Australian Competition and Consumer Commission v Cascade Coal Pty Ltd - [2023] FCA 1212 - FCA 2023 case summary — Zoe

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Australian Competition and Consumer Commission v Cascade Coal Pty Ltd

[2023] FCA 1212

Federal Court of Australia|2023-09-29|Before: Jackman J

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Source facts

Court

Federal Court of Australia

Decision date

2023-09-29

Before

Jackman J

Source

Original judgment source is linked above.

Judgment (12 paragraphs)

[1]

Introduction 1 One Funds Management Limited (OFML) seeks orders convening a meeting to consider a proposed creditors' scheme of arrangement (the Scheme) between itself and the unitholders of four managed investment funds of which OFML is the trustee: the Glen Waverley Fund, the JY Hotel Fund, the Cornerstone New SIV Bond Fund and the Cornerstone Bond Fund (together, the Funds). 2 The Scheme is being proposed as a means of resolving claims brought by unitholders of the Funds against OFML and its related entities arising out of the collapse of the iProsperity group of companies (IPG). Each of the Funds was established to service investments made by investors under the Australian Federal Government's "Significant Investor Visa" (SIV) scheme. Entities within the IPG were appointed as the investment managers of the Funds and large sums were on-lent to the IPG entity, IProsperity Underwriting Pty Ltd (in liquidation) (IPU). That entity was wound up on 19 August 2020, with the monies it received having apparently been dissipated. 3 Various unitholders in each of the Funds have brought proceedings against OFML (in its own capacity and as trustee for the Funds) and against former and current directors and officers of OFML (the Proceedings). Additional unitholders have foreshadowed further proceedings in connection with loss of investments arising from the same transactions. 4 The Scheme is being proposed by OFML as a means of compromising all claims by unitholders in the Funds (who constitute scheme creditors) against itself, its related entities and officers, as well as OFML's insurers. In exchange for releases, Scheme Creditors would receive a distribution from a scheme fund (with the monies to be contributed by a related entity of OFML and its insurers). The Scheme will not impact the unitholders' remaining interests in the Funds. 5 By originating process filed 4 September 2023, OFML seeks orders, including pursuant to s 411 of the Corporations Act 2001 (Cth) (Act), for: (a) the convening of a meeting of creditors for the purpose of considering, and if thought fit, agreeing to, the Scheme; (b) approving the draft explanatory statement (Explanatory Statement) for the Scheme for distribution to the Scheme Creditors; and (c) a stay of the Proceedings. 6 OFML relies on the following evidence: (a) the affidavit of Michael John Sutherland, a director of OFML, sworn 8 September 2023 (First Sutherland Affidavit), addressing the proceedings brought against OFML, and giving a summary of the proposed Scheme, Explanatory Statement and independent expert report; (b) a further affidavit of Mr Sutherland sworn 27 September 2023 (Second Sutherland Affidavit), addressing verification and despatch of the Explanatory Statement and other scheme meeting materials, related party voting, the contributions to the Scheme Fund and other proceedings against OFML; (c) an affidavit of Christopher Michael Prestwich, the solicitor for OFML, affirmed 27 September 2023, addressing the provision of the Explanatory Statement to the Australian Securities and Investments Commission (ASIC) and subsequent communications, the willingness and ability of the Scheme Administrators and Chairperson and alternate Chairperson to act and a proposed stay of the Proceedings; and (d) a further affidavit of Mr Prestwich sworn 28 September 2023, by way of update.

[2]

