9 In arriving at his comparison of the results of liquidation as against the results under a deed of company arrangement, Mr Warner assumed that stocks in the balance sheet of Miles Special Builders at approximately $369,000.00 would be utilised to generate further work in progress and ultimately further debtors in that amount. No provision was made for replacement stock although Mr Warner agreed that stocks had stood at approximately the same value in the balance sheet over time.
10 A further criticism of the figures was made upon the basis that they included no amount for costs of administration. Mr Warner did say that the costs of administration were likely to be the costs of a liquidation if the deed of company arrangement was not put in place; in other words, there was no advantage so far as costs were concerned under the one alternative as against the other.
11 The expected return to liquidity is dependent, in part, on debtors being realised in a short space of time. The history of Miles Special Builders suggested that the vast bulk of its debtors were in excess of 60 days. Indeed, the percentage was 92.3% representing debts of approximately $725,000.00, although there was included in that amount a challenged debt of approximately $467,000.00.
12 Mr Warner had been told that there were significant amounts on 14 day terms. He conceded that if Miles Special Builders was in liquidation it would be highly unlikely that such terms would be met.
13 If the amount claimed by Tollfab was taken into account and Mr Warner's comparison of liquidation against a deed of the company arrangement was adjusted, it would mean that in a liquidation the creditors would receive nothing as the forecast amount available to creditors of $231,000.00 would be insufficient to deal with the additional $344,000.00. On the other hand, under a deed of company arrangement, there would still be a return of 100 cents in the dollar if Mr Warner's estimates are accurate because there is expected to be available to non-priority creditors an amount of $1,183,000.00 with total creditors, excluding Tollfab, of $831,000.00, leaving a return to subordinated creditors of $352,000.00 and that figure would be sufficient to accommodate the Tollfab claim of $344,000.00.
14 The submission made by Bidald Consulting was that in the light of these uncertainties, the figures should not be accepted and I should not conclude that there is any reasonable prospect of Miles Special Builders returning to liquidity in a short space of time.
15 While there are clearly some criticisms of the figures upon which Mr Warner expressed his opinion, I am not satisfied that the doubt as to his prognostication of a return to liquidity is sufficient for me to conclude in terms of the Corporations Act 2001 (Cth), s 440A(2) that it is not in the interests of the company's creditors for Miles Special Builders to continue under administration rather than to be wound up. The purpose of Pt 5.3A is spelt out in s 435A, which is:
"The object of 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 than would result from an immediate winding up of the company."
16 In my view, Mr Warner's analysis suggests there is a prospect that a better return for creditors and members of Miles Special Builders will result from a continuation of the voluntary administration.
17 The Corporations Act 2001 (Cth), s 440A(2) requires that I adjourn the hearing of the application for an order winding up Miles Special Builders as it is under administration if I am satisfied that it is in the interests of the company's creditors for the company to continue in administration rather than be wound up. For the reasons I have already expressed, I am of that view. I therefore propose to adjourn the application of Bidald Consulting.
18 In McDonald v Deputy Commissioner of Taxation [2005] NSWSC 2, Barrett J concluded that an order for costs against a company in administration in favour of a creditor that had sought its winding up in insolvency was not provable in the company's subsequent creditors' voluntary winding up: it was neither an expense properly incurred by the administrators or liquidators in terms of the Corporations Act 2001 (Cth), s 566(1)(a) or s 556(1)(d), nor was it a debt the circumstances giving rise to which occurred before the commencement of the administration in terms of s 553(1).
19 It was suggested that I might overcome that decision by making an order under the Corporations Act 2001 (Cth), s 447A. It empowers the court to make an order about how Pt 5.3A might operate in relation to a particular company. In Coventry Auto Parts Pty Ltd v Tony Michael Mechanical Pty Ltd (under administration) [2003] QSC 141, Fryberg J took the view that he could make an order for the inclusion of a term in a deed in terms of s 447A. Section 444A specifies the content of an instrument setting out the terms of a deed of company arrangement. His Honour directed that that provision should operate in relation to the company in question so that the instrument specified that the costs of the applicant for the winding up of the company, ordered to be paid by the company, be paid by the administrators in priority to all other amounts payable by them. I propose to take a similar course.
20 I order that the originating process of Bidald Consulting Pty Ltd be stood over before the Corporations List Judge at 10.00 am on Monday 11 April 2005. I reserve Bidald Consulting Pty Ltd's costs.
21 Pursuant to the Corporations Act 2001 (Cth), s 447A, I direct that s 444A operate in relation to Miles Special Builders Pty Ltd so that the instrument referred to therein must specify that Bidald Consulting Pty Ltd's costs of these proceedings be paid by the administrators in priority to all other amounts payable by them.
22 Pursuant to the Corporations Act 2001 (Cth), s 447A, I further direct that s 439B and s 439C operate so that no resolution that Miles Special Builders Pty Ltd be wound up may be put to a meeting of creditors unless Bidald Consulting Pty Ltd has been given seven days' written notice of such intention.
23 I grant Bidald Consulting Pty Ltd liberty to apply on 24 hours' notice.