O'CALLAGHAN J:
1 I made the orders set out above on the papers on 8 March 2022. These are my reasons.
2 The plaintiffs (the Administrators) are the administrators of four companies (Companies) which together comprise the "Murray River Organics" corporate group.
3 By originating process dated 7 March 2022, the Administrators sought an order under s 439A(6) of the Corporations Act 2001 (Cth) (the Act) extending, to 9 June 2022, the period within which they were required to convene the second meeting of the creditors of each Company. Unless extended, the convening period for each Company was to expire on 9 March.
4 The Companies operate a business of producing, manufacturing and marketing certified, organic and natural food products. Their brands include Murray River Organics, Gobble, Premium Australian Clusters and Murray River Wholegoods.
5 The four Companies are:
(1) Murray River Organics Group Limited, the parent entity, listed on the Australia Securities Exchange. It leases a head office, warehouse and distribution centre in Dandenong South, Victoria.
(2) Murray River Organics Pty Limited, the trading and employing entity. As at the date of the Administrators' appointment, the company had 56 employees and two non-executive directors. Since then, the employees have been retained, except for one employee who has been made redundant, and nine employees who have resigned.
(3) Murray River Organics Property Pty Limited, the property holding entity. It owns seven farm properties in Victoria.
(4) Murray River Organics Property 2 Pty Limited, which is dormant.
6 On 9 February 2022, John Ross Lindholm and Peter Damien McCluskey of KPMG were appointed receivers and managers of the Companies by National Australia Bank Ltd (NAB), a secured creditor holding security over the whole, or substantially the whole, of the Companies' assets. The receivers were trading on the business, conducting an expression of interest campaign (with a view to selling the business as a going concern), and otherwise attending to the realisation of the Companies' assets. The expression of interest campaign remained on foot as of the date of the Administrators' application to this court.
7 The Companies appointed the Administrators on 11 February. The Administrators convened a first meeting of creditors on 21 February.
8 Pursuant to sub-ss 439A(1) and (5) of the Act, the Administrators were then required to convene the second meeting of creditors within five business days before or after the end of the convening period, which was, relevantly, 20 business days after the day the administration began, being 9 February 2022.
9 Section 439A relevantly provides:
439A Administrator to convene meeting and inform creditors
(1) The administrator of a company under administration must convene a meeting of the company's creditors within the convening period as fixed by subsection (5) or extended under subsection (6).
…
(2) The meeting must be held within 5 business days before, or within 5 business days after, the end of the convening period.
(5) The convening period is:
(a) if the day after the administration begins is in December, or is less than 25 business days before Good Friday - the period of 25 business days beginning on:
(i) that day; or
(ii) if that day is not a business day - the next business day; or
(b) otherwise - the period of 20 business days beginning on:
(i) the day after the administration begins; or
(ii) if that day is not a business day - the next business day.
(6) 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.
…
10 By originating process dated 7 March 2022, the Administrators sought an order under s 439A(6) of the Act extending the period within which they were required to convene the second meeting of creditors to 9 June. Unless extended, the end of the convening period, as calculated under s 439A(5)(b), was 9 March.
11 The Administrators filed a short written submission in support of their application, as well as an affidavit of Mr Matthew Byrnes dated 7 March 2022.
12 Mr Byrnes' affidavit set out the background to the Companies, including the appointment of the Administrators, receivers, and managers, and the Companies' financial position. The affidavit also set out the steps taken by himself and Mr Hewitt as administrators, and their reasons for forming the opinion that it was in the best interests of creditors to extend the convening period to 9 June 2022. These reasons are described in further detail below.
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.
15 Section 439 is contained within Part 5.3A. This Part has the following object:
435A Object of Part
The object of this Part, and Schedule 2 to the extent that it relates to this Part, is to provide for the business, property and affairs of an insolvent company to be administered in a way that:
(a) maximises the chances of the company, or as much as possible of its business, continuing in existence; or
(b) if it is not possible for the company or its business to continue in existence - results in a better return for the company's creditors and members than would result from an immediate winding up of the company.
16 In light of the authorities and the object of Part 5.3A, in my view, it was appropriate to extend the convening period to 9 June 2022, for the following reasons submitted by counsel, and established by the evidence of Mr Byrnes.
17 First, the extension will likely improve the prospects of preserving the business and maximising returns to creditors, by allowing the receivers to conclude the sale campaign (which is still on foot). The value of the Companies' assets, and accordingly, the return to creditors, will be maximised if the campaign is successful and the business is sold as a going concern. And if the business is not sold, the extension will allow the receivers more time to conduct a sale and an orderly wind-down of the Companies' assets.
18 Secondly, an extension will facilitate exploration of any proposal for a deed of company arrangement in the event that the sale process is unsuccessful and/or an offer is made to purchase Murray River Organics Group Limited, the listed parent entity, as a shell company.
19 Thirdly, the extension will give the Administrators more time to provide a considered recommendation to the creditors for the purposes of the s 439A meeting.
20 Mr Byrnes' evidence was that the Administrators were of the view that, prior to the completion of outstanding tasks, the Administrators could not prepare a report to creditors which would adequately inform them of the future of each of the Companies, nor could they hold a second meetings of creditors in which the creditors had sufficient information to allow them to vote on proposed resolutions. The outstanding tasks identified included, among other matters, the continued trading of the business in order to sell it as a going concern, as well as the Administrators' ongoing investigations and assessments of the affairs of the Companies.
