Dickerson, in the matter of McWilliam's Wines Group Ltd (subject to Deed of Company Arrangement) (No 3) [2020] FCA 1564

Introduction 1 By an interlocutory process filed on 29 September 2020, the applicants sought orders under s 444GA(1)(b) of the Corporations Act 2001 (Cth) granting the first applicants leave to transfer all of the issued shares in McWilliam's Wines Group Ltd (subject to a deed of company arrangement) (McWilliam's) (Shares) from the members of McWilliam's to MCW BidCo Pty Ltd ACN 642 488 524 or its nominee (MCW). 2 Gayle Dickerson, Tim Mableson and Ryan Eagle, in their capacity as joint and several deed administrators of McWilliam's (together the deed administrators, formerly the administrators), are the first applicants in these proceedings. McWilliam's is the second applicant. McWilliam's is the immediate parent company of Mount Pleasant Wines Pty Ltd (ACN 000 024 813) (subject to a deed of company arrangement) (Mount Pleasant) and they are together referred to as the Companies. 3 The deed administrators were appointed as administrators of each of the Companies on 8 January 2020. 4 Pursuant to resolutions of the creditors of the Companies passed at the second meeting of creditors held on 24 July 2020, the following documents were executed on 3 August 2020: (a) A deed of company arrangement between the Companies, the administrators and MCW (as deed proponent) (DOCA) pursuant to which the deed administrators were appointed as such; and (b) A trust deed establishing the McWilliam's Creditors' Trust between the Companies, the deed administrators and MCW (as deed proponent) (Creditors' Trust) pursuant to which, among other things, the deed administrators were appointed as trustees of the Creditors' Trust. 5 The applicants also seek orders: (a) Under s 447A(1) of the Corporations Act and/or s 90-15(1) of the Insolvency Practice Schedule (Corporations) (being Sch 2 to the Corporations Act) authorising any of the applicants, jointly or severally to: (i) execute, on behalf of the members of McWilliam's, share transfer forms and any other documents as are necessary to effect the transfer of the Shares; and (ii) enter, or procure the entry, of the name of MCW in McWilliam's register of members in respect of the Shares; and (b) That the applicants' costs of and incidental to this application be costs in the deed administration of McWilliam's. 6 It is a condition precedent to completion of the DOCA that the Court makes orders under s 444GA(1)(b) of the Corporations Act granting leave to effect the transfer of the Shares to MCW. 7 In accordance with the procedural orders made by the Court on 29 September 2020, the applicants have given notice of the hearing of the application (including Ms Dickerson's affidavit sworn on 29 September 2020 and exhibit GD-1) to interested parties, including creditors and members of McWilliam's and the Australian Securities and Investments Commission (ASIC), substantially in the form of exhibit B in the proceedings (the Notice). Included in the Notice was a link to an explanatory statement dated 30 September 2020 and the expert's report referred to below. 8 The Court notes that the explanatory statement at [25]-[26] advised that, if the Court makes the proposed order under s 444GA, the other conditions precedent to the DOCA are satisfied and MCW has made the necessary contribution payments as required by the DOCA: (a) The deed administrators will transfer the Shares to MCW; (b) Members will not receive any consideration for the transfer of the Shares and they will cease to hold the Shares. Members will still be bound by the terms of the DOCA in accordance with s 444G of the Corporations Act; (c) Any claims members have against McWilliam's in their capacity as members will be extinguished and any claims to participate in the distribution of capital of McWilliam's in the event of a winding up will be transferred to the McWilliam's Creditors' Trust and adjudicated upon by deed administrators as trustees in accordance with the trust deed dated 3 August 2020 constituting the McWilliam's Creditors' Trust (Creditors' Trust). (d) Any claims they have as creditors of McWilliam's will be transferred to the Creditors' Trust and adjudicated by the trustees of the Creditors' Trust in accordance with the trust deed. 9 At [27]-[28] of the explanatory statement, interested parties are advised of their right to oppose the application for orders under s 444GA and the process by which they might do so or appear to make submissions. 10 No interested party gave notice of its intention to oppose the application and no interested party appeared at the hearing of the application to oppose the proposed orders being made or to make submissions.

