Deputy Commissioner of Taxation v Laguna Australia Airport Pty Ltd, in the matter of Laguna Australia Airport Pty Ltd

STATUTORY PROVISIONS 9 Section 440A(2) of the Act provides: The Court is to adjourn the hearing of an application for an order to wind up a company if the company is under administration and the Court is satisfied that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up. (Emphasis added.)

APPLICABLE PRINCIPLES 10 Generally, an adjournment under s 440A(2) of the Act requires that the Court is satisfied that it is in the creditors' interests to continue the administration in all the circumstances. There must be a sufficient possibility, as distinct from mere optimistic speculation, that creditors' interests will be accommodated to a greater degree in an administration than in a winding up: Weriton Finance Pty Ltd v PNR Pty Ltd (in admin) (2012) 92 ACSR 88 at [16] and the authorities cited. 11 The onus is upon Laguna to show, by persuasive evidence, that it is in the interests of Laguna's creditors that the administration continue rather than liquidation ensue: Deputy Commissioner of Taxation v Yates Security Services Pty Ltd (1997) 26 ACSR 629 at 632-633. As McPherson JA (with whom Pincus and Davies JJA agreed) stated in Creevey and Another v Deputy Commissioner of Taxation (1996) 19 ACSR 456 at 457: The question of whether an administration should continue, rather than that there be a winding up, is obviously closely related to the further question of whether the creditors could hope to get more by way of payment of their debts from one form of process or administration than from the other. In order to satisfy the court of the matter referred to in s 400A(2) of the Corporations Law, one would expect that there would have to be some persuasive evidence to enable it to be seen that there were assets which, if realised under one form of administration rather than the other, would produce a larger dividend, or at least an accelerated dividend for the creditors. 12 In considering whether it is in the interests of Laguna's creditors that the Commissioner's winding up application be adjourned and the administration continue, the Court is required to act on available admissible evidence: Deputy Commissioner of Taxation v Westend Asset Pty Ltd [2013] FCA 1140 at [4]. An assessment of whether such evidence is sufficiently persuasive will depend, in part, on the circumstances in which an adjournment is sought. 13 As Campbell J (as his Honour then was) said in Deputy Commissioner of Taxation v Bradley Keeling Management Pty Ltd (admins apptd) (2003) 44 ACSR 377 at [18]: Ultimately what the court needs to do is to be persuaded. The amount of proof which can result in persuasion, differs with the circumstances in which litigation comes before the court. It is common enough, in applications under s 440A, for an administrator to need to seek an adjournment very soon after his or her appointment, at a time when he or she knows very little about the affairs of the company. In that sort of situation, comparatively little material might be needed to justify a short adjournment. As time goes on, however, and the occasion that there has been for the collecting of evidence increases, so the amount of material which might need to be put before the court before it is persuaded, will increase. 14 For the reasons set out below, on balance I am satisfied that the material before the Court provides sufficient evidence that the interests of Laguna's creditors would be better served under the Proposed DOCA. I say, on balance, because the information initially provided to the Court in support of the adjournment was deficient. The subsequent information was provided late. That information did not address all of the deficiencies and, significantly, if it had been provided earlier, it may have obviated the need for the subsequent hearings.

