Blundell (Administrator), in the matter of MG Gold Pty Ltd (administrators appointed) [2023] FCA 282

JACKMAN J 1 This matter involves an application for essentially two matters. One is an order pursuant to s 447A(1) of the Corporations Act 2001 (Cth) (the Act), that Pt 5.3A of the Act is to operate in relation to MG Gold Pty Ltd (the Company) as though Mr Blundell and Mr Cathro were validly appointed as joint and several voluntary administrators of the Company, on 17 February 2023. That order is not opposed, and I will make the order in due course. The other aspect is an application for an extension of time, pursuant to s 439A(6) of the Act, for convening the second meeting of creditors under s 439A of the Act. The extension sought by the plaintiff, being the administrators, is for six months or so, until 30 September 2023. That application is opposed by Maradox Pty Ltd (Maradox), a creditor of the Company, which contends that the extension should be a shorter period, in the order of two to three months. 2 There is agreement between the parties that the applicable principle is that stated by Barrett J in Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10], to the effect that in considering an application to extend the convening period, the Court must have regard to the objects of Pt 5.3A of the Act, set out in s 435A, and reach an appropriate balance between the expectation that an administration will be undertaken in a relatively speedy and summary manner with a need to ensure the administration is not conducted without consideration of sensible and constructive options directed towards maximising the returns for creditors and any return for shareholders. 3 In the present case, the administrators have called for expressions of interest, and there have been six parties which have expressed interest in a transaction with the administrators in relation to the future of the company. The expression of interest campaign has closed, and the administrators anticipate that at least some of the prospective counterparties may be interested in implementing a deed of company arrangement (DOCA). Mr Cathro is of the view that a DOCA proposal may well result in a better return to creditors than an immediate liquidation. Importantly, Mr Cathro estimates the time to negotiate with one or more of the preferred offerors will take three to six weeks. Taking the upper end of that range, that would take the parties through to the end of April, or perhaps early May, given that the Easter and Anzac Day holidays will intervene. 4 Mr Cathro says that once an in-principle agreement is reached, it is likely that consent from the Minister will be required, and time will be required to complete negotiations, prepare documents and transact the sale. Mr Cathro says that process should be completed by 30 September 2023. Understandably, Mr Cathro has not been able to give evidence of the likely timeframe for obtaining such ministerial consent. 5 Maradox is concerned with the length of the proposed extension of time. The affidavit of Mr Roberts, the solicitor representing Maradox, refers to information he has received from the director of Maradox, Mr Sailah, who has experience in the gold mining industry, to the effect that the longer the mine is left without a full team of people or an injection of capital, the more it deteriorates. Specifically, Mr Sailah has informed Mr Roberts that machinery and equipment is at risk of water damage, and that the condition of seals and pumps at the mine will worsen over time. Counsel for the plaintiff questions Mr Sailah's qualifications in providing those opinions to Mr Roberts, however they strike me as matters of common sense, which one would not require very much, if any, experience in the gold mining industry to appreciate. I should add that there is no suggestion at all that the administrators have taken an unreasonably long time to undertake the steps which they have undertaken to date, or that they have conducted themselves in any way unreasonably in seeking to guard against risks to the mine and the mining equipment. 6 Maradox also points to the delay to date in obtaining a resolution of its claim. Accordingly, as I have indicated, Maradox considers that any extension should be for a shorter period of two or possibly three months, which would permit the administrators sufficient time to complete the expressions of interest negotiations and ascertain whether they can sell the company's business undertaking and assets and whether anyone will propose a DOCA at a second creditors' meeting. Maradox points out that it will still be open to the administrators to seek a further extension of the convening period for the second creditors' meeting if one is required at that point. 7 In undertaking the balancing exercise to which Barrett J referred, I have come to the view that an appropriate period of extension is three months, until 16 June 2023. It may well be that a further extension will be required after that, and I accept that that will require some expense and diversion of resources on the part of the plaintiffs. However, it appears that by the end of April or early May, the plaintiffs will have been able to make a decision on the expressions of interest which they have received and should be in a position by that time to have negotiated an agreement. If ministerial consent is then required for that agreement, then it is to be hoped that the Minister and the Minister's department will be able to reach a decision on that application by early June, in order to enable the second creditors' meeting to take place within the stipulated period surrounding 16 June 2023. 8 As to costs, I have received very considerable assistance, both from the affidavit of Mr Roberts and also the appearance of Mr Gronow and his junior counsel. 9 In those circumstances, having regard to the assistance which I have derived from Maradox and its legal team, together with the success which they have enjoyed at this hearing, in my view, the costs incurred by Maradox should be costs of the administration now and be paid out of the property of the Company. I have helpfully been provided with draft orders by the plaintiff. I will amend order 2 to delete the date 30 September 2023 and insert the date 16 June 2023. I will amend order 6 to insert after the words "the administrators" the words "and Maradox Proprietary Limited's" so that it reads: The administrators and Maradox Proprietary Limited's costs of and incidental to this application be costs in the administration of the company and be paid out of the property of the company. 10 Order 4 in those orders gives liberty to apply on three days' notice, which I will leave in, and I will adjourn the further hearing of the originating process indefinitely, with the intention that if there is an application for a further extension of time or for any other variation of the orders pursuant to the liberty to apply, then there is no need to incur the expense of commencing fresh proceedings for that purpose. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman.