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[2020] FCA 717
plaintiff. All orders sought granted with minor refinements including notice requirements, COI reporting obligations, good-faith carve-outs for JobKeeper, and liberty to apply. Costs ordered as costs in the...
Justice Middleton approved a comprehensive set of orders sought by the administrators of the Virgin Australia group. The company and its subsidiaries had been placed in voluntary administration because COVID-19 travel bans had destroyed revenue while fixed costs remained. The administrators needed practical solutions: fixing a short notice problem for one subsidiary's first meeting, allowing all future creditor contact and meetings to occur electronically, adding the subsidiary to the single committee of inspection, obtaining three extra months to run a sale process, protecting themselves from personal liability if they signed new contracts, took JobKeeper money or lent between group companies, issuing conditional credits instead of refunds to keep customer goodwill, preparing one combined report for the closely related companies, letting committee members still do business with the group on normal commercial terms, and using just two bank accounts instead of 39. The judge found each step was justified because it would help keep the airline flying where possible, give the best chance of selling the business as a going concern, and produce a better outcome for the thousands of employees, lessors, noteholders and trade creditors than an immediate liquidation. Safeguards such as notice to counterparties, updates to the committee and liberty to apply ensured creditors were protected.
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3,103 words · generated 24/04/2026
The Virgin Australia group, one of Australia's two major airlines, entered voluntary administration on 20 April 2020 after the COVID-19 pandemic and associated border closures and travel bans caused a catastrophic collapse in passenger numbers. The first plaintiffs, experienced Deloitte insolvency practitioners Vaughan Strawbridge, Salvatore Algeri, John Greig and Richard Hughes, were appointed joint and several administrators of Virgin Australia Holdings Ltd (a listed public company) and 38 subsidiaries. A further dormant but note-guaranteeing entity, Tiger International No. 1 Pty Ltd, entered administration on 28 April 2020. Collectively the companies employed approximately 10,000 people, operated a fleet of 144 aircraft under multiple brands, and faced secured debt of roughly $2 billion, unsecured notes of approximately $1.99 billion, aircraft lessor claims of $1.88 billion, employee entitlements approaching $451 million and numerous trade and other creditors.
The administrators moved quickly to stabilise the business. They continued limited domestic and repatriation flights, secured assets, reviewed PPSR registrations, liaised with governments, unions and stakeholders, and opened dedicated enquiry email addresses that received nearly 5,000 messages. A competitive sale and recapitalisation process was launched with advisers Houlihan Lokey and Morgan Stanley. An information memorandum and data room were made available to 19 interested parties, with non-binding indicative offers due on 15 May 2020 and binding offers on 12 June 2020. First meetings of creditors were held electronically on 30 April 2020 (for the main group) and 11 May 2020 (for Tiger 1). A proposal for a single committee of inspection representing noteholders, employees, secured creditors, trade creditors and others was overwhelmingly approved.
On 11 May 2020 the administrators filed an interlocutory process seeking a wide suite of orders. Hearings occurred on 13, 15 and 20 May 2020 before Middleton J, with the Commonwealth (via the Attorney-General's Department responsible for the Fair Entitlements Guarantee Scheme) and the Deputy Commissioner of Taxation appearing as interested persons. On 13 May 2020 orders were made joining Tiger 1, curing its short notice of meeting, permitting electronic notices and meetings, incorporating it into the existing committee of inspection, extending the convening period to 18 August 2020, and limiting liability in respect of a specific Rio Tinto charter agreement and proposed conditional customer credits. Further orders on 15 and 20 May 2020 dealt with limitation of liability for a long list of future "Applicable Agreements" (aircraft protocols, alliance, procurement, airport, charter, cargo, insurance and training contracts), JobKeeper repayment risks for three employing entities, intercompany loans, a single consolidated report as to affairs for 13 companies linked by a deed of cross guarantee, leave for committee of inspection members to transact on arm's-length terms, and use of common bank accounts. Notice of the orders was required to be given electronically and by publication to creditors, ASIC, the ACCC, the ATO and the Attorney-General's Department, with liberty to apply on short notice. Costs were ordered to be costs in the administrations. The reasons for judgment were delivered on 26 May 2020 and comprise 200 paragraphs.
Middleton J approached the application on the basis that the administrations were "sophisticated and complex" ([15]) involving a "very large commercial enterprise" with "substantial operations, complex affairs, considerable assets and a very large number and type of creditors" ([15]). The judge expressly endorsed supporting "innovative measures" proposed by administrators provided creditors' interests were taken into account, noting the national importance of the airline industry ([6]).
For the Tiger 1 joinder and curative orders, the Court accepted that r 9.05 permitted joinder to avoid multiplicity because common issues arose across the group. Section 1322(4)(a) was engaged because the short notice to note trustees (issued 7 May for an 11 May meeting) did not invalidate the meeting: creditors had received substantial overlapping information from the earlier group meeting, no objection was raised, and the meeting proceeded successfully electronically ([35]-[43]). The power was exercised liberally to avoid technical invalidity where no substantial injustice occurred ([38]-[39]).
Electronic notices and meetings were authorised under s 447A(1) and s 90-15 because the first group meeting had been conducted successfully via Microsoft Teams with 898 creditors and 661 observers, 137 live questions answered, and no technical difficulties. The same practical considerations applied to Tiger 1. Publication on the ASIC notices website and the administrators' dedicated Virgin website, supplemented by email or post where addresses were known, satisfied the objective of notifying creditors cheaply and quickly ([44]-[52]).
Incorporation of Tiger 1 into the single committee of inspection was justified because its only external creditors (noteholders and the ATO) were already represented on the committee formed for the other companies. Separate committees would duplicate costs and processes. The overwhelming creditor vote (99.47%) in favour of the proposed committee members, the absence of any request for a separate Tiger 1 committee, and the streamlining benefits supported dispensing with the formal resolution requirements in ss 80-10 and 80-15 of the IPSC ([53]-[59]).
The three-month extension of the convening period to 18 August 2020 was granted after a detailed application of the principles summarised from Re Riviera and Mighty River International ([64]-[68]). The administrations were large and complex, with 3,463 PPSR registrations, over 1,100 proofs of debt (many multi-entity), ongoing lease and retention-of-title investigations, employee entitlement calculations, and a live competitive sale process whose binding-offer stage fell after the original convening deadline. Without extension the administrators would have been forced to recommend liquidation before any realistic DOCA or sale proposal could be formulated. The judge accepted the administrators' evidence that a going-concern sale would preserve employment, maintain supplier relationships, avoid a "fire sale" perception and produce a better return than immediate winding up. No creditor objected despite express invitation at the first meetings, and the Attorney-General's Department raised no opposition. The extension was described as "relatively brief" in the context of the group's size ([76]). Flexibility to convene earlier was also ordered, following Daisytek ([83]).
Limitation of personal liability under s 443A was the most significant aspect of the judgment. The Court first reiterated that s 443A imposes personal liability for post-appointment debts for services, goods, leased property, borrowed money and related costs, with indemnity and lien rights under ss 443D and 443F. However, s 447A permits modification. Drawing on Unlockd, Secatore, Ten Network and Great Southern, the judge held that such orders are regularly made where continued trading benefits creditors, administrators should not be expected to expose themselves to substantial personal risk, and the arrangements are consistent with Part 5.3A objects ([89]-[91]).
For the Rio Tinto charter agreement the counterparty had already contractually agreed to limit recourse; the order merely gave Court sanction ([94]-[96]). For the long list of "Applicable Agreements" (aircraft protocols, alliances, fuel, maintenance, airport leases, insurance, training etc) the Court accepted that without limitation the administrators might have to surrender possession or terminate arrangements, destroying value and the going-concern sale prospect. The orders were forward-looking, limited recourse to the assets of the contracting company, required express notice to counterparties before entry, mandated a schedule and COI updates, and excluded liability only to the extent assets were insufficient. The extraordinary COVID-19 context, national interest, and absence of opposition from the Commonwealth were emphasised ([98]-[119]).
JobKeeper limitation for three employing entities followed similar reasoning. The scheme was new, untested, required rapid applications based on pre-administration records that could not be fully verified, and exposed administrators to strict repayment liability plus interest for overpayments even if they acted honestly. Payments had already been made to over 8,000 employees. The orders carved out liability only for good-faith, non-negligent acts and excluded certain fraud provisions in the JobKeeper legislation ([120]-[146]).
Intercompany loans arose because only two operating accounts (in VAA and VARA) were used, with journal entries recording intra-group movements. This was treated as borrowing under s 443A(1)(d). Limitation to the borrowing entity's assets was appropriate to allow efficient cash management in a group likely to pool in any DOCA or liquidation ([147]-[156]).
The conditional credits proposal was justified under s 90-15 because it preserved goodwill, offered customers a chance to realise full value on future domestic flights rather than proving as unsecured creditors, and did not worsen their position if unused. Associated liability limitation prevented the administrators from bearing personal risk for a scheme potentially affecting thousands of customers and generating ancillary tax or surcharge liabilities ([157]-[166]).
The single ROCAP for 13 deed-of-cross-guarantee companies with common directors and consolidated accounts was more informative and less burdensome than 13 separate reports; other companies would still provide individual reports. The Commonwealth's request for entity-level financial information was accommodated by separate undertakings ([167]-[175]).
Leave under s 80-55(5)(b) for COI members (including likely aircraft lessors and trade creditors) to derive profit from arm's-length transactions was granted because trading and sale negotiations would otherwise be hampered. The prohibition on gifts or remuneration by reason of membership, plus mandatory schedules, COI updates and disclosure in the s 75-225 report, provided adequate protection ([176]-[188]).
Finally, dispensing with separate administration accounts under s 65-45 was justified on cost, complexity and efficiency grounds where intercompany journals maintained proper reconciliation and pooling was likely in any exit ([189]-[199]). Throughout, the Court gave weight to the administrators' experienced opinion, the absence of opposition, and the national interest.
Prior to this judgment the law required at least five business days' notice for first creditors' meetings (s 436E(3)), contemplated physical meetings (rr 75-30, 75-35 IPR), imposed strict personal liability on administrators under s 443A without statutory carve-outs for future contracts, required separate ROCAPs for each company (s 438B(2)), prohibited COI members from deriving profit or advantage without creditor approval or Court leave (former s 551, now s 80-55 IPSC), and mandated separate administration accounts (Div 65 IPSC). Extensions of the convening period were granted in complex cases but usually required strong evidence of prejudice avoidance (Re Riviera at [13], Mighty River at [73]).
This judgment did not change the statutory text but significantly expanded the practical availability of s 447A and s 90-15 modifications in large-group, COVID-affected administrations. It confirmed that curative s 1322 orders can readily validate short notice where creditors are otherwise informed and raise no objection. It endorsed wholly electronic meetings and notices as the default in pandemic conditions, building on the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020. The forward-looking limitation of liability for an entire class of "Applicable Agreements" rather than individual contracts represented an efficient use of s 447A, subject to notice and COI oversight. JobKeeper-specific protection clarified that administrators acting diligently on imperfect records would not bear personal repayment risk for a government scheme intended to preserve employment. Consolidated ROCAPs for deed-of-cross-guarantee entities and common accounts were approved where business overlap and cost savings justified departure from literal requirements. Leave for COI members to transact on arm's-length terms during trading administrations was confirmed as consistent with the shift from liquidation-focused to administration-focused regulation in the 2017 reforms. The "before" position was therefore one of technical rigidity; the "after" position is one of principled flexibility where administrators demonstrate creditor benefit, transparency and minimal prejudice.
Paragraph [6]: "the Court should support innovative measures that are considered appropriate by the Administrators as long as the interests of the relevant creditors are taken into account. It is important that there be an efficient progression of the administration and in a timely manner as far as the circumstances permit. Obviously, the role of the airline industry in Australia as a whole, of which Virgin is a part, is important to the whole community and to the national interests generally."
Plain-English translation: The judge is signalling that he will back the administrators' practical ideas provided they look after creditors. Speed and efficiency matter, but so does the fact that Virgin is a major national employer and transport provider. This sets a supportive tone for the entire judgment.
Paragraph [64]: "In making such an order, the Court must reach an appropriate balance between an expectation that the administration will be relatively speedy and summary, and the countervailing factor that undue speed should not be allowed to prejudice sensible and constructive actions directed to maximising a return for creditors."
Plain-English translation: There