Overview of the Scheme 7 The key features of the Scheme are as follows: (a) the Scheme is proposed between OFML and a single class of its creditors, being unitholders in the Funds (Scheme Creditors). As explained below, certain unitholders are excluded from the definition of Scheme Creditors; (b) the Scheme Creditors will release OFML from all "Claims"; (c) the following third party releases will also be provided by Scheme Creditors: (i) a release of OFML's related entities (as defined in s 9 of the Act) (Related Entities); and (ii) a release in favour of certain of OFML's insurers who will be making a contribution to the Scheme Fund (Participating Insurers). The Participating Insurers will also receive releases from OFML (as well as the other insured entities under the relevant policies of insurance). The releases would be given in connection with any "Insured Claim"; (d) a scheme fund totalling $13,250,000 will be established (Scheme Fund), comprising: (i) $5,000,000 contributed by One CC Pty Ltd, a related entity of OFML (Scheme Company Contribution); and (ii) $8,250,000 contributed by OFML's Insurers (Participating Insurer Contribution). Both One CC Pty Ltd and the Participating Insurers have entered into deeds containing their commitment to contribute those funds; and (e) the Scheme will prescribe the manner in which each Scheme Creditor's Scheme Claim is to be calculated. There is some complexity to those calculations, but they reflect the loss that each unitholder suffered as a result of Fund monies having been paid to IPU and which were unable to be recovered. The proposed calculation for each of the Funds is at cl 7.1 of the Scheme and explained in Section 9 of the Explanatory Statement. Scheme Creditors will also receive 25% of the legal costs that they have incurred (but must account for any indirect payments received in connection with their investments from IPU or Mr Gu). 8 If the Court makes orders at the second hearing approving the Scheme in accordance with s 411(4)(b) of the Act and the Scheme becomes "Effective" upon lodgement of those orders with ASIC pursuant to s 411(10) of the Act, the following will occur: (a) Barry Kogan and Jonathan Henry of McGrathNicol (Scheme Administrators) will be appointed as the true and lawful attorney and agent of each Scheme Creditor with authority to execute a deed poll providing releases in favour of OFML, its related entities and the Participating Insurers (the Scheme Creditor Deed Poll of Release); (b) a deed poll executed by OFML and certain of its officers and related entities will come into effect, providing releases in favour of the Participating Insurers (the One Group Deed Poll of Release); (c) each of the Proceedings will be discontinued with no order as to costs; (d) the Scheme Fund will be established to be administered by the Scheme Administrators; (e) the Scheme Administrators will assess, determine and notify each Scheme Creditor of the amount of any Scheme Creditor's Admitted Scheme Claim, and pay any distribution within six months of the "Effective Date"; and (f) in the case of "Foreign Scheme Creditors", to be entitled to a distribution for any Admitted Scheme Claim, they will be required to execute the "Foreign Scheme Creditor Ratification Deed Poll" ratifying and approving the execution of the Scheme Creditor Deed Poll of Release. 9 The Court will order the convening of the scheme meeting and approve the explanatory statement if it is satisfied of the following matters: (a) the plaintiff is a Pt 5.1 body; (b) the proposed scheme is an arrangement within the meaning of s 411 of the Act; (c) the scheme booklet will provide proper disclosure to scheme creditors; (d) the scheme is bona fide and properly proposed; (e) ASIC has had a reasonable opportunity to examine, and make submissions in respect of, the terms of the scheme and the scheme booklet and has had 14 days' notice of the proposed first Court hearing date; (f) the procedural requirements have been met; and (g) the scheme of arrangement proposed is of such a nature and cast in such terms that, if it received the statutory majority at the scheme meeting, the Court would be likely to approve it on the hearing of a petition which is unopposed. See, in the context of a creditors' scheme, Re HIH Casualty and General Insurance Ltd [2005] NSWSC 1180; (2005) 56 ACSR 295 at [6] (Barrett J); Re Boart Longyear Ltd [2017] NSWSC 567; (2017) 121 ACSR 328 at [75]-[76] (Black J). 10 Each of the preconditions to the exercise of the power in s 411(1) of the Act is met in the present case. 11 First, the plaintiff is a Pt 5.1 body and the Scheme is an "arrangement" or "compromise" between the plaintiff and the Scheme Creditors. 12 Second, on 4 September 2023, the plaintiff provided ASIC with a draft copy of the Explanatory Statement and its attachments, together with the filed originating process confirming the first Court hearing date. ASIC was given more than 14 days' notice, as required under s 411(2) of the Act. The plaintiff tendered at the first Court hearing a letter from ASIC to that effect in the usual form. 13 Third, the Explanatory Statement has been subject to a verification process which is set out at paragraphs [6] to [17] of the Second Sutherland Affidavit. 14 Fourth, the procedural requirements under the Federal Court (Corporations) Rules 2000 (Cth) (Rules) have been met, namely: (a) as required by r 2.4(2) of the Rules, the company search for the plaintiff was carried out no earlier than 7 days before the originating process was filed on 4 September 2023; (b) as required by r 3.2 of the Rules, Mr Barry Kogan of McGrathNicol has confirmed his willingness to act as chair and has addressed the matters in r 3.2(b); (c) as required by r 3.3(1) of the Rules, the draft orders convening the Scheme Meeting identify the proposed Scheme; (d) as required by r 3.4 of the Rules, the draft orders include the publication of notice of the second Court hearing in The Australian newspaper, proposed to be published no later than 1 November 2023. (OFML proposes newspaper publication in this case, rather than seeking dispensation from r 3.4, because it does not have its own website and Scheme Creditors are unlikely to access that of its parent.) 15 An independent expert report has been prepared by Barry Kogan of McGrathNicol (Expert Report). Mr Kogan opines that: (a) following the implementation of the Scheme, the Scheme Company will be solvent; (b) if the proposed Scheme was not put into effect and OFML was to be wound up within six months, it is estimated that creditors would receive a distribution of between 0.18 cents and 0.44 cents in the dollar of their estimated claim against OFML; and (c) the expected distribution to Scheme Creditors under the Scheme is estimated to be between 9.2 cents and 10.4 cents in the dollar of their claim against OFML. 16 Mr Kogan is also proposed to be the Scheme Administrator and Chairperson of the Scheme Meeting, and Jonathan Henry is proposed to be a Scheme Administrator and alternate Chairperson of the Scheme Meeting. The proposed appointment of Mr Kogan as one of two Scheme Administrators is a relatively minor future engagement that has been disclosed to Scheme Creditors in the scheme booklet, and does not compromise the independence of his expert report: Re Atlas Iron Ltd [2016] FCA 366; (2016) 112 ACSR 554 at [61] (Gleeson J) and Re Boart Longyear Ltd [2021] NSWSC 982 at [52] (Black J); Explanatory Statement, Sections 5.8 and 12.2. 17 There is no apparent reason why the Scheme should not, in due course, receive approval if the necessary majority of votes is achieved and such approval is not opposed. 18 The reasons for voting for or against the Scheme are set out in Sections 6 and 7 of the Explanatory Statement respectively. Scheme Creditors may be expected to prefer the Scheme for reasons including the following: (a) Scheme Creditors will receive a superior financial return under the Scheme than in a scenario where the Scheme is not effected and in the event of insolvency of the plaintiff; (b) the Scheme provides greater certainty than the alternative (which is likely to involve lengthy, costly and uncertain litigation); and (c) funds are being provided by OFML's related entities and the Participating Insurers that may not otherwise be available for the benefit of the Scheme Creditors. 19 Consistent with the plaintiff's ex parte disclosure obligations the following matters have been specifically brought to the Court's attention.

