Jahani, in the matter of Northern Energy Corporation Ltd (Administrators Appointed (No 2) [2019] FCA 382

Federal Court of Australia|2019-03-15|Before: Mr J, Farrell J

Date of last submissions: 15 March 2019

Registry: New South Wales

Division: General Division

Sub-area: Corporations and Corporate Insolvency

Category: Catchwords

Counsel for the Plaintiff: Mr I Pike SC

Solicitor for the Plaintiff: Johnson Winter & Slattery

Counsel for New Hope Corporation Limited: Mr J Giles SC with Ms G Keesing

Solicitor for New Hope Corporation Limited: Gilbert + Tobin

Counsel for WICET Pty Ltd: Mr N Young QC with Mr J Hutton

Solicitor for WICET Pty Ltd: Ashurst Australia

ORDERS NSD 2058 of 2018 IN THE MATTER OF NORTHERN ENERGY CORPORATION LTD (ADMINISTRATORS APPOINTED) & COLTON COAL PTY LTD (ADMINISTRATORS APPOINTED)

BETWEEN: AN APPLICATION BY SAID JAHANI & SHAUN MCKINNON IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF NORTHERN ENERGY CORPORATION LTD (ADMINISTRATORS APPOINTED) & COLTON COAL PTY LTD (ADMINISTRATORS APPOINTED) Plaintiff

AND: NEW HOPE CORPORATION LIMITED ACN 010 653 844 Interested Party

WIGGINS ISLAND COAL EXPORT TERMINAL PTY LTD ACN 131 210 038 Interested Party

JUDGE: FARRELL J DATE OF ORDER: 15 March 2019

The undertaking provided to the Court on behalf of New Hope Corporation Limited ACN 010 653 844 (NHC) on a without admissions basis that, without leave of the Court, NHC will not take any step to revoke the Deed of Cross Guarantee dated 31 July 2012 lodged with ASIC and numbered 028233406 in respect of Northern Energy Corporation Limited (ACN 081 244 395) (NEC) and/or Colton Coal Pty Ltd (ACN 140 768 636) (Colton Coal) (together, the Companies) prior to the conclusion of the second meeting of creditors of NEC and Colton Coal held pursuant to s 439A of the Corporations Act 2001 (Cth) (Act).
The assurance given by NHC to the plaintiffs in paragraph 1 of the email from J Moody of New Hope Group to C Hillier and M Busch, copying S Jahani, dated 5 March 2019 as updated by email from C Lynch of Gilbert + Tobin to the Associate to Justice Farrell dated 7 March 2019. THE COURT ORDERS THAT:
Pursuant to s 447A(1) of the Act, Part 5.3A of the Act is to operate in relation to each of the Companies as if: (a) the period within which the plaintiffs or any administrators of NEC and Colton Coal then in office (the administrators) must convene the second meeting of creditors in respect of each of the Companies, required to be held under s 439A of the Act, is extended up to and including 19 July 2019; and (b) the meeting of creditors of the Companies, required by s 439A of that Act, may be convened and held at any time during the period as extended under paragraph (a) of this Order, and the period of five (5) business days thereafter, notwithstanding the provisions of s 439A(2) of the Act.
Pursuant to s 447A(1) of the Act, Part 5.3A of the Act is to operate in relation to the Companies so that Scott Langdon and Robert Hutson of KordaMentha Pty Ltd be appointed as special purpose administrators of NEC and Colton Coal to: (a) undertake the investigations provided for under s 438A of the Act so far as concerns the matters provided for in Schedule A to these Orders and have all the powers available to the administrators under the Act to conduct those investigations (special purpose administrators); and (b) report to administrators, on the outcome of their investigations, by 28 June 2019. The appointment of the special purpose administrators also takes effect pursuant to s 90-15(1) of the Insolvency Practice Schedule (Corporations).
The administrators must: (a) use their reasonable endeavours to assist the special purpose administrators to exercise the powers given to them by Order 2 above, including by providing any documents or information previously prepared or obtained by them in investigating the matters provided for in Schedule A to these Orders; and (b) provide to any creditor upon request a copy of the report given to the administrators by the special purpose administrators.
The interlocutory process (WICET Interlocutory Process) filed by Wiggins Island Coal Export Terminal Pty Limited (WICET) on 19 February 2019 be otherwise dismissed.
In respect of the WICET Interlocutory Process: (a) there be no orders as to costs in respect of NHC and WICET; and (b) the costs of the plaintiffs be costs in the administration of the Companies.
In respect of the interlocutory process filed by the plaintiffs on 14 February 2019: (a) there be no orders as to costs in respect of NHC and WICET; and (b) the costs of the plaintiffs be costs in the administration of the Companies.
Liberty to apply is granted to any person, including any creditor of the Companies or the Australian Securities and Investments Commission, who can demonstrate sufficient interest to vary the Orders on the giving of 24 hours' notice to the plaintiffs, and to the Court.
These Orders be entered forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. Schedule A
Obtain a valuation of the assets of the transferred entities as at the date of the antecedent transaction by an expert coal mining professional with appropriate expertise in the valuation of coal assets and who has prepared similar valuations previously.
Conduct investigations into whether any Antecedent Transaction is a voidable transaction pursuant to Div 2 of Part 5.7B of the Act which could be voidable at the suit of a liquidator, under section 228 of the Property Law Act 1974 (Qld) or its equivalents, or at common law or in equity.
In relation to any Antecedent Transaction, conduct investigations into any breaches of duty owed to the Companies, whether under the Act, at the suit of a liquidator or otherwise, at common law or in equity, by: (a) the directors or officers of the Companies; or (b) any other person, including persons otherwise involved in the management and control of the Companies.
Conduct investigations into the conduct and knowledge of current and former directors and those involved in the management and control of the Companies and of NHC and its subsidiaries in respect of the matters described at paragraphs 2 and 3 above.
Subject to the outcome of the findings in paragraphs 1 to 4 above, estimate the likely range of potential recovery that may be available in a liquidation scenario after giving consideration to the costs of litigation. For the purpose of this schedule the term: "Act" means the Corporations Act 2001 (Cth). "Antecedent Transaction" means the in specie transfer, on 31 January 2016, by NEC of all of its shares in the transferred entities to Arkdale Pty Limited and/or transactions related to it. "Companies" means Northern Energy Corporation Limited (Administrators Appointed) ACN 081 244 395 and Colton Coal Pty Limited (Administrators Appointed) ACN 140 768 636 both jointly and severally. "NHC" means New Hope Corporation Limited ACN 010 653 844. "transferred entities" means Taroom Coal Pty Limited, Yamala Coal Pty Limited and Elimatta Pastoral Pty Limited.

INTRODUCTION 1 These are reasons for orders made on 15 March 2019 extending the convening period for the second meeting of the creditors of Colton Coal Pty Limited and Northern Energy Corporation Limited (NEC) (the Companies) to 19 July 2019 and appointing Scott Langdon and Robert Hutson of KordaMentha Pty Ltd as special purpose administrators of each of the Companies.

Background 2 Said Jahani and Shaun McKinnon were appointed as administrators of the Companies pursuant to s 436A of the Corporations Act 2001 (Cth) on 17 October 2018. Colton is a wholly-owned subsidiary of NEC. The Companies are wholly owned subsidiaries of New Hope Corporation Limited (NHC). NHC is listed on the Australian Stock Exchange (ASX) and it had a market capitalisation of $2.98 billion (as at July 2018). 3 On 20 November 2018, this Court made orders extending the convening periods in relation to the second meeting of the creditors of the Companies until 21 February 2019: see Jahani, in the matter of Northern Energy Corporation Ltd (Administrators Appointed) [2018] FCA 1983 (Reasons). Wiggins Island Coal Export Terminal Pty Ltd (WICET) is an unsecured creditor of the Companies and appeared in those proceedings to oppose those orders being made. 4 The Companies' primary assets comprise mining tenements that have not yet reached production. Those tenements include an area adjacent to Queensland Rail's North Coast Rail Line and provide direct rail access to the Gladstone Port and the Wiggins Island Coal Export Terminal. 5 In August and September 2011, the Companies became parties to three agreements relating to the development and operation of the Terminal by WICET, including a Take or Pay Agreement. The Terminal commenced operation in September 2016. In September 2014, November 2015 and May 2017 respectively, three of the eight shippers with obligations under a Take or Pay Agreement of the kind to which the Companies were parties went into voluntary administration. As a result, amounts payable by the Companies under the Take or Pay Agreement have more than doubled and costs under a Port Services Agreement with Gladstone Ports Corporation Limited have also increased. This caused financial strain on the Companies. 6 NEC was listed on the ASX between February 1998 and October 2011. Arkdale Pty Ltd, a wholly owned subsidiary of NHC, acquired all of the shares in NEC (and therefore its subsidiary Colton) in 2011. The total consideration for the acquisition of those shares was $226,125,909.38. 7 Mr Jahani has had access to documents which indicate that, from 2011 until December 2017, NHC provided unsecured funding to the Companies by way of a letter of support so that they could meet their obligations under the Take or Pay Agreement. From December 2017, this arrangement ceased and new arrangements were put in place to provide security for advances made by NHC. 8 In early 2016, by way of dividend, NEC distributed in specie to its holding company, Arkdale, all of its shares in Taroom Coal Pty Ltd, Yamala Coal Pty Ltd and Elimatta Pastoral Pty Ltd (transferred entities). This is the "antecedent transaction" about which WICET expressed concerns and said it wished to have investigated in written submissions filed with the Court prior to the hearing on 6 March 2019 and in oral submissions made at that hearing. 9 Taroom is the registered holder of tenements associated with the Elimatta Project in the Western Downs Regional Council area of south-west Queensland. The consideration for the transfer of the transferred entities (which had a carrying value of $43.8 million as at 31 July 2017) was an assumption of liabilities with the carrying value of $45.9 million. Based on this calculation, Arkdale assumed liabilities of $2.1 million in excess of the carrying value of assets received. The Elimatta Project is close to final development according to NHC's annual report as at 31 July 2018 and WICET is concerned that the transaction was at an undervalue and with a related party giving rise to possible actions for breach of directors' duties and voidable transactions. NEC's obligations to WICET were not assumed by Arkdale. 10 As recorded in the Reasons at [19]-[20]: (1) NHC is a secured creditor of both of the Companies for an amount of $7,060,062.14. (2) WICET claimed to be owed $3,672,249.38 in respect of obligations under the Take or Pay Agreement which have fallen due and $128,732,428 in respect of future liabilities. The proof of debt lodged by WICET noted that WICET holds bank guarantees in its favour for the amount of AUD$1,784,375 and US$9,218,750 in respect of debts payable by the Companies under the Take or Pay Agreement. The larger amount claimed relates to a termination payment outlined in clause 12.3 of that agreement under which a termination payment is payable "within the earlier of 12 months of the default occurring or the date that WICET has exhausted the Acceptable Security provided". Mr Jahani says that he has not been notified by WICET that the Acceptable Security provided has been exhausted. WICET has issued a default notice under the Shareholders Agreement; (3) Aurizon Network Pty Ltd claims an amount of $3,305,035 pursuant to the Wiggins Island Rail Project deed, the parties to which are shippers through the Terminal. Mr Jahani says that Aurizon's claim is disputed by the Companies and other shippers and it is currently the subject of litigation. The administrators have not yet adjudicated on this claim. (4) Gladstone Ports Corporation lodged a proof of debt for $5,950,689 on 13 November 2018. Prior to that it claimed $265,689 and the administrators say that that amount is in dispute. Gladstone Ports Corporation holds a bank guarantee in its favour in the amount of $306,350 in respect of debts payable to the company. 11 As a creditor of the Companies, WICET claims to have the benefit of a Deed of Cross Guarantee (DOCG) executed on 31 July 2012 by NHC and some of its subsidiaries. The DOCG was executed in order to obtain relief under Class Order [CO 98/1418] issued by the Australian Securities and Investments Commission (ASIC), allowing accounts for some subsidiaries of NHC to be prepared on a consolidated basis. The Class Order has since been repealed and replaced by another legislative instrument. 12 The Companies and some other subsidiaries of NHC are listed in Part 1(3) of the schedule to the DOCG as being "Group Entities (other than the Holding Entity) which are as at the date of execution of the Deed ineligible for the benefit of the Class Order"; I will refer to these as Part 1(3) Entities. They did not execute the DOCG. 13 NHC is listed in Part 1(1) of the schedule as the "Holding Entity". Arkdale is one of the entities listed in Part 1(2) of the schedule as being "Group Entities (other than the Holding Company) which are as at the date of execution of this Deed eligible for the benefit of the Class Order"; I will refer to these companies as Part 1(2) Entities. NHC and the Part 1(2) Entities are all signatories to the DOCG. 14 WICET's opposition to the grant of the extension of the convening period to 21 February 2019 (and to the further extension to 19 July 2019) was and is on the basis that NHC's obligations under the DOCG would crystallise upon the winding up of the Companies and it was therefore in the interests of the Companies' creditors that the administration end.

