Australasian Memory Pty Ltd v Brien

1. Pursuant to s 444GA(1)(b) of the Corporations Act 2001 (Cth), Mr Jarrod Villani and Mr Robert Hutson of KordaMentha in their capacities as the joint and several deed administrators of Black Oak (Deed Administrators), have leave to transfer all of the issued shares held by each of the members in Black Oak Minerals Ltd (Subject to Deed of Company Arrangement) (in liq) (ACN 124 374 321) (Black Oak) to Ramelius Operations Pty Ltd (ACN 621 626 391) (Ramelius).
2. Pursuant to s 447A of the Corporations Act and s 90-15(1) of Schedule 2 of the Corporations Act the Deed Administrators have leave to execute all necessary share transfer forms and other documents ancillary to the relevant share transfers and the entry of the name of Ramelius in Black Oak's share register.
3. Pursuant to s 90-15 of Schedule 2 of the Corporations Act the liquidation of Black Oak be terminated on 7 February 2019.
4. The Deed Administrators have liberty to apply.
5. The costs of and incidental to this proceeding be paid out of the assets of Black Oak. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BANKS-SMITH J: 1 The plaintiff, Richard Tucker, is one of three deed administrators (Deed Administrators) of a deed of company arrangement (DOCA) entered into between Black Oak Minerals Ltd (Subject to Deed of Company Arrangement) (in liq) (Black Oak) and its creditors. 2 The DOCA was entered into at a time when the company was in liquidation, and was entered into for the purpose of facilitating a sale of one of its key assets to Ramelius Operations Pty Ltd (Ramelius). That asset is known as the Marda Gold Project. 3 It was a term of the sale that all the shares in Black Oak would be transferred from the shareholders to Ramelius. Under the Corporations Act 2001 (Cth) (Act), shares in a company may be transferred by a deed administrator with either the written consent of each shareholder or the leave of the court. 4 Accordingly, Mr Tucker seeks leave on behalf of the Deed Administrators to transfer all the shares in Black Oak to Ramelius, and for orders to then terminate the liquidation of Black Oak. 5 The application first came before Colvin J for a case management hearing. At that hearing, his Honour raised several matters for further consideration by Mr Tucker. I will deal with those below but I consider that Mr Tucker adequately addressed those matters prior to the hearing before me. 6 On 31 January 2019 I heard the application and granted the orders sought by Mr Tucker. These are the reasons for those orders.

Provisions of Act relied upon 7 The application is brought under s 444GA(1)(b), s 447A and s 482 of the Act and div 90-15 of Schedule 2 of the Act - Insolvency Practice Schedule (IPS). The relevant sections are set out in full below.