[3]

Third Party Releases 20 The Scheme is conditional upon releases in favour of the plaintiff's Related Entities and the Participating Insurers (together, the Third Parties). After the Scheme becomes effective: (a) each Scheme Creditor, acting through the Scheme Administrator as its duly appointed agent and attorney, releases the plaintiff's Related Entities from all "Claims" and those claims are extinguished; (b) the plaintiff, its Related Entities and Scheme Creditors will release the Participating Insurers in respect of any "Policy Period Claim", being a claim that could be made in connection with the relevant contracts of insurance held by OFML; and (c) the Scheme Creditors (through the Scheme Administrator as their appointed agent) covenant not to bring or pursue any claim against the Third Parties in respect of any matter which is the subject of the release. 21 The releases in favour of the Third Parties (and the mechanism for giving them) are permissible under s 411: see Fowler v Lindholm; Re Opes Prime Stockbroking Limited [2009] FCAFC 125; (2009) 178 FCR 563 at [69], [72] and [73] (Emmett, Gordon and Jagot JJ). 22 Two related requirements emerge from the authorities: (a) first, there must be a sufficient nexus between a release by the creditor of the claims against the third party and the relationship between the creditor and the scheme company: Fowler v Lindholm at [68]-[73]; and (b) second, there must be some element of give and take such that the creditors receive something in return for the benefit conferred on the third party: Fowler v Lindholm at [69]; Re Lift Capital Partners Pty Limited (In Liquidation) [2009] FCA 1523 at [35] (Emmett J); Bacnet Pty Ltd v Lift Capital Partners Pty Limited (in liquidation) [2010] FCAFC 36; (2010) 183 FCR 384 at [144]-[145](Keane CJ and Jacobson J). 23 As to the first requirement, there is a clear "nexus" here between the release in favour of the Third Parties and the relationship between the Scheme Creditors and the plaintiff: (a) certain Scheme Creditors have commenced the Proceedings against the plaintiff in its capacity as trustee of the Funds and certain of its Related Entities. Other Scheme Creditors have also foreshadowed claims. The claims against the plaintiff and the Related Entities largely (and in many cases completely) overlap. Claims against some of the Related Entities include claims of knowing assistance in the alleged breaches of trust by the plaintiff and breaches of directors' duties; (b) the release provided in favour of the Participating Insurers means that no claims can be made against the Participating Insurers that may fall under relevant policies of insurance held by the plaintiff or its Related Entities with the Participating Insurers: Re Lehman Brothers Australia Ltd (in liq) (No 2) [2013] FCA 965; (2013) 95 ACSR 685 at [78]-[81] (Jacobson J); Re Lehman Brothers Australia Ltd (in liq) [2013] FCA 486; (2013) 94 ACSR 528 at [26]-[32], [75] (Jacobson J); and (c) compromising the interrelated claims against the Third Parties is necessary for finality in the Proceedings and claims which have been threatened to be commenced. 24 As to the second requirement, the Scheme Creditors are receiving contributions from certain of the Third Parties in exchange for the releases: (a) The Participating Insurers have agreed to provide an amount of $8,250,000 in exchange for releases. This is done on a without admission basis and (with the exception of one Participating Insurer) the Participating Insurers have not confirmed liability under any insurance policy held by the plaintiff or its Related Entities with respect to the claims made in the Proceedings. The Participating Insurers would not have agreed to make that payment if they were not receiving the releases provided for under the Scheme. Absent the Scheme, there is no certainty that the Scheme Creditors would receive any benefit from any insurance policy held by OFML or its Related Entities. (b) One CC Pty Ltd, a Related Entity, has agreed to provide a contribution of $5,000,000 to the Scheme Fund in exchange for the releases in favour of the Related Entities. Absent the Scheme, if the claims against it were to succeed, the plaintiff has no entitlement to require any other group entity to assist it to meet its liabilities. 25 OFML in various trustee capacities is itself a Scheme Creditor under the Scheme. Like other Scheme Creditors, OFML would be releasing individuals who are its officers under the Scheme. 