Evidence 11 The applicants rely on the following evidence: (a) The affidavit of Gayle Dickerson sworn on 29 September 2020 and exhibit GD-1. (b) The affidavit of Andrea De Cian sworn on 13 October 2020. Mr De Cian is a partner in Grant Thornton Australia and a director of Grant Thornton Corporate Finance Pty Ltd (expert). The expert was retained by the deed administrators to provide an expert report for the purposes set out at [48] below. The report dated 24 September 2020 (to which Mr De Cian (as a director) and Helen Lagis (as an authorised representative) are signatories) is exhibit ADC-1 (expert's report). (c) The affidavit of Andrew Ng sworn on 14 October 2020. Mr Ng is a solicitor employed by HWL Ebsworth Lawyers (HWLE), the applicants' solicitors in relation to the application.

Legal principles 12 The deed administrators sought orders under ss 444GA and 447A of the Corporations Act to give effect to the transfer of the Shares to MCW. 13 Section 444GA of the Corporations Act provides as follows: 444GA Transfer of shares (1) The administrator of a deed of company arrangement may transfer shares in the company if the administrator has obtained: (a) the written consent of the owner of the shares; or (b) the leave of the Court. (2) A person is not entitled to oppose an application for leave under subsection (1) unless the person is: (a) a member of the company; or (b) a creditor of the company; or (c) any other interested person; or (d) ASIC. (3) The Court may only give leave under subsection (1) if it is satisfied that the transfer would not unfairly prejudice the interests of members of the company. 14 As submitted by the deed administrators, the applicable legal principles relating to the grant of leave under s 444GA(1) are well settled. They were summarised by Banks-Smith J in Tucker, in the matter of Black Oak Minerals Ltd (Subject to a Deed of Company Arrangement) (in liq) [2019] FCA 293 (Black Oak Minerals) at [31]-[36] as follows: 31 Applicable legal authorities and principles were set out by Black J in In the matter of Paladin Energy Limited (subject to Deed of Company Arrangement) [2018] NSWSC 11 at [28]-[35], and the following four paragraphs reflect his Honour's summary. 32 As noted in the Explanatory Memorandum to the Corporations Amendment (Insolvency) Bill 2007 (Cth), the requirement that the transfer not unfairly prejudice shareholders is intended to direct the Court to consider the impact of a compulsory sale on shareholders where there may be some residual value in the company. 33 As Martin CJ noted in Weaver v Noble Resources Ltd [2010] WASC 182; (2010) 41 WAR 301: [79] … [t]he notion of unfairness only arises if prejudice is established. If the shares have no value, if the company has no residual value to the members and if the members would be unlikely to receive any distribution in the event of a liquidation, and if liquidation is the only alternative to the transfer proposed, then it is difficult to see how members could in those circumstances suffer any prejudice, let alone prejudice that could be described as unfair. … [80] … So, something more would have to be established before it could said that unfair prejudice to the members of the company could arise. 34 As White J explained in Lewis, in the matter of Diverse Barrel Solutions Pty Ltd (Subject to a Deed of Company Arrangement) [2014] FCA 53 at [19]: Whether or not 'unfair prejudice' will result from a transfer of the shares is to be determined having regard to all the circumstances of the case and to the policy of the legislation. Relevant matters would seem to include whether the shares have any residual value which may be lost to the existing shareholders if the leave is granted; whether there is a prospect of the shares obtaining some value within a reasonable time; the steps or measures necessary before the prospect of the shares attaining some value may be realised; and the attitude of the existing shareholders to providing the means by which the shares may obtain some value or by which the company may continue in existence. A relevant comparison will be between the position of the shareholders if the proposal does not proceed and their position if leave to transfer shares is granted. 35 According to Re Nexus Energy Ltd (Subject to Deed of Company Arrangement) [2014] NSWSC 1910; (2015) 105 ACSR 246 at [27] (Black J), there is an evidentiary onus on the shareholders to raise any consideration telling against the exercise of the discretion, but the ultimate onus of satisfying the court that the discretion should be extended remains on the Deed Administrators. This requires that the Administrators prove that the transfer would not unfairly prejudice the interests of the company. 36 I also note that in Re BCD Resources NL (Subject to Deed of Company Arrangement) [2018] NSWSC 1605, Parker J held at [11] that it was a relevant consideration that a full and accurate description of the proposal has been given to shareholders and they have been given full opportunity to appear on the application. 15 The question of whether shares hold any residual equity of value for the purposes of assessing the existence and nature of any unfair prejudice to the interests of members is determined by comparison with the position of the members in a winding up, at least where that is the likely or necessary consequence of the transfer of shares not being approved: In the matter of Mirabela Nickel Ltd (subject to deed of company arrangement) [2014] NSWSC 836 (Black J) at [42]; In the matter of Paladin Energy Limited (subject to Deed of Company Arrangement) [2018] NSWSC 11 (Black J) at [31]. 16 It has consistently been held that if liquidation is the only realistic alternative to a proposed transfer of the shares, and the shares would have no value in a liquidation, then there is no prejudice, or no unfair prejudice, to the interests of members if leave is given pursuant to s 444GA(1)(b): In the Matter of OrotonGroup Limited (Subject to Deed of Company Arrangement) ACN 000 038 675; Application of Strawbridge and Kanevsky [2018] NSWSC 1213 (White J) and the cases there cited. 17 Section 447A of the Corporations Act is relevant to the relief claimed relating to the execution of transfers of the Shares and the entry of MCW's name on the McWilliam's register of members. Section 447A relevantly provides as follows: General power to make orders (1) The Court may make such order as it thinks appropriate about how [Part 5.3A] is to operate in relation to a particular company. … (3) An order may be made subject to conditions. (4) An order may be made on the application of: (a) the company; or … (d) in the case of a company that has executed a deed of company arrangement - the deed's administrator … 18 As noted by Banks-Smith J in Black Oak Minerals at [39]-[40]: 39 The Court's powers under [s 447A] have been described as 'plenary powers to do whatever it thinks is just in all the circumstances', but the Court must bear in mind the rights of the various groups of people affected: Cawthorn v Keira Constructions Pty Ltd (1994) 13 ACSR 334 at 341 (Young J). In Australasian Memory Pty Ltd v Brien [2000] HCA 30; (2000) 200 CLR 270 at [17], the High Court (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ) noted that the section is not confined to cases where it is necessary to cure defects or to remedy the consequences of some departure from the scheme set out in the other provisions of Pt 5.3A, and that there is no cogent reason to read down the application of s 447A. 40 Orders of the kind sought … have previously made pursuant to s 447A in Paladin Energy Limited, Re BCD Resources NL and In the Matter of OrotonGroup Limited (Subject to Deed of Company Arrangement) ACN 000 038 675; Application of Strawbridge and Kanevsky [2018] NSWSC 1213 (White J). 19 Having regard to these principles, the Court was satisfied that it has power to make the orders sought by the applicants.

Background 20 The following background is derived from the evidence referred to above and submissions filed on behalf of the applicants on 15 October 2020.

McWilliam's and the Group 21 McWilliam's is an unlisted public company with a total of 67,522,705 ordinary shares on issue. Those are held by approximately 80 shareholders who are members of the McWilliam family and their relatives including corporate entities controlled by them. 22 McWilliam's is the holding company of nine subsidiaries (together the Group). The Group was established in 1877. Only the Companies are subject to a deed of administration. The other companies in the Group are non-trading, they have no known assets and are not under external administration. 23 The Group's current product range consists of, among others, the McWilliam's 1877 and Single Vineyard labels, McW, Mount Pleasant Estate and the Show Reserve range of fortified wines. The Group was also the sole Australian distributor for various global brands such as Henkell, Mateus, Mionetto and Champagne Taittinger. The Group's key assets include its business as a going concern including two major standalone winey operations in the Riverina and Hunter Valley in New South Wales, stock in hand, water rights and a portfolio of leasehold and freehold interests in vineyard, winery and warehouse properties including the Beelbangera Winery, Lovedale Vineyard, "McWilliam's Wines" at Hanwood, the Mount Pleasant Winery and Vineyard and Rosehill Vineyard. 24 McWilliam's owns all of the Group's assets and intellectual property except for the Mount Pleasant Winery and Vineyard, Rosehill Vineyard, Lovedale Vineyard and associated water licences which are owned by Mount Pleasant.

Employees 25 At the time the administrators were appointed as administrators on 8 January 2020, there were 148 employees (excluding casual labour for "Vintage 2020") identified from the books and records of the Group. There were six permanent contractors who worked across different functions. McWilliam's was the employer of the employees. Approximately 80 employees have since left the business, including 36 casual employees.

Overview and financial position 26 The following overview is based on a timeline set out in Ms Dickerson's affidavit at [17], which Ms Dickerson says is derived from the administrators' investigations: Date Event 26 June 2013 The Group refinanced its existing bank loans under a five year credit facility with GE Capital up to a maximum availability of $55 million. 29 September 2014 The Group's global wine supply agreement with E&J Gallo Winery (a leading wine producer and distributor of California Wines in select markets around the world) was terminated and its preference shares were fully redeemed for an amount of $7.3 million, payable in instalments under a loan deed as follows: $0.6 million on settlement and 4 equal instalments of $1.675 million on 1 July 2016, 1 July 2017, 1 July 2018 and 1 July 2019. The final instalment was not paid prior to the appointment of the administrators on 8 January 2020. 2 February 2015 Sale and leaseback of the Coonawarra and Hanwood vineyards to CK Life Sciences International Inc for $15.7 million. 8 November 2015 Bain Capital acquires GE Capital. 21 December 2015 McWilliam's sells Brand's Laira business to Casella Family Brands for $15.8 million. 16 May 2016 Jeffrey McWilliam appointed CEO of the Group. 19 May 2017 The Board was notified of letter of default from Bain Capital triggered by a breach of the EBITDA covenant in March 2017. 23 May 2017 The Board approves an exclusive agreement with Pendulum Capital (an advisory firm associated with Peter Fogarty) to assist with the turnaround of McWilliam's. 9 June 2017 The Group entered into a 3 year loan agreement with Margaret River Wine Production Pty Ltd (MRWP), with funding of $25 million provided by MRWP used to repay the facility owed to Bain Capital in full. In exchange for the loan of $25 million, McWilliam's granted a future option of 30% to MRWP to purchase McWilliam's, and MRWP would have an option to purchase the Evans & Tate brand. 22 June 2017 The Group entered into a 3 year receivables purchase agreement with AssetSecure up to a maximum available facility of $12 million. 12 September 2017 McWilliam's sold the Evans & Tate brand for $32.8 million to MRWP. The proceeds of $32.8 million consisted of a reduction in the debt facility between McWilliam's and MRWP of $22.8 million and McWilliam's acquiring an additional 10% equity interest in MRWP valued at $10 million. 23 July 2018 David Pitt appointed CEO of the Group, replacing Jeffrey McWilliam. 10 December 2018 The Group entered into a binding agreement with MRWP (a Heads of Agreement had been executed in September 2018) under which the Group sold about 20% of the shares in MRWP to Laguna Bay Agricultural Fund (Laguna Bay) for $9.6 million (such that its shareholding in MRWP went from about 30.4% (fully diluted) to 10.2% (fully diluted)). The Group also received funds of $6.2 million from MRWP by way of subscription by MRWP for 7 year secured convertible notes in the Group pursuant to a Secured Convertible Note Deed dated 7 December 2018 (Convertible Notes Deed) between MRWP and McWilliam's (as borrower) and Mount Pleasant (as guarantor) . 25 January 2019 The recapitalisation transaction with MRWP and Laguna Bay completed. January 2019 The Board was restructured with the directors becoming Jim Brayne (Chair), Karen McWilliam, Lisa Ashton and Peter Fogarty, and four directors resigning (all McWilliam family members). February 2019 1,110,538 ordinary shares valued at $466,000 were issued pursuant to the conversion of unsecured shareholder loan notes. June 2019 The Group renewed the receivables purchase agreement with AssetSecure for a further two years with the facility maturing on 30 June 2021 1 July 2019 6,254,064 ordinary shares valued at $2.6 million were issued pursuant to the conversion of unsecured shareholder loan notes. October 2019 Directors seek "safe harbour" protection under the premise of a 'better outcome' scenario. 20 December 2019 The Group sold its 10.2% residual shareholding interest in MRWP to Valley Vino Pty Ltd (a related party and an associate vehicle of Laguna Bay) for $5.5 million with the $4 million MRWP loan repaid on settlement. December 2019/January 2020 Directors & Officers insurance expired, with the business unable to secure new cover due to the insurer's concerns relating to solvency. 8 January 2020 Appointment of the administrators as voluntary administrators

27 As noted in the applicants' written submissions: (a) The Group had been trading at a loss for a number of years. It had accumulated trading losses of over $60 million in the period from 1 July 2014 to 31 December 2019. (b) In the 2018 financial year, the Group recorded a loss of $4.861 million. That result would have been substantially worse had it not been for a one-off gain from the sale of certain assets and other non-recurring adjustments, which totalled $14.814 million. (c) In the 2019 financial year, the Group recorded a loss of $19.885 million. The Group was faced with reduced sales revenue and significant increases in one-off costs relating to an onerous lease for the former bottling site operated by the Group from premises leased by McWilliam's at Chullora and also from production delays associated with the third party bottling arrangement at Hanwood (a town in the central Riverina region of New South Wales). (d) In the first half of the 2020 financial year, the Group recorded a loss of $9.344 million. Although revenue increased in that half-year period, that increase represented a reduction of inventory through greater sales of bulk wine and pre-sales of juice from the 2020 vintage in order to generate cash for the Group rather than the sale of finished goods into the Group's usual sales channels. (e) Efforts were made to source further capital over the course of 2019 (apart from the conversion of loans into equity), but this was unsuccessful and no further cash was injected into the business other than from the sale of the Group's residual shareholding in MRWP (the proceeds of which were in turn used to repay (in part) the loan owing to MRWP). (f) In October 2019, McGrath Nicol provided insolvency advice to the directors of McWilliam's and Mount Pleasant, having been ostensibly engaged to provide guidance as to the securing of a better outcome for the Group (ostensibly seeking to invoke the 'safe harbour' provisions in s 588GA of the Corporations Act). 28 Ms Dickerson attributes the decision made by McWilliam's board to appoint voluntary administrators on 8 January 2020 to the Group's inability to secure necessary capital, inadequate sales and cash flow, consecutive trading losses in financial years 2013 to 2019 and the board's inability to secure directors' and officers' insurance. 29 Based on the administrators' investigations, the administrators formed the view that the Companies were cash flow insolvent on or about 30 November 2019. In forming that view they relied on the following matters (among others): the Group's historical financial performance (including consecutive trading losses including in the financial years ending 30 June 2018 and 2019); aged creditors' balances of the Companies; creditor payment deferrals outside trading terms; pressure from creditors including overdue payment notices and demands for payment; overdue Commonwealth and State taxes; informal payment plans; and the lack of access to alternative sources of finance.

The administration 30 On 4 February 2020, Yates J made orders extending the convening period to 31 July 2020: see Dickerson (Administrator), in the matter of McWilliam's Wines Group Ltd (Administrators Appointed) [2020] FCA 57. Shortly thereafter, on 11 February 2020, MRWP sought to redeem its secured convertible notes and, on 14 February 2020, MRWP enforced its security interest and appointed receivers and managers to the assets and undertaking of McWilliam's and Mount Pleasant. 31 The administrators took the view that discharging the Group's indebtedness to MRWP was in the best interests of the Group and its creditors because, amongst other reasons, that course: (a) Permitted the administrators to continue to trade the business of the Group (including the production and completion of the '2020 Vintage') with a view to maximising the value of any sale or recapitalisation of its business and assets as a going concern to ensure a better return to creditors; and (b) Avoided duplicate costs of different insolvency practitioners being involved in the external administration of the Group. 32 Accordingly, the administrators entered into agreements with Gordon Brothers Pty Ltd to borrow monies to repay the amount to MRWP and to cause the receivers and managers to retire, which occurred on 17-18 February 2020: see further Dickerson, in the matter of McWilliam's Wines Group Ltd (Administrators Appointed) (No 2) [2020] FCA 417 (Gleeson J). 33 The administrators formed the view that it was in the best interests of all stakeholders that the business and assets of the Group be sold as a going concern. As a result, the administrators continued to trade the business of the Group during their appointment (including by hiring additional casual employees and by continuing to meet the Group's obligations to wine grape growers to ensure that the 2020 wine vintage was harvested) with a view to offering the business for sale as a going concern and/or to explore a possible deed of company arrangement or recapitalisation. 