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[2005] FCA 633
Federal Court of Australia
2005-05-06
Gyles J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 This is an application by John Maxwell Morgan and David Joseph Levi, in their capacity as administrators of Can Can Lingerie Group Pty Limited ('the company') (hereinafter called 'the Administrators') for orders pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (the Act) that the period within which a second meeting of creditors be convened be extended and an order consequently that, in effect, a meeting may be held at any time during the extended period. There are some consequential orders also. 2 The Administrators were appointed on 22 April this year. The first meeting of creditors was held on 29 April 2005. The end of the convening period is thus 12 May next. The company carries on a retail business at a number of locations in and around Sydney and has warehouse facilities as well. 3 The Administrators formed the view that it was beneficial to continue to trade in order that options may be left open for the consideration of creditors. That has been done. There was no committee of creditors appointed at the first meeting of creditors. Furthermore, at that meeting, the chairman, who is one of the Administrators, said: 'I am going to ask this meeting if any creditors have any objection to the administrators making application to the court to extend the convening period because it will preserve the value of the company's assets while the sale process continues'. No attendee stated that there was any objection and several stated that they approved of such an application. An affidavit has been filed which sets out, broadly speaking, the position of the company and it also sets out what has taken place during the administration to date.
4 The primary basis upon which the application is made is that unless the business is sold as a going concern the return from the sale of the assets would be minimal and certainly not sufficient to meet the claims of secured creditors. In order to explore the possibilities of sale, it will be necessary to undertake a process about which evidence is given which would extend beyond the convening period whilst maintaining the business in the meantime. 5 I am satisfied that this is a business and commercial decision which the Administrators are in a position to make. It appears perfectly reasonable. I have only two caveats which have caused me some concern about the matter. 6 The first caveat is the absence of representation of any contradictor or potential contradictor. However, I cannot, at the moment, see the necessity for a party to act as contradictor. The facts have been exposed. The Administrators are in the best position to expose those facts. As it is an ex parte application there is a duty to bring forward all relevant matters. The deponent to the affidavit is a registered liquidator and an official liquidator. Furthermore, it is difficult to see who would be an appropriate representative as all creditors would have their own individual points of view. That is not to say that in matters of this kind it may not be, on occasion, necessary to work out a process whereby a contradictor's point can be put. I will, however, make an order along the lines made by Hely J in a recent case which will grant a special liberty to apply to persons with a sufficient interest to modify or discharge the orders pursuant to the statutory power so to do. 7 The other caveat is that the affidavit assumes that the Administrators might go ahead and sell the business. That is not something that I have any view about one way or the other, but I would not wish it thought that the orders I have made here today are based upon that assumption. I say no more. I have not asked for submissions on the point and I am not expressing any view that suggests that I doubt that power. It is a matter of principle which may arise later. I am of the view that the steps taken and to be taken to explore that option more fully are perfectly reasonable, including calling for expressions of interest. 8 I have been assisted in coming to the conclusions I have by considering the recent decision of Hely J in the matter of Re Henry Walker Eltin Group Limited (Administrators Appointed) [2005] FCA 316 (16 February 2005) which, in turn, acknowledged the guidance of the decision of Barrett J of the Supreme Court of New South Wales in Re Diamond Press Australia Pty Ltd [2001] NSWSC 313. 9 For those reasons I make the orders in the draft orders which I have initialled and dated. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.