Hutchins, in the matter of Ardenberg Pty Ltd (Administrators Appointed) v Ardenberg Pty Ltd

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 349 of 2014

IN THE MATTER OF ARDENBERG PTY LTD (ACN 063 103 444) (ADMINISTRATORS APPOINTED) BETWEEN: MARK RAYMOND HUTCHINS, BRUNO ANTHONY ROBERT SECATORE AND JASON BING-FAI TANG IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF ARDENBERG PTY LTD (ACN 063 103 444) (ADMINISTRATORS APPOINTED)

AND: ARDENBERG PTY LTD (ACN 063 103 444) (ADMINISTRATORS APPOINTED)

JUDGE: MCKERRACHER J DATE: 31 MARCH 2015 PLACE: PERTH

REASONS FOR JUDGMENT REVISED FROM THE TRANSCRIPT 1 The plaintiff applies pursuant to s 447A(1) of the Corporations Act 2001 (Cth) (CA) for a further extension of time for the convening of the second meeting of creditors of Ardenberg Proprietary Limited (administrators appointed) from 31 March 2015 to midnight on 31 July 2015, and other consequential orders, including an order that any creditor of Ardenberg, or any other interested person, have liberty to apply to vary the orders on 48 hours' notice. (It is a further extension as extensions have already been granted on two occasions late last year for similar reasons.) 2 The relevant principles in relation to an extension were canvassed in my decision in Mentha, in the matter of The Griffin Coal Mining Company Pty Ltd (administrators appointed) (ACN 008 667 285) [2010] FCA 30 (at [15]-[22]). It is necessary to have regard to, and balance, the interests of creditors in the speedy administration and the need to allow sufficient time for administrators to carry out their function properly and maximise the benefit to creditors through a proper administration: Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 (at [10]); Re Austcorp Group Ltd [2009] FCA 636 (at [18]). There is a comprehensive examination of the authorities by Austin J in Re; Riviera Group Pty Ltd (2009) 72 ACSR 352, particularly (at [8]-[18]). These passages are also collected in Mentha (at [18]-[19]). 3 One consideration of some importance is whether those who are subject to the statutory moratorium on enforcement of rights during administration would be prejudiced by an extension. I am told that the administrators are not aware of persons who would be adversely affected by an extension, if granted. (Creditors have received notification of the previous applications and of the current application, albeit that the notification of the current application was very recent.) 4 This application is supported by two very recent affidavits of Mr Tang, a certified accountant, on behalf of the administrators. Mr Tang confirms that since 22 December 2014, the date on which the period was previously extended to 31 March 2015, the solicitor's administrators have been active in trying to obtain information about delivery of goods to Ardenberg by Goodman Fielder on behalf of Metcash Trading Ltd and IGA Distribution (WA) Pty Ltd (Metcash). 5 A reasonably detailed account is given both in Mr Tang's affidavit filed in support the first application for an extension on 21 November 2014 and in his recent affidavit filed on 27 March 2015. The administrators have now appointed solicitors to act for them in relation to the claim against Metcash. Correspondence has ensued between the administrators and the prospective creditor in respect of the claim, which is possibly not insubstantial. I form no view as to the merits of the claim other than to note that there has been a deal of activity and the basis of the claim, at least, does not appear to be frivolous. The steps taken to date have been itemised. The events concerned extend over a number of years and numerous transactions. Apparently one 'without prejudice' offer has been made by Metcash's solicitor, albeit that it has been rejected by the administrators. Steps have now been taken to activate a dispute resolution procedure under the franchise agreement between the parties. 6 Mr Tang anticipates that at least 13 weeks may be needed under that procedure in order to settle, if it can be settled, any dispute. He itemises the basis for his estimate of 13 weeks in his 27 March 2015 affidavit. I consider the period of time requested for the extension to be excessive and luxurious. I consider, on analysing Mr Tang's breakdown of those periods of time, that a period of eight weeks extension from the current date would be as much as I could reasonably order at present in accordance with the governing principles. 7 In a subsequent affidavit affirmed by Mr Tang and filed today, 31 March 2015, he has confirmed that creditors have been notified of the application before me today. This has been, where possible, by email and also by publication on the website of the accounting firm of the administrators. Mr Tang also confirms that a discussion took place with one creditor who, despite preliminary opposition, has indicated that there is no opposition to a further extension of time. 8 It is necessary to be mindful that affected creditors cannot or do not always read last minute emails, let alone web page announcements, so it is important that they have liberty to apply to the Court on short notice. While, in the real world, ordinary creditors do not necessarily want to rush off to court to protect their rights, it is relevant that they also received notice of the proposed extension application prior to the applications heard in November and December 2014. On the evidence, no opposition to any of the applications has been pursued. 9 I consider that abridging the extension to a period of eight weeks meets the balance discussed in the authorities to which I have referred. 10 Any subsequent application seeking a further extension would require a much more powerful case to be made. 11 The following orders will be made:

1. An order pursuant to section 447A(1) of the Corporations Act 2001 (Cth) (Act), that Part 5.3A of the Act has the effect that the period under section 439A(6) of the Act for convening the second meeting of creditors of Ardenberg Pty Limited (administrators appointed) ACN 063 103 444 (Company) be extended further from 31 March 2015 to midnight on 31 May 2015.
2. An order under section 447A(1) of the Act, that Part 5.3A has the effect in relation to the Company such that the meeting of creditors required by section 439A of the Act may be held at any time during, or within 5 business days after the end of the convening period, as extended by the orders sought in paragraph 1 above, notwithstanding the provisions of section 439A(2) of the Act.
3. An order that the Plaintiffs are to give notice of these orders, within two business days of the date of these orders, to the Company's creditors, by means of: a. circular to be emailed to those of the Company's creditors for whom the plaintiffs have email addresses, otherwise by post; and b. publication on the website for the plaintiffs' firm, Cor Cordis Chartered Accountant each instance including publication of the orders, with order 4 below published in bold and italic text.
4. An order that any creditor of the Company, or any other interested person, have liberty to apply to vary any orders made by the Court pursuant to this interlocutory application on 48 hours' notice.
5. An order that the Plaintiffs' costs of this application be paid as a cost in the administration of the Company.
6. An order that the Plaintiffs have liberty to apply on 48 hours' notice. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.