34 Around 24 January 2020, the administrators engaged Colliers International (NSW) Pty Ltd to act as sale agents and advisers in relation to the sale of the Group's business, which involved both an informal expressions of interest campaign followed by a formal sale and marketing program seeking expressions of interest both nationally and internationally. Ms Dickerson's affidavit (at [62]-[65]) provides details of the indications of interest and offers received as part of the sales campaign. 35 The sale and recapitalisation process conducted by the administrators culminated in a proposal for a deed of company arrangement and associated trust deed put forward by MCW on 30 June 2020 (MCW DOCA Proposal). The administrators formed the view that the MCW DOCA Proposal was more favourable than all other final offers received during the sale process for various reasons, including that: (a) It would result in a greater return to creditors than all other offers; (b) It would result in a higher return to creditors than in a liquidation scenario (as was envisaged by other final offers for the business of the Group); (c) It would result in a more certain and timely return to creditors than in a liquidation scenario; (d) It would allow for the ongoing employment of most of the Group's employees; and (e) There would be the potential for a distribution of a surplus (after all unsecured creditors were paid in full) to members of McWilliam's whose Shares would be transferred to MCW. 36 On 15 July 2020, the administrators issued their second report to creditors of the Companies. 37 At the concurrent second meeting of the creditors of the Companies held on 24 July 2020 pursuant to s 439A(1) of the Corporations Act, the creditors resolved (among other things) that the Companies should execute the DOCA with MCW and the associated trust deed establishing the Creditors' Trust.

DOCA 38 Under the DOCA, the administrators were appointed as deed administrators. 39 Pursuant to the DOCA, upon the conditions precedent set out in cl 6 of the DOCA being satisfied or wavied and MCW (or one of its related bodies corporate) paying the required contributions to the deed administrators, the contributions will be paid into the Creditors' Trust, 100% of the Shares will be transferred to MCW (or another person or entity nominated by MCW) on the Implementation Date (being the fifth business day after the satisfaction or waiver of the conditions precedent set out in the DOCA or such other date as is agreed in writing by MCW and the deed administrators). The rights of creditors of the Companies will be extinguished and exchanged for a beneficial right to claim in the Creditors' Trust. 40 The Creditors' Trust will comprise: (a) A cash contribution by MCW or its related body corporate comprised of: (i) $30 million minus 70% of the accrued and unpaid annual leave, leave loading and long services leave entitlements (in respect of employees with an excess of 5 years continuous employment) of those employees continuing to be employed by the Group at the Implementation Date; plus (ii) The value of the stock at completion calculated in accordance with the physical stocktake and stocktake valuation mechanism contained in the DOCA which the deed administrators estimate to be at least $16 million at the Implementation Date. This will be calculated and determined immediately prior to the Implementation Date; plus (b) Closing receivables and any net cash surplus from trading of the Companies' businesses by the administrators and the deed administrators. 41 Pursuant to cl 6.1 of the DOCA, completion is conditional on, among other things: (a) The Court making orders pursuant to s 444GA(1)(b) of the Corporations Act granting leave to the deed administrators to transfer all of the Shares to MCW (or its nominee) in accordance with the terms of the DOCA. (b) ASIC granting relief from compliance with s 606 of the Corporations Act under s 655A as necessary to permit the transfer all of the shares in McWilliam's to MCW (or its nominee). The Court notes that, by an email dated 9 October 2020 from an officer of ASIC to Mr Ng, ASIC advised that an in principle decision had been made to provide relief with respect to compliance with s 606 to facilitate the transfer of all of the issued shares in William's to MCW, subject to the Court making orders pursuant to s 444GA(1)(b) in accordance with the DOCA. 42 The conditions precedent to the DOCA must be satisfied (or waived by MCW) on or before 30 November 2020 or such later date as may be agreed in writing by MCW and the deed administrators (sunset date). If the conditions precedent have not been satisfied or waived by MCW by the sunset date, MCW will cease to be bound by the DOCA and the deed administrators must convene a meeting of creditors to determine the future of the Companies. 43 The Court notes that cl 4.4 of the trust deed provides for distribution of the trust fund of the Creditors' Trust broadly in accordance with the priority which would apply in a liquidation of McWilliam's.

