Autodom Ltd (Administrators Appointed) (Receivers and Managers Appointed),... [2012] FCA 1393 | Case summary | Zoe

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Autodom Ltd (Administrators Appointed) (Receivers and Managers Appointed),... [2012] FCA 1393 | Case summary | Zoe

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INTRODUCTION AND OVERVIEW 1 The plaintiffs (the Administrators) apply pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (CA) or alternatively under s 447A CA and r 1.32 of the Federal Court Rules 2011 (Cth) for orders that the convening period of the administration of the seven companies identified in the originating process be extended by four months from the date of filing of the originating process on 30 November 2012. The extension sought is until 28 March 2013 or for such shorter period as the Court deems fit. The relief is pursued in relation to some or all of those companies. Associated orders are also sought. 2 The application is supported by two affidavits of Mr Peter Ivan Macks, one of the Administrators. The companies are part of a corporate group. Autodom Ltd (Administrators Appointed) (Receivers and Managers Appointed) (ACN 009 123 782) (Autodom) is the parent company of the group. There are three trading entity subsidiaries, namely, AiDair Dandenong Pty Ltd (Administrators Appointed) (Receivers And Managers Appointed) (ACN 145 157 599) (AiDair Dandenong), AiDair New Gisborne Pty Ltd (Administrators Appointed) (Receivers And Managers Appointed) (ACN 145 157 571) (AiDair New Gisborne) and AiAutomotive Pty Ltd (Administrators Appointed) (Receivers And Managers Appointed) (ACN 087 311 920) (AiAutomotive) (together the Group). There are then three other subsidiaries of AiAutomotive which are inactive but in respect of which an issue arises in respect of the apparent forgiveness of inter-company loans. 3 The application before me was brought and heard as a matter of urgency with the Court convening in Perth but counsel for one of the creditors appearing in Brisbane, counsel for the Receivers appearing in Melbourne, counsel for the Administrators in Adelaide and senior counsel for two unions whose employees are affected by the relief sought, also appearing in Adelaide. All counsel appeared by video-link. The activities of the Group are conducted in Victoria and South Australia. The practical connection with the West Australian Registry was not particularly striking. As Mr Strong observed, electronically filing in the Western time zone enabled the application to be brought at the last possible moment. 4 The Administrators have sustained difficulties in collating necessary information about the Group to prepare the report required under s 439A(4) CA and to make recommendations to the creditors. The application for extension is firmly opposed by the two unions in relation to the subsidiaries and also by the creditor. 5 For the reasons they advance, I am of the view that their arguments are sufficiently persuasive to decline granting the relief sought. In doing so, I should make two things clear. The first is that the Administrators were not so much pressing the Court for an extension of time as informing the Court of the difficulties they were experiencing and making it clear that they would need much more time to get to the bottom of matters to make suitable recommendations to creditors than the statutory scheme would otherwise permit (although I note that the creditors themselves may, if they see fit, authorise an extension of up to 60 days). It was accepted that if I was of the view that the opposition by the creditors and the unions was a more powerful consideration in balancing the respective interests, then the relief (at least in the terms sought) would not be granted. The second matter which is to be made clear is that it will still be necessary to provide an extension of seven days or so to permit the Administrators to convene a meeting and complete the discharge of their statutory functions. No party opposed this short term relief. 6 This is an unusual case and, as senior counsel for the Administrators accepted, there appears to be no precedent for granting relief of the nature sought, that is, a substantial extension of time in the face of strenuous and apparently well founded opposition. As senior counsel for the Administrators pointed out, however, the Administrators owe a duty to a broader range of creditors simply than those whose interests are reflected in the votes taken on the creditors' committees or those arguing against extension in this application. It is with regard to those obligations that the Administrators have sought the extensions or, alternatively, sought directions from the Court as to the appropriate steps to take. I will briefly examine the basis upon which the Administrators bring the application and then give consideration to the arguments in opposition to it. 7 Before doing so, I should say that the Receivers, in essence, took a neutral position on the extension application and appeared in order to provide assistance to the Court should it be needed.