Events since the orders made in November 2018 15 NHC disputes that it has any liability to the creditors of the Companies under the DOCG. Accordingly, on 1 February 2019, NHC (and some companies related to it, including Arkdale) commenced proceedings in the Supreme Court of New South Wales against nineteen defendants, including the Companies, other Part1(3) Entities and WICET (DOCG Proceedings). 16 In the DOCG Proceedings, NHC contends that: (1) On the proper construction of the DOCG, NHC and the other parties to the DOCG have not guaranteed the debts of the Companies (or any of the other Part 1(3) Entities). To that end, NHC and the other plaintiffs (who are all Part 1(2) Entities) seek declarations to that effect and that the parties to the DOCG comprise only NHC and the Part 1(2) Entities; and (2) Alternatively, the DOCG should be rectified to reflect the mutual intention and belief of NHC and the other parties to the DOCG (Part 1(3) Entities not being signatories to the DOCG and therefore not parties) that they were guaranteeing the debts only of the parties to the DOCG, and not the debts of the Companies or any other Part 1(3) Entity. In support of this prayer, NHC says that it has provided to the parties to the DOCG Proceedings numerous documents that predate execution of the DOCG and provide evidence of mutual intention and belief. 17 The DOCG Proceedings have been given expedition and have been listed for hearing on three days commencing on 17 June 2019. After WICET opposed being appointed as the representative defendant, Hammerschlag J ordered that NEC (which is the first defendant) be appointed to represent all creditors of NEC and the other defendants other than WICET. NHC has undertaken to pay NEC's costs as a representative defendant to facilitate the expeditious determination of the DOCG Proceedings. Justice Hammerschlag's comments to the parties, which are in evidence, would indicate that his Honour is apprised of the need for the DOCG Proceedings to be determined as soon as possible and, provided the parties play their part promptly, there may be a judgment by the middle of the year. 18 On 5 March 2019 (the day before the hearing), the Board of NHC also approved a term sheet for a proposed deed of company arrangement (DOCA proposal) for the Companies which may be summarised as follows: (1) NHC will contribute $19 million (DOCA contribution) which, together with the proceeds of sale of the Companies' assets, will constitute a Deed Fund available for distribution to the creditors of the Companies. It is recognised that, as the secured creditor, NHC will be entitled to be paid approximately $7 million of this money. (2) It is a "pooled" DOCA having regard to the commonality of the creditors of the Companies. (3) NHC's obligation to make the DOCA contribution will be subject to the following conditions precedent: (a) The administrators applying for, and being granted, an extension of the convening period to a date which is after final judgment in the DOCG Proceedings; (b) The DOCG Proceedings are determined in NHC's favour in all aspects such that it is not liable whatsoever for the debts and liabilities of the Companies; (c) WICET provides, in a form satisfactory to NHC, written confirmation that it will not file or direct NEC (in its representative capacity) to file an appeal in the DOCG Proceedings within the prescribed timeframe; (d) NEC (in its own capacity and in its representative capacity) and Colton provide written confirmation, in a form acceptable to NHC, that it will not file an appeal in the DOCG Proceedings within the prescribed timeframe; and (e) No appeal is filed in the DOCG Proceedings within the prescribed timeframe. (4) It will consent to the sale of the Companies' assets, allowing them to be sold so that the sale proceeds may be distributed as set out above. (5) In consideration of NHC making the DOCA contribution, the administrators and the Companies will release NHC, its directors and officers and the Companies' directors and officers from all claims that they may have relating to the period before 17 October 2018, being the date the administrators were appointed. 19 Having said that, the administrators say that the outcome of the DOCG Proceedings will determine the nature of the DOCA put forward by NHC on the basis that they have been told that NHC intends to better a liquidation in any DOCA proposal.

Applications 20 On 18 February 2019, the Court made orders further extending the convening period to 15 March 2019 to allow time for evidence and submissions to be filed in relation to two interlocutory applications. 21 The first interlocutory application was filed on 14 February 2019 by the administrators seeking orders further extending the convening period up to and including 19 July 2019. WICET and NHC were given leave to be heard in relation to that application. NHC supported that application and WICET opposed it. 22 The second interlocutory application was filed by WICET on 19 February 2019. If the extension of the convening period was granted, WICET sought the appointment of special purpose administrators to undertake investigations which, in summary, concern whether the antecedent transaction involved a voidable transaction or breach of duty by any of the directors, officers or those involved in the management of the Companies and the conduct and knowledge of any of those persons about those matters, and to prepare a report to creditors in relation to their findings pursuant to r 75-225(3)(a) of the Insolvency Practice Rules (Corporations) 2016 (Cth). 23 Initially, the administrators opposed the appointment of the special purpose administrators but, ultimately, they neither consented to nor opposed that appointment. 24 NHC neither consented to nor opposed the appointment of the special purpose administrators; NHC stated that it was interested in the investigation being undertaken but was indifferent as to the identity of the person undertaking it. 25 In the alternative, WICET sought orders ending the administration of the Companies under ss 447A(2)(c) or 447A(1) of the Corporations Act and winding up the Companies under ss 459P(1)(b) and 459A of the Corporations Act, and that Scott Langdon and Robert Hutson of KordaMentha be appointed as joint liquidators of the Companies. The application for the alternative orders was opposed by the administrators and NHC. 26 WICET did not press for the alternative remedies in light of the Court's view expressed at the hearing that, in the circumstances of this matter, there was no reason to deprive all creditors of the opportunity to consider the DOCA proposal or any other DOCA which might emerge prior to a second meeting of creditors if the Court declined to order an extension of the convening period.