DOCA v liquidation returns 44 For the purposes of the administrators' recommendation to creditors in relation to the MCW DOCA proposal and in considering whether or not, for the purposes of s 444GA(3), the transfer of the Shares to MCW in accordance with the DOCA would unfairly prejudice the interests of members of McWilliam's, the administrators/deed administrators conducted an analysis of the estimated likely return to stakeholders if the DOCA and Creditors' Trust are implemented as compared to a liquidation of the Companies. 45 The deed administrators estimate that, if the DOCA and Creditors' Trust are implemented: (a) The net cash available for distribution to unsecured creditors of the Companies will be between $38.681 million and $44.667 million; (b) The total claims of unsecured creditors of the Companies will be between $31.534 million and $41.255 million with the variance resulting from contingent creditor claims including the contingent landlord claims of Pipeclay Lawson Ltd (in relation to the former leased warehouse located in Chullora, New South Wales) and QWIL Investments Pty Ltd (in relation to the Hanwood Vineyard), sundry accruals and rebates, and final adjudication of proofs of debt. 46 Allowing for variances discussed in Ms Dickerson's affidavit (at [85]-[86]), the deed administrators havc concluded that if the DOCA and Creditors' Trust were implemented, it is likely that: (a) Secured creditors and priority unsecured creditors will receive 100 cents in the dollar; (b) Unsecured creditors will received between 94 cents and 100 cents in the dollar; (c) Employee and unsecured creditors will receive statutory interest on their debts between zero and an aggregate amount of $2.7 million (being the total statutory interest due); (d) Members of McWilliam's whose Shares are transferred to MCW will in aggregate receive between zero and $10.472 million in a low and high scenario respectively; and (e) While timing might be impacted by a number of factors, the DOCA would be effectuated and terminated by November 2020 and funds distributed to beneficiaries of the Creditors' Trust by the end of December 2020. 47 As a result of their analysis of a liquidation scenario for the Companies, the deed administrators have concluded that: (a) All of Mount Pleasant's creditors will receive 100 cents in the dollar and there will be a surplus payable to McWilliam's as its shareholder; (b) With respect to McWilliam's: (i) Secured creditors and priority unsecured creditors will receive 100 cents in the dollar in all scenarios; (ii) Ordinary unsecured creditors will receive a return of between 37 and 69 cents in the dollar; and (iii) Members of McWilliam's will not receive a return; (c) The quantum of unsecured creditor claims will be higher than compared to the DOCA scenario because under the DOCA various creditor claims (such as those of continuing employees and claims relating to continuing leases) are effectively assumed by MCW through its ownership of McWilliam's. If the Companies are placed into liquidation, such claims would be provable in the winding up of the Companies; (d) The increase in the estimated unsecured creditor claims in a liquidation scenario (as compared to a DOCA) is likely to substantially outweigh any potential recoveries achieved by a liquidator, even if those potential recovery actions were wholly successful; and (e) While secured and priority creditors (such as employees) would likely be paid a dividend in full in a timely manner before December 2020, the timing of the payment of a dividend to unsecured creditors would be dependent on the time taken to sell the Group's inventory, property, plant and equipment, and would likely take at least 6 to 12 months.

