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[2009] FCA 1556
plaintiff. The Court approved the schemes for the relevant plaintiffs, exempted them from compliance with s 411(11), made consequential orders under s 413, and reserved liberty to apply; the applications...
The Court approved a set of internal Peabody-group restructurings that moved assets, liabilities and some shares or joint venture interests between related companies. Most affected companies were to be deregistered after their assets and liabilities were transferred. The Court accepted that the arrangements could proceed as members’ schemes without creditor meetings, but still examined creditor positions. It was satisfied with the member disclosure, meeting process, voting results and ASIC’s no-objection. Two applications were held over because employee transfers were still to take place. The reasons apply to the applications decided in this proceeding and do not provide a general ruling that every intra-group restructuring can proceed on the same terms.
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In Millennium CHPP Pty Ltd v Millennium Coal Pty Ltd [2009] FCA 1556, Stone J considered applications for approval of schemes of arrangement concerning companies in the Peabody Energy Australia corporate group. The stated purpose was to reorganise assets and liabilities connected with particular projects and operations into what the applicants described as a “logical component structure” ([1]).
The arrangement involved 21 plaintiff companies and several related company defendants. The schemes did not all use the same mechanism. Most involved transferring all of a company’s assets and liabilities to another group company and then deregistering the transferor without winding it up. Other schemes concerned particular assets, liabilities, shares or joint venture interests ([1], [6], and the orders).
The procedural sequence was compressed. On 7 December 2009, the Court made orders for member meetings under s 411(1) of the Corporations Act 2001 (Cth). The meetings took place on 8 December, and the approval hearing took place on 16 December. Stone J observed that the interval was unusually short, but considered it not inappropriate for meetings involving members of the same corporate group, referring to SGIC Insurance Limited v Insurance Australia Limited [2004] FCA 1492; 51 ACSR 470 ([3]).
The Court approved the schemes within the scope of its orders. Its order 1 expressly covered the first to eleventh and thirteenth to twentieth plaintiffs. The applications concerning the twelfth plaintiff, Excel Employment Services Pty Ltd, and the twenty-first plaintiff, North Goonyella Coal Mine Management Pty Ltd, were stood over. The reason given was that additional employees had been identified and were to be transferred before those schemes proceeded ([9]). The reasons therefore should not be read as approving those two deferred schemes.
The consequential orders under s 413 gave legal effect to specified transfers and provided for the continuation of certain legal proceedings against or by successor companies. They also allowed relevant transferee companies, or their directors, to complete documents and other steps needed to perfect transfers. Many transferor companies were to be deregistered without winding up. The precise effect for each company depended on the terms of its scheme and the orders.
Stone J treated the central question as whether the statutory requirements for the arrangements had been established, rather than whether the internal restructuring was commercially preferable. The reasons describe the schemes as intra-group arrangements and say that there was nothing novel or unprecedented about recognising arrangements of this kind as schemes under Part 5.2 ([6]). That statement is tied to the arrangements before the Court; it is not a finding that every group reorganisation can use the same process.
The evidence addressed whether the schemes were bona fide and properly proposed, whether each plaintiff was a “Part 5.1 body”, whether members had received proper disclosure, and whether ASIC had been notified and given a reasonable opportunity to examine the schemes ([7]). The Court also recorded that ASIC had waived the requirement for an independent expert opinion in this case ([7]). The reasons do not set out the basis for that waiver or establish a general rule about when it is appropriate.
Member approval was supported by evidence that the necessary majorities voted in favour ([13]). The Court considered how meetings had been conducted where there were different share classes. Although the initial Court orders contemplated an overall meeting for each company, notices of meeting provided for class meetings where there were different classes. The evidence showed that class meetings and overall meetings were held for the three companies with more than one class, and that their constitutions did not prevent special-class shareholders consulting with ordinary shareholders about the company’s future. Stone J was satisfied that the meetings were appropriately held and approval legitimately obtained ([11]).
The reasons also addressed disclosure and notice. The explanatory statement’s factual information had been verified through evidence from the group’s general manager, legal ([12]). The scheme booklet was served on members and registered with ASIC after the first hearing ([12]). A hearing notice appeared in The Australian on 9 December. Although it gave the plaintiffs’ registered office, rather than their solicitors’ address, as the address for service, the evidence was that no creditor or shareholder had notified an intention to attend. The matter was also called outside Court at the hearing without response ([13]). ASIC’s letter of 16 December stated that ASIC had no objection and did not propose to appear ([14]). Stone J referred to the statutory requirement for that written statement in s 411(17)(b).
Creditors were considered despite the schemes being advanced as members’ schemes. Stone J accepted, by reference to SGIC Insurance, that a creditors’ meeting was unnecessary in this case ([4]). The Court nevertheless examined the financial information put before it: nine companies had no balance-sheet liabilities; seven of the 16 companies discussed had only inter-company loan liabilities; and the transferee companies for the remaining five were shown to have substantial net asset positions after implementation ([5]). The reasons state both the conclusion that a creditors’ meeting was unnecessary and the need to take creditors’ positions into account. They do not establish that creditor interests can be disregarded in other schemes.
The judgment does not describe a change in the law before and after the decision. It presents the application of existing statutory provisions and earlier Federal Court authority to the particular facts.
Before the approval order, the proposed transfers remained subject to the member-meeting and Court-approval process described in the reasons. The first hearing resulted in orders convening meetings under s 411(1); approval at the second hearing was sought under s 411(4)(b), with consequential relief sought under s 413 ([3], [8], [15]). The reasons treat the meeting process as a necessary precondition to invoking the Court’s jurisdiction under s 413 ([3]).
After approval, the orders provided for transfers at the “Effective Time” defined in the schemes. They also addressed the continuation of specified legal proceedings and authorised the relevant transferee company, or its directors, to take steps to complete or perfect the transfers. For the companies specified in the orders, deregistration without winding up was to follow the relevant transfers. Those outcomes arise from the orders, not from an independent declaration in the reasons that every transfer of this kind has those effects.
As to creditor procedure, the Court applied the position discussed in SGIC Insurance: a creditors’ meeting was unnecessary for these schemes, but creditors’ positions remained relevant to the Court’s consideration ([4]–[5]). As to whether the arrangements could be schemes at all, Stone J said they were neither novel nor unprecedented and cited SGIC Insurance and Stork ICM Australia Pty Ltd v Stork Food Systems Pty Ltd [2006] FCA 1849 ([6]). The judgment does not state a comprehensive test beyond the conclusions and statutory steps it addresses.
At [4], Stone J said the schemes were “appropriately put forward as member schemes” even though they affected creditors, and that a creditors’ meeting was unnecessary for reasons given in the authorities. In plain English, the Court accepted that member meetings could be the relevant meetings for these arrangements, notwithstanding effects on creditors. This did not end the inquiry into creditors.
At [5], the judge said it remained relevant to consider creditors’ positions. The evidence about liabilities and the transferees’ net asset positions was part of the Court’s assessment. In plain English, the absence of a creditors’ meeting did not mean that the Court treated creditor impact as immaterial.
At [6], Stone J said there was “nothing novel” or “unprecedented” about the arrangements being recognised as schemes under Part 5.2. This indicates that the internal transfers and, in most cases, subsequent deregistration were not treated as outside the statutory scheme process merely because they occurred within a corporate group. The paragraph does not establish that all internal restructurings qualify.
At [7], the Court recorded its satisfaction that each scheme was bona fide and properly proposed, that each plaintiff was a Part 5.1 body, and that member disclosure and ASIC notification requirements had been met. In plain English, these were central findings supporting the approval application.
At [15], Stone J concluded that the required matters had been proved and that the s 413 orders should be made. This is the decision’s concise statement of the basis for granting the requested relief. It should be read alongside the specific scope of the orders and the applications stood over at [9].
The decision is most directly relevant as an example involving internal group reorganisations implemented through schemes of arrangement. The features included transfers among related companies, a combination of whole-company and partial transfers, affected creditors, member voting, and proposed deregistration without winding up for many transferors ([1], [6]).
It is particularly useful to examine where a proposed restructuring uses a members’ scheme even though creditors may be affected. The judgment supports the proposition that, on the authorities it considered, a creditors’ meeting was not required for the schemes before it. But the Court also looked at balance-sheet liabilities and transferee net asset positions ([4]–[5]). A materially different creditor impact, or different evidence about the transferees’ financial position, is not resolved by this judgment.
The decision also illustrates the importance of procedural evidence where there are multiple companies, differing share classes, and a short timetable. The Court considered the consistency between the meeting orders and notices, the actual meetings held, constitutional provisions, member disclosure, ASIC’s involvement, and public notice ([11]–[14]). It also shows that the status of particular entities can change before approval: the proposal concerning Southcoal as a transferee had been amended, and the ninth defendant was removed from the proceeding ([10]).
The judgment has a clear limit where a scheme depends on unresolved operational steps. The applications for Excel Employment Services and North Goonyella Coal Mine Management were stood over because employee transfers were still proposed ([9]). It does not determine how those later applications were resolved.
The supplied judgment contains no subsequent decisions discussing or applying Millennium CHPP. It is therefore not possible, from this text alone, to say how later courts have treated it.
The authorities Stone J cited were earlier decisions, not later treatment of this judgment. SGIC Insurance Limited v Insurance Australia Limited was cited for the short interval between hearings and for the proposition that a creditors’ meeting was unnecessary in the circumstances ([3]–[4]). Stork ICM Australia Pty Ltd v Stork Food Systems Pty Ltd was cited alongside SGIC Insurance in support of the observation that the arrangements were not unprecedented ([6]). The reasons do not provide enough detail to describe the full reasoning in those cases.
For research purposes, the decision can be identified as an example of a Federal Court approval of intra-group transfer schemes under ss 411 and 413. Any account of its present precedential weight, or of later judicial acceptance or qualification, requires later authorities not included in the judgment supplied here.
The judgment does not explain the detailed basis on which ASIC waived an independent expert opinion, beyond recording the waiver ([7]). It does not set out the contents of the explanatory statement or the expert material, if any, considered by ASIC. Those matters therefore cannot be reconstructed from the reasons alone.
The creditor discussion is concise. The reasons give aggregate categories of liabilities and refer to substantial net asset positions, but do not identify amounts, creditor classes, security positions, or the terms of any creditor protections ([5]). The decision supports a case-specific conclusion, not a broad rule that an intra-group transfer can proceed without creditor meetings whenever the companies belong to the same group.
Nor do the reasons analyse in detail how the Court assessed whether a scheme was fair or whether a different outcome could be preferable for a particular member or creditor. The judgment records the Court’s satisfaction with the evidence, disclosure and voting, but gives limited detail on the commercial terms of each scheme ([7], [11]–[15]).
Finally, the reasons do not resolve the applications stood over for the two companies whose employee transfers were pending ([9]). Nor do they report on later implementation, disputes about transfer mechanics, or subsequent judicial treatment. Those issues remain outside the material supplied.
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Pursuant to section 411(4)(b) Corporations Act 2001 (Act), the schemes of arrangement between each of the First to Eleventh, and Thirteenth to Twentieth Plaintiffs and its respective members, in the form set out in Annexure 'A' to these orders (each a Scheme and together the Schemes), be approved.
Pursuant to section 411(12) of the Act, the First to Eleventh, and Thirteenth to Twentieth Plaintiffs be exempted from compliance with the requirements of section 411(11) of the Act.
Pursuant to section 413(1) of the Act (and using the definitions in the Schemes), as from the Effective Time, each of the following transactions will occur, in relation to each Scheme, in the order set out below:
(i) first, all of the Assets of the First Plaintiff, Millennium CHPP, will be transferred to and become the Assets of the First Defendant, Millennium Coal;
(ii) second, all of the Liabilities of Millennium CHPP will be transferred to and become the Liabilities of Millennium Coal; and
(iii) third, Millennium CHPP will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Second Plaintiff, Huntercoal, will be transferred to and become the Assets of the Second Defendant, Peabody Australia Mining;
(ii) second, all of the Liabilities of Huntercoal will be transferred to and become the Liabilities of Peabody Australia Mining; and
(iii) third, Huntercoal will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Helensburgh Scheme Assets will be transferred from the Third Plaintiff, Helensburgh Coal, to and become the Assets of the Ninth Defendant, Metropolitan Collieries; and
(ii) second, all of the Helensburgh Scheme Liabilities will be transferred to and become the Liabilities of Metropolitan Collieries;
(i) first, all of the shares in Helensburgh Coal, held by the Fourth Plaintiff, Southcoal, will be transferred to the Third Defendant, Metropolitan Collieries;
(ii) second, all of the Assets of Southcoal will be transferred to and become the Assets of the Second Defendant, Peabody Australia Mining;
(iii) third, all of the Liabilities of Southcoal will be transferred to and become the Liabilities of Peabody Australia Mining; and
(iv) fourth, Southcoal will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Fifth Plaintiff, Excel Equities, will be transferred to and become the Assets of the Second Defendant, Peabody Australia Mining;
(ii) second, all of the Liabilities of Excel Equities will be transferred to and become the Liabilities of Peabody Australia Mining; and
(iii) third, Excel Equities will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Sixth Plaintiff, Cumbo Land, will be transferred to and become the Assets of the Fourth Defendant, Wilpinjong Coal;
(ii) second, all of the Liabilities of Cumbo Land will be transferred to and become the Liabilities of Wilpinjong Coal; and
(iii) third, Cumbo Land will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act.
(i) first, all of the Assets of the Seventh Plaintiff, Excel Resources, will be transferred to and become the Assets of the Second Defendant, Peabody Australia Mining;
(ii) second, all of the Liabilities of Excel Resources will be transferred to and become the Liabilities of Peabody Australia Mining; and
(iii) third, Excel Resources will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Eighth Plaintiff, Excel Holdings, will be transferred to and become the Assets of the Second Defendant, Peabody Australia Mining;
(ii) second, all of the Liabilities of Excel Holdings will be transferred to and become the Liabilities of Peabody Australia Mining; and
(iii) third, Excel Holdings will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Ninth Plaintiff, RFC Royalty Investments, will be transferred to and become the Assets of the Second Defendant, Peabody Australia Mining;
(ii) second, all of the Liabilities of RFC Royalty Investments will be transferred to and become the Liabilities of Peabody Australia Mining; and
(iii) third, RFC Royalty Investments will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Tenth Plaintiff, Excel Investments (NSW), will be transferred to and become the Assets of the Second Defendant, Peabody Australia Mining;
(ii) second, all of the Liabilities of Excel Investments (NSW) will be transferred to and become the Liabilities of Peabody Australia Mining; and
(iii) third, Excel Investments (NSW) will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Eleventh Plaintiff, Conexcel 2, will be transferred to and become the Assets of the Second Defendant, Peabody Australia Mining;
(ii) second, all of the Liabilities of Conexcel 2 will be transferred to and become the Liabilities of Peabody Australia Mining; and
(iii) third, Conexcel 2 will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) all of the shares in Peabody (Burton Coal) held by the Thirteenth Plaintiff, Burton Coal, will be transferred to the Sixth Defendant, PEA;
(i) first, all of the shares in Burton Coal and the Burton Joint Venture Assets held by the Fourteenth Plaintiff/Eighth Defendant, Peabody Energy Australia Coal, will be transferred to the Fifth Defendant, Peabody (Burton Coal);
(ii) second, all the Burton Joint Venture Liabilities of Peabody Energy Australia Coal will be transferred to and become the Liabilities of Peabody (Burton Coal);
(iii) third, all the North Goonyella Joint Venture Assets held by Peabody Energy Australia Coal will be transferred to the Seventh Defendant, Peabody (Bowen);
(iv) fourth, all the North Goonyella Joint Venture Liabilities of Peabody Energy Australia Coal will be transferred to and become the Liabilities of Peabody (Bowen); and
(v) fifth, all of the shares in Peabody (Bowen) held by Peabody Energy Australia Coal will be transferred to and become the Assets of the Sixth Defendant, PEA;
(i) first, all of the Assets of the Fifteenth Plaintiff, Mitterb, will be transferred to and become the Assets of the Seventh Defendant, Peabody (Bowen);
(ii) second, all of the Liabilities of Mitterb will be transferred to and become the Liabilities of Peabody (Bowen); and
(iii) third, Mitterb will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Sixteenth Plaintiff, Ellensfield Pastoral, will be transferred to and become the Assets of the Seventh Defendant, Peabody (Bowen);
(ii) second, all of the Liabilities of Ellensfield Pastoral will be transferred to and become the Liabilities of Peabody (Bowen); and
(iii) third, Ellensfield Pastoral will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Seventeenth Plaintiff, Peabody Surat, will be transferred to and become the Assets of the Sixth Defendant, PEA;
(ii) second, all of the Liabilities of Peabody Surat will be transferred to and become the Liabilities of PEA; and
(iii) third, Peabody Surat will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Eighteenth Plaintiff, Peabody Fuels, will be transferred to and become the Assets of the Sixth Defendant, PEA;
(ii) second, all of the Liabilities of Peabody Fuels will be transferred to and become the Liabilities of PEA; and
(iii) third, Peabody Fuels will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Nineteenth Plaintiff, Peabody Australia Management Services, will be transferred to and become the Assets of the Fourteenth Plaintiff/Eighth Defendant, Peabody Energy Australia Coal;
(ii) second, all of the Liabilities of Peabody Australia Management Services will be transferred to and become the Liabilities of Peabody Energy Australia Coal; and
(iii) third, Peabody Australia Management Services will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act;
(i) first, all of the Assets of the Twentieth Plaintiff, Coal Developments German Creek, will be transferred to and become the Assets of the Fourteenth Plaintiff/Eighth Defendant, Peabody Energy Australia Coal;
(ii) second, all of the Liabilities of Coal Developments German Creek will be transferred to and become the Liabilities of Peabody Energy Australia Coal; and
(iii) third, Coal Developments German Creek will be deregistered by ASIC without winding up pursuant to section 413(1)(d) of the Act.; and
Pursuant to section 413(1)(c) of the Act, as and from the Effective Time (as defined in the Schemes), any legal proceedings pending by or against:
(a) the First Plaintiff, Millennium CHPP, will be deemed continued by or against (as the case may be) the First Defendant, Millennium Coal;
(b) the Second Plaintiff, Huntercoal, the Fourth Plaintiff, Southcoal, the Fifth Plaintiff, Excel Equities, the Seventh Plaintiff, Excel Resources, the Eighth Plaintiff, Excel Holdings, the Ninth Plaintiff, RFC Royalty Investments, the Tenth Plaintiff, Excel Investments (NSW), or the Eleventh Plaintiff, Conexcel 2, will be deemed continued by or against (as the case may be) the Second Defendant, Peabody Australia Mining;
(c) the Sixth Plaintiff, Cumbo Land, will be deemed continued by or against (as the case may be) the Fourth Defendant, Wilpinjong Coal;
(d) the Seventeeth Plaintiff, Peabody Surat, or the Eighteenth Plaintiff, Peabody Fuels, will be deemed continued by or against (as the case may be) the Sixth Defendant, PEA;
(e) the Fifteenth Plaintiff, Mitterb, or the Sixteenth Plaintiff, Ellensfield Pastoral, will be deemed continued by or against (as the case may be) the Seventh Defendant, Peabody (Bowen); and
(f) the Nineteeth Plaintiff, Peabody Australia Management Services, or the Twentieth Plaintiff, Coal Developments German Creek, will be deemed continued by or against (as the case may be) the Fourteenth Plaintiff/Eighth Defendant, Peabody Energy Australia Coal,
without the need for any further act or deed, other than appropriate amendment of the record of the relevant court or tribunal.
Pursuant to section 413(1)(g) of the Act, as from the Effective Time (as defined in the Schemes), the defendant to whom the relevant Assets or Liabilities of a plaintiff are transferred under a Scheme, or any director of that defendant from time to time, may sign all documents and do all things required to be done by the relevant plaintiff to complete or perfect the transfer of the Assets and Liabilities of that plaintiff provided for in these orders, whether by lodgement, registration, notification or otherwise.
Liberty be reserved to any party to apply for any further orders as may be considered necessary or desirable under section 413 of the Act.
Without prejudice to the generality of Order 6, liberty to either the Twelfth Plaintiff or the Twenty-First Plaintiff, or both of them, to apply at any time for orders under sections 411 and 413 of the Act.
These orders be entered forthwith. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA
General Division NSD 1379 of 2009
BETWEEN: MILLENNIUM CHPP PTY LTD (ACN 117 688 696)
First Plaintiff HUNTERCOAL PTY LTD (ACN 087 413 152)
Second Plaintiff HELENSBURGH COAL PTY LTD (ACN 086 463 452)
Third Plaintiff SOUTHCOAL PTY LTD (ACN 078 236 816)
Fourth Plaintiff EXCEL EQUITIES PTY LTD (ACN 071 707 956)
Fifth Plaintiff CUMBO LAND PTY LTD (ACN 077 362 746)
Sixth Plaintiff EXCEL RESOURCES PTY LTD (ACN 071 905 774)
Seventh Plaintiff EXCEL HOLDINGS PTY LTD (ACN 071 905 738)
Eighth Plaintiff RFC ROYALTY INVESTMENTS PTY LTD (ACN 077 752 099)
Ninth Plaintiff EXCEL INVESTMENTS (NSW) PTY LTD (ACN 107 987 897)
Tenth Plaintiff CONEXCEL 2 PTY LTD (ACN 121 412 208)
Eleventh Plaintiff EXCEL EMPLOYMENT SERVICES PTY LTD (ACN 104 594 489)
Twelfth Plaintiff BURTON COAL PTY LTD (ACN 064 159 977)
Thirteenth Plaintiff PEABODY ENERGY AUSTRALIA COAL PTY LTD (ACN 001 401 663)
Fourteenth Plaintiff MITTERB PTY LIMITED (ACN 094 234 278)
Fifteenth Plaintiff ELLENSFIELD PASTORAL PTY LTD (ACN 010 758 746)
Sixteenth Plaintiff PEABODY SURAT PTY LTD (ACN 010 178 551)
Seventeeth Plaintiff PEABODY FUELS PTY LTD (ACN 103 091 096)
Eighteenth Plaintiff PEABODY AUSTRALIA MANAGEMENT SERVICES PTY LTD (ACN 003 181 217)
Nineteenth Plaintiff COAL DEVELOPMENTS (GERMAN CREEK) PTY LTD (ACN 009 974 896)
Twentieth Plaintiff NORTH GOONYELLA COAL MINE MANAGEMENT PTY LTD (ACN 103 803 354) Twenty-First Plaintiff AND: MILLENNIUM COAL PTY LTD (ACN 089 566 021)
First Defendant PEABODY AUSTRALIA MINING LIMITED (ACN 002 818 699)
Second Defendant METROPOLITAN COLLIERIES PTY LTD (ACN 003 135 635)
Third Defendant WILPINJONG COAL PTY LTD (ACN 104 594 694)
Fourth Defendant PEABODY (BURTON COAL) PTY LTD (ACN 077 679 513)
Fifth Defendant PEABODY ENERGY AUSTRALIA PTY LTD (ACN 096 909 410)
Sixth Defendant PEABODY (BOWEN) PTY LTD (ACN 010 879 526)
Seventh Defendant PEABODY ENERGY AUSTRALIA COAL PTY LIMITED (ACN 001 401 663) Eighth Defendant
REASONS FOR JUDGMENT 1 This proceeding is an application for Court approval of 21 transfer schemes (individually and collectively, the Scheme) involving the internal reorganisation of the Peabody Energy Australia corporate group. The object of the Scheme is to transfer some or all of the assets and liabilities of each plaintiff company (the Scheme companies) to another company within the Peabody corporate group. The intent is to reorganise assets and liabilities of particular projects and operations into a logical component structure. Following the transfer, the Scheme companies, with three exceptions, will be deregistered by the Australian Securities and Investments Commission (ASIC) without winding up. 2 On 16 December 2009 I made orders approving the Scheme and undertook to give reasons at a later date. These are my reasons. 3 On 7 December 2009 I made orders for the calling of meetings under s 411(1) of the Corporations Act 2001 (Cth) (the Act). The meetings are a necessary precondition to evoking the jurisdiction of the Court under s 413 of the Act. Because most of the Scheme companies are single member intra-group entities the meetings are more of a formality than would otherwise be the case. For this reason also, the interval between the first hearing on 7 December and this second hearing on 16 December in respect of approval under s 413 has been unusually short. This is not inappropriate where the meetings involve members of the same corporate group; SGIC Insurance Limited v Insurance Australia Limited [2004] FCA 1492; 51 ACSR 470. 4 The Schemes are appropriately put forward as member schemes although the transfer of the assets and liabilities of the Scheme companies affect creditors. This issue has been discussed in a number of cases and for reasons given in those authorities I am satisfied that a meeting of creditors is unnecessary: SGIC Insurance at [7] - [11]. 5 As Mr Oakes, senior counsel for the plaintiffs, submitted, it is nevertheless relevant for the Court to take into account the position of creditors. In this case the evidence shows that nine of the 21 Scheme companies have no balance sheet liabilities and seven of the 16 scheme companies only have liabilities which are inter-company loans. In relation to the remaining five companies, the balance sheets of the transferee companies show that following implementation of the Scheme they will have a substantial net asset position. 6 The majority of the Schemes (17 companies) which are the subject of the present application involve the transfer of all the assets and liabilities of the transferor to another company in the Peabody group and the subsequent deregistration of the transferor. In the remaining cases the transfer will relate only to certain assets and/or liabilities of the transferor which will remain registered. There is nothing novel in any of these arrangements being recognised as schemes under Pt 5.2 of the Actnor is there anything unprecedented in any of the arrangements; see generally SCIG Insurance Ltd v Insurance Australia Ltd [2004] FCA 1492, 51 ASCR 470 and Stork ICM Australia Pty Ltd v Stork Food Systems Pty Ltd [2006] FCA 1849. 7 In the case of a scheme such as this it is not necessary to describe the evidence in detail. It is sufficient to say that on the evidence I am satisfied that each Scheme is bona fide and properly proposed, each plaintiff is a "Part 5.1 body", there has been a proper disclosure to members and that ASIC has been given notice in accordance with s 411(2)(a) and has had a reasonable opportunity to examine the Scheme pursuant to s 411(2)(b). I note also that in this case ASIC has waived the requirement for an independent expert opinion. 8 At the conclusion of the hearing on 7 December I was satisfied that there had been compliance with s 411 and I therefore made orders for the calling of meetings. Those orders are set out in Sch 1 to these reasons. 9 Following those meetings, the matter came before the court for approval of the Scheme on 16 December 2009. Evidence was adduced to show that, with the exception of two companies, meetings of the transferor companies were held. The exceptions were in respect of the twelfth plaintiff, Excel Employment Services Pty Ltd and the twenty-first plaintiff, North Goonyella Coal Mine Management Pty Ltd. The reason in each case is that additional employees of these companies had been identified and it is proposed that these employees be transferred before the Scheme proceeds in relation to the twelfth and twenty-first plaintiffs. At the hearing I gave the plaintiffs leave to stand these two applications over to a date to be fixed. 10 At the second hearing I gave leave for the plaintiffs to file an amended originating process deleting the ninth defendant, Southcoal Pty Ltd. This was done on 18 December 2009. The reason for the reason removing Southcoal was explained in the affidavit of Peter William Stokes, sworn on 16 December 2009. Mr Stokes is a solicitor employed by the solicitors of the first to twenty-first Plaintiffs, McCullough Robertson Lawyers. He explained that when the draft copies of the explanatory statement were sent to ASIC and when the originating process in this proceeding was initially filed it had been intended for one of the Schemes to transfer certain assets and liabilities of the third plaintiff, Helensburgh Coal Pty Ltd, to Southcoal. Later the proposal was amended so there are now no transfers to Southcoal under the Schemes. 11 At the first hearing it was contemplated that an overall meeting of all classes of shareholders would be held in respect of each company and the orders made following that hearing reflected this. However, the notices of meeting which were annexed to the explanatory statement actually provided for class meetings where there were different classes of shareholders. Mr Julian Thornton, who chaired each meeting, deposed that the plaintiffs resolved the inconsistency by holding class meetings as well as an overall meeting for the three companies (Southcoal Pty Ltd, Peabody Energy Australia Coal Pty Ltd and Coal Developments (German Creek) Pty Ltd) which have more than one class of shareholder. The evidence of Ms Hewson also demonstrated that there were no constitutional impediments to any special class of shareholders consulting with ordinary shareholders as to the future of the company. I am satisfied that the meetings were appropriately held and the approval of shareholders legitimately obtained. 12 The factual information in the Explanatory Statement concerning the Scheme has been verified by the process described in the affidavit sworn on 5 December 2009 by Janette Hewson who is the General Manager, Legal, of the sixth defendant, Peabody Energy Australia Pty Ltd and its subsidiaries. I am satisfied that the Scheme Booklet corresponding with that tendered at the hearing on 7 December was served on shareholders of the Scheme companies and, was registered with ASIC after the first Court hearing. 13 At the Scheme meetings the necessary majorities voted in favour of the Scheme and on 9 December 2009 a Notice of Hearing to approve Compromise or Arrangement was published in The Australian newspaper. The advertisement gave the name of the plaintiffs' solicitors as the name of the person giving notice but, presumably in error, gave as the plaintiff's address for service the plaintiffs' registered office not that of the solicitor. Accordingly both Mr Stokes the solicitor and Ms Hewson, the secretary of the plaintiff companies, gave evidence that no notice of any intention to attend the second Court hearing by a creditor or shareholder had been received. At the commencement of the hearing of the application for approval the matter was called outside the Court without response. 14 Section 411(17)(b) of the Actprovides that the Court must not approve an arrangement such as the present unless a written statement made by ASIC is produced to the Court stating that ASIC has no objection to the Compromise or Arrangement. At the hearing the plaintiffs tendered a letter from ASIC dated 16 December 2009 which stated that ASIC had no objection to the Scheme and did not propose to appear at the hearing on 16 December. 15 On the evidence put before me at the second Court hearing I was satisfied that the matters that were required to be proved in connection with the s 411(4)(b) application had been proved and that the orders sought pursuant to s 413 of the Corporations Act should be made. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.
Associate: Dated: 21 December 2009 Counsel for the Plaintiffs: M Oakes SC
Solicitor for the Plaintiffs: McCullough Robertson Lawyers
Schedule 1 ORDER JUDGE: Justice Stone DATE OF ORDER: 7 December 2009 WHERE MADE: Sydney
Pursuant to section 411(1) Corporations Act 2001 (Cth) (Act), there be convened by the First Plaintiff a meeting of its member, Millennium Coal Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in the document entitled 'Explanatory Statement', which is Exhibit 1), between the First Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Second Plaintiff a meeting of its members, Peabody Australia Mining Limited and Excel Equities Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Second Plaintiff and its members.
Pursuant to section 411(1) of the Act, there be convened by the Third Plaintiff a meeting of its member, Southcoal Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Third Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Fourth Plaintiff a meeting of its members, Peabody Australia Mining Limited and Excel Equities Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Fourth Plaintiff and its members.
Pursuant to section 411(1) of the Act, there be convened by the Fifth Plaintiff a meeting of its member, Excel Holdings Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Fifth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Sixth Plaintiff a meeting of its member, Excel Resources Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Sixth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Seventh Plaintiff a meeting of its member, Excel Holdings Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Seventh Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Eighth Plaintiff a meeting of its member, Peabody Australia Mining Limited, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Eighth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Ninth Plaintiff a meeting of its member, Peabody Australia Mining Limited, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Ninth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Tenth Plaintiff a meeting of its member, Peabody Australia Mining Limited, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Tenth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Eleventh Plaintiff a meeting of its member, Peabody Australia Mining Limited, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Eleventh Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Twelfth Plaintiff a meeting of its member, Peabody Australia Mining Limited, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Twelfth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Thirteenth Plaintiff a meeting of its member, Peabody Energy Australia Coal Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Thirteenth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Fourteenth Plaintiff a meeting of its member, Peabody Energy Australia Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Fourteenth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Fifteenth Plaintiff a meeting of its member, Coal Developments (German Creek) Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Fifteenth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Sixteenth Plaintiff a meeting of its member, Peabody Energy Australia Coal Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Sixteenth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Seventeenth Plaintiff a meeting of its member, Peabody Fuels Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Seventeenth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Eighteenth Plaintiff a meeting of its member, Peabody Energy Australia Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Eighteenth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Nineteenth Plaintiff a meeting of its member, Peabody Energy Australia Coal Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Nineteenth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Twentieth Plaintiff a meeting of its member, Peabody Energy Australia Coal Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Twentieth Plaintiff and its member.
Pursuant to section 411(1) of the Act, there be convened by the Twenty-First Plaintiff a meeting of its member, Peabody Energy Australia Coal Pty Ltd, to be held on Tuesday, 8 December 2009, at Level 13, 259 Queen Street, Brisbane, commencing at 2.30pm (or as soon after the conclusion of the meeting in Order 1 above as may be practicable), for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being the applicable scheme of arrangement set forth in Exhibit 1), between the Twenty-First Plaintiff and its member.
The explanatory statement for the schemes of arrangement, a copy of which forms part of Exhibit 1, be approved for distribution to the members of each of the Plaintiffs.
Each scheme meeting shall be convened by a notice of meeting, a copy of which forms part of Exhibit 1, accompanied by a copy of the explanatory statement.
Service of each notice of meeting and accompanying explanatory statement may be effected by electronic means or by hand delivery to a person who is a proxy, corporate representative appointed under section 250D of the Act, or attorney under power, of each member of the applicable plaintiff at any time before a relevant meeting commences.
Julian Thornton, or in his absence, Janette Hewson, act as Chairperson of each of the said meetings, unless any meeting shall otherwise resolve.
The scheme meetings shall be held consecutively.
In the case of each meeting, one member present by proxy, corporate representative appointed under section 250D of the Act, or attorney under power, shall constitute a quorum.
Notwithstanding Orders 1 to 21 above, and without limiting the operation of section 249S of the Act, each scheme meeting may with the consent of the chairperson and member(s) be conducted by telephone without any of them being present at the address stipulated in those orders.
A proxy, appointment of a corporate representative under section 250D of the Act, or power of attorney to act on behalf of a member of any of the First to Twenty-First Plaintiffs (Plaintiffs) may be delivered to the Chairperson of a meeting at any time up until the vote is cast on a resolution at that meeting.
A resolution put to the vote at any of the scheme meetings to approve the proposed schemes of arrangement, or any modification to the proposed schemes of arrangement, must be decided by the Member or its representative signing a record of the resolution.
The Chairperson of each meeting has the power to adjourn such meeting in his absolute discretion.
Regulations 5.6.12 to 5.6.36A Corporations Regulations 2001 shall not apply to any scheme meeting.
The proceedings be stood over to 2.15 pm on Wednesday, 16 December 2009 before Stone J for the hearing of any application to approve the schemes of arrangement.
Millennium CHPP Pty Ltd
Millennium Coal Pty Ltd
The Court approved the schemes for the relevant plaintiffs, exempted them from compliance with s 411(11), made consequential orders under s 413, and reserved liberty to apply; the applications concerning Excel Employment Services and North Goonyella Coal Mine Management were stood over.