THE EVIDENCE OF MR ROHRT 15 When the matter first came before the Court on 22 November 2013, the totality of the evidence concerning Laguna's adjournment application comprised two affidavits sworn by Mr Rohrt. Laguna's activities 16 There was little evidence concerning the operations of Laguna prior to it entering into administration. Laguna was incorporated on 4 October 2000. According to information supplied to Mr Rohrt by Mr Marriner, Laguna was set up as part of the wider operations of Laguna Australia Pty Ltd (the ultimate holding company and sole shareholder of Laguna) in the Whitsundays region of Queensland, and in particular regarding the proposed project of the Queensland government in relation to the development of an international airport at the Laguna Quays Resort. However, the proposed funding for the project was not forthcoming and the Queensland government decided to postpone the project. Once the project was postponed, Laguna ceased trading. Based on Mr Rohrt's preliminary investigations, this occurred as far back as February 2012. Laguna's financial position 17 There is no doubt that Laguna is insolvent. Based on his preliminary investigations, Mr Rohrt's evidence was that Laguna does not own any assets and its primary liabilities as at 31 July 2013 comprised: Name Amount Owing Trade unsecured creditors Australian Taxation Office $1,527,392 Archers Whitsundays $321,052 Mills Oakley Lawyers $3,300 Landale Consulting Pty Ltd $1,760 Related party unsecured creditors Daleford Cove Pty Ltd $217,664.42 Laguna Australia Pty Ltd $5,583,154

As will become evident, that list was in fact incomplete. 18 Mr Rohrt had not identified any currently registered outstanding charge in relation to Laguna. However, Mr Rohrt identified a current Purchase Money Security Interest registered in the name of Fralara Pty Ltd (the PMSI). Mr Rohrt indicated in his s 439A Report that the PMSI relates to a Deed of Variation where Laguna is the fifth defendant. However, the amount owing under the Deed of Variation is not payable until 31 March 2016. On that basis, Mr Rohrt's stated opinion was that the PMSI would not have any bearing on the process of the administration or on any return to creditors in the event of a DOCA being ratified by Laguna's creditors. This is an issue that will be considered in further detail below.

Examination of Laguna's affairs 19 Mr Rohrt's stated opinion was that, on the face of available information, it was unlikely that a liquidator, should one be appointed, would take action against Mr Marriner (a) for any offences under Pt 2D.1 of the Act or (b) under s 588M of the Act. Mr Rohrt also gave evidence that based on the information available to him, he has not identified any transactions which could potentially be classified as voidable. Finally, in his first affidavit, Mr Rohrt stated that: Based on my investigations to date and the information available to me, I am of the opinion that the explanation provided by the Director is accurate. However, I am also of the [opinion] that there may well be other factors behind the company's large deficiency of assets to liabilities. (Emphasis added.) This statement was also contained in his s 439A Report. Again, this is an issue that will be considered in further detail below. The Proposed DOCA 20 In his s 439A Report, Mr Rohrt indicated that Mr Marriner had put forward a proposal for all creditors to consider at the second meeting of creditors that Laguna enter into the Proposed DOCA. The broad terms of the Proposed DOCA were described in the s 439A Report as follows: 1. Mr Marriner will make a contribution in the sum of $410,000 to be distributed in instalments from 15 October 2013 to 30 May 2014 (the DOCA Fund). 2. All creditors will be bound by the terms of the Proposed DOCA. 3. Any creditor, owner or lessor bound by the Proposed DOCA will also be bound for the duration of the Proposed DOCA to a moratorium and will be unable to take any action to wind up Laguna's affairs, commence or continue any enforcement action against Laguna or exercise any set-off or cross-claim against Laguna. 4. Control of Laguna's affairs will revert to Mr Marriner upon execution of the Proposed DOCA. 5. Mr Marriner must not charge or pledge Laguna's assets as a form of offering security for the duration of the Proposed DOCA without the Deed Administrator's written consent which should not be unreasonably withheld. 6. The proposed dividend to be declared by the Deed Administrator to Participating Creditors will be in full and final satisfaction of any amounts due by Laguna to any of its creditors. 