Background 8 On 27 November 2015 Mr Jarrod Villani, Mr Robert Hutson and Mr David Winterbottom were appointed as voluntary administrators of Black Oak (First Administrators) pursuant to s 436A of the Act. The causes of insolvency were identified as a decrease in the volume and grade of the interpreted high mineralisation of gold reserves at Mount Boppy Gold Mine, additional costs associated with the processing of gold at that mine, and delays in the production of gold. This led to a lack of working capital required to continue Black Oak's operations. 9 At that time, Black Oak owed its secured creditor, Trailstone Netherlands I Coöperatief U.A. (Trailstone) almost $30 million. Trailstone appointed receivers and managers to Black Oak (Receivers) immediately following the appointment of the administrators. 10 On 23 December 2015 the First Administrators issued their report to creditors under s 439A of the Act. That report did not propose a deed of company arrangement and instead recommended that Black Oak's creditors resolve to wind it up. This recommendation was echoed by a supplementary report issued to creditors on 8 March 2016. 11 On 15 March 2016 a meeting of creditors was held. At that meeting the creditors unanimously resolved that Black Oak be wound up pursuant to s 439C of the Act and that the First Administrators be appointed as the joint and several liquidators of Black Oak. I note that on 30 August 2017 Mr Winterbottom retired as a joint and several liquidator of Black Oak. Mr Villani and Mr Hutson continued as liquidators (Liquidators). 12 Between November 2015 and July 2018 the Receivers realised substantially all of the assets of Black Oak that were subject to the security in favour of Trailstone. The sale of these assets resulted in realisations of approximately $11 million, with some $2.370 million flowing to Trailstone. 13 Despite their efforts, the Receivers were unable to realise the Marda Gold Project. On 2 July 2018 they started a new sale campaign, but at the end of July 2018 they retired from their position as a result of a conflict of interest. 14 The Liquidators stepped in to complete the sale process, receiving seven final offers by August 2018. The Liquidators formed the view that the superior offer was that made by the parent company of Ramelius, being Ramelius Resources Limited (RRL). In reaching this view, the Liquidators considered the quantum of the offer, the level of conditionality, the proposed acquisition structure and the acquirer's capacity to complete the transaction. 15 On 12 September 2018 the Liquidators signed a binding 'Exclusivity and Implementation Deed' with RRL for the proposed acquisition of the Marda Gold Project (Ramelius Proposal). 16 Pursuant to the Ramelius Proposal, the acquisition of the Marda Gold Project was to be facilitated through a proposed DOCA which would result in Ramelius acquiring 100% of the issued shares in Black Oak and all debts owed by Black Oak being compromised and released. 17 The key terms of the proposed DOCA under the Ramelius Proposal were that the total consideration was $13 million, with a deposit of $2 million. Trailstone would then facilitate a gift of $200,000 to be paid to a creditors' trust for the benefit of the unsecured creditors. Priority unsecured creditors (such as those with priority employee entitlements for wages and leave entitlements) would likely absorb all distributions from that trust fund. There would be no return to unsecured creditors in a liquidation scenario. 18 In summary, the DOCA provides for a small return to unsecured creditors as part of the creditors' trust which would not otherwise be available in a sale involving the direct transfer of the Marda Gold Project, because all proceeds of such a sale would ordinarily go to Trailstone as the secured creditor. Mr Tucker's evidence is that Trailstone supports the Ramelius Proposal. 19 On 13 September 2018 Ramelius paid the $2 million deposit to the Liquidators as required by the Exclusivity and Implementation Deed. Of that sum, $500,000 is non-refundable and so available to pay the costs of, amongst other things, this application. 20 On 3 October 2018 the Liquidators commissioned a valuation report from PCF Capital Group in relation to the Marda Gold Project. The authors of the report considered the Marda Gold Project to be worth between $4 million and $6 million, with a preferred value of $5 million. 21 On 5 October 2018 Mr Tucker, Mr Villani and Mr Hutson (Second Administrators) were appointed administrators of Black Oak pursuant to leave granted by this Court under s 436B(2)(g) of the Act. In granting that leave, this Court ordered that the Second Administrators' report under r 75-225 of the Insolvency Practice Rules (Corporations) 2016 (Cth) should contain details of the Ramelius Proposal and the information necessary to compare the outcomes of the Ramelius Proposal to other likely outcomes for the creditors if the Ramelius Proposal did not proceed. 22 On 23 October 2018 the Second Administrators released their report pursuant to r 75-225. The report also gave notice of the meeting of Black Oak's creditors to be held on 31 October 2018. 23 At the meeting of 31 October 2018, the creditors voted in favour of the proposed DOCA and the resolution was passed. The only creditor who voted against the DOCA was the Commonwealth Department of Jobs and Small Business in its role as administrator of the Fair Entitlements Guarantee Scheme (FEG). FEG asserted a belief that there may be assets subject to circulating security interests which, if recovered, may provide a better return to FEG than the Ramelius Proposal. 24 The DOCA was executed on 8 November 2018. 25 In December 2018 KordaMentha also prepared an Independent Expert Report (IER) which valued the assets of Black Oak between $4.3 million (low case) and $15.5 million (high case). 26 This application was filed in December 2018. Mr Tucker deposed to the fact that at that time Black Oak remained insolvent, with a secured debt owed to Trailstone of approximately $28 million, other debts outstanding to Trailstone and to unsecured creditors of approximately $10 million, and with no cash reserves or liquid assets to discharge its liabilities. 27 Notice of the application to this Court was sent to shareholders of Black Oak on 11 December 2018, and notices were published in The Australian and Australian Financial Review newspapers throughout December 2018 and January 2019. An Explanatory Statement was released on KordaMentha's website on 21 December 2018 (each of Mr Tucker, Mr Villani and Mr Hutson work at KordaMentha). The notice was also published on the KordaMentha website on 24 January 2019, and in the Australian Securities and Investment Commission (ASIC) Business Gazette on 29 January 2019 (I will return to the issue of notice). 28 ASIC was also on notice of the hearing but did not wish to be heard (I will also return to communications with ASIC). There was no representative from FEG at the hearing. No shareholders attended the hearing.