RELEVANT PRINCIPLES 27 The principles applicable to an application for extension of the convening period in the Reasons at [35]-[36] are not in dispute. They are as follows: 35. The principles applicable to an application of this kind are well settled. The Court must strike a balance between the expectation that an administration will be relatively speedy and the requirement that undue speed should not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders: Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 per Barrett J at [10], cited with approval in the High Court by Nettle and Gordon JJ in Mighty River International Ltd v Mineral Resources Ltd (2018) 92 ALJR 822; [2018] HCA 38 at [73]. 36 In Re Mentha, in the matter of The Griffin Coal Mining Company Pty Ltd (administrators appointed) (ACN 008 667 285) [2010] FCA 30, McKerracher J noted that in order for the administrators to carry out their function properly, it is necessary that they should have sufficient time to investigate the affairs of the companies under administration and to provide sensible information and advice to the creditors, citing Hayes, in the matter of Estate Property Group Limited (Administrators Appointed) [2007] FCA 935 at [16]. That includes sufficient time to investigate and carry out a sale process in which structured "due diligence" procedures are adopted: Re Diamond Press at [11], Re Hans Continental Smallgoods Pty Ltd [2008] FCA 1933 at [21]. 28 It was also not contentious that the Court has power to appoint special purpose administrators under s 447A of the Corporations Act. In any event, it is plainly possible to do so under s 95-15 of the Insolvency Practice Schedule (Corporations) where it is necessary or convenient in the context of the particular administration. This is so, having regard to the definitions of "external administration" and "external administrator" set out below, even though the examples of orders which might be made under that section all refer to "liquidators". Section 90-15 relevantly provides: 90-15 Court may make orders in relation to external administration Court may make orders (1) The Court may make such orders as it thinks fit in relation to the external administration of a company. Orders on own initiative or on application (2) The Court may exercise the power under subsection (1): (a) on its own initiative, during proceedings before the Court; or (b) on application under section 90-20. Examples of orders that may be made (3) Without limiting subsection (1), those orders may include any one or more of the following: (a) an order determining any question arising in the external administration of the company; (b) an order that a person cease to be the external administrator of the company; (c) an order that another registered liquidator be appointed as the external administrator of the company; (d) an order in relation to the costs of an action (including court action) taken by the external administrator of the company or another person in relation to the external administration of the company; (e) an order in relation to any loss that the company has sustained because of a breach of duty by the external administrator; (f) an order in relation to remuneration, including an order requiring a person to repay to a company, or the creditors of a company, remuneration paid to the person as external administrator of the company. and ss 5-15 and 5-20 contain the following definitions: 5-15 Meaning of external administration of a company A company is taken to be under external administration if: (a) the company is under administration; or (b) a deed of company arrangement has been entered into in relation to the company; or (c) a liquidator has been appointed in relation to the company; or (d) a provisional liquidator has been appointed in relation to the company. 5-20 Meaning of external administrator or a company A person is an external administrator of a company if the person is: (a) the administrator of the company; (b) the administrator under a deed of company arrangement that has been entered into in relation to the company; or (c) the liquidator of the company; or (d) the provisional liquidator of the company. 29 Without in any way seeking to be restrictive, the Court accepts that special purpose administrators may be appointed in circumstances similar to those which Courts have found sufficient to justify the appointment of special purpose liquidators. Examples of those circumstances are set out in Gleeson J's reasons in Deputy Commissioner of Taxation, in the matter of ACN 154 520 199 Pty Ltd (in liq) v ACN 154 520 199 (in liq) [2017] FCA 444 at [64]-[85] and they include: (1) Where there are matters that require investigation with a view to possible recovery for the benefit of creditors. (2) Where the current administrators have insufficient funds and insufficient prospects of obtaining funds to pursue an investigation. (3) Where a creditor is prepared to fund an investigation and recovery action, but only on condition that another administrator is appointed. (4) Where such appointment would be beneficial in the administration (or subsequent winding up) to the creditors as a whole.

