RE STRANDLINE RESOURCES LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) [2025] WASC 127 (28 April 2025)

1. The factual background to the application is set out in the affidavits and can be briefly summarised as follows.
2. On 21 February 2025, the first plaintiffs were appointed as voluntary administrators of the Companies (Administrators), pursuant to s 436A of the Act.[1] On the same date, Mr Brauer, Jason Preston and Linda Methven were appointed as receivers and managers of the Companies (Receivers). From this date, the Receivers have taken control of the day‑to‑day operations of the Companies, including taking possession of the Companies' books and records.[2]
3. The Companies are involved in the mining of heavy mineral sands from the Coburn Mineral Sands Project (Project), which is located approximately 200 kilometres north of Geraldton, in Western Australia. The Project is wholly owned by Coburn, who, in turn, is a wholly owned subsidiary of Strandline. The shares of Strandline are listed on the Australian Securities Exchange.[3]
4. The first creditors' meeting for the Companies was held on 6 March 2025.[4] At this meeting, the creditors of Coburn resolved to appoint a committee of inspection. No creditor of either Company raised concerns with the appointment of the first plaintiffs as administrators or any other issues.[5] At this meeting, the plaintiffs foreshadowed their intention to seek an extension of time to convene the second creditors' meeting.
5. The evidence before me is that since their appointment, the Receivers have:[6]

(a) liaised with the Companies' workforce, creditors, contract counterparties, and major financial institutions;

(b) engaged an independent valuer to value the equipment and assets on the Project site;

(c) commenced a sales process, and have had a number of prospectus bidders come forward; and

(d) otherwise continued the normal trading operations of the Project.

1. Based on the investigations done by the Receivers to date, their preliminary assessment of the consolidated creditor position of the Companies is as follows:[7]

(a) approximately $290 million is owed to secured lenders (which is cross-collateralised against both Companies);

(b) approximately $2.1 million is owed by Strandline in unpaid employee entitlements;

(c) $31.3 million is owed predominantly by Coburn, to trade creditors and suppliers;

(d) $28.6 million is owed in equipment and lease liabilities; and

(e) $6.7 million is owed to other unsecured creditors.

1. The information available to the Administrators is slightly different, which is probably explicable by reason of the fact that they do not have day‑to‑day control or possession of the Companies' books and records. Based on this information, the Administrators believe that the amounts owed to unsecured creditors may exceed $50 million and note that the directors of the Companies have disclosed the existence of an intercompany loan exceeding $200 million. The existence and terms of that loan is currently under investigation.
2. Counsel for the plaintiffs also drew the Australian Securities and Investments Commission (ASIC) search to my attention, which discloses that controllers have been appointed, no doubt in relation to some of the equipment and leases that are the subject of the evidence of the Receivers.
3. Pursuant to s 439A(5)(b) of the Act, the convening period for the second creditors' meeting ends on 24 March 2025, with the second creditors' meeting required to be held by no later than 31 March 2025.[8] The plaintiffs seek an extension of the time for the convening of the second creditors' meeting for four months until 24 July 2025.
4. The Receivers believe that an acquisition and/or recapitalisation of the Companies and their assets, including by way of a deed of company arrangement (DOCA), may be possible if an extension is granted. In their view, these options would provide a better return for unsecured creditors than liquidation of the Companies. Mr Brauer's evidence is that the Receivers have commenced a competitive sales process and a number of interested bidders have already expressed interest. However, more time is needed for the Receivers to complete this process. Given the significant debt owed by the Companies to the secured lenders, in their view a DOCA is likely to be the only way that unsecured creditors will see any return from the administration. For this reason, the plaintiffs and the Receivers believe that an extension to the convening period is required and that if one is not granted, it is almost certain that the Companies will go into liquidation at the end of the second creditors' meeting.[9]
5. I note that the evidence before me is that notice of the application has been given to all known creditors of the Companies.[10] I am also informed by counsel for the plaintiffs that notice of this application has been given to ASIC.

Should an extension of time for the convening period be granted?

1. The legal principles that govern this application are well known.
2. Pursuant to s 439A(6) of the Act, the court has power to extend the convening period of a second creditors' meeting. In determining the application, the court is required to consider and take into account the objects and scheme of pt 5.3A of the Act, which is set out in s 435A of the Act. These objects are to maximise the chances of the company (or as much as possible of its business) continuing in existence, or, if this is not possible, for the administration to be done in a way so as to result in a better return for the company's creditors and members than would result from the immediate winding up of the company.
3. In reaching its decision, the court must maintain an appropriate balance between an expectation that the administration will be undertaken in a relatively speedy and summary manner, with the need to ensure that the administration is not concluded without consideration of sensible and constructive options directed towards maximising returns for creditors and whether there is any possible return for shareholders.[11] The court is also required to take into account the detriment to third parties, including the suspension of rights and remedies of secured creditors, lessors, and others.[12]
4. The court will generally exercise its discretion to extend the convening period where one or more of the established categories are raised, where there is no evidence of material prejudice to those affected by the extension of time, and the court is satisfied that the administrator's estimate of the time required has a reasonable basis.[13]
5. In this case, I am satisfied that it is appropriate to grant the requested extension until 24 July 2025 for the following reasons.
6. First, on the evidence before me, I accept that more time is required for the Receivers to undertake a sale process to sell the Companies and/or their assets, and to consider whether there is a possibility of a DOCA being proposed.
7. Second, I accept the evidence that, without an extension, the plaintiffs will not be in a position to make an informed recommendation to creditors at the second creditors' meeting as to the future of the Companies.
8. Third, no creditor has raised any opposition to the proposed extension, and no one appeared today to oppose the orders that are sought. The creditors who have provided responses to the plaintiffs have simply noted the impact of any extension and continued costs on the employees who are priority creditors of the Companies. I accept that there will be some impact on the interests of the employees, but consider that in the circumstances of this case, that is not a sufficient reason to not grant the extension. This is largely because, on the evidence before me, the potential benefit of the extension will outweigh any prejudice to all creditors from delay in holding the second creditors' meeting. In my view, it is in the interests of all creditors at the Companies as a whole to grant the extension that has been sought.
9. Finally, in exercising my discretion to grant the extension, I have taken into account the opinion of the plaintiffs. That opinion is that an extension is required for a period of approximately four months. On the basis of the evidence before me, I am satisfied there is a reasonable basis for this.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Affidavit of Thomas Donald Birch filed 14 March 2025 [4], [10], 'TDB-1' - 'TDB-9'.

[2] Affidavit of Robert Conry Brauer filed 17 March 2025 [18]; Affidavit of Thomas Donald Birch filed 14 March 2025 [13].

[3] Affidavit of Robert Conry Brauer filed 17 March 2025 [11] - [15].

[4] Affidavit of Thomas Donald Birch filed 14 March 2025 [16].

[5] Affidavit of Thomas Donald Birch filed 14 March 2025 [17] - [18].

[6] Affidavit of Robert Conry Brauer filed 17 March 2025 [38].

[7] Affidavit of Robert Conry Brauer filed 17 March 2025 [34] - [35], 'RCB-9'.

[8] Plaintiffs' submissions filed 17 March 2024 [4].

[9] Affidavit of Robert Conry Brauer filed 17 March 2025 [47].

[10] Affidavit of Thomas Donald Birch filed 14 March 2025 [61] - [62], 'TDB-14'.

[11] Tucker (Administrator) v Bolten (Trustee), in the matter of Quintis Leasing Pty Ltd (Administrators Appointed) (No 2) [2024] FCA 46 [54], citing Diamond Press Australia Limited [2001] NSWSC 313 [10].

[12] Shaw and Albarran (Joint and Several Administrators of Home Art Building Group Pty Ltd) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274 [18].

[13] Mighty River International Limited v Hughes [2018] HCA 38 [73].