Mann v Abruzzi Sports Club Ltd

Pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (the Act) the period within which the Plaintiffs must convene a meetings of the creditors of: (a) Bounty Mining Limited (administrators appointed) (receivers and managers appointed) ACN 107 411 067 (Bounty); (b) Bounty Minyango Pty Limited (administrators appointed) (receivers and managers appointed) ACN 103 192 829 (Bounty Minyango); (c) Bounty Cook Pty Limited (administrators appointed) (receivers and managers appointed) ACN 111 762 924 (Bounty Cook); (d) Bounty Mining Investments Pty Limited (administrators appointed) (receivers and managers appointed) ACN 165 575 815 (Bounty Mining Investments); and (e) Bounty Operations Pty Limited (administrators appointed) (receivers and managers appointed) ACN 103 192 838 (Bounty Operations), be extended up to and including 30 June 2020 (Second Meetings).
Pursuant to s 447A(1) of the Act, Part 5.3A of the Act is to operate in relation to Bounty, Bounty Minyango, Bounty Cook, Bounty Mining Investments and Bounty Operations such that the Second Meetings may be held together or separately at any time during, or within 5 business days after the end of, the convening period as extended by the Court, notwithstanding the provisions of s 439A(2) of the Act.
The Plaintiffs, within seven business days of these orders, give notice of these orders to the creditors of each of Bounty, Bounty Minyango, Bounty Cook, Bounty Mining Investments and Bounty Operations creditors, by means of a circular.
The Plaintiffs and any creditor of Bounty, Bounty Minyango, Bounty Cook, Bounty Mining Investments and Bounty Operations have liberty to apply to vary these orders upon two business days' written notice.
Costs of and incidental to this application be costs and expenses in the administration of Bounty, Bounty Minyango, Bounty Cook, Bounty Mining Investments and Bounty Operations. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

PERRAM J: 1 This is an application pursuant to ss 439A(6) and 447A of the Corporations Act 2001 (Cth) ('the Act') to extend the convening period for the second meeting of the creditors of Bounty Mining Limited (administrators appointed) (receivers and managers appointed) ('Bounty') and also the corresponding second meetings for the creditors of its four wholly owned subsidiaries to which receivers and managers have also been appointed and which are also in administration (together, 'the Companies'). An extension to 30 June 2020 is sought. The Plaintiffs also seek an order permitting these second meetings to be held at any time during the convening period (and not just at its end). The Plaintiffs are the joint and several administrators of each of the Companies. 2 Bounty is a public company whose shares were traded on the Australian Stock Exchange until 18 December 2019. The Companies presently conduct an underground coal mine called Cook Colliery which is located south of Blackwater in central Queensland. They also operate a coal handling and processing plant nearby which processes not only the coal from the Cook Colliery but also coal mined by other entities (in return for a fee). In addition they are pursuing three other coal projects in Queensland which are in various stages of development. 3 On 17 December 2019 the directors of Bounty and its subsidiaries resolved to appoint the Plaintiffs as administrators. On the same day, a secured creditor, QCoal Bounty Holdings Pty Ltd ('QCoal'), appointed receivers and managers to the Companies. This was done pursuant to a registered security interest held by it over all of the property of the Companies. The receivers and managers have continued to conduct the Companies' businesses and are in control of all of their assets and undertakings. There are a large number of other registered security interests in respect of particular assets such as cars, mining equipment and printers. 4 On 15 January 2020 the directors provided the administrators with their report about the Companies' activities and property which was required by s 438B(2) of the Act. This was due at an earlier date but the administrators granted the directors an extension to that date. The administrators have, therefore, only just received this report and have not yet had a chance fully to digest its contents. 5 Based on their review of the Companies' books to date, however, the administrators believe there are about 197 unsecured creditors of the group on a consolidated basis and that each of the subsidiaries also have unsecured creditors ranging in number from 1 to 176. In addition, the Companies have 42 employees on their books. The largest creditor is the secured creditor QCoal which appears to be owed $80,425,084.00. The unsecured creditors are owed $31,218,754.54 and the employees have entitlements totalling $1,706,406.62. The administrators are not yet sure of the precise position of the subsidiaries. 6 The administrators have expressed the view that the business of the Companies is a complex one which I accept. 7 The first meeting of creditors took place on 31 December 2019 at which time committees of inspection were established for two of the Companies. Given the time of year, the administrators have not yet completed their inquiries and given the complexity in the underlying businesses do not expect to do so for some time. As part of that process, they are investigating whether there have been any voidable transactions and whether there might be any causes of action available to the companies if they were ultimately to be placed into liquidation. At the second meeting, a decision should be made as to whether the Companies should be placed in liquidation or instead whether a deed of company arrangement should be executed. The administrators are bound to provide a recommendation as to which of these two paths should be pursued but they do not feel that they are presently in a position to make such a recommendation. 8 In parallel, on 27 December 2019, the receivers and managers advised the administrators that they are seeking to sell the whole of the Companies' businesses as a going concern. That process would be stunted if the Companies went into liquidation and they ceased to trade as a going concern. The receivers and managers have advised the administrators that they would like to see the convening period extended by five months. This would have the practical effect of postponing any winding up sufficiently to allow a sale to occur. The administrators agree with this proposal. Given the complexity of the business the administrators do not regard a five month period as excessive especially having regard to the due diligence enquiries any purchaser would need to make on the acquisition of a complex geological business with significant plant and equipment. 9 It seems to me that it would be in the interests of all concerned to see if the business can be sold as a going concern. The unsecured creditors are likely to get nothing in a winding up so their best chance lies in a sale of the business. The business is substantial and of a kind which can plainly be sold and would be best sold as a going concern. 10 The administrators are presently required by s 439A to convene the second meeting of creditors by 23 January 2020 and that meeting must be held by 30 January 2020. They seek an extension of the convening period to 30 June 2020. The creditors were informed that the administrators would pursue this path at the first meeting of creditors on 31 December 2019 and none voiced opposition. I am satisfied that the creditors have been informed of the proposal. 11 The principles applicable to the extension of a convening period granted under s 439A(6) are straightforward. The Court will have regard to the objectives of Pt 5.3A of the Act and the need for expedition in an administration, but will also have regard to the countervailing factor that undue speed should not be allowed to prejudice sensible and constructive actions directed to maximising a return for creditors: Re Renex Holdings (Dandenong) 1 Pty Ltd (admins apptd) [2015] NSWSC 2002 at [7] per Black J; Mann v Abruzzi Sports Club Ltd (1994) 12 ACSR 611. Included in that assessment is a consideration of the complexity of the business and group structure and the time needed to effect an orderly sale process: Re Riviera Group Pty Ltd (admins apptd) (recs and mgrs apptd) [2009] NSWSC 585; 72 ACSR 352 at 355 per Austin J and the cases there cited. This approach was recently confirmed by the High Court in Mighty River International Limited v Hughes [2018] HCA 38; 92 ALJR 822 at 839-840 [73] per Nettle and Gordon JJ. 12 This is a clear case for the exercise of the extension power. There is a likely benefit from the sale if it occurs and there appears to be no prejudice to creditors. Accordingly, I will make the orders sought in the originating application. If, once the Plaintiffs' investigations into the Companies are complete, it becomes apparent that the sale will not proceed and that there will be no deed of company arrangement, then this five month period should not be used up and the administrators should convene the second meetings as soon as practicable. They have indicated in their evidence before me that they intend to do so. In that circumstance, I will make an order that the second meeting may occur at any time during the convening period or within five days after the expiration of the convening period pursuant to s 447A(1). This varies the usual requirement in s 439A(2) that the second meeting be held within five days before or five days after the end of the convening period. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

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