Issues 29 Three issues fell to be determined in this case: (1) Should this Court grant leave to transfer shares under s 444GA? (2) Should orders be made pursuant to s 447A of the Act granting leave for the Administrators to execute all necessary share transfers and enter the name of Ramelius in Black Oak's share register? (3) Should the winding up of Black Oak be terminated pursuant to div 90-15 of the IPS?

Transfer of shares - principles 30 Section 444GA of the Act provides as follows: Transfer of shares (1) The administrator of a deed of company arrangement may transfer shares in the company if the administrator has obtained: (a) the written consent of the owner of the shares; or (b) the leave of the Court. (2) A person is not entitled to oppose an application for leave under subsection (1) unless the person is: (a) a member of the company; or (b) a creditor of the company; or (c) any other interested person; or (d) ASIC. (3) The Court may only give leave under subsection (1) if it is satisfied that the transfer would not unfairly prejudice the interests of members of the company. 31 Applicable legal authorities and principles were set out by Black J in In the matter of Paladin Energy Limited (subject to Deed of Company Arrangement) [2018] NSWSC 11 at [28]-[35], and the following four paragraphs reflect his Honour's summary. 32 As noted in the Explanatory Memorandum to the Corporations Amendment (Insolvency) Bill 2007 (Cth), the requirement that the transfer not unfairly prejudice shareholders is intended to direct the Court to consider the impact of a compulsory sale on shareholders where there may be some residual value in the company. 33 As Martin CJ noted in Weaver v Noble Resources Ltd [2010] WASC 182; (2010) 41 WAR 301: [79] … [t]he notion of unfairness only arises if prejudice is established. If the shares have no value, if the company has no residual value to the members and if the members would be unlikely to receive any distribution in the event of a liquidation, and if liquidation is the only alternative to the transfer proposed, then it is difficult to see how members could in those circumstances suffer any prejudice, let alone prejudice that could be described as unfair. … [80] … So, something more would have to be established before it could said that unfair prejudice to the members of the company could arise. 34 As White J explained in Lewis, in the matter of Diverse Barrel Solutions Pty Ltd (Subject to a Deed of Company Arrangement) [2014] FCA 53 at [19]: Whether or not 'unfair prejudice' will result from a transfer of the shares is to be determined having regard to all the circumstances of the case and to the policy of the legislation. Relevant matters would seem to include whether the shares have any residual value which may be lost to the existing shareholders if the leave is granted; whether there is a prospect of the shares obtaining some value within a reasonable time; the steps or measures necessary before the prospect of the shares attaining some value may be realised; and the attitude of the existing shareholders to providing the means by which the shares may obtain some value or by which the company may continue in existence. A relevant comparison will be between the position of the shareholders if the proposal does not proceed and their position if leave to transfer shares is granted. 35 According to Re Nexus Energy Ltd (Subject to Deed of Company Arrangement) [2014] NSWSC 1910; (2015) 105 ACSR 246 at [27] (Black J), there is an evidentiary onus on the shareholders to raise any consideration telling against the exercise of the discretion, but the ultimate onus of satisfying the court that the discretion should be extended remains on the Deed Administrators. This requires that the Administrators prove that the transfer would not unfairly prejudice the interests of the company. 