7. The Australian Taxation Office, as the petitioning creditor in the Federal Court of Australia will withdraw its winding up application in relation to Laguna and accept the return obtained from participating in the Proposed DOCA as the full and final settlement of its outstanding debt owed by Laguna. 8. Mr Marriner will procure the releases from the two related entities of Laguna (Daleford Cove Pty Ltd and Laguna Australia Pty Ltd) due a sum of approximately $5,800,818 agreeing prior to the execution of the Proposed DOCA to not participate in a dividend pursuant to the Proposed DOCA. 9. Upon the Proposed DOCA becoming completed or "wholly effectuated", all claims by all creditors against Laguna will be extinguished. 10. The costs of the Administrator and Deed Administrator, should they exceed the amounts contemplated pursuant to the terms of the Proposed DOCA, will be indemnified by Mr Marriner without further costs or impost to creditors of Laguna and subject to the terms of the Proposed DOCA. 11. Should the creditors not agree to the proposal then the Proposed DOCA may not be executed and Laguna as a result of a default will be placed into liquidation and its affairs will be wound up. 21 In his second affidavit sworn on 25 November 2013, Mr Rohrt indicated that Mr Marriner intended to amend the Proposed DOCA such that Goldworthy Pty Ltd (ACN 007 348 754) (Goldworthy) as trustee for the Goldworthy Trust would secure the payment of the DOCA Fund to a limit of $410,000. Mr Marriner is a director of Goldworthy. 22 Mr Rohrt also stated in his second affidavit that Mr Marriner had remitted the first three contributions of the DOCA Fund, in the amount of $110,000. That amount is being held on trust pending the outcome of a second meeting of creditors should it be held. The agreement Mr Rohrt has reached with Mr Marriner is that if creditors do not vote in favour of the Proposed DOCA and Laguna is placed into liquidation, the Deed Fund will be returned to Mr Marriner. Mr Rohrt's recommendation 23 In his s 439A Report, Mr Rohrt set out his view that, on either optimistic or pessimistic estimated realisable values in a liquidation scenario, there are not expected to be any assets available for any class of creditor and that if Laguna was placed into liquidation, there will be no funds available with which to declare a dividend to any class of creditor. 24 Accordingly, based on a return to participating creditors (estimated at that time to be approximately 19 cents in the dollar) under the Proposed DOCA, Mr Rohrt recommended that creditors should vote in favour of Mr Marriner's proposal. Mr Rohrt's stated belief was that it was in the best interests of creditors for Laguna to continue in administration rather than be wound up. Again, as will become evident, the return to participating creditors has substantially reduced.

Marriner Affidavit 25 On 25 November 2013, Mr Marriner provided sworn evidence to the Court that disclosed: 1. Laguna is part of the Marriner Group of Companies and it was the Marriner Group of Companies that formerly operated the Laguna Quays Resort, near Proserpine, Queensland. 2. In about 1997, Mr Marriner, CBUS Construction Building Superfund and another Marriner company, Stage Developments Australia Pty Ltd (ACN 058 626 761), (collectively, the Property Group) invested $26.2 million to revive the Laguna Quays Resort after a venture between Japanese investors and the then Queensland government had failed. 3. At the time the Property Group took control, construction of the Laguna Quays Resort was near complete. Two conditions of the investment were that an international airport would be built at Laguna Quays Resort to be funded by the Property Group and a Chinese consortium, and operated by Brisbane Airport Corporation. The airport was designed to be a "gateway to China" bringing visitors to the Whitsundays. The second condition was that the nearby Proserpine airport would be sold to interests associated with Mr Marriner and closed on completion of the new international airport at Laguna Quays Resort. 4. Following local community protests, the then Queensland government was no longer willing to close the Proserpine airport and sell it to interests associated with Mr Marriner and then the Queensland government withdrew its support for the development of the international airport at the Laguna Quays Resort in or around February 2009. 