Administrators' submissions 30 Mr Jahani says that, since mid-November 2018 (when he last gave evidence), the following work has been undertaken by the administrators: (1) They have continued to liaise with interested parties and shortlisted bidders in relation to the sale of the Companies' mining tenements and other assets relevant to the Colton Coal Project. The shortlisted bidders (the number of which was not identified) have been invited to conduct further due diligence, but on the basis that the offers put forward by the preferred bidders are commercially sensitive and confidential, Mr Jahani did not depose to them. (2) They have sourced additional information to assist shortlisted bidders with their due diligence and arranged for the preparation of a draft sale and purchase agreement. They have liaised with NHC in relation to the sale of those assets. (3) They have reviewed and analysed the DOCA proposal and sought and obtained legal advice from counsel in relation to the DOCG. (4) They have continued undertaking investigations into the business, property and affairs of the Companies including the in specie dividend made by NEC to Arkdale on 31 January 2016. In this regard, the administrators have obtained: (a) The financial records of the Companies. They are of the view that they appear to comply with s 286 of the Corporations Act; (b) The financial statements of NEC dated 31 July 2016, spreadsheets referred to as "6(a) Northern Energy Corporation Limited - Discontinued operations calculations" and "6(b) Detailed asset breakdown 31 January 2016", audited financial statements of NEC for 2012 until 2015, a NEC Target Statement including an independent expert report prepared by Deloitte as at 22 September 2011, a NEC Target Statement including an independent expert report prepared by Lonergan Edwards & Associates as of 23 November 2010, trial balances for NEC and the transferred entities for 2012 until 2015, NHC's annual report for 2015, and NHC's website. So far as Mr Jahani is aware there are no other financial records of the Companies in relation to the in specie dividend by way of transfer of the transferred entities to Arkdale; (c) The circulating resolution approving the in specie dividend and the board briefing paper for that resolution; and they are still investigating the communications between the officers of the Companies and officers of NHC to determine whether those communication shed any light on the transaction to assist with any potential recovery action (should such action be necessary) for the benefit of creditors. A copy of the documents referred to above has been provided to WICET. (5) They have commenced, but not completed, drafting the second report to creditors. (6) They have corresponded and met with representatives of WICET in relation to its proof of debt and bank guarantees, the DOCG and the DOCG Proceedings. (7) They have considered and provided to WICET all documents which respond to a request made by WICET pursuant to s 70-45 of the Insolvency Practice Schedule (Corporations) and a notice to produce documents dated 21 February 2019. 31 In reviewing the DOCA proposal by NHC, Mr Jahani formed the view that it might return between 9 and 24 cents in the dollar to unsecured creditors, before the realisation of securities including bank guarantees held by the unsecured creditors. A more certain view will be able to be formed when the amount of the proceeds of the sale of the Companies' assets is known. The DOCA proposal may therefore deliver a better return to creditors than what would be available in a liquidation, subject to the outcome of investigations into the antecedent transaction. 32 Mr Jahani provided consent for leave to be granted to NHC pursuant to s 440D(1) of the Corporations Act, so that it could commence the DOCG Proceedings. 33 Mr Jahani says that he has formed the view that the DOCG obliges NHC to guarantee the debts of the Companies. However, given that NHC takes a different view, it is in the interests of creditors that the matter be determined expeditiously so that creditors know whether they have the benefit of the DOCG or not. 34 Mr Jahani says that in his view it is in the best interests of the creditors that the DOCG Proceedings be heard and determined before the second meeting of creditors because: (1) The creditors of the Companies ought to know the impact of the DOCG before considering the future of the Companies as it will affect an assessment of whether liquidation or the DOCA proposal is more advantageous to them. (2) If the proper construction of the DOCG is that NHC is bound to guarantee the Companies' debts in a liquidation (and the DOCG is not rectified as NHC proposes) creditors of the Companies would be paid their debts in full in the liquidation. (3) If the proper construction of the DOCG is that NHC is not bound to guarantee the debts of the Companies in a liquidation scenario then the DOCA proposal put forward by NHC would be an option open for consideration by the creditors at the second meeting which may produce a greater and more expedited dividend to creditors than in a liquidation scenario, subject to the outcome of investigations in relation to the antecedent transaction. (4) The current DOCA proposal by NHC is only available if the convening period is extended and it is successful in the DOCG Proceedings. (5) It is NHC's intention to propose an alternative DOCA if it is found in the DOCG Proceedings that NHC has guaranteed the debts of the Companies. 35 Mr Jahani instructed Andrea de Cian, one of his partners at Grant Thornton Australia, to prepare an estimated enterprise valuation of the transferred entities as at 31 January 2016 (the date of the in specie dividend) for the purpose of investigating whether or not the carrying book value of the assets ($43.8 million) and liabilities ($45.9 million) correctly reflected their true value with the result that the in specie dividend involved the assumption of liability by Arkdale of approximately $2.1 million. 36 Mr Jahani's evidence is that Mr De Cian estimated that as at 31 January 2016, the assets of the transferred entities had an enterprise value of $43.9 million (low) and $68.1 million (high), with a mid-point of approximately $56 million. Mr Jahani says that his investigations are ongoing but his preliminary view is that the assets of the transferred entities may have been recorded in the books of NEC at an amount less than the upper end of the estimated valuation range. Mr Jahani does not consider that the book value of the transferred entities was recorded at an amount overwhelmingly less than the estimated valuation range identified by Mr De Cian. 37 He says that an aspect of his assessment of any potential recovery action under Part 5.7B of the Corporations Act for the benefit of creditors relates to the solvency of NEC at the time the antecedent transactions occurred. In Mr Jahani's view, if the DOCG Proceeding determines that NHC is bound to guarantee the debts of the Companies in a liquidation, the Companies would be solvent at the time of the transaction. He is also investigating whether the in specie dividend may amount to a breach of directors' duties or give rise to an action under s 37A of the Conveyancing Act 1919 (NSW), which might not rely on the solvency of the Companies as at 31 January 2016. 38 In response to concerns raised by Nathan King, WICET's Chief Financial Officer, Mr Jahani says that: (1) If it is ultimately determined in the DOCG Proceedings that NHC has guaranteed the debts of NEC, there will be no need to seek compensation for the in specie dividend of the transferred entities as NHC will be required to pay the debts of NEC, meaning that no loss could result to the creditors of NEC from that antecedent transaction (regardless of whether the antecedent transaction is voidable or not). (2) In his view, he has identified a letter of support provided by NHC to NEC for the period 17 November 2015 to 17 November 2016. He states that he was informed by Matthew Busch, the Chief Financial Officer of NHC, that it was NHC's practice to provide letters of support to NEC, which were, until December 2017, generally valid for 12 months periods. Mr Jahani says that he will seek legal advice in respect of the letter to determine whether any of the creditors of NEC can rely on it as a basis for requiring NHC to pay their debts. (3) If the DOCG and the letter of support do not create an obligation upon NHC to discharge the creditors of NEC and NEC goes into liquidation, it is his view that it would then be appropriate to have an independent expert value the assets of the transferred entities for the purposes of litigation and to consider whether examinations are necessary to obtain further evidence to support a proceeding to recover the transferred entities or compensation. He says that he has not yet done this because, in his opinion, it is premature to undertake any further investigations into the antecedent transaction until the DOCG Proceedings are determined. This is on the basis that further investigation may not be necessary if NHC is required to pay out WICET and the other creditors or the letter of support creates obligations on NHC to pay current debts of NEC. (4) The administrators are not aware of, and have not identified, any evidence to suggest that NHC and NEC had "already decided to abandon their commitment to the Colton Coal Project" at the time of the in specie dividend. (5) Mr Jahani has provided to WICET on a confidential basis all of the valuation material in relation to the enterprise valuation of the transferred entities completed by Mr De Cian. (6) In relation to an indemnity provided by NHC to the administrators in relation to environmental liabilities and to provide a contribution of $780,000 towards their remuneration and expenses (with the option for the administrators to seek further funding if required from NHC): (a) It is not unusual for secured creditors or other stakeholders to provide an indemnity otherwise there may be no funds to conduct the administration; (b) Mine remediation costs can be imposed by statutory bodies for which the administrators may be personally liable and it is therefore Mr Jahani's practice to obtain such an indemnity; (c) The nature and extent of the indemnity has been fully disclosed to creditors. Only WICET has raised a concern, and that concern was not raised at the hearing on 19 February 2019 in the Supreme Court of New South Wales at which NHC agreed to indemnify NEC in relation to its representative capacity in the DOCG Proceedings; (d) The administrators have taken a view which opposes NHC's in the DOCG Proceedings; (e) At no stage has NHC or its lawyers sought to restrain any action by the administrators; and (f) The existence of the indemnity does not alter his decisions, conduct or investigation in the administration. 39 Mr Jahani says that the administrators will not be able to report properly to creditors about any meaningful comparison between a liquidation and the DOCA proposal until the DOCG Proceedings have been determined and the recoverability of the antecedent transaction is known. The matter is further exacerbated by the fact that the DOCA proposal may return more to creditors than a liquidation scenario if the DOCG does not respond to the debts of the Companies, but the DOCA contribution is not available until the DOCG Proceedings are determined. Mr Jahani says that the administrators are unable to make a recommendation to creditors as required by s 438A(b) of the Corporations Act. 40 It was submitted on behalf of the administrators that an immediate liquidation will not result in a larger or more immediate return to creditors. This is because liquidation would obviate the need for expedition in the DOCG Proceedings, and the sting of the liquidation is a loss of the DOCA proposal which may produce a better outcome (at least as to speed) to creditors than recovery in relation to any antecedent transaction. NHC's intention to propose a DOCA which delivers a better outcome than a liquidation in the event that it is unsuccessful in the DOCG Proceedings may also be lost. In those circumstances, the submission by WICET that there is benefit to immediate liquidation should not be accepted. 41 Even if WICET is the largest creditor, so that its vote would carry the day at the second creditors' meeting, the appropriate inquiry in relation to this application is one concerning the interests of the creditors as a whole. They rely on South Burnett Wines Limited (Administrators Appointed) [2004] NSWSC 1239 at [14], per Campbell J. The position of NHC as ultimate shareholder and secured and unsecured creditor of the Companies cannot be ignored and the DOCA proposal seeks to improve the return to all unsecured creditors if the DOCG is not engaged. 42 Mr Jahani says that the extension of the convening period to 19 July 2019 will not prejudice the creditors of the Companies in respect of the pursuit of any antecedent transaction by a liquidator as relevant limitation periods have not expired and the limitation period in relation to insolvent transactions can be extended. On 13 February 2019, by correspondence between their solicitors, NHC provided Mr Jahani with a further undertaking (which it consented to being placed before the Court) that it would not revoke the DOCG until the second meeting of creditors of the Companies is held and concluded pursuant to s 439A of the Corporations Act. This is relevant because notice of revocation will start time running for the crystallisation of creditors' claims under the DOCG. If the Companies are placed in liquidation and subsequently the DOCG Proceedings are determined in favour of NHC, creditors will be prejudiced by additional costs required to place the Companies back in administration and Mr Jahani estimates those costs to be in the range of $150,000-$200,000. Further, an extension of the convening period will allow time for there to be greater certainty for creditors regarding the outcome of the sale process and its impact on any likely dividend to creditors. 43 In support of that application, the following documents were tendered: (1) A letter dated 5 March 2019 addressed to the solicitors for the administrators, NHC and WICET from the solicitors for Gladstone Ports Corporation in relation to the application for extension of the convening period. It advised that Gladstone Ports Corporation did not intend to appear at the hearing of the application on 6 March 2019 and it neither consented to nor opposed the application. No similar communication was received from Aurizon. (2) An email dated 5 March 2019 from Janelle Moody, NHC's General Counsel and Company Secretary, copied to Mr Jahani, responding to questions asked by NHC's lawyers saying: New Hope Corporation Limited confirms on behalf of it and Arkdale Pty Ltd that, until you notify us that your investigations into the in specie dividend are concluded or the second meeting of the Companies creditors is held (whichever is earlier) they will not dispose of, or further encumber their interests in, or the assets of, Taroom, Elimatta and Yamala, without first giving five business days' notice to you. 44 Mr Jahani undertook to convene and hold the second creditors' meeting earlier than 19 July 2019 if it is appropriate and in the interests of creditors to do so.

