Carter, in the matter of AMT Group Pty Ltd (Administrators Appointed) [2017] FCA 303

YATES J: 1 The plaintiffs are the joint and several voluntary administrators of nine companies which, for convenience, I will call "the AMT Group" or simply "the Group". The plaintiffs seek an extension of the convening period for the second meeting of creditors of each company in the Group. Unless extended, the convening period, in each case, will expire on 6 March 2017. The present application is supported by an affidavit made by the firstnamed plaintiff, Mr Carter. The companies in the AMT Group are ultimately wholly owned by Skidmore Retail Group Inc (Skidmore). Skidmore is a privately held company incorporated in Canada. 2 Certain of the companies in the AMT Group operated an independent mobile phone retailing business with stores under the "Allphones" banner, as well as stores operated on behalf of Vodafone Hutchison Australia Pty Limited (Vodafone) and Samsung Electronics Australia Pty Limited (Samsung). Prior to the plaintiffs' appointment, these companies operated 84 stores employing 434 employees across Australia. Mr Carter has provided details of these stores and the state of their operations, both as at the date of the plaintiffs' appointment and as at the present time. It is sufficient for me to note that a number of stores were closed and a number of employees were made redundant following the plaintiffs' appointment. 3 As at the date of the plaintiffs' appointment, the companies' total annualised revenues were approximately $60 million. According to Mr Carter, the plaintiffs' initial investigations have established that there is no secured creditor with a security interest over the whole, or substantially the whole, of the companies' assets. There are several holders of security interests registered against the companies on the Personal Property Securities Register maintained under the Personal Property Securities Act 2009 (Cth). The persons holding these interests are owed approximately $2.8 million. There are also various unsecured and contingent creditors who are owed approximately $12 million. Of these, employees are owed approximately $1.1 million, excluding redundancy payments of approximately $1 million, which have now crystallised. Trade creditors are owed approximately $10.9 million. 4 Mr Carter expressed the view that the opportunities for sale of the companies' businesses and/or assets appear to be very limited outside transitioning parts of those businesses or assets to current stakeholders, in particular Vodafone and Samsung. 5 On 21 February 2017, the plaintiffs executed an agreement with respect to transitioning the operation of 27 stores operated by Australian Retail Management Services Pty Limited (administrators appointed) (ARMS), one of the companies under administration, to a third party nominated by Samsung. This transition has now been achieved. 6 The plaintiffs are continuing to explore the possible transition of other stores, and have paid the rent for certain licensee stores for the period up to and including February 2017 in order to facilitate this. 7 Mr Carter has given an account of the plaintiffs' activities as administrators undertaken to date. It is not necessary for me to set out the detail of that work. 8 A first meeting of creditors was held on 16 February 2017. At that meeting, the creditors were informed of the possibility that the present application would be made. Mr Carter has deposed that no creditor at the first creditors' meeting raised any objection to such a proposal. Committees of creditors were appointed in respect of AMT Group Pty Limited (administrators appointed) (AMT), ARMS, and Allphones Retail Pty Limited (administrators appointed) (Allphones Retail). 9 The plaintiffs have been informed by Skidmore's local solicitors, Herbert Smith Freehills, that it intends to propose at least three separate deeds of company arrangement in respect of AMT, ARMS, and Allphones Retail (the DOCA proposals). Although no formal proposals have been made, present information indicates that the DOCA proposals will include paying all unpaid employee entitlements of employees in the AMT Group in full, immediately following execution of the relevant deed or deeds, subject only to verification and calculation of the claims by the deed administrators. 10 The DOCA proposals would also include paying unpaid licensee and franchisee commission payments up to the date of the plaintiffs' appointment in respect of payments received by the AMT Group, less any payments made to or for the benefit of licensees and franchisees since the plaintiffs' appointment. It is envisaged that effectuation of any such proposals will result in a better return for unsecured creditors than is likely to be received in a liquidation of the companies concerned. Skidmore has requested further information from the plaintiffs to enable it to finalise its intended proposals, and Mr Carter has deposed that this information is likely to be provided by 10 March 2017, with an expectation that the DOCA proposals will be received by 17 March 2017. 