5. As a result of that decision, along with the downturn that the Australian tourism industry suffered over from 2008 to 2012, the Laguna Quays Resort became financially unviable and a decision was made to close it in about February 2012. 6. Laguna's primary purpose was to hold Lots 3, 4 and 8 on RP846432, Laguna Quays Resort, Laguna Quays (Title Reference 21506122, 21506123 and 21506127) (the Land). The Land comprised the Turtle Point Golf Course which was part of the Laguna Quays Resort. The Land was purchased by Laguna Australia Pty Ltd for the sum of approximately $1.624 million on 13 November 2001. In 2009, the Mackay Regional Council obtained the Land from Laguna Australia Pty Ltd due to non-payment of rates. On 17 November 2009, an agreement of sale was entered into between the Mackay Regional Council and Laguna Golf (Turtle Point) Pty Ltd, transferring the Land to that entity upon payment of the outstanding rates of $400,001. On or about 18 November 2009, the Land was transferred by Laguna Golf (Turtle Point) Pty Ltd to Laguna. 7. When the decision was made to close the Laguna Quays Resort in February 2012, Laguna ceased trading. 8. On about 18 June 2013, the Land was sold, as part of the larger Laguna Quays Resort sale, to Nanjing Construction Group (Australia) Investments Management Pty Ltd (ACN 145 536 241) (Nanjing) for approximately $1 million being a loss of approximately $625,000 on the purchase price. Because of the nature of the transaction, Laguna had to pay goods and services tax (GST) on the purchase price. Laguna did not remit the GST to the Commissioner. 9. The funds received at settlement of the sale of the Land were used to part pay a debt owing by Laguna to Fralara Pty Ltd, a secured creditor of Laguna (Fralara). Fralara's security included a security interest registered on the Personal Property Security Register on 30 November 2009. The remainder of the Fralara debt was paid from funds obtained elsewhere as part of the overall Laguna Quays Resort sale. 10. On or about 12 July 2013, the sale of the Marriner Group assets held at Laguna Quays Resort completed. The Marriner Group of Companies sold the assets, to Nanjing. As part of the sale, Nanjing granted to Mr Marriner or his nominee, the option to buy back 50% of the Laguna Assets within 18 months of Completion for a price to be agreed between the parties (Option). A copy of the Heads of Agreement was in evidence and contracts were executed and exchanged in accordance with the Heads of Agreement. 11. Mr Marriner intends to exercise the Option. Laguna is intended to be the nominated entity because historically, Laguna and its parent company, Laguna Australia Pty Ltd, have been the Laguna entities most closely connected with the Laguna Quays Resort project. 12. The exercise of the Option is one of the reasons Mr Marriner has put forward the Proposed DOCA. 26 The balance of the Marriner Affidavit addressed one further issue - the source of funds for the Proposed DOCA. Mr Marriner's evidence was that the instalments paid to the administrator to date (totalling $110,000) had come from his personal resources and he intends that the balance of the DOCA Fund will also be paid by him personally. Mr Marriner told the Court that he was prepared to give a personal undertaking to provide or procure the balance of the instalments. His sworn evidence was that he has personal net assets of approximately $1.5 to $2 million. The nature of those assets was not disclosed. 27 In addition, Mr Marriner told the Court that Goldworthy would provide a guarantee or security to the satisfaction of the administrator to pay $300,000 to the DOCA Fund. As noted, Mr Marriner is a director of Goldworthy. The other director is his wife. The Trust Deed was in evidence. Mr Marriner is the Specified Person and a beneficiary of the Trust. Mr Marriner stated that he had reviewed the Trust Deed and was of the opinion that nothing in it prevented Goldworthy from either providing Deed Funds or providing a guarantee or security for the provision of Deed Funds. For the reasons that follow, it is unnecessary to determine if Mr Marriner's contention is correct. It is sufficient to note that it is difficult to identify how providing funds, or security for payment of those funds, to a non-trading company with no assets is an appropriate course for a trustee to adopt even if the Trust Deed would appear to grant Goldworthy the power "to give any guarantee or indemnity for the payment of money or the performance of any contractual obligation or undertaking and become surety or security for any persons": cl 