WICET's submissions 45 WICET first noted that the administrators bore the onus of establishing that it was appropriate to extend the convening period, consistently with the objectives of Part 5.3A, by demonstrating that the preponderance of the balance was in favour of extension. Reference was made to the policy of Part 5.3A as one that favoured administrations conducted quickly, on account of the moratoria imposed, including curtailment of the right of creditors to vote for a winding up (see Brian Rochford Ltd (Administrator Appointed) v Textile Clothing & Footwear Union of NSW (1998) 47 NSWLR 47 at 44-45). The second substantive extension will have the effect of suspending the rights of creditors for a total period of over nine months from the date the administrators were appointed. It is very likely that further extensions will need to be sought because (having regard to the amounts of money at stake) is likely the DOCG Proceedings will be appealed whatever the presiding judge's decision may be. It opposed the extension of the convening period. 46 WICET submitted that the sale process is not complete and there is very little information in the administrators' evidence concerning it; it "appears to have stalled completely". There is no report on the level of the expressions of interest or of the steps taken in the sale process. The only evidence is that a shortlist has been identified and they have been invited to undertake due diligence, but there is no indication of how many have been shortlisted, what the time frame for due diligence is or any indication of prices. Five months should have been long enough to complete the sale process and make a recommendation to creditors, but no real advance has been made since the last extension was granted. 47 WICET submitted that the extension of the convening period would have the effect of delaying investigation of the antecedent transaction, given that the administrators have formed the view that they will not do so and they do not have funding available for that purpose but the antecedent transaction requires immediate investigation. It was also concerned that remedies to redress the antecedent transaction, such as the retransfer of the transferred entities to NEC, may be affected by the intervention of interests of third parties with the final development of the Elimatta Project being imminent. Accordingly the investigation of those transactions should not be deferred as proposed by the administrators. 48 The only valuation of the transferred entities is a desktop valuation prepared by Mr De Cian. WICET agrees that it will be necessary to obtain a formal valuation to determine whether the transferred entities were transferred to Arkdale at an undervalue. However, no steps have yet been taken to do that and the investigation is not otherwise far advanced in view of the administrators' opinion that that should await the outcome of the DOCG Proceedings as, if the creditors are to be paid in full pursuant to the DOCG, investigation would be unnecessary. 49 NHC's DOCA proposal has been produced (the day before the hearing), but it is highly conditional (see [18(3)] above) and it is likely to be of academic interest only. There is no need for the DOCA proposal to be subject to a condition that the convening period be extended. The DOCA proposal requires the grant of a release to NHC companies and various directors and officers which would deprive the Companies (and therefore the creditors) of rights of recovery in relation to the antecedent transaction. The condition that WICET must give up its appeal rights is asymmetrical in circumstances where NHC is not required to make the same undertaking. WICET has no intention of giving up its right of appeal. Even if WICET were willing to give up its appeal rights, the condition that NEC undertakes not to appeal cannot be satisfied. That is because NEC appears in the DOCG Proceedings in a representative capacity. If there is a reasonably arguable appeal, it would not be able to compromise that right; it would require the sanction of the Court to do so, but it is acting for creditors who are not going to benefit from any deed of company arrangement, since they are creditors of subsidiaries of NHC other than the Companies. 50 Ultimately, the position of the creditors will have to balance the value of recovery proceedings in respect of the antecedent transaction against the value of any unconditional deed of company arrangement which might be brought forward at the relevant time and "that calculus does not change regardless of the" DOCG. Senior counsel for WICET conceded that that is "not a calculus that can be made today", because it depends on the outcome of the investigation in relation to the antecedent transactions. WICET observed that Mr Jahani did not say how he reached the conclusion that the DOCA proposal would result in a return to unsecured creditors of between nine and 24 cents in the dollar. 51 WICET submitted that if, notwithstanding these matters, the Court does extend the convening period, it should appoint special purpose administrators immediately to investigate the antecedent transaction. The administrators' position is that the investigation of the antecedent transaction should await the outcome of the DOCG Proceedings. Accordingly, WICET is not prepared to fund the administrators but would be prepared to fund Robert Hutson and Scott Langdon of KordaMentha to an amount of $500,000. WICET would only be entitled to recover that funding out of the proceeds of any recovery action following that investigation. The Court noted to the parties that the terms on which the special purpose administrators might be appointed did not empower them to undertake recovery action, which put WICET at risk that it would not recover any funding. 52 WICET submitted that even if the administrators have funding to conduct an investigation, they are not willing to proceed now. If special purpose administrators are appointed, the administrators will be able to pursue the completion of the sale of the Companies' assets and the investigation of the antecedent transaction will be advanced. What WICET proposed will not impinge upon the administration or adversely affect other creditors. Senior counsel for WICET accepted that that is an efficient outcome and both creditors and the administrators would be in a position to make informed decisions.