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STATUTORY FRAMEWORK 8 Section 439A CA relevantly provides as follows: 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. (3) The administrator must convene the meeting by: (a) giving written notice of the meeting to as many of the company's creditors as reasonably practicable; and (b) causing a notice setting out the prescribed information about the meeting to be published in the prescribed manner; at least 5 business days before the meeting. (4) The notice given to a creditor under paragraph (3)(a) must be accompanied by a copy of: (a) a report by the administrator about the company's business, property, affairs and financial circumstances; and (b) a statement setting out the administrator's opinion about each of the following matters: (i) whether it would be in the creditors' interests for the company to execute a deed of company arrangement; (ii) whether it would be in the creditors' interests for the administration to end; (iii) whether it would be in the creditors' interests for the company to be wound up; and also setting out: (iv) his or her reasons for those opinions; and (v) such other information known to the administrator as will enable the creditors to make an informed decision about each matter covered by subparagraph (i), (ii) or (iii); and (c) if a deed of company arrangement is proposed - a statement setting out details of the proposed deed. (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. (7) If an application is made under subsection (6) after the period referred to in paragraph (5)(a) or (b), as the case may be, the Court may only extend the convening period if the Court is satisfied that it would be in the best interests of the creditors if the convening period were extended in accordance with the application. …

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BRIEF HISTORY 9 The Administrators consented to act in the administration of each of the Group entities on 3 November 2012 on receipt of resolutions from the Board of Directors of each of the companies. At that stage the major financier was the National Australia Bank (NAB). It was a secured creditor of the Group. NAB entered into various banking facilities with Autodom and AiAutomotive. Each of the entities provided charges and guarantees to NAB. NAB cancelled all facilities on 5 November 2012 and made demand in respect of a debt of a little over $6 million. On the following day, NAB advised it had assigned its rights, pursuant to an agreement with the Group, to Ford Motor Company of Australia Ltd (Ford) and GM Holden Ltd such that those entities became the secured creditors (the Secured Creditors). The Secured Creditors, however, on the same day, appointed McGrathNicol as Receivers and Managers of the company (the Receivers). 10 The first meeting convened by the Administrators of creditors of each company of the Group was held on 14 November 2012 in accordance with the requirements of s 436E CA. Meetings were held concurrently in Adelaide and Melbourne and committees of creditors were appointed. At this meeting Mr Macks raised with creditors the possibility of seeking an extension of the convening period. The report as to the affairs of each of the Group entities (the RATA) was not received until 23 November 2012. There is a requirement under s 438B(2) CA that within five business days after the administration of a company begins, or such longer period as the Administrator allows, for the directors to give the Administrator a statement about the company's business, property affairs and financial circumstances. 11 The Administrators had requested the directors of the Group to provide the RATA on 7 November 2012. On 9 November 2012 a director of each of the Group entities requested an extension of 10 business days due to the unavailability of the chief financial officer and secretary of the Group as well as another director. Consequently, the lateness of the receipt of the RATA has left the Administrators with limited time to review it for the purpose of preparing their report required for s 439A(4) CA. 12 At meetings for each of the committees of creditors held on 28 November 2012, the Administrators foreshadowed their intention to bring the present application. Members of those committees advised their position in respect of whether an application should be made. The Administrators were met with a divergence of views in response to that request. 13 The unions who represent employees employed by subsidiary companies all opposed, and continue to oppose, any extension for reasons which will be discussed. There was a variety of responses from the other committee members. This left the Administrators in a difficult position, resulting in the present urgent application.

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RELEVANT PRINCIPLES 14 The relevant principles on an application to extend the convening period have been considered in some detail relatively recently in Mentha, in the matter of the Griffin Coal Mining Company Pty Ltd (administrators appointed) [2010] FCA 30 (at [15]-[22]) where I noted that the principles themselves are well understood. Relevantly: The Court has jurisdiction to make an extension order by reason of s 439A(6). In exercising that jurisdiction, it must have regard to, and balance, the interests of creditors in a relatively speedy administration and the need to allow sufficient time to administrators to carry out their function properly and maximise the benefit to creditors through a proper administration: Griffin (at [15]); Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 (at [10]) per Barrett J. Administrators need to have sufficient time to investigate the affairs of the company under administration and to provide sensible advice and information to the creditors: Griffin (at [16]); Hayes, in the matter of Estate Property Group Ltd (Administrators Appointed) [2007] FCA 935 (at [1]) per Gyles J. What that requires in a given context will depend on the complexities of the issues in the administration. Issues that may provide reasons for justifying an extension include: ○ the size and scope of the business; ○ a large number of employees with complex entitlements; ○ a complex corporate group structure and intercompany loans; ○ a lack of access to corporate financial records; ○ the need for time to assess thoroughly any proposal for a Deed of Company Arrangement (DoCA); ○ where an extension would allow the sale of a business as a going concern; and ○ where additional time is likely to enhance the return for unsecured creditors (Griffin (at 18]); Re Riviera Group Pty Ltd (admins apptd) (recs and mgrs apptd) (2009) 72 ACSR 352 (at [13]) per Austin J). 