26 In that connection, OFML draws attention to s 199A(1) of the Act which provides relevantly that a company must not exempt a person from a liability to the company incurred as an officer of the company. However, CCI submits, and I accept, that s 199A does not prevent a company from giving a release as part of the bona fide compromise of a disputed claim, as distinct from a "blank cheque" or blanket exemption in advance of a disputed claim being compromised or even identified, as the authorities concerning the predecessor to s 199A, namely s 241 of the Corporations Law 1990 (Cth), establish: Eastland Technology Pty Ltd v Whisson [2005] WASCA 144; (2005) 223 ALR 123 at [39] (McLure JA, with whom Malcolm CJ and Steytler P agreed); Miller v Miller (1995) 16 ACSR 73 at 88 (Santow J); Selim v McGrath [2003] NSWSC 927; (2003) 47 ACSR 537 at [152] (Barrett J). Further, any issues of fairness pertaining to the third-party releases can be addressed at the second Court hearing: Re BIS Finance Pty Ltd [2017] NSWSC 1713 at [44] (Black J).

[4]

Single class of creditors 27 OFML proposes that there be a single class of Scheme Creditors. 28 The class test was authoritatively summarised by the Court of Appeal in First Pacific Advisors LLC v Boart Longyear Ltd [2017] NSWCA 116; (2017) 121 ACSR 136 (Boart Longyear) at [80] (Bathurst CJ, with whom Beazley P and Leeming JA agreed). The test directs attention to whether creditors have different rights or rights differently affected by the scheme, and whether those differences make it impossible for the creditors in question to consult together with a view to their common interest. In considering classes of creditors the Court should adopt a practical business-like approach and should not be too assiduous in identifying classes, as that could end up with any number of classes, thereby conferring on each class a power of veto: Re Opes Prime Stockbroking Limited [2009] FCA 813; (2009) 179 FCR 20 at [66] (Finkelstein J). 29 Each of the Scheme Creditors is a unitholder with a possible damages claim against OFML, and their rights will be affected under the Scheme in the same way. Those claims all arise in similar circumstances. Each Scheme Creditor holds units in a Fund that was established under the Australian SIV scheme, was managed by an IPG entity and of which OFML was the trustee. Monies from each of the Funds was invested (either directly or indirectly) with IPG. 30 To the extent that the rights of Scheme Creditors are different (e.g. as a result of how far advanced their claim against OFML is), those differences do not make it impossible for the Scheme Creditors to consult together. While only some unitholders have brought proceedings against OFML and others, an additional 27 unitholders have foreshadowed commencing similar claims. There is no reason to consider that other unitholders would not have equivalent claims. That is apparent from an examination of the claims made in the Proceedings which demonstrates that they arise from the circumstances in which each investment was made by the Funds, rather than arising from any particular attribute unique to a unitholder. 31 OFML (which holds units in a trustee capacity and is itself a Scheme Creditor) is in no different position to other Scheme Creditors. Equititrust Ltd (in liq) v Equititrust Ltd (in liq) (No 4) [2017] FCA 1133 (Jagot J) provides an example of how a trustee (such as OFML) in its capacity as trustee of a different trust could prosecute a claim against itself for the benefit of the unitholders of that trust. The point is allied to a broader issue of principle as to whether a trustee may enter into a contract or other transaction with itself in a non-trustee capacity, or as trustee of a different trust. There is no objection in principle to the validity of such a transaction, provided that no impermissible conflict of duty or interest arises (that being a matter which is modified by s 601FC(1)(c) of the Act in relation to registered managed investment schemes and also typically modified by the terms of the trust deed for investment trusts): Gulland v Federal Commissioner of Taxation (1983) 72 FLR 362 at 379-381 (Kennedy J); Re Australand Holdings Limited [2005] NSWSC 835; (2005) 54 ACSR 687 at [19]-[20] (Barrett J). Although those authorities express the point with a degree of tentativeness, Mr Thomas SC submits, and I accept, that the proposition should be regarded as entirely sound as a matter of principle that a trustee can enter into a contract or other transaction with itself in a different capacity, subject to the contract or transaction not being avoided for breach of the duty (if applicable) in relation to the trustee being in a position of impermissible conflict. That being so, there can similarly be no objection to the trustee making a claim (in court or otherwise) pursuant to such a contract or transaction.