NHC's submissions 53 NHC's submissions support Mr Jahani's application for an extension of the convening period. It submitted that the objectives of Part 5.3A would be advanced by granting the extension because: (1) Court ordered liquidation would deprive creditors of the opportunity to vote in relation to its DOCA proposal or any other deed of company arrangement which might be proposed. (2) Immediate liquidation presupposes that the value of the recovery which may be made if the antecedent transaction is determined to be voidable will exceed the $19 million (effectively $12 million after NHC is paid out as the secured creditor) to be contributed by NHC in the DOCA proposal at a time when there is no evidence supporting that presupposition. (3) It is antithetical to the interests of the Companies' creditors for costs to be incurred in a liquidation when it is not clear that they should be in liquidation. 54 NHC submitted that when considering any countervailing prejudice to creditors of the Companies if the extension is granted, it is necessary to take into account: (1) Its undertaking not to take steps to revoke the DOCG before the second creditors' meeting, a consideration which has not changed since the extension to 21 February 2019 was granted. (2) NHC has acquired most of the small debts. The large debts are either secured by bank guarantees, subject to ongoing litigation or not yet due. It is therefore not clear that liquidation will result in an earlier or better return to creditors, but it is clear that liquidation will risk materially worsening the potential return to creditors by virtue of losing the $19 million DOCA proposal. (3) The creditors' positions are fully protected in relation to any potential voidable transactions as the s 513C date has been fixed by the commencement of the administration and, as noted by the administrators, there is no relevant limitation period pursuant to s 588FF(3) of the Corporations Act (or otherwise) that is at risk of barring any claims other than in the distant future and in any event that period can be extended by the Court. Investigations will continue during the extended convening period. (4) The question of the Companies' solvency cannot be determined with certainty until it is clear whether their debts are guaranteed by NHC, particularly where, as here, the vast majority of WICET's claim is contingent. (5) WICET has not produced any compelling evidence or reason to demonstrate that creditors should be deprived of a second meeting with full information relating to the outcome of the DOCG Proceedings and any investigation into potential voidable transactions. 55 NHC, through its senior counsel, submitted that NHC has "studied indifference" to the identity of the administrators who investigate the antecedent transaction, provided they are professional and reputable. Its position is that the investigation should occur during the extended convening period, at least in so far as is necessary to satisfy creditors, acting reasonably, that there is nothing to see or, alternatively, so that creditors can make an informed decision about the benefits of the DOCA proposal as against liquidation. 56 NHC accepted that if WICET would not trust anyone other than KordaMentha to conduct the investigation, then that would weigh in favour of their appointment as special purpose administrators. Further, in view of WICET's commitment to fund the special purpose administrators to an amount of $500,000, which WICET would only be entitled to recover out of the proceeds of a successful action, then there will be no erosion of the creditors' estate if, as NHC expects, there is "nothing to see". 57 Senior counsel also noted the representation it had made through its solicitors to the administrators that, until the administrators notified NHC that they had concluded their investigations in relation to the antecedent transaction or the second meetings of the Companies' creditors had been held (whichever is earlier) it would "not dispose of, or further encumber their interests in, or the assets of" the transferred entities, without first giving the administrators five business days' notice. At the hearing, and by email after the hearing, NHC confirmed that representation (not being an undertaking to the Court but a representation to the world at large) would apply irrespective of who conducted the investigation. 58 Senior counsel acknowledged that a convening period of nine months must be justified. He submitted that while it is a relatively long period, it is not unprecedented in more recent times and WICET had sought to rely on older cases which placed more emphasis on the speed of the administration. Senior counsel submitted that the real question is how the appropriate balancing is achieved in the prevailing circumstances. 59 If WICET is right in its interpretation of the DOCG, then on one view there is a benefit to liquidation because NHC would be "on the hook for the whole amount". Senior counsel noted the content of a letter from NHC's lawyers to WICET's lawyers in which it was stated: In the unlikely event that our clients are unsuccessful in the Deed Proceeding, New Hope's intention is to put forward an alternative DOCA at that time, appreciating that any such DOC would need to provide creditors with a better outcome than a liquidation scenario. Counsel submitted that this meant that NHC would put forward a "deed" which ensures the creditors would be no worse off than 100 cents in the dollar. 60 On the other hand, if NHC proves to be right either in its construction of the DOCG or it is successful in having the DOCG rectified, then creditors will know that they have a choice between a DOCA proposal which makes (effectively) $12 million over and above sale proceeds of the Companies' assets available to creditors, in addition to those amounts available to them under letters of credit and other securities. Mr Jahani estimates that this will result in a return of between nine and 24 cents in the dollar. 61 Senior counsel referred to Mr King's evidence that WICET was not in a position to evaluate the merits of any proposal sponsored by NHC until investigation of the antecedent transaction is complete, and NHC agrees with that proposition. 62 Senior counsel submitted that, at this point, the administrators are not in a position to make a recommendation to creditors and the creditors are not in a position to make an informed vote until the DOCG Proceedings have been determined and the investigation of the antecedent transaction had been advanced. This is so, notwithstanding WICET's position that it is the largest creditor and it will vote against any DOCA proposal and the fact that NHC's DOCA proposal is conditional on there being no appeal of any decision made by the presiding judge in the DOCG Proceedings. While it might be true that there may be need for another application for an extension of the convening period whatever that decision is, that is a question for another day. At the very least, if special purpose administrators are appointed, more will be known about the antecedent transaction at that time and the position will have been advanced concerning whether NHC has liability under the DOCG. 63 Senior counsel noted that the creditors who had supported WICET's position when the first extension of the convening period was granted by this Court are not all "lining up" behind it now. He relied on the letter provided by Gladstone Ports Corporation's solicitors that it has no position on this application and further noted that Aurizon has not updated its position.