36 I also note that in Re BCD Resources NL (Subject to Deed of Company Arrangement) [2018] NSWSC 1605, Parker J held at [11] that it was a relevant consideration that a full and accurate description of the proposal has been given to shareholders and they have been given full opportunity to appear on the application. 37 Further, in Shepard, in the matter of Quest Minerals Limited v Mutual Holdings Pty Limited [2016] FCA 1559 (McKerracher J), the defendant shareholders argued that the transfer of shares was only in the interests of creditors and the scheme proponents, and not in the interests of the members of the company, because potential claims against the company's past and present directors had not been considered. McKerracher J found that, subject to analysis of other potential prejudice asserted by the defendants, leave should be granted on the basis of the established principles surrounding the lack of any residual value in the shares if leave was not granted. 38 Section 447A of the Act is relevant to the relief claimed relating to the execution of transfers and the entry of Ramelius' name on the Black Oak share register. It provides, relevantly: General power to make orders (1) The Court may make such order as it thinks appropriate about how [Part 5.3A] is to operate in relation to a particular company. … (3) An order may be made subject to conditions. (4) An order may be made on the application of: (a) the company; or … (d) in the case of a company that has executed a deed of company arrangement - the deed's administrator; or … 39 The Court's powers under this section have been described as 'plenary powers to do whatever it thinks is just in all the circumstances', but the Court must bear in mind the rights of the various groups of people affected: Cawthorn v Keira Constructions Pty Ltd (1994) 13 ACSR 334 at 341 (Young J). In Australasian Memory Pty Ltd v Brien [2000] HCA 30; (2000) 200 CLR 270 at [17], the High Court (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ) noted that the section is not confined to cases where it is necessary to cure defects or to remedy the consequences of some departure from the scheme set out in the other provisions of Pt 5.3A, and that there is no cogent reason to read down the application of s 447A. 40 Orders of the kind sought by Mr Tucker have previously made pursuant to s 447A in Paladin Energy Limited, Re BCD Resources NL and In the Matter of OrotonGroup Limited (Subject to Deed of Company Arrangement) ACN 000 038 675; Application of Strawbridge and Kanevsky [2018] NSWSC 1213 (White J). 41 Taking into account those principles, it is clear that the Court has the power to make the orders sought by Mr Tucker, but the main issue remains a consideration of whether there is any unfair prejudice to the members of Black Oak.

Leave for transfer of shares 42 The Deed Administrators formed the opinion that it was in the best interests of the creditors of Black Oak to implement the Ramelius Proposal. Mr Tucker deposed to that opinion having been formed on the basis of the following reasons: (a) if the Ramelius Proposal is not implemented, the only alternative scenario is the return of Black Oak to the control of the Liquidators; (b) the Ramelius Proposal does not account for all outstanding debts owed to the creditors (including the secured creditor and employees); (c) however, all creditors would receive less in a winding up than under the Ramelius Proposal; (d) shareholders will receive nothing under the Ramelius Proposal and in a winding up; (e) the shareholders no longer have an economic interest in Black Oak; and (f) shareholders are in no worse position under the Ramelius Proposal than if Black Oak was returned to the control of the Liquidators. 43 There were also six specific matters addressed by counsel relevant to the application.