11 At the present time, the administrations are being partially funded by way of a payment of approximately $858,000 from Skidmore. The funds are being used to pay wages, rent, and other operational costs to allow time to explore transitioning parts of the companies' businesses and assets to new operators. Skidmore provided some of this funding on the condition that it would result in the early payment of employee entitlements and amounts owing under leases held by the companies for stores occupied by franchisees and licensees. Mr Carter anticipates that the amounts to be paid under the DOCA proposals will be reduced by the amount of these early payments. He has also expressed his understanding that Skidmore would consider providing further funding to the plaintiffs to meet additional costs of the administration, should that be required. 12 The plaintiffs seek an extension of the convening periods for two principal reasons. First, the intended DOCA proposals are likely to present a better return to creditors in respect of AMT, ARMS and Allphones Retail than a liquidation of those companies. Given Mr Carter's expectation that the DOCA proposals will be received by 17 March 2017, further time will be required for them to be developed, negotiated and considered by the plaintiffs, and to be put to creditors. Mr Carter anticipates that this will take a further period of up to two weeks. 13 The second reason is that, at the present time, the plaintiffs are unable to provide any meaningful recommendation or proposal to creditors as required under s 439A of the Corporations Act 2001(Cth) (the Act). In this connection, Mr Carter has noted that the directors of the companies have not, as yet, provided a report as to affairs. An extension for doing so has already been granted, and Mr Carter expects that a further short extension will be sought, which he says the plaintiffs would favourably consider. The plaintiffs also wish to continue with their investigations into the companies' affairs. 14 Mr Carter has expressed the opinion that, given the size and relative complexity of those affairs, a period of up to one month is necessary to allow the plaintiffs to properly undertake this task. Mr Carter has expressed the view that extending the convening periods by one month will not cause any material prejudice to any creditor of the companies or any other interested person. Indeed, he has expressed the view that the extensions are likely to increase the possibility of a greater return to the majority of creditors by allowing sufficient time for the DOCA proposals to be formulated and considered. 15 Mr Carter deposed to the giving of notice of the present application to interested parties. No person to whom notice has been given has expressed opposition to the convening period being extended, in each case, for the short time that is sought. Mr Carter has deposed that if the extensions are granted then, in the intervening period, the plaintiffs will continue to meet employees' entitlements for the period in which the plaintiffs continue to trade the companies' businesses. He has also deposed that the plaintiffs will meet their obligations to pay rent for the premises whilst the companies continue to occupy those premises. 16 The principles on which an extension of the convening period will be granted in respect of the second meeting of creditors of a company in administration are not in doubt and do not require recitation in these reasons. I have recently referred to these principles in Weston, in the matter of Flush Fitness Pty Limited (Administrators Appointed) [2017] FCA 172 at paragraphs [14]-[16]. A balance needs to be struck between the expectation that an administration under Part 5.3A of the Act will be conducted with relative speed and the requirement that speed not prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders. 17 In the present case, the extensions that are sought are modest and justified so as to facilitate the making of the DOCA proposals that are in contemplation. I accept Mr Carter's assessment, expressed in his affidavit, that it is in the best interests of creditors and members of the respective companies for the orders sought in the originating process to be made. For these reasons, orders substantially as sought will be made. 18 There is one additional matter to which I should refer. The plaintiffs currently have postal, facsimile or email addresses for approximately 92 per cent in number of the known creditors. They seek orders that would enable them to send documents to creditors by electronic means. If they were required to send such documents by post to all creditors, it would be necessary for them to engage the services of an external provider at the cost of approximately $11,400, which could be avoided if they were permitted to send communications by email where email addresses are available to them. 19 I am of the view that it is an entirely sensible course that the sending of notices and other documents be facilitated by electronic communication, where that is possible. The virtue of such an approach was discussed by Black J in Re Creative Memories Australia Pty Limited (Administrators Appointed) [2013] NSWSC 732. For this reason, I also propose to make orders pursuant to s 447A(1) of the Act, which will enable notices and other documents to be sent electronically to creditors, including persons claiming to be creditors, where the plaintiffs hold an email address. The orders will also include provision for causing notices to be posted on the website maintained by the plaintiffs' firm, PPB Advisory, in relation to the companies, as well as causing notice of the second meeting of creditors to be published in The Australian newspaper. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.

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