CONSIDERATION 64 While the extension of the convening period to 19 July 2019 does result in a relatively long convening period of nine months, I was satisfied that it is not unprecedented and that it is justified in this case. 65 In Mentha, in the matter of The Griffin Coal Mining Company Pty Ltd (administrators appointed) (ACN 008 667 285) (No 3) [2010] FCA 1087 at [44], McKerracher J noted the statutory period within which to convene a second creditors meeting was fixed by the legislature to cover companies of all sizes, in straightforward and difficult situations. His Honour there said that there is no presumption against an extension of time being granted, so long as the complexity of an administration (supported by admissible evidence) warrants it in order to enable administrators to properly carry out their functions, citing Re Riviera Group [2009] NSWSC 585; 72 ACSR 352 at 354-357 at [8]-[18] (per Austin J). 66 In Re Harrisons Pharmacy Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2013] FCA 458 at [44] and [46], I noted a number of cases in which lengthy extensions had been granted and the trend to more lengthy convening periods. In In the matter of Pan Pharmaceuticals Limited [2003] FCA 598 at [41], Lindgren J concluded that the essential issue is whether the extension is necessary to enable the administrators to arrive at the opinion they are required to provide to creditors so as to place the creditors in the position to choose between the alternatives of liquidation, approving any proposed deed of company arrangement or ending the administration. 67 If the convening period were not to be extended, I accept that it would be difficult for the administrators to provide a meaningful recommendation to the Companies' creditors. Although WICET gave short shrift to that opinion in its submissions, the Court can, and should, give weight to the considered judgment of the administrator(s) in matters of this kind: see Park (administrator), in the matter of Surfstitch Group Ltd [2017] FCA 1221 at [30] per Gleeson J citing Re BCD Resources NL (recs & mgrs. apptd) (admins apptd) [2015] NSWSC 777 at [12] per Black J, and Re Owen, RiverCity Motorway Pty (Ltd (admins apptd) (recs & mgrs apptd) v Madden (No. 4) [2012] FCA 1491; (2012) 92 ACSR 255 at [26] per Logan J. Further, I accept that their concerns are not misplaced having regard to the interests of creditors and members of the Companies. 68 Despite the regrettable lack of detail in the administrators' evidence concerning the sale process for the Companies' assets, it appears that the sale process (which had not long commenced at the time of the last substantive extension to the convening period) is still underway. I accept the administrators' view that it is likely that a better return will be realised if the assets are sold by them rather than in a liquidation scenario. Nonetheless, the lack of detail provided by the administrators might well have undermined the administrators' case for an extension of the convening period had that been the only issue. An application for an extension must be supported by detailed information about the affairs of the company: see Re Allbuild Construction Co Pty Ltd; Ex parte Featherby [2000] WASC 227; Re Strickland as Administrators of Port Kennedy Resorts Pty Ltd [2000] WASC 302; 19 ACLC 328. 69 The bigger issue is the uncertainty surrounding whether the Companies creditors' have the benefit of the DOCG and whether there is a realistic possibility that meaningful recoveries can be made in relation to the antecedent transaction. 70 While the administrators have formed the view that NHC has guaranteed the Companies' liabilities to creditors of the Companies, that interpretation issue is not settled and the question of rectification of the DOCG for which NHC contends in the DOCG Proceedings raises factual issues of which the administrators are not fully seized. In those circumstances, neither the administrators nor WICET is in a position to say definitively whether the unsecured creditors will be better off if the Companies go into liquidation (a trigger for the operation of the DOCG) or not. 71 As conceded by senior counsel for WICET, the appointment of special purpose administrators allows for prompt investigation of the antecedent transaction while leaving the administrators free to concentrate on the securing sale of the Companies' assets. That allows for greater timeliness and efficiency in the conduct of the administration. The special purpose administrators will be charged with providing a report by 28 June 2019, several weeks in advance of the end of the extended convening period so as to enable the administrators to consider the impact of the report on their own reporting to the Companies' creditors before the second creditors' meeting. 72 The special purpose administrators are people in whom WICET has confidence. They will be charged with obtaining a valuation of the transferred entities, critical to the issue of whether the antecedent transaction is voidable. Due to the complexity of the valuation, a matter raised by WICET, it will be performed by an expert coal mining professional with appropriate expertise in the valuation of coal assets and who has prepared similar valuations previously. The special purpose administrators will also be in a position to undertake investigation of the antecedent transaction (including related transactions) and undertake enquiries as to the conduct and knowledge of the officers of the Companies, NHC and their related entities about the antecedent transaction. WICET will only recover its costs of funding the special purpose administrators out of actions arising out of the antecedent transactions, so that creditors generally will not bear any of the costs unless the investigations bear fruit. 73 If the convening period is not extended, the DOCA proposal would not be available for consideration because a condition precedent to its operation would not have been satisfied. I give this little weight in light of NHC's expressed intention to propose a deed of company arrangement which ensures that the Companies' creditors will be no worse off than in a liquidation scenario. 74 Despite WICET's opposition to the extension of the convening period and the apparent firmness of its view that it will vote for liquidation at the second creditors' meeting, it is necessary to take into account the interests of all creditors and the members of the Companies. In my view, the general body of creditors and NHC (as the secured creditor and the Companies' ultimate holding company) are better served by there being a determination by the Supreme Court of New South Wales of whether NHC has liability to creditors of the Companies under the DOCG (albeit that any decision made by the presiding judge may be subject to appeal) and by investigation of the antecedent transaction being advanced by the appointment of special purpose administrators. All of NHC, the Companies' unsecured creditors and the administrators will be in a better to position to assess whether they will be better off if they vote in favour of liquidating the Companies or for any deed of company arrangement proposal which might then be current or ending the administration. 75 In saying this, the Court appreciates that there may be remaining uncertainty following a decision in the DOCG Proceedings occasioning a further application for an extension of the convening period. Whether such an extension would be appropriate properly falls for determination in the circumstances as then known. Those circumstances should be better defined than they are now by progress in the sale of assets, securing the special purpose administrators' report in relation to the antecedent transaction and knowing the outcome of the DOCG Proceedings. 76 As I understand it, the creditors of the Companies will not be prejudiced in any material way by the extension. In forming this view, I take into account the matters set out [54] above and previous submissions that the major creditors' claims are subject to dispute and some of them (including WICET) have access to letters of credit and other securities. 77 I am satisfied that this approach best meets the purposes of Part 5.3A as set out in s 435A of the Corporations Act. 78 Following the hearing on 6 March 2019, the administrators, NHC and WICET conferred with a view to settling the form of the orders which should be made. They were unable to agree them. The issues which divided them were: (1) Whether the special purpose administrators should be charged with investigating whether there were any voidable transactions or breaches of duty owed to the Companies by any of their directors or officers or any other person involved in management of the Companies or whether the task should be limited by reference to the antecedent transaction "and/or any related transaction". (2) Whether the special purpose administrators should provide their report to creditors of the Companies in addition to the administrators (or anyone else who might perform that function) or simply to the creditors. 79 While WICET argued that it would be more cost efficient to give the special purpose administrators the wider task and although WICET's interlocutory application was widely framed, argument in written and oral submissions centred on the need for speedy investigation of the antecedent transaction so that the administrators would be in a position to provide advice to creditors about that issue in the report that they are obliged to give to creditors in advance of the second creditors' meeting. Accordingly, the more limited task was appropriate having regard to the timeframe in which the report is required to be made. 80 The Court was satisfied that the special purpose administrators' report should be provided in the first instance to the administrators, albeit that they should make the report available to creditors upon request. In this way, the administrators are in a position to address any issues that they consider appropriate arising out of the report having regard to the wider scope of their duties, while ensuring that the creditors have access to the report should they require it. I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.

Corporations Act 2001(Cth)ss 286, 435A, 438A, 439A, 440D

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