[9]

Distribution of the Scheme Booklet 40 The plaintiff seeks orders for the despatch of the Scheme Meeting Materials by 4 October 2023. The materials are comprised of the Explanatory Statement, Cover Letter, Notice of Meeting, Personalised Voting Proof of Debt Form and Personalised Proxy Form. 41 OFML intends to provide Scheme Creditors with Mandarin translations of key sections of the Explanatory Statement and the other materials in full due to the existence of a substantial proportion of foreign Scheme Creditors. Whether translations of those materials in full should be provided can be considered at the second Court hearing. 42 The plaintiff's orders contemplate an electronic despatch of the Scheme Meeting Materials to all except two Scheme Creditors with whom the plaintiff corresponds by post. In that regard, the unitholder application forms held by the plaintiff for Scheme Creditors only record email as the preferred method of communication for 55% of the Scheme Creditors. The remaining 45% did not state a preference. The terms of the application forms state that, where a preference is not ticked by the unitholder, all communication will be sent by post. However, since the inception of the first of the four Funds (Cornerstone Bond Fund) in 2016, it has been the plaintiff's customary practice to communicate with Scheme Creditors via email. 43 The plaintiff's orders contemplate that Scheme Creditors who are sent the Scheme Meeting Materials by post will also receive a reply-paid envelope should they wish to return their Personalised Voting Proof of Debt Form and Proxy Form by mail. All Scheme Creditors have the option to scan and email the forms to the registry or otherwise deliver their forms in person. 44 Having regard to Re Vita Group Ltd [2023] FCA 400; (2023) 165 ACSR 576 at [36], the plaintiff has not adduced evidence of the proposed procedures to be followed by OFML and its registry to despatch the Scheme Meeting Materials and other materials because the orders sought are self-explanatory.

[10]