(1) Notice to shareholders 44 Notice of this application was sent to the shareholders of Black Oak on 11 December 2018. The notice informed the shareholders of this application and informed them that the date of the hearing would be advertised on KordaMentha's website when known. Mr Tucker disclosed that there were some errors in the notice. The date of publication of the originating process and the Explanatory Statement were incorrect. The Court file number was incorrect. However, the Explanatory Statement and notice were then uploaded and released on the KordaMentha website on 21 December 2018 and the documents stated the date and time of the first hearing (before Colvin J). 45 Prior to the first hearing, copies of the notice were published in The Australian and the Australian Financial Review newspapers on 28 December 2018, 2 January 2019, 7 January 2019, and 9 January 2019. The notice stated that shareholders had the ability to make submissions at the hearing on 23 January 2019. 46 Following the first hearing, further notices were published on the KordaMentha website, in the ASIC Business Gazette, and in The Australian and in The Australian Financial Review newspapers. Each of these notices set out the date of the final hearing on 31 January 2019. 47 The Deed Administrators received some 19 queries from shareholders. The queries included requesting advice on the number of Black Oak shares held by the particular shareholder, seeking further explanation of the Ramelius Proposal, requests for formal advice that the shareholder would receive no consideration for the shares to assist with tax claims and requests for hard copy documents. Apart from one email, which expressed some anger at the process but did not otherwise object to the orders sought or express an intention to attend at the hearing, no complaints or objections were received from shareholders or others in respect of the Ramelius Proposal or this application. 48 I note that Colvin J had suggested to the Deed Administrators that shareholders should also be notified of the date of this hearing by notice uploaded to the ASIC portal. Mr Tucker deposed to having made inquiries, but said that ASIC had informed him that it was not possible to upload the notice of the hearing. 49 Mr Tucker submitted that the shareholders have been given a full and accurate description of the Ramelius Proposal, and full opportunity to appear on the application, by virtue of the notices and their subsequent publication on the KordaMentha website and ASIC Business Gazette, the Explanatory Statement, and by the various newspaper advertisements. It also submitted that whilst there were a number of responses from shareholders, no complaints or objections were made. 50 I accept that sufficient opportunity was given to the shareholders to make any submissions and be heard with respect to this application. I do not consider the errors in the original notice were such as to confuse or mislead shareholders when viewed in light of the other efforts made to notify the shareholders of this application. The errors were minor and the fact that quite a number of shareholders in fact contacted the Deed Administrators suggests that the shareholders were well aware of who to contact if they had any concerns.

(2) Communications with ASIC 51 Mr Tucker also submitted that engagement with ASIC had been extensive. One reason for this is that the Deed Administrators sought and obtained relief from ASIC from the operation of s 606 of the Act (prohibition on acquisition of relevant interest in voting shares). The Deed Administrators provided the amended draft Explanatory Statement and IER to ASIC, and also served the application and principal accompanying affidavit. ASIC was also informed (as it had requested) that that there were no shareholder objections. 52 On 22 January 2019 ASIC provided in principle relief in response to the Deed Administrators' application relating to s 606 of the Act. ASIC was also informed of the date of this hearing. ASIC had previously indicated to the Deed Administrators that it did not consider there was any reason why the relief sought by this application could not be granted, and, as already noted, it did not appear at the hearing. 53 Whilst ASIC's position is not binding (and nor did ASIC purport to make submissions as such), I was greatly assisted by seeing copies of the ASIC communications. I am also satisfied that ASIC had the opportunity to raise any concerns of principle that it considered arose on the application.

(3) No cause to impugn Trailstone securities 54 Mr Tucker deposed to inquiries undertaken by the Liquidators as to the validity of the security granted in favour of Trailstone. This was another matter Colvin J had suggested ought to be addressed in the supporting evidence. Mr Tucker provided evidence of a PPSR search showing that Trailstone's security interest has had the benefit of continued perfection since its registration on 24 September 2014, and copies of the various mining mortgages granted by Black Oak in favour of Trailstone which had been stamped and registered on the appropriate register. He deposed that, having made inquiries of the Liquidators and having reviewed the books of the liquidation, neither he nor the Liquidators were aware of any challenge to the primacy or legitimacy of the security granted in favour of Trailstone. 55 Mr Tucker said that the Liquidators had formed the view that the securities appeared valid and not open to being impugned by them. Further, even absent security, the underlying debt to Trailstone was so significant that it would present an insurmountable barrier to the restoration of any value to the shares. 56 I am satisfied on the basis of Mr Tucker's evidence that due inquiries have been undertaken with respect to the securities and nothing has been uncovered which suggests those securities might be impugned.