15 Administrations should not be allowed to be unduly extended. 16 Having said that, there is no particular presumption against granting an extension, as long as adequate reasons are given in support of the application for extra time: Griffin (at [19]); Riviera (at [12]). 17 Where a substantial reason in one or more of the above categories is established, the Court will tend to grant an extension for the time sought by the administrator, as long as there is sufficient evidence to justify the application and the extra period nominated. Also relevant to the question, however, is evidence of material prejudice to those affected by the extension. If none is apparent, the application will generally be granted. If there is evidence of prejudice, then the balancing exercise becomes more difficult. 18 If an objection is raised, it is necessary to consider its nature, for example, whether it is to the steps proposed or the time to be taken. The latter type of objection in particular requires careful scrutiny (Griffin (at [21]). 19 It is not unusual for an application to be granted for a period of months. 20 There have been many applications for extensions in the 20 years since Pt 5.3A CA was enacted. The principles to be applied were also recently examined by Le Miere J in the Supreme Court of Western Australia in Hughes as Administrator of Westgem Investments Pty Ltd (Receivers and Managers Appointed) v Receivers and Managers of Westgem Investments Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (No 4) [2012] WASC 412. His Honour pointed out (at [4] and [5]) the competing considerations which have to be balanced. First, the creditors should be able to make a considered decision at the earliest reasonable time. Second, it is desirable that they have sufficient and worthwhile information upon which to base a decision. His Honour pointed to the need for the Court to give consideration to the matters raised in support of the extension. In an earlier application by the same administrators for the same company (Hughes as administrator of Westgem Investments Pty Ltd (Receivers and Managers Appointed) (No 2) [2011] WASC 114), Corboy J outlined the relevant principles in more detail. His Honour set out five matters which he considered to be relevant (footnotes omitted) (at [11]): (a) It has been said in several cases that the function of the court is to strike an appropriate balance between, on the one hand, the expectation that administration will be a relatively speedy and summary matter and, on the other hand, the requirement that undue speed should not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders: see for example, Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 [10]; Re ABC Learning Centres. (b) The starting point for any application to extend the time for convening creditors' meetings must be that generally, the court will expect that administrators adhere to the specified times limits: Re Evans & Tate Ltd (Administrators Apptd) (recs and mgrs apptd); Ex parte Jones [2007] WASC 235 [20]. However, as the learned editors of Ford's Principles of Corporations Law [26.201] observe: More recently, confronted with cases involving large corporate groups and complex businesses, or the prospect of successful realisation of assets through negotiations with third parties (such as receivers) if given more time … courts have tended to recognise that the statutory timeframe, appropriate though it may be for small businesses, is in some cases unworkable. (c) The degree of complexity of the administration is the key to understanding the court's approach. There is no place for a predisposition against an extension of time where there is evidence of complexity, such as in large corporate groups, complex funding arrangements or complex business transactions: Re Riviera Group Pty Ltd (Administrators Apptd) (recs and mgrs apptd) [2009] NSWSC 585 [17]-[18]. (d) It is not necessary that the administrator shows special grounds for the extension being sought: Re Evans & Tate. However, the administrator is required to particularise the problems that make an extension of time necessary: see the comments of Owen J in Re Allbuild Construction Co Pty Ltd (Administrators Apptd); Ex parte Featherby [2000] WASC 227 regarding the need for the court to be provided with sufficient information concerning the affairs of the company and the investigations that have been made into those affairs to enable it to properly exercise its discretion. (e) One relevant matter for the exercise of the court's discretion is the attitude of the creditors and others who may be affected by the extension sought: Re ABC Learning Centres Ltd (No 5); Re Evans & Tate. Another relevant matter is whether an extension is necessary to enable an administrator to prepare and provide the report and statements and in particular, to arrive at the opinion contemplated by s 439A(4): Re ABC Learning Centres (No 5); Re Pan Pharmaceuticals [2003], Corporations Act 2001 FCA 598; 21 ACLC 1144 [41].

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APPLICATION OF THE PRINCIPLES 21 The Administrators are faced with the difficulty that they are confronted with substantial complexity in the affairs of the Group and have received limited information only about those affairs. Specifically, (a) they have found it difficult to obtain access to key employees, information and documents used in the continuation of the trading by the Group; (b) they say they had difficulty in obtaining information directly from the Receivers; (c) the operating entities will be closing from 22 December 2012 to 6 January 2013 inclusive, such that access to the records during that period will be limited; (d) notwithstanding this, requests made by employees for annual leave prior to the administration will be honoured during that time resulting in further delays; and (e) because of the appointment of a receiver, the Administrators have no control over the assets of the Group and have limited access to funding. 22 The businesses are of considerable size. The Administrators say that the RATA is quite incomplete as to the matters the Administrators must take into account. In particular, the extent of exposure to redundancy entitlements payments, should there be any employee terminations, or possible damages for breaches of any contracts in the event of liquidation is uncertain. Evidence as to the value of Autodom is also inadequate. There are considerable liabilities to unsecured creditors including possibly the Commonwealth. The Administrators are unaware as to the extent to which those debts may be contingent upon liquidation not occurring. 23 Although for the most part the redundancy liability has been calculated, the Administrators having met with union representatives have continued to monitor the ongoing employment and redundancy liability obligations. The Administrators are conscious that if the Group or an individual employing company is placed into liquidation, that event will provide employees with access to the General Employee Entitlements and Redundancy Scheme (GEERS), a Commonwealth scheme. The availability of the entitlements under GEERS would present an attraction to the unions on behalf of the employees in accessing that scheme earlier rather than later. As the Administrators say, however, the employees are not the only creditor of the companies and the Administrators require the opportunity to form their own opinion as to what is in the best interests of the creditors as a whole. The RATA suggests that the floating charge assets of the Group are valued in excess of $20 million. This would be available to pay employee entitlements in priority to amounts owed to the Secured Creditor. However, the Receiver has indicated that, in its view, the net value of the floating charge assets is likely to be considerably less than that suggested in the RATA. The Administrators say they need time to investigate and consider the discrepancy of that assessment. Additionally, employees may continue to be employed even in liquidation but if the Administrators were appointed as liquidators they cannot at present say whether or not they would consent to the carrying on of the businesses of the subsidiaries. In Mr Macks' view, it may take considerable time for employees to access GEERS. The Receivers firmly take quite a different point of view on that issue. It is not something which can be resolved in an application of this nature. 24 The position of the Administrators in summary is that they cannot say at this point that there is no option but to place the companies into liquidation. That might be the position but they are not yet able to judge that question. The lack of information is hampering them in advancing that progress. On the other hand, if the Administrators are required to make a recommendation in the next week or so, liquidation would be their recommendation albeit based on limited detailed information. 25 There are some subsidiary issues of varying weight. Mr Macks gives evidence as to the apparent forgiveness of inter-company loans in the Group which would need consideration as possible voidable transactions under s 588FE CA. I do not place much weight on this factor although it is right for the Administrators to disclose it and certainly adds to the complexity of the resolution of matters. However, if there is something in it, on liquidation the issue would no doubt be explored. 26 In relation to the Receivers, there is an ongoing need for both the Administrators and the Receivers to communicate about various matters. Each office has its different obligations and for so long as each is in a continuing position, there will be added (and to some extent duplicated) expense. There are competing views, for example, as to the capacity with which it may be possible to sell the Group on an ongoing basis. The Receivers have already commenced exploring that process but the Administrators are not as advanced. 27 Finally, in relation to potential considerations, there is a possibility of a DoCA. A director of Autodom, Mr Martin has announced his intention to propose a DoCA. He requested information which the Administrators cannot yet provide in order to make that proposal. His advice raises particular considerations relevant to Autodom. Mr Macks is of the view that there is considerable potential to realise the assets of Autodom, in particular, the listed 'shell' company and certain tax losses of some considerable magnitude. That potential, however, depends upon there being a DoCA and potentially, it is also said, on the transfer of assets to Autodom from one or more subsidiaries for valuable consideration. Should a liquidation of the subsidiaries proceed, the Administrators are uncertain as to whether or not the potential to realise those assets would be lost. The Administrators say they would require three weeks to consider any DoCA proposal but, as they have indicated, the information on which such a proposal would be based is apparently not yet available to the Administrators. 28 The DoCA proposal is only in the broadest of terms being constituted by an email of 28 November 2012 from Mr Martin to Mr Macks saying: I wish to formally lodge my interest in proposing a Deed of Company Arrangement over Autodom Ltd (in my own right or via a nominee). In order to assist me in formulating a Deed, please let me know: 1. the details of the creditors of Autodom Ltd including the quantum of their asserted debts; 2. what you anticipate the return to creditors of Autodom Ltd would be in a liquidation scenario. With this information at hand, I anticipate being in a position to lodge a proposal of a Deed without any undue delay and before the forthcoming second meeting of creditors (so as to avoid the need to extend the convention period for the second meeting of creditors of Autodom Ltd). I look forward to your earliest response. 29 The Administrators express the view that additional time would probably increase the prospects of a return for unsecured creditors of Autodom. There may be residual benefit to the unsecured creditors of the subsidiaries. Otherwise, the Administrators would presently recommend a winding up in the absence of a DoCA proposal or potential to sell the subsidiaries. 30 To date, the Administrators have spent about 450 professional hours in relation to the administration of the Group. There are substantially greater tasks which would be carried out if a four or three month extension were to be granted. A one week extension would be necessary at the very least to give the requisite notice of a second creditors' meeting.

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Position of the employees 32 The position of the employees is advanced in an affidavit affirmed by Mr Steven Dargavel, the Victorian State Secretary of the Automotive, Foods, Metals, Engineering, Printing and Kindred Industries Union (AMWU). He deposes that the Group employs about 400 workers in three of the companies in the Group, including AiDair Dandenong and AiDair New Gisborne in Victoria and AiAutomotive in South Australia. The majority of those employees are AMWU members with a smaller number being members of the Australian Workers Union (AWU). 33 Mr Dargavel has maintained communications with Mr Keith Crawford from McGrathNicol, the Receiver, and has also arranged for ongoing communications with the Administrators, including the attendance at meetings. Mr Dargavel describes the details of those dealings which are not in the circumstances presently necessary to explore in light of the fact that I accept the objection advanced for the employees and decline the relief sought in relation to the subsidiaries. 34 Shortly put, as Mr Dargavel deposes and I accept, the employees oppose an extension. In particular, the AMWU employees are low paid factory workers, many of whom are of non-English speaking backgrounds. The AMWU is very concerned for these employees who will be seriously disadvantaged until the operating entities within the Group are liquidated. As Mr Dargavel submits, those members often have mortgage repayments to make, rent to pay and families to support. Christmas is a particularly difficult time for them to be unemployed and to find work. The difficulty is compounded by the present decline in customer demand for some Australian cars and Australian automotive parts. 35 Employees who are made redundant are not entitled to access GEERS until the company goes into liquidation. If the convening period is extended by several months and employees are made redundant in this time, those who have been become redundant have no guaranteed income stream. However, Mr Dargavel is aware of a recent liquidation of another automotive parts supplier where 100 union members were made redundant but were able to recover entitlements under GEERS within the first pay period after liquidation. 36 In my view, this consideration is powerful. It is all the more powerful, having regard to the vagueness and uncertainty of any alternative proposal in relation to the subsidiaries, such as a DoCA. The contemplated DoCA applies only to Autodom. Whether Autodom can be quarantined in some way is a valid consideration but even then, in the circumstances of this Group taken as a whole, one would need to be persuaded that the 'balance' as discussed in the authorities is sufficient to warrant the quarantining of Autodom from likely liquidation in the short term.

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The landlord's interest 37 Hajosa Investments Pty Ltd (Hajosa) applied for an adjournment of the Administrators' application. That application was not supported by the other parties and I declined to grant it. In light of the outcome being favourable to Hajosa, it is unnecessary to deal with the adjournment issue given the urgency of these reasons. 38 Hajosa is a creditor of Autodom and the landlord of the premises occupied by AiDair Dandenong and a contingent creditor of that company. It is affected by the application as discussed above by reason of s 440B CA which provides as follows: 440B Restrictions on exercise of third party property rights General rule (1) During the administration of a company, the restrictions set out in the table at the end of this section apply in relation to the exercise of the rights of a person (the third party) in property of the company, or other property used or occupied by, or in the possession of, the company, as set out in the table. Exception - consent of administrator or leave of court (2) The restrictions set out in the table at the end of this section do not apply in relation to the exercise of a third party's rights in property if the rights are exercised: (a) with the administrator's written consent; or (b) with the leave of the Court. Possessory security interests - continued possession (3) If a company's property is subject to a possessory security interest, and the property is in the lawful possession of the secured party, the secured party may continue to possess the property during the administration of the company. Restrictions on exercise of third party rights Item If the third party is … then … 1 a secured party in relation to property of the company, and is not otherwise covered by this table the third party cannot enforce the security interest. 2 a secured party in relation to a possessory security interest in the property of the company the third party cannot sell the property, or otherwise enforce the security interest. 3 a lessor of property used or occupied by, or in the possession of, the company, including a secured party (a PPSA secured party) in relation to a PPSA security interest in goods arising out of a lease of the goods the following restrictions apply: (a) distress for rent must not be carried out against the property; (b) the third party cannot take possession of the property or otherwise recover it; (c) if the third party is a PPSA secured party - the third party cannot otherwise enforce the security interest. 4 an owner (other than a lessor) of property used or occupied by, or in the possession of, the company, including a secured party (a PPSA secured party) in relation to a PPSA security interest in the property the following restrictions apply: (a) the third party cannot take possession of the property or otherwise recover it; (b) if the third party is a PPSA secured party - the third party cannot otherwise enforce the security interest.

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39 Importantly, Hajosa submits that there is lack of utility in prolonging the administrations. The suggestion that the businesses are likely to be able to be sold or restructured does not have any tangible support in Hajosa's submission. Hajosa makes the point that the Administrators have spent some 450 hours already but achieved extremely limited progress which is why such a substantial extension is sought. That extra cost, which might be in the order of $200,000, it is submitted (I make no finding as to that figure), must be taken into account in any decision to extend the administrations. Hajosa makes the point that there is no suggestion of handing the company back to the directors and, in the absence of any concrete evidence of a DoCA, the only realistic course of action for the creditors is to vote in favour of liquidation of Autodom. Indeed, this is what the Administrators intend to propose to creditors if the Court grants only a short extension of time to enable a meeting to be called as soon as practicable. 40 In short, Hajosa reinforces the unions' submissions for the employees that there is no tangible evidence at all at this stage on which there can be realistic optimism about enhancing the interests of creditors. As time marches on, particularly if an extension of some months is granted, there is a greater likelihood that there will be significantly increasing ongoing costs. Even insofar as these are concerned, it is unclear as to how the costs will be paid in light of difficulties alluded to by the Administrators in relation to access to cash. Hajosa submits: Whatever may be the merits of postponing the Second Creditors Meeting for Autodom Ltd in the hope that this nascent proposal might come to full gestation, there is no proposal for any of the other companies. Accordingly, when Mr Macks deposes … that he would not in the event of a short extension be able to provide the creditors with an opinion as to whether it would be in their interest for any of the entities to enter into a DoCA as opposed to liquidation, that is simply because there is no such proposal. … [A]ll he relies upon is the theoretical possibility of some proposal emerging sometime in the future which may or may not be within the four-month period sought by the Administrators. 41 Finally, Hajosa makes the point that liquidation does not necessarily preclude some future arrangement between the company and its creditors if this is thought to be appropriate by a liquidator. At present, however, there is no utility in prolonging the administrations especially for the subsidiaries companies.

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CONCLUSION 42 However, having considered all the factors and the balancing requirements referred to in the authorities, in my view there is a real prejudice to the employees in prolonging this administration. There is also prejudice to at least one major creditor. As against that, the degree of certainty of a better outcome being achieved by prolonging the administration is so low that it cannot be given significant weight. 43 In all those circumstances, in relation to the subsidiaries, I will decline to extend the period of time in the manner sought by the Administrators. I will extend the period of time for a period of seven days to enable the creditors' meeting to be convened and conducted in accordance with the statutory obligations the Administrators hold. 44 Insofar as Autodom is concerned, there is at least some limited prospect of a better outcome for the creditors, especially if a DoCA can be approved. I am not prepared to allow anything like four months for exploration of that process. I will confine an extension to a period of six weeks. If at completion of that period or during it, it is apparent that there is a substantially more tangible prospect of a more beneficial outcome than liquidation, then it will be open to the Administrators to approach the Court in fresh proceedings seeking further extension. For my part, I would need much clearer indications of alternatives to liquidation than those now available. There is no obligation on the Administrators to use the full period of that extension if it is apparent that other proposals such as a DoCA are not a realistic prospect. 45 Insofar as costs are concerned, all parties are agreed that regardless of the outcome, each of the parties (except the Receivers) should be entitled to payment of its costs in the administration. Although the application by the Administrators was not granted in the terms sought, it was entirely appropriate to bring the application. In the case of the Receivers, the Receivers' costs would be part of the receivership and a costs order is unnecessary. I will direct the Administrators to file a minute of orders reflecting these reasons within 3 days. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.