Jones, in the matter of Eastern Goldfields Limited (Administrators Appointed) [2018] FCA 2081

Pursuant to s 439A(6) of the Corporations Act (Cth) (Act), the period in which the plaintiffs must convene the meetings of the creditors of Eastern Goldfields Limited (Administrators Appointed) (ACN 100 038 266) and each of the entities listed in the schedule (the Companies) pursuant to s 439A of the Act be extended up to and including 31 January 2019;
Pursuant to s 447A(l) of the Act, Part 5.3A is to operate such that the meetings of creditors of the Companies required by s 439A of the Act may be held at any time during, or within five business days after the end of, the convening period as extended by order 1 above, notwithstanding the provisions of s 439A(2) of the Act;
The plaintiffs are to inform creditors of the Companies (or any one of them) of the orders made: (a) by means of a circular posted to the 'Documents' section of the website maintained by the plaintiffs at by no later than 24 December 2018; (b) by sending such notice electronically to the email address of the creditors (including the persons claiming to be creditors) for whom the plaintiffs have an email address; and (c) by sending such notice to the postal address or facsimile number, or otherwise as provided for by the Act or the Insolvency Practice Rules (Corporations) 2016 (Cth), to any creditors not being a creditor referred to in sub-para (a).

COLVIN J: 1 The administrators of Eastern Goldfields Limited and a number of associated companies seek an extension of the period to convene the second meeting of creditors of the companies. The associated companies are: Monarch Nickel Pty Ltd; Monarch Gold Pty Ltd; Carnegie Gold Pty Ltd; Siberia Mining Corporation Pty Ltd; Mt Ida Gold Operations Pty Ltd; Ida Gold Operations Pty Ltd; Pilbara Metals Pty Ltd; Mt Ida Gold Pty Ltd; Eastern Goldfields Mining Services Pty Ltd; and Siberia Gold Operations Pty Ltd. 2 The Court has power to grant the extension under s 439A(6) of the Corporations Act 2001 (Cth). 3 On such an application, the Court balances the expectation that an administration will be undertaken in a relatively speedy and summary manner with the need to ensure that the administration is not concluded without consideration of sensible and constructive options that may provide better returns for creditors and any return to shareholders (or indeed enable the company to return to trading in the interests of creditors and shareholders): Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10]. A number of the circumstances that may cause the Court to grant an extension were gathered by Austin J in Re Riviera Group Pty Ltd (admin apptd) (recs and mgrs apptd) [2009] NSWSC 585 at [13]. 4 The evident purpose of the power to grant an extension is to enable the Court to allow further time where it is appropriate to do so in order to advance the purposes of the administration. It is not to be granted so as to undermine or compromise the object of a speedy and summary consideration of the alternatives or to otherwise turn it into something that is different to the nature of the administration provided for in the Corporations Act. Extensions for a relatively short period are much more likely to be consistent with the evident statutory objectives of an administrator. 5 The administrators were appointed on 29 November 2018 and the first meeting of creditors was held on 11 December 2018. If not extended, the convening period for the second meeting would expire on 31 December 2018. The timing over the Christmas period is most inconvenient for shareholders and makes it difficult for the administrators to obtain advice from third party experts. The extension sought is until 31 January 2019. 6 The companies the subject of the administration are not trading. The main assets of the companies concern a gold mining operation that has been on care and maintenance since before the commencement of the administration. Employees have been retained to continue the care and maintenance. There is also a large portfolio of tenement interests held by the companies. Issues also arise as to whether significant transactions and dealings that occurred within the six months before the commencement of the administration mean that there may be claims made to avoid those dealings. There is a need to consider those matters before providing a recommendation at the second creditors meeting. 7 These matters mean that there is some complexity to the administration. 8 The companies have a cash position of around $3 million and those funds will be sufficient for it to continue care and maintenance until at least the end of February 2019. However, there is a cost to further delay and that is a matter to be weighed in considering the application. 9 Committees of inspection have been established for four of the companies. They met on 17 December 2018. They each formally acknowledged the application to extend the convening period and resolved to consent to the application. 10 The administrators have engaged PCF Capital Group, an independent corporate advisory firm specialising in mining project divestment to provide advice as to the value and sale options of the mining property of the companies. PCF Capital Group will not be able to finalise a report until 25 January 2019. 11 The administrators have also engaged McMahon Mining Title Services to audit the 145 tenements held by the companies. A report as to those matters is important given their significance in terms of assessing available assets and any sale options. It has just been received by the administrators. I am informed that it is some 150 pages in length and will take some time to consider. 12 On the evidence the administrators have acted without delay and taken appropriate steps to obtain information and specialist advice to be able to report to the creditors having regard to the nature of the assets of the companies. It would not be in the interests of creditors to convene the second meeting until the administrators have obtained that information and advice and been able to formulate informed recommendations. 13 Finally, on the evidence, a major secured creditor is intending to propose a deed of company arrangement for consideration. Present indications are that it may result in a significant distribution to creditors. There have been numerous discussions and the proponent has engaged lawyers and financial advisors to advance the proposal. Therefore, there is a real prospect that such a proposal may be presented if the extension is granted. 14 On an application to extend the convening period, it is relevant to consider any specific opposition from creditors. All known creditors have been given short notification of the application by circular and ASX announcement. There is no known opposition from creditors to the extension and the orders propose a regime by which creditors will be notified and there may be an application at relatively short notice to set aside or vary the orders if it is demonstrated that such a course is appropriate. There is no likely prejudice to creditors evident from the material before me. The major secured creditor has no objection to the extension. 15 ASIC has been notified of the application, but has not yet responded. The liberty to apply would enable ASIC to bring the matter back before the Court if it formed the view that there was prejudice or other concerns arising from the extension. 16 In all the circumstances, I am satisfied that there should be an extension of the convening period. 17 The administrators also seek orders pursuant to s 447A(1) that the meetings may be convened within five business days after the end of the convening period. Orders of that kind are commonly made where an extension of the convening period is ordered. They provide flexibility as to the convening of the second creditors meeting and make clear that notices may be sent by reference to the extended period. I am satisfied that such an order should be made. 18 The orders sought propose notification to creditors by circular posted on a website. I propose to order that there also be publication by email to creditors whose email addresses are known (162 in number) and by mail to other creditors (144 in number). 19 I see no reason why the costs of the application should not be costs in the administration and will make an order to that effect. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin.

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