(4) Current and future residual value of shares 57 Mr Tucker submitted that there is no possibility of unfair prejudice to the shareholders as the shares have no residual value, having regard to Black Oak's approximately $39 million of liabilities, at least $28 million of which is owed to Trailstone. 58 Having regard to the PCF Capital Group valuation report and the IER, Mr Tucker submitted that the high case of the Marda Gold Project valuation is $14 million and having regard to its debt levels, there is no scenario where any value could be returned to the shareholders of Black Oak on the basis of current valuations. 59 However, as raised by counsel for Mr Tucker during the hearing, the high case valuation wrongly assumed that certain gold reserves were still owned by Black Oak. If those reserves were disregarded, Mr Tucker contended that the correct valuation of the Marda Gold Project was between $4.1 million and $6.1 million. 60 Counsel submitted that in any event, even if the high case valuation were accepted as accurate, the high point valuation would still have left a very substantial deficit between Black Oak's assets and its liabilities. 61 Mr Tucker also deposed to an absence of any knowledge of circumstances that would result in a substantial increase in the value of Black Oak's assets. 62 Taking into account the valuation evidence and evidence of Black Oak's level of indebtedness, I accept Mr Tucker's submission that there is no real prospect of there being residual value in the Black Oak shares for its shareholders.

(5) Issue raised by FEG as to other circulating assets 63 Having raised it, FEG did not then seek to substantiate the existence of any undisclosed circulating assets. Mr Tucker deposed to the fact that his inquiries had not revealed any. I note that FEG had the opportunity to appear and did not do so. In those circumstances, and absent any probative evidence that might support FEG's claim, I do not give it weight.

(6) No potential actions of value against directors 64 During the case management hearing, there was some discussion about whether an assessment that there would be no return or residual value to shareholders was sufficient to allay concerns about unfair prejudice to members. Mr Tucker accepted that there may be circumstances where there are matters beyond the mere assessment of residual value in the shares that should be taken into account in that assessment (and that potential is seemingly acknowledged by McKerracher J in Shepard, in the matter of Quest Minerals Limited). The matter of particular concern in this instance was whether the members might be denied the benefit of the outcome of further investigations that might otherwise be carried out by a liquidator into the affairs of the company. 65 However, Mr Tucker submitted that in this case, there is no real question that a lack of further inquiries would give rise to the potential for unfairness, for the following reasons: (a) Black Oak had been in voluntary administration prior to liquidation and the First Administrators had reported on the reasons for Black Oaks' financial failure, and there was no suggestion by them of malfeasance on the part of the directors; (b) Black Oak had been in liquidation for some 3 years and no creditor or shareholder had raised any question as to any impropriety on the part of Black Oak's former directors and officers; (c) the Liquidators are of the view that the reasons for failure are those that were previously disclosed to the creditors; and (d) the Liquidators' investigations have not revealed any evidence of malfeasance. 66 The fact that this company has been through a range of insolvency administrations over some years supports a view that there has been ample opportunity for allegations as to any impropriety to be raised or for impropriety to be uncovered. I do not ignore that the different roles of administrators and liquidators have been filled by a small pool of persons, but there is no suggestion they have not properly carried out their obligations. 67 In this case there is nothing to suggest that there is potential benefit to shareholders from further inquiries into unascertained and unidentified potential improprieties.

Determination - transfer of shares 68 For the reasons set out above, in all of the circumstances, I am satisfied that the transfer of shares would not unfairly prejudice the interests of members of Black Oak. I am satisfied as to a lack of residual value for shareholders and I am also satisfied that there is no other matter raised that might unfairly prejudice the members in this case. 69 I consider this is an appropriate case for the exercise of the Court's discretion under s 444GA(1)(b) to grant leave for the transfer of the relevant shares, and that it is also appropriate to make ancillary orders as to executing transfers and entering the name of Ramelius as shareholder in the Black Oak Register.