Interim Suppression Order 45 The plaintiff seeks orders under ss 37AF(1) and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) that Confidential Exhibit MS-5 to the Second Sutherland Affidavit be suppressed on an interim basis. Confidential Exhibit MS-5 contains the terms on which the Participating Insurers have committed to provide the Participating Insurer Contribution (Participating Insurer Terms). The Participating Insurer Terms impose a confidentiality regime as follows: (a) the disclosure that OFML can make about the Participating Insurer Contribution is limited in scope and confined to Scheme Creditors, ASIC and the Court; and (b) without the written consent of the Participating Insurers, OFML is further restrained from disclosure to any party (including Scheme Creditors, ASIC and the Court) of the identities of the Participating Insurers, the terms of the underlying insurance policies and/or the premium paid under the underlying insurance policies. While the Participating Insurers have consented to the plaintiff tendering the Participating Insurer Terms as evidence of the various commitments it has obtained, that consent is subject to OFML seeking orders at the first Court hearing to otherwise maintain the confidentiality regime imposed. 46 The following principles are relevant to a court's consideration of whether to grant a suppression order: (a) the threshold which a plaintiff must satisfy is high and it bears a heavy onus of persuading the Court to make the order: Australian Competition and Consumer Commission v Valve Corporation (No 5) [2016] FCA 741 at [8] (Edelman J); (b) mere embarrassment, inconvenience, annoyance or unreasonable or groundless fears will not suffice to found a suppression or non-publication order: Australian Competition and Consumer Commission v Cascade Coal Pty Ltd (No 1) [2015] FCA 607; (2015) 331 ALR 68 at [30] (Foster J); and (c) once the Court is satisfied that an order is necessary, it would be an error not to make it, and there is no exercise of discretion or balancing exercise involved: Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 at [32]-[33] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ). 47 Commercial in confidence material may form a sufficient basis for the grant of a suppression order on the ground that such an order is "necessary" to prevent "prejudice to the proper administration of justice": s 37AG(1)(a) of the Federal Court Act; Clime Capital Limited v UGL Pty Limited (No 2) [2020] FCA 257 at [15] (Anastassiou J), and the authorities cited there. 48 In this case, a suppression order is necessary. It is sought in circumstances where the arrangements between the plaintiff and the Participating Insurers are by their very nature confidential, and maintaining that confidentiality was necessary to OFML obtaining the Participating Insurer Contribution. While there is a high bar to the Court suppressing evidence, the scope of the suppression order sought is narrow. It attaches to one confidential exhibit and will remain in place for a period of two years (subject to further order).

[11]

Stay of Proceedings 49 The plaintiff is seeking an order under s 411(16) of the Act that all further proceedings, actions or other civil proceedings by or on behalf of any of the Scheme Creditors against the plaintiff (whether directly or indirectly) be restrained except by leave of the Court and subject to such terms as the Court imposes. 50 A Court's power to order a stay of proceedings is discretionary. As stated by Black J in Re Boart Longyear Limited [2021] NSWSC 982 at [53]: [S]uch an order restrains any proceedings whether by action or other civil proceeding against the company the subject of the scheme of arrangement, whether or not such action or proceeding has already been commenced, and the purpose of such an order is to promote the orderly and efficient consideration of a scheme of arrangement: Re Glencore Nickel Pty Ltd (2003) 44 ACSR 210; [2003] WASC 18 at [67]; Re Boart Longyear Limited (2017) 318 FLR 226; [2007] NSWSC 537 at [11]. 51 The relevant factors include whether: (a) the scheme has been proposed, and how progressed it is; (b) the scheme has been disclosed to at least some of the affected creditors; (c) at least some scheme creditors would be better off if the scheme were approved than if it were not; (d) not granting a stay would result in the proceedings frustrating or seriously prejudicing the prospects of the scheme being considered and approved; and (e) the Part 5.1 entity can demonstrate substantial creditor support. See Re Boart Longyear Limited [2021] NSWSC 982 at [53]-[54]. 52 In the present case: (a) the Court has before it a genuine proposal in advanced form which warrants the Court restraining the exercise of creditors' rights: Playcorp Pty Ltd v Venture Stores (Retailers) Pty Ltd (1992) 7 ACSR 193; (b) the plaintiff has disclosed the existence of the Scheme to many of the Scheme Creditors who would be affected: Re GAE Pty Ltd [1962] VR 252 at 255-256 (Sholl J). On 11 September 2023, solicitors for OFML wrote to the legal representatives of any Scheme Creditor who has a present Proceeding on foot against it and its related entities. The correspondence to each plaintiff law firm gave the Scheme Creditors ample time to consider the Scheme proposal and to object to the seeking of a stay by OFML; (c) the Scheme has the potential, if approved, to bring about a significantly better return than a winding up and to restore the company to solvency: Re Boart Longyear Limited [2017] NSWSC 537; (2017) 318 FLR 226 at [15]-[16] (Black J); (d) timetabling orders have been made in three of the Proceedings for the plaintiffs to put on evidence. In the event that the Scheme is agreed to by the Scheme Creditors and approved by the Court, the stay would avoid those Scheme Creditors incurring costs that would ultimately be wasted; and (e) the stay will preserve the status quo while Scheme Creditors consider, and vote, on the Scheme and, as a result, does not cause material prejudice to any person. The stay operates on an interim basis only and does not permanently resolve any rights or interests. 53 An exception from the stay has been made for proceeding number S EAPCI 2023-0065 in the Victorian Court of Appeal, as it relates to a priority dispute between various classes of unitholder in one of the Funds, and once decided the underlying proceedings will be remitted to a first instance judge (and be subject to the stay).