6(f) of the Trust Deed. 28 In any event, Goldworthy is apparently a trading entity. A draft profit and loss and balance sheet as at 30 June 2013 was in evidence. Mr Marriner stated that based on his knowledge as a director of Goldworthy, the draft report was true and accurate, subject to the usual accounting alterations such as deductions for depreciation, prepayments and accruals. The draft balance sheet recorded total assets of $36,537,919. Goldworthy's main current assets are listed as related party and third party receivables of approximately $5,338,155 and $2,355,299 respectively. Its main non-current asset is listed as real property and plant and equipment. The balance sheet records current liabilities of $792,196 and non-current liabilities (interest bearing liabilities) of $10,198,060. As a result, the draft balance sheet records that as at 30 June 2013 there was a surplus of assets to liabilities of $25,547,662. 29 Next, on the eve of the adjourned hearing (and contrary to Court orders), Mr Rohrt provided another unsworn affidavit. This was to be his third affidavit. That affidavit addressed three issues - the terms of the Proposed DOCA, Laguna's creditors and an expansion of particular matters addressed in his s 439A Report. In relation to the first issue - the amended Proposed DOCA - Mr Rohrt stated that he had been informed by Mr Marriner of the proposal that Goldworthy provide a guarantee or security to him for payment of the remaining Deed Fund instalments of $300,000. That issue has been addressed: see [27] above. 30 The second issue addressed by Mr Rohrt concerned Laguna's creditors and the fact that the two other unsecured participating creditor, Mills Oakley Lawyers and Archer Whitsunday's Pty Ltd, would be "likely to vote in favour of a DOCA at the second meeting" of Laguna's creditors. 31 Next, Mr Rohrt sought to expand on two matters raised in his s 439A Report. One matter was his statement that "I am also of the [opinion] that there may well be other factors behind the company's large deficiency of assets to liabilities": see [19] above. Mr Rohrt stated that this statement: is a qualification I usually put in section 439A reports to reflect the fact that those reports (and presently this Report) are prepared within the limited timeframe available under the [Act] and that there may be other factors which are identified if a liquidator is appointed to conduct further investigations. Mr Rohrt did not resile from the statement. 32 The next matter was the PMSI registered by Fralara: see [18] above. Mr Rohrt explained that the PMSI arose because of a Deed of Variation. His explanation was limited to the following statements: The solicitors for [Fralara], Cornwall Stodart, inform me that certain contingent creditors of [Laguna] (which include Monit Nominees Pty Ltd, [Fralara], Spotlight Pty Ltd and Spotlight Superannuation Pty Ltd) … entered into Deed of Settlement with [Mr Marriner] and others, including [Laguna] on or about February 2013 as a result of the Contingent Creditors obtaining Judgment against [Mr Marriner] and associated entities on 20 September 2011 and subsequent Winding Up Proceedings as defined in the Deed of Variation. Pursuant to the Deed of Variation, [Laguna] and others jointly and severally are to pay … $2,000,000 by 31 March 2016. … I have requested that my solicitor contact Cornwall Stodart to ascertain Fralara's view of the [Proposed DOCA]. (Emphasis in original.) 33 The following morning the Court received an affidavit sworn by Mr Lewin, a solicitor for Laguna and Mr Rohrt. It was late. The solicitor sought to explain the delay. In relation to Fralara, and after referring to paragraph 2.5 of the s 439A Report headed "Registered Charges" (see [18] above), the affidavit relevantly stated: I am informed by [Mr Rohrt] that [Fralara], Monit Nominees Pty Ltd, Spotlight Pty Ltd and Spotlight Superannuation Pty Ltd (Fralara & Ors) have lodged a proof of debt in the administration for the sum of $2,000,000. … Fralara & Ors are all companies associated with Morray Fraid of [address], East St Kilda and companies associated with Spotlight Pty Ltd which the Fraid family controls. Fralara & Ors are not companies which are related creditors of [Laguna] for the purposes of s 600A of the [Act]. … On 25 November 2013 it occurred to me that, notwithstanding the registered security interest held by Fralara over [Laguna's] present and after acquired property, it would be prudent for [Mr Rohrt] to ascertain the attitude of Fralara & Ors to [Mr