Terminating the winding up - principles 70 Mr Tucker also seeks an order terminating the winding up of Black Oak. 71 Section 482 of the Act relevantly provides as follows: Power to stay or terminate winding up (1) At any time during the winding up of a company, the Court may, on application, make an order staying the winding up either indefinitely or for a limited time or terminating the winding up on a day specified in the order. (1A) An application may be made by: (a) in any case - the liquidator, or a creditor or contributory, of the company; or … (c) in the case of a company subject to a deed of company arrangement -the administrator of the deed. (2) On such an application, the Court may, before making an order, direct the liquidator to give a report with respect to a relevant fact or matter. (2A) If such an application is made in relation to a company subject to a deed of company arrangement, then, in determining the application, the Court must have regard to all of the following matters: (a) any report that has been given to the Court by: (i) the administrator, or a former administrator, of the company; or (ii) the liquidator, or a former liquidator, of the company; or (iii) ASIC; and that contains an allegation that an officer of the company has engaged in misconduct; (b) any report that has been lodged with ASIC by: (i) the administrator, or a former administrator, of the company; or (ii) the liquidator, or a former liquidator, of the company; and that contains an allegation that an officer of the company has engaged in misconduct; (c) the decision of the company's creditors to resolve that the company execute a deed of company arrangement; (d) any document that accompanied a notice of the meeting under section 439A when the company was under administration; (da) any notice that has been given to the administrator of the deed of company arrangement or the company's creditors under section 445HA (notification of contravention of deed of company arrangement); (e) whether the deed of company arrangement is likely to result in the company becoming or remaining insolvent; (f) any other relevant matters. 72 Following the repeal of s 511 of the Act on 1 September 2017, this Court is now empowered to terminate a voluntary winding up under s 482 pursuant to div 90-15 of the IPS: Re Manband Pty Ltd (in liq) (Subject to Deed of Company Arrangement [2018] NSWSC 1282 at [19] (Black J), citing Krejci (liquidator), in the matter of Community Work Pty Ltd (in liq) [2018] FCA 425 (Gleeson J). 73 The Court has discretion as to whether the winding up should be terminated, and in exercising its discretion it considers the interests of the company's current and future creditors, the liquidator, the contributories, and the public interest in matters of commercial morality and the winding up of insolvent companies: Vero Workers Compensation (NSW) Ltd v Ferretti [2006] NSWSC 292 at [17] (Austin J). 74 The principles relevant to the granting of an order terminating a winding up under s 482, as summarised by Black J in Re Living Creatively Exhibitions Pty Ltd (in liq) (subject to deed of company arrangement) [2013] NSWSC 717, are as follows: [7] Generally, the court will not terminate a winding up unless a company will have additional financial strength and stability to provide confidence that it can continue without an appreciable risk of returning to liquidation: Re Data Homes Pty Ltd (in liq) [1972] 2 NSWLR 22 at 27; Leveraged Equities Ltd v Hilldale Australia Pty Ltd [2008] NSWSC 190; (2008) 26 ACLC 182; Re SNL Group Pty Ltd (in liq) [2010] NSWSC 797. A question will arise as to whether sufficient steps have been taken to recapitalise a company or restore its solvency so that, in the language of Re Pine Forests of Australia (Canberra) Pty Ltd [2010] NSWSC 1127 at [3], its "financial health" is such that it may safely be released from the form of external administration focussed mainly on the interests of creditors and returned to the mainstream of commercial life where it may, under the control of its directors, incur new debts that have to be paid as and when they fall due. Similarly in Re SNL Group Pty Ltd (in liq) above at [24] Bergin CJ observed that: 'it is clear that in determining whether to terminate the winding up of a company, it is usual that the most significant matter for consideration is the solvency of the company. The other considerations, such as the extent of the creditors, the status of the debts and the nature of the company's business will be taken into account in determining whether the company has returned to, or will be returned to solvency.' 75 Sometimes a question arises as to whether the Court should make a prospective order terminating a winding up, for example where the termination is to take effect on the happening of a particular event or at a time in the future. 76 In Re Manband, an insolvent company's director had expressed a willingness to contribute his own capital to a deed fund if the winding up was terminated. However, Black J declined to make an order terminating the winding up before the capital had actually been subscribed by the director. His Honour had regard to the objectives under Pt 5.3A of the Act and the matters specified in s 482(2A) of the Act and noted that that the insolvency may have been caused by the directors' failure to maintain proper financial accounts. This matter underscored his Honour's reluctance to make a prospective order. 77 The question is of some relevance in this case as Mr Tucker proposed that the termination of the winding up take effect on 7 February 2019.

