Lindholm, in the matter of Munday Group Pty Limited (Administrators... [2010] FCA 447 | Case summary

Pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (the Act) the convening period defined in s 439A(5)(a) of the Act in respect of Munday Group Pty Limited (administrators appointed) (receivers and managers appointed) (ACN 116 558 420) and each of the companies listed in the Schedule to these Orders (the Companies), be extended until midnight on 16 July 2010. 2. Pursuant to s 447A(1) of the Act, Pt 5.3A of that Act is to operate in relation to the Companies as if the meeting of creditors of Munday Group Pty Limited (administrators appointed) (receivers and managers appointed) (ACN 116 558 420) and each of the Companies required by s 439A of the Act may be held at any time during the period comprising the convening period as extended by Order 1 above and the period of five business days thereafter, notwithstanding the provisions of s 439A(2) of the Act. 3. Liberty is granted to the Plaintiffs to apply for a further extension of the convening period referred to in Order 1 above at any time prior to 16 July 2010. 4. Any person having a sufficient interest may apply to the Court for an order discharging or varying any of the Orders 1, 2 and 3 above. 5. The Plaintiffs' costs and expenses of this application be costs and expenses of the administration of the Companies. 6. By 11 May 2010, the Plaintiffs: (i) upload a copy of this Order onto the Ferrier Hodgson website; and (ii) send a circular letter to Creditors of the Companies (by email in respect of those Creditors who have informed the Plaintiffs 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.

