whether creditors were proceeding on the basis of sufficient information and whether the views of the approving majority were, in a rational sense, consistent with the interests of the creditors as a whole. 31 MCI's claim against Alpha (Aust) is in the sum of $47,543.76. The aggregate claims of all unsecured creditors are $919,755.00, exclusive of employee claims of $171,160.00. MCI's claim therefore represents about 4.36% of total unsecured claims of $1,090,915.00. At the meeting of creditors of MCI held on 12 July 2004, votes were tendered by four creditors, including MCI. The other three voted in favour of the consolidation proposal. The aggregate claims of those voting in favour were $71,216.80, compared with MCI's $47,543.76. Positive votes therefore represented 75% by number of creditors and 60% by value of the claims of creditors voting. Having regard to the principles as to creditor voting in s.510 and the absence of any special requirement as to voting majority for a resolution under s.510(1)(b) (in contradistinction to s.510(1)(a)), it can be said that the level and mode of creditor approval envisaged by s.510(1)(b) were manifested. 32 As to whether the creditors were proceeding on the basis of sufficient information, regard may be had immediately to the criticisms or complaints of MCI as set out at paragraph [5] above. The information and explanations given by the administrators were obviously of such a quality as to make MCI doubt whether consolidation would, in the long run, produce benefits for creditors. There can therefore be no suggestion that the material submitted to creditors had the capacity to slant their thinking unduly in favour of the proposal. The conclusions MCI drew should, in my view, be taken to be indicative of an opportunity of the creditors who cast positive votes to form, in an informed way, similarly negative opinions on the material given to them. They did not form such negative opinions. 33 This last observation, it seems to me, is also relevant to the question whether the views of the approving majority were, in a rational sense, consistent with the interests of creditors as a whole. There is no suggestion in the evidence that the three creditors other than MCI who favoured the consolidation proposal at the Alpha (Aust) meeting on 12 July 2004 had any interest in the winding up otherwise than as unsecured creditors. MCI, on the other hand, is, as its own objections make clear (see paragraph [5] above), a possible or potential target of recovery proceedings in the winding up of the other company, Alpha. That, plus the fact that MCI is a creditor of Alpha as well as Alpha (Aust), means that objections by MCI directed towards non-consolidation of assets and liabilities in the windings up may well be motivated by considerations affecting MCI that do not also affect the creditors who favoured the consolidation proposal at the meeting of creditors of Alpha (Aust). 34 The circumstances in which the consolidation proposal was put before creditors of Alpha (Aust) and voted upon by them were, in my judgment, such as to justify a conclusion that the majority vote (both by number and value) in favour ought be recognised as a properly informed expression of the will of the creditors reflective of the interests of the general body of creditors. The elements contemplated by s.510(1)(b) and (4) may therefore be taken to be satisfied by analogy. 35 A case has been made out for relief under s.447A causing the consolidation proposal to have the effect in relation to each company that it would have achieved if subjected to the s.510 procedures, subject, in the case of each company, to the liquidators having first received unanimous assent of the contributories. 36 The orders of the court are as follows: 1. Order pursuant to s.447A of the Corporations Act 2001 (Cth) that Part 5.3A of that Act is to have effect in relation to ACN 099 627 362 Pty Limited as if s.446A were modified by inserting the following sub-section (2A) immediately after sub-section (2) thereof: "(2A) If the liquidator receives (a) the written consent of every member of the company to the implementation of the resolution with respect to consolidation of the assets and liabilities of the company and those of Alpha Telecom (Aust) Pty Limited ACN 108 802 991 and conduct of the windings up of the company and the said Alpha Telecom (Aust) Pty Limited as if they were the winding up of a single company (being the resolution passed at a meeting of creditors of the company on 30 June 2004); and (b) the written consent of every member of the said Alpha Telecom (Aust) Pty Limited to the implementation of a corresponding resolution of creditors of that company the terms of the firstmentioned resolution shall be taken to be the terms of an arrangement entered into between the company and its creditors as mentioned in subsection 510(1) and neither subsection 510(1A) nor subsection 510(4) shall apply to or in relation to the arrangement."

2. Order pursuant to s.447A of the Corporations Act 2001 (Cth) that Part 5.3A of that Act is to have effect in relation to Alpha Telecom (Aust) Pty Limited as if s.446A were modified by inserting the following sub-section (2A) immediately after sub-section (2) thereof: "(2A) If the liquidator receives (a) the written consent of every member of the company to the implementation of the resolution with respect to consolidation of the assets and liabilities of the company and those of ACN 099 627 362 Pty Limited ACN 099 627 362 and conduct of the windings up of the company and the said ACN 099 627 362 Pty Limited as if they were the winding up of a single company (being the resolution passed at a meeting of creditors of the company on 30 June 2004); and (b) the written consent of every member of the said ACN 099 627 362 Pty Limited to the implementation of a corresponding resolution of creditors of that company the terms of the firstmentioned resolution shall be taken to be the terms of an arrangement entered into between the company and its creditors as mentioned in subsection 510(1) and neither subsection 510(1A) nor subsection 510(4) shall apply to or in relation to the arrangement." **********

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