Expert's report 48 The Court notes that Mr De Cian has deposed that he has read the Federal Court's Expert Evidence Practice Note (GPN-EXPT) and the Harmonised Expert Witness Code of Conduct and agreed to be bound by it in relation to the provision of an independent expert's report. The purposes of the expert's report are said to be: (a) Assisting the Court in determining whether the proposed transfer of Shares to MCW will unfairly prejudice McWilliam's members for the purposes of the application for leave under s 444GA(1) of the Corporations Act; (b) In relation to MCW's application to ASIC for technical relief from the takeover provisions of the Corporations Act; and (c) For inclusion in an explanatory statement to be sent to members of McWilliam's before the court hearing relating to the application for leave under s 444GA(1). 49 Mr De Cian notes that MCW is an entity owned (through interposed entities) by Prcstnt Asset Management. Mr De Cian describes Prcstnt as a global capital and asset management firm focused on the intersection of sustainability and the industries of food and agriculture, energy and resources, technology and intelligence. He says that Prcstnt's first fund was launched in Australia in 2016 and as at the date of the expert's report, Prcstnt had around AUD$1 billion in funds under management. 50 The deed administrators engaged the expert to value the Companies on a going concern basis and a liquidation basis. 51 For the purpose of valuing the Companies on a going concern basis, the expert developed three scenarios based on assumptions as to the objectives and growth targets outlined in a strategic plan that was developed by McWilliam's during the 2019 financial year (Strategic Plan) as follows: (a) Scenario A: a "base case" with the key assumptions being that certain initiatives in the Strategic Plan are achieved, including an increase in grape crush production at the Hanwood Winery, international sales growth, and sales growth linked to "premiumisation" with an increased average selling point; (b) Scenario B: an accelerated version of Scenario A with more aggressive growth assumptions; and (c) Scenario C: a less aggressive version of Scenario A. 52 Dependent on a number of assumptions (including that the current financial difficulties of McWilliam's do not exist and that there is sufficient funding available for McWilliam's to pursue and succeed in the implementation of the turnaround of the business which bears significant uncertainty), the expert assessed the value of the Shares on a going concern basis. It is only at the high-end of Scenario B that the expert assessed the Shares as having any value, being $2.142 million. The expert noted that this is lower than the high end of returns to members of McWilliam's under the DOCA (being $10.5 million). At the low end of Scenario C, the expert assessed the total value of the Shares as a negative amount of $44.6 million. 53 The expert also noted that the macro-economic environment had deteriorated significantly since the administrators were appointed. They noted the predicted global recession driven by the outbreak of COVID 19 and its impact of lower prices for wine and over-supply of wine in the short to medium term, the report issued by the Australian Competition and Consumer Commission at the end of September 2019 which recommended the phasing out of long-term payment periods between harvest and payment (the implementation of which would require greater working capital investment), and, the risks to the export of wine to China (which currently accounts for the majority of Australian exports) following the launch of two separate investigations into Australian wine by the Chinese Ministry of Commerce. 54 The expert assessed the value of the Shares on a liquidation basis as being nil. In forming this view, the expert reviewed the deed administrators' estimated outcome statement (EOS) which was updated from the version of that statement included in the second report to creditors, had discussions with the deed administrators and consulted the expert's internal liquidation team which provided feedback on the reasonableness of the assumptions in the EOS. In the result, the expert estimated the deficiency to unsecured creditors in a liquidation scenario as being a low of minus $29.389 million and a high of minus $10.472 million compared to the deed administrators' estimated deficiency of a low of minus $35.943 million and a high of minus $14.192 million.

Disposition 55 Having regard to the evidence and legal principles set out above, the Court made the orders sought because: (a) The Court accepted the applicants' submission that the transfer of the Shares to MCW will not cause any unfair prejudice to members of McWilliam's for two primary reasons: (i) The alternative to implementation of the DOCA is a winding up of McWilliam's. In that scenario, its members will receive no return from the Shares; that assessment is supported by the independent expert. The deed administrators estimate that (while secured and priority employees will receive 100 cents in the dollar) unsecured creditors will receive between 37 cents and 69 cents in the dollar; and (ii) Completion of the DOCA will provide for payment of a substantial sum of money into the Creditors' Trust. That carries with it the likelihood that the Companies' businesses will continue to employ many of their employees and continue as lessee of some properties with secured creditors and any priority employees being paid in full while unsecured creditors will be paid between 94 cents and 100 cents in the dollar. It also carries some prospect of a financial return of up to $10.5 million in aggregate being made to members. (b) By way of the Notice sent on 1 and 2 October 2020, all interested parties were advised of the hearing of the application and they were given access to the explanatory statement, expert's report and Ms Dickerson's affidavit so that they were adequately informed of the nature of the application and the consequences to them of the Court making the orders sought. The Court also notes that the fact that it would be a condition precedent to the effectuation of the DOCA that the Court makes orders under s 444GA granting leave to the transfer of the Shares was made known to creditors before they approved entry into the DOCA by a majority of 151 (representing debts valued at $27,589,638.71) to 1 (representing debts valued at $8,158,565) with 6 abstentions (representing debts valued at $561,657.32). (c) No interested party gave notice of its intention to oppose the application and no interested party appeared at the hearing to oppose the Court making the orders sought or to make submissions. I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Farrell.