REASONS FOR JUDGMENT 1 On 9 April 2010, Peter McCluskey and John Lindholm, (the Administrators), were appointed as joint and several administrators of: 1. Hamday Pty Limited trading as The Grand Frankston (ACN 113 225 979); 2. Joday Pty Limited trading as Players on Lygon (ACN 111 150 509); 3. Magday Pty Limited trading as Golden Nugget (ACN 113 225 657); 4. Pieday Pty Limited trading as Court Jester (ACN 109 800 357); 5. Spar Holdings Pty Limited trading as Sugar Gum Hotel (ACN 100 379 628); 6. Taylor McKay Pty Limited trading as Whalers Inn (ACN 118 950 244); 7. Upday Pty Limited trading as Golden Fleece Hotel (ACN 106 215 356); and 8. Yadnum Pty Limited trading as The Cove Hotel (ACN 106 053 212), by secured creditor, National Australia Bank, pursuant to s 436C of the Corporations Act 2001 (Cth) (the Act), (the 9 April Appointments). Those entities operate hotels with gaming machines. 2 On 12 April 2010, the Administrators were also appointed as joint and several administrators of a further group of entities by the National Australia Bank pursuant to s 436C of the Act, namely: 1. Dontaris Pty Limited (ACN 067 640 920); 2. Fisherman's Pier Pty Limited trading as Fisherman's Pier Restaurant (ACN 100 738 583); 3. Hot Summers Pty Limited formerly trading as Lorne Hotel (ACN 069 834 555); 4. MGQ Ayr Pty Limited formerly trading as Ayr Hotel (ACN 116 838 825); 5. Munday Group Holdings Pty Limited (ACN 117 478 458); 6. Munday Group Pty Limited (ACN 116 558 420); 7. Munday Tiger Pty Limited trading as Man Bo Towers (ACN 126 769 328); 8. Ricnic Pty Limited (ACN 066 794 509); and 9. SRAM Nominees Pty Limited formerly trading as Torquay Hotel (ACN 102 863 981), (the 12 April Appointments). 3 That group of entities, that is those the subject of the 12 April Appointments, in fact divide into two further groups. The first group are two entities that operate restaurants, being Fishermen's Pier Pty Limited trading as the Fishermen's Pier Restaurant, and Munday Tiger Pty Limited, trading as Man Bo Towers Restaurant. The balance of the group is made up of shell companies: Munday Group Holdings Pty Limited, is the parent company; Munday Group Pty Limited, a shell company; Dontaris Pty Limited, the former business investment trust company; Hot Summers Pty Limited, formerly traded as Lorne Hotel, and the hotel was sold in December 2009; Ricnic Pty Limited, the company that previously held the freehold for the Lorne Hotel; MGQ Ayr Pty Limited, formerly traded as Ayr Hotel, and the hotel was sold in April 2009; SRAM Nominees Pty Limited, formerly traded as Torquay Hotel, and the hotel was sold in January 2010. 4 The entities the subject of the 9 and 12 April Appointments are collectively known as, "the Munday Group". 5 On 9 April 2010, Ian Carson and Craig Crosby were appointed joint and several receivers and managers of each entity in the Munday Group. 6 The Administrators now seek to extend, by 60 days, the convening period for the calling of the second meeting of creditors of the Munday Group required to be held pursuant to s 439A(1) of the Act, to 16 July 2010. Pursuant to s 439A(5) of the Act, the convening period for the 9 April Appointments will, unless extended, expire on 10 May 2010 and the convening period for the 12 April Appointments will, unless extended, expire on 11 May 2010. The first meeting of creditors of the Munday Group was held on 21 April 2010 and at that meeting the Administrators stated that because of the uncertainty of what was described as the "gaming auctions," it would be likely that they would need to make application to the Court for an extension of the convening period for the second meeting. The Administrators asked if there were any objections to that proposal from the creditors present at that meeting and no objections were received. 7 The uncertainty foreshadowed by the Administrators at the first meeting of creditors has become reality. The affidavit of John Lindholm sworn 6 May 2010, sets out in some detail, the reasons why the "gaming auctions" are necessary as a result of recent changes to the Victorian gaming legislation and that that process will not be complete in sufficient time to enable the second meeting of creditors to be held and for the Administrators to be in a position to propose what they consider should happen to the entities within the Munday Group. 8 In addition to that concern, the Administrators seek an extension of the convening period for a number of other reasons (1) to permit them to complete their investigations (2) to seek the completion of a proper return as to affairs in relation to the entities within the Munday Group (3) to retain the option to recapitalise the Munday Group by way of a deed of company arrangement, if it is considered to be in the best interests of the creditors of the Munday Group and finally, to be in a position to prepare a report which contains the requisite opinions as to the three options referred to in s 439A(4) of the Act. 9 In particular, Mr Lindholm has deposed that having regard to the uncertainties surrounding both the gaming auctions as well as other matters just identified, neither he nor Mr McCluskey is in a position to prepare a report to creditors which adequately informs them about the options for the future of the Munday Group. The alternative is for the second meeting of creditors to proceed at which time Mr Lindholm deposes he would need to recommend to the meeting that it be adjourned to enable the matters identified to be completed. In my view, that is an unnecessary expense, especially given that there are 17 companies within the Munday Group with a total of 910 creditors. 10 In the circumstances, consistent with the authorities which include Mentha, in the matter of Hans Continental Smallgoods Pty Ltd (Administrators Appointed) [2008] FCA 1933 at [20] and given the attitude of the creditors to the issues I have identified, I consider that it is appropriate for the Court to grant the extension sought by the Administrators in order to maximise, and because those actions are directed towards maximising, the return for creditors and shareholders. 11 Accordingly, I will make orders in the following terms: 1. Pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (the Act) the convening period defined in s 439A(5)(a) of the Act in respect of Munday Group Pty Limited (administrators appointed) (receivers and managers appointed) (ACN 116 558 420) and each of the companies listed in the Schedule to these Orders (the Companies), be extended until midnight on 16 July 2010. 2. Pursuant to s 447A(1) of the Act, Pt 5.3A of that Act is to operate in relation to the Companies as if the meeting of creditors of Munday Group Pty Limited (administrators appointed) (receivers and managers appointed) (ACN 116 558 420) and each of the Companies required by s 439A of the Act may be held at any time during the period comprising the convening period as extended by Order 1 above and the period of five business days thereafter, notwithstanding the provisions of s 439A(2) of the Act. 3. Liberty is granted to the Plaintiffs to apply for a further extension of the convening period referred to in Order 1 above at any time prior to 16 July 2010. 4. Any person having a sufficient interest may apply to the Court for an order discharging or varying any of the Orders 1, 2 and 3 above. 5. The Plaintiffs' costs and expenses of this application be costs and expenses of the administration of the Companies. 6. By 11 May 2010, the Plaintiffs: (i) upload a copy of this Order onto the Ferrier Hodgson website; and (ii) send a circular letter to Creditors of the Companies (by email in respect of those Creditors who have informed the Plaintiffs 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. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

Lindholm, in the matter of Munday Group Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) (ACN 116 558 420) [2010] FCA 447

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (5 paragraphs)

Legislation Cited (1)

Cases Cited (1)

Cited By (1)