Marriner's] proposal for a deed of company arrangement particularly in circumstances where Fralara & Ors are the largest non-related party creditors of [Laguna]. On 25 November 2013 at around 3:00pm I spoke by telephone with John Hutchings (Hutchings) of Cornwall Stodart, the solicitors for Fralara & Ors. I asked Hutchings whether his clients intended to vote in relation to the resolution that [Laguna] execute the [Proposed DOCA] at the yet to be convened second meeting of creditors and if so, how they intended to vote. … At (sic) on 25 November 2013 at (sic) I received a letter from Cornwall Stodart which set out the position of Fralara & Ors in relation to the [Proposed DOCA]. In short Fralara & Ors support the [Proposed DOCA] on the basis that: (a) the [Proposed DOCA] be amended so that it incorporates a declaration by [Laguna] that immediately prior to the appointment of the administrator, it had no assets; and a provision that, if the declaration is sound to be materially inaccurate, the [DOCA] shall be terminated; and (b) before they vote in the affirmative, the Spotlight entities require each of [Laguna] and Kunapipi Pastoral Pty Ltd (ACN 111 098 876), Laguna Golf (Jagabara) Pty Ltd (ACN 098 668 083), Laguna Australia Pty Ltd (ACN 092 398 617) and [Mr Marriner] (to enter into a deed with the Spotlight entities under which [Laguna] and the other Marriner entities agree and covenant that none of: (i) an affirmative vote by the Spotlight entities; (ii) the successful passage of a resolution for a [DOCA] by [Laguna]; (iii) entry into a [DOCA]; and (iv) receipt by the Spotlight entities of dividends from [Laguna] (whether pursuant to a [DOCA] or otherwise), in any way affects the liabilities of any one or more of the other Marriner entities to any one or more of the Spotlight Entities. (Emphasis in original.) The proof of debt lodged by Fralara & Ors was not listed by Mr Rohrt: see [17] above. 34 Mr Lewin then went on to explain that at 9:40am on 26 November 2013, he spoke with Mr Marriner by telephone and that Mr Marriner had agreed to vary, yet again, the Proposed DOCA such that: 1. Mr Mariner and Laguna would declare that Laguna had no assets immediately prior to the appointment of the administrator, and that if the declaration is found to be materially inaccurate, the DOCA would terminate; and 2. Mr Marriner, Kunapipi Pastoral Pty Ltd, Laguna Golf (Jagabara) Pty Ltd and Laguna Australia Pty Ltd (Mr Marriner being a director of these entities) agreed to enter into a deed containing the terms set out in [33] above. 35 It is against that background that the application for adjournment is to be considered.

ANALYSIS 36 Laguna is required to demonstrate, by persuasive evidence, that the Commissioner's winding up application should be adjourned. Where the hearing of Laguna's application has previously been adjourned to allow Mr Rohrt to gather further information, the need for there to be compelling evidence before the Court to justify an adjournment is amplified: Bradley Keeling Management Pty Ltd (admins apptd) at [18]. There has, in fact, been two adjournments. 37 Notwithstanding the time granted to obtain further information in support of the application, there were serious deficiencies in the evidence adduced by Laguna when the matter came before the Court on 22 November 2013. 38 The evidence concerning the Proposed DOCA, while in broad terms was outlined in the s 439A Report, lacked certainty and precision. The Commissioner also expressed concern as to the source of the funds to be contributed by Mr Marriner. In responding to the funding concern, Laguna pointed to two matters. The first was that Mr Marriner had already contributed $110,000 to the DOCA Fund: see [22] above. Secondly, Laguna emphasised the aspect of the proposal that Goldworthy secure Mr Marriner's contributions to the DOCA Fund. However, there was no evidence before the Court that such an arrangement would be sufficiently certain. There was no admissible evidence from Goldworthy. Laguna could only point to an email dated 20 November 2013 from a Mr Rex Lucas of the Marriner Group stating that "David is OK for Goldworthy to undertake contributing towards DOCA proposal". Further, the only evidence of Goldworthy's financial position was a draft balance sheet as at 30 June 2013 obtained by the administrator. That draft balance sheet disclosed a surplus of assets over liabilities in the amount of $25,547,662. Moreover, there was no evidence establishing that Goldworthy had the requisite authority as trustee of the Goldworthy Trust to utilise trust funds for this purpose. Some of those deficiencies have now been rectified, albeit at the eleventh hour. Mr Marriner, as a director of Goldworthy, has provided sworn evidence of its activities, financial position and the terms of the trust deed. Mr Rohrt has filed a third affidavit and another creditor has come out of the wood work. 39 The Court is faced with this dilemma: Deputy Commissioner of Taxation, in the matter of KJ Consulting Pty Limited v KJ Consulting Pty Limited (Administrators Appointed) [2005] FCA 1827 at [5]. Laguna is an insolvent company that ceased trading more than 18 months ago. It has no assets available for any class of creditors. The Court cannot be certain that security can be provided by the Goldworthy Trust or that the funds will be contributed to the DOCA Fund. It is apparent that a resolution to enter into a DOCA would prevent the proper investigation of matters that may warrant the scrutiny of a liquidator. As demonstrated by the proofs of debt lodged by related entities, there have been significant related party transactions. A liquidator has broader scope and powers to investigate and follow potential breaches of the law by those concerned with Laguna than Mr Rohrt as administrator. And, Mr Rohrt has not resiled from his statement that "there may well be other factors behind [Laguna's] large deficiency of assets to liabilities": see [19] and [31] above. 40 What then is on the other side of the ledger? As noted, the position has been a moving feast. It is by no means clear that sufficient consideration was given at the outset to the activities of Laguna, the terms of the Proposed DOCA or the entities affected by it. That is unfortunate and could in large part have been avoided. 41 Significantly, the return to creditors is potentially greater if Laguna is not wound up and the creditors vote in favour of the Proposed DOCA. In the end, the question remains - is there a sufficient basis upon which the Court can be satisfied that the Proposed DOCA represents a better outcome for creditors than would be achieved through liquidation. As the Commissioner submitted, in considering that question, it is important to bear in mind that in the event of a default, the costs of execution and/or enforcement of any security are likely to significantly reduce the funds available for distribution to unsecured creditors. 42 On balance, I am persuaded to the requisite standard that Laguna has demonstrated that it is in the best interests of creditors that the administration continue as opposed to the company being wound up in liquidation so that the Proposed DOCA (in its latest form) can be the subject of a vote at the second meeting of creditors. That, of course, will require Mr Rohrt to remedy the apparent deficiencies in the material to be provided to the creditors. As the extensive additional affidavit material has demonstrated, there are a number of significant facts and matters not previously disclosed or not sufficiently disclosed. In addition, the Proposed DOCA has been amended, or amendments have been foreshadowed, on numerous occasions. 43 As Laguna submitted, the creditors will have the opportunity to question or reject Mr Rohrt's view at a meeting to be convened on or before 29 November 2013 in accordance with s 439A of the Act: KJ Consulting at [4]. The composition of the creditors to vote on that proposal significantly changed at the eleventh hour and changed in favour of the Proposed DOCA: see [17] and [33] above. The fact was and remains that the position of Fralara & Ors should have addressed earlier. The position that now prevails is that there are sufficient unrelated creditors in value and in number (excluding the Commissioner) that are able to assess the terms of the Proposed DOCA and who have indicated that they are likely to vote in favour of the Proposed DOCA. In those circumstances, the Court should not pre-empt that decision. That vote will be a vote that considers a possible return of up to 9 cents in the dollar as against a nil return if Laguna is wound up. As Counsel for the administrator submitted, the position may have been different if one of the creditors was willing to provide funding to a liquidator. No such creditor came forward.

CONCLUSION 44 The Commissioner's application to wind up Laguna is adjourned to permit the creditors of Laguna to vote on the Proposed DOCA at a meeting of creditors to be convened on or before 6 December 2013. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.