Terminating the winding up in this case 78 Mr Tucker submitted that upon effectuation of the DOCA, all debts owed by Black Oak will be compromised and released, meaning that it will have no liabilities and accordingly it will be solvent. It will also become a wholly owned subsidiary in a group of companies owned by RRL, a company listed on the ASX which reported profit of over $30 million and net assets of over $200 million in the 2018 financial year. Mr Tucker submitted that the financial matters identified in Re Living Creatively Exhibitions are therefore satisfied. 79 Mr Tucker submitted that the present case should be distinguished from that in Re Manband and a prospective order should be granted. He made this submission on three bases: (a) the Ramelius Proposal imposed time restraints, namely that effectuation is to take place within four business days of orders being granted under s 444GA, and so there may be practical difficulties in returning to court for termination orders within that time frame; (b) the terms of the DOCA do not create any risk that Black Oak will be removed from external administration prior to it being restored to a position of financial strength; and (c) the proximity of the effectuation of the DOCA to the proposed date of termination of the winding up, being 7 February 2019, lends itself to a prospective order. 80 I accept that the second and third submissions are particularly persuasive in this case. The Deed Administrators will remain in place and the time period between these orders and the date of the proposed termination is short. As to the first reason, which is also valid in terms of utilisation of court resources and costs, I note that this Court will always endeavour to facilitate an urgent hearing where it is required. 81 With respect to the requirements set out in s 482(2A) of the Act, Mr Tucker submitted: (a) sub-paragraphs (a) and (b) of s 482(2A) are satisfied because no reports have been lodged by Mr Tucker, his co-appointees or the First and Second Administrators or Liquidators with the Court or ASIC in respect of any allegation that an officer of the company has engaged in misconduct; (b) ASIC was notified of the application to terminate the winding up and did not appear on this application; (c) the decision to resolve to execute the DOCA was made by the creditors of the company; (d) the only creditor who voted against the resolution (FEG) was given notice of the application and notified Mr Tucker that it did not intend to appear at the hearing; (e) the documents which accompanied the notice under s 439A were fully disclosed and publicised and formed part of the material accompanying this application; (f) no notice had been given pursuant to s 445HA of the Act of any contravention of the DOCA; (g) the effectuation of the DOCA will restore Black Oak to solvency; and (h) there is no other matter of which Mr Tucker is aware which might be relevant to the Court exercising its discretion in favour of terminating the winding up.

Determination - termination of winding up 82 This is a matter where it is appropriate to make orders terminating the winding up. I accept Mr Tucker's submission in this regard. I do not think the short delay between the orders and the proposed date of termination tells against such an order. In circumstances where Black Oak is subject to a DOCA and that DOCA facilitates the release of Black Oak's debts and a return to solvency, I do not consider any significant risk arises from there being such a short delay before the termination of the winding up takes effect. 83 For these reasons I made the orders as asked on 31 January 2019. I certify that the preceding eighty-three (83) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Banks-Smith.