Kaso, in the matter of Speedpanel Australia Ltd (Administrators Appointed) [2017] FCA 453

Federal Court of Australia|2017-04-26|Before: O'Callaghan J

Pursuant to subsection 439A(6) of the Corporations Act 2001 (Cth) (Act), the convening period within which the Applicants must convene the second meeting of creditors of: (a) Speedpanel Australia Ltd (ACN 107 723 240); (b) Speedpanel (Vic) Pty Ltd (ACN 107 723 955); and (c) Speedpanel Corporate Services Pty Ltd (ACN 107 723 964), (together, the Companies) is extended to and includes 29 July 2017.
Pursuant to section 447A of the Act, Part 5.3A of the Act is to operate in relation to the Companies as if the second meeting of creditors of the Companies required by section 439A of the Act be held at any time during, or within five business days after the end of, the convening period as extended by paragraph 1 of these orders, notwithstanding the provisions of section 439A(2) of the Act.
The Applicants give notice of these orders to the Companies' creditors by sending a circular letter to creditors of the Companies (by email in respect of those creditors who have informed the Applicants that email is their preferred method of communication and by post in respect of all other known creditors) informing them of the substance of these orders and enclosing a copy of the orders.
Liberty to apply is granted to any person who can demonstrate sufficient interest to modify or discharge the order at paragraph 1 on not less than 48 hours' notice to the Applicants.
The Applicants' costs of the application are costs in the administration of the Companies. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

O'CALLAGHAN J: 1 This is an application by Mr Kaso and Mr Secatore (the Administrators) under ss 439A(6) and 447A of the Corporations Act 2001 (Cth) (the Act) in their capacity as the administrators of three related companies - Speedpanel Australia Pty Ltd (Administrators Appointed) (SPA), Speedpanel (Vic) Pty Ltd (Administrators Appointed) (SPV) and Speedpanel Corporate Services Pty Ltd (Administrators Appointed) (SPCS) (the Companies) - seeking an extension of the period for the convening of the meeting of creditors of the Companies from 28 April 2017 to 29 July 2017 (being 90 days). The Administrators were appointed to the Companies on 21 March 2017. 2 On 26 April 2017 I heard the application, which was supported by an affidavit of Mr Kaso. After hearing from counsel for the Administrators, I made the orders sought because, as counsel submitted, the case for the extension sought was compelling. These are my reasons for making those orders.

SUBMISSIONS AND EVIDENCE 3 The Companies are engaged in the manufacture and supply of concrete walls and panels used in large scale construction and infrastructure projects. SPA is an unlisted public company, which has 20 employees and owns 100% of the shares in both SPV and SPCS. SPV, the main trading entity, leases premises at locations in Victoria and New South Wales and has almost 90 employees. SPCS owns the plant and equipment used by the business operated by the Companies. 4 Following the appointment of the Administrators, the Companies' business has been generating weekly sales of about $550,000 (inclusive of GST) and is forecast to trade profitably over a 15-week period. 5 Mr Kaso deposed that the Administrators require more time in which to give the written notice to creditors required by s 439A (3) and (4) of the Act. This is because: (1) The Companies use patented processes in the production of concrete wall panels, which are critical to the operation of the businesses and thus a material consideration in any assessment of the value of the Companies' business and assets. The ownership of those processes, however, is currently in dispute. (2) The Administrators did not, at the date of hearing, have sufficient information to prepare a report to the Companies' creditors. In particular, although the Administrators had not yet conducted a marketing campaign, they had already been approached by a number of parties expressing interest in purchasing the Companies' business. Further, the Administrators did not expect to receive the information that they were seeking regarding ownership of the patents for up to four to five weeks. 6 Mr Kaso also deposed that the Administrators had received no objections from creditors to the extension sought.

CONSIDERATION 7 In exercising the power to extend the convening period under s 439A(6) of the Act the function of the Court is to: …strike an appropriate balance between the legislature's expectation that the administration will be a relatively swift and summary procedure, 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. (Silvia, Re Austcorp Group Ltd (Administrators Appointed) [2009] FCA 636; citing Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10]; Re Pan Pharmaceuticals Ltd (2003) 46 ACSR 77 at [42] per Lindgren J; and Re New Horizons Corporation; Ex parte De Vries [2004] NSWSC 253 at [5] per Austin J. See also Dixon, Re G. G. Engineering (Aust) Pty Ltd (Admins Apptd) [2017] FCA 365 at [6] per Davies J, citing with approval Re Riviera Group Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (2009) 72 ACSR 352; [2009] NSWSC 585 at [15] and Parbery, Re NewSat Limited (Administrators Appointed) (Receivers and Managers Appointed) [2015] FCA 435 at [59].) 8 In my view, the extension sought by the Administrators strikes the appropriate balance in the circumstances. Relevantly: (1) the reasons given by Mr Kaso for requiring an extension are consistent with the object and purpose of Pt 5.3A of the Act, as set out in s 435A of the Act; (2) the Administrators are continuing to operate the business of the Companies; (3) an extension will enable the Administrators to complete their investigations in relation to the Companies' assets, including in relation to what counsel described as the "murky question" of who owns critical items of intellectual property used in the business operated by the Companies; (4) the extension is only for up to 90 days, by which time the Administrators expect to be in a position to report to creditors in advance of the meeting; and (5) the extension was not opposed by the Companies' major secured creditor, the members of SPV's committee of creditors or the Companies' landlords. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Callaghan.

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