21 I am satisfied that, in this case, the extension should be granted to afford the Administrators sufficient time to investigate the affairs of the Companies and provide considered and informed opinions about the future of the Companies. See Re Pan Pharmaceuticals Limited [2003] FCA 598; (2003) 46 ACSR 77 at 85 [41]-[43] (Lindgren J). As the Administrators submitted, the extension sought will give more time for the sale campaign to be completed and the Administrators to consider the appropriate form for a deed of company arrangement, so that the Administrators can provide a meaningful and considered recommendation to creditors in their report, in advance of the second creditors' meeting.
22 Fourthly, the benefits to creditors and stakeholders identified above outweigh any prejudice that might be occasioned by the 90-day extension sought. The receivers are trading on the business, and the receivers are continuing to pay, in the ordinary course, the landlord, lessors and employees.
23 As to the landlord, if the leased premises are no longer required at some later stage, the Administrators will likely give consent to the landlord to re-take possession.
24 As to employees, the Administrators submitted that the receivers anticipate that the revenues generated from trading activities will be sufficient to cover all current and accrued employee entitlements, so that there will be no need to call upon the Fair Entitlements Guarantee scheme. And if the business is sold as a going concern, it will maximise the prospect of employees retaining their employment.
25 And as to creditors, the Companies' major secured creditor, NAB, supported the Administrators' decision to apply for the extension. The Administrators submitted that, on the basis of the information available to them, they anticipated a significant shortfall to NAB and, accordingly, it is unlikely that any funds would be available for distribution to ordinary unsecured creditors in a liquidation scenario.
26 Fifthly, there is no opposition to the extension sought. The committee of inspection, of which NAB is a member, passed a unanimous resolution supporting the Administrators' decision to seek the extension. In their submissions, the Administrators indicated that if the extension was granted, they would inform creditors of the extension. In addition, the orders provide liberty to any affected party to seek to vary or discharge the orders.
27 Finally, the period of the proposed extension is appropriate. While the length of the extension sought is not itself a determinative factor of whether the extension should be granted, the authorities show that courts are willing to alter the time frames in Part 5.3A as necessary. See, for example, Mentha; Re The Griffin Coal Mining Company Pty Ltd (administrators appointed) [2010] FCA 30 (McKerracher J) at [22] and the examples set out in the cases cited therein.
28 In light of the steps still to be undertaken by the receivers and the Administrators set out above, the length of the extension is appropriate. It will enable the diligent pursuit of those outstanding tasks, while also ensuring that the creditors' exercise of their right to determine the future of the Companies will not be unduly delayed.
29 Accordingly, I granted the extension sought.
30 The Administrators also sought an order pursuant to s 447A(1). Section 447A(1) provides that "The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company". Section 447A, like s 439A, is also contained in Part 5.3A.
31 The order sought was that "Part 5.3A of the Act is to operate in relation to each of the Companies as if the second creditors' meeting of the Companies required by section 439A of the Act be held at any time during, or within 5 business days after the end of, the convening period as extended by Order 1 above, notwithstanding the provisions of section 439A(2) of the Act".
32 The Administrators submitted that such an order would provide flexibility as to the date on which the meeting of creditors is convened, by providing that the meeting may be held at any time within the (extended) convening period and the period of five business days thereafter, rather than, as provided by s 439A(2), strictly within five business days before or after the end of the convening period. Such an order would permit the Administrators to convene the second meeting earlier than otherwise prescribed by s 439A(2), if they are in a position to do so, so as not to unduly prolong the administration.
33 I accept the Administrators' submissions. It is clear that s 447A gives this court the power to make orders altering times fixed by Part 5.3A, including s 439A. See Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at 281 [24] (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ). And orders in the form sought by the Administrators are "sensible and now almost routine". See Re LED Builders Pty Ltd (administrators appointed) [2008] NSWSC 633 (Austin J) at [2]. As Lindgren J observed in Re Daisytek Australia Pty Ltd [2003] FCA 575; (2003) 45 ACSR 446 at 448 [14], "if it becomes desirable for the meetings of creditors to be held prior to the expiry of the extended convening period, Pt 5.3A will 'operate in relation to' (in terms of s 447A(1)) the two companies by requiring the administrators to 'sit on their hands' until [the extended expiry of the convening period] to no good end". It is therefore appropriate to make orders varying the operation of s 439A(2), so that the Administrators are not unnecessarily prohibited from convening the second creditors' meeting at some time before the end of the convening period.
34 The Administrators also sought, and I granted, an order permitting them to send notices to creditors electronically where email addresses are available to them. It is now common for such orders to be made. See, by way of example only, Re BBY Limited [2015] NSWSC 974 at [7] (Brereton J). The order for notification of creditors by email is appropriate. It fulfils the objective of notifying as many creditors as efficiently as possible, thereby conserving the limited assets of the Companies for the benefit of creditors. The orders sought that the Administrators may publish notices of relevant matters to creditors through the online creditor portal and on the website of the Australian Securities and Investments Commission are also similarly suited to achieving this purpose.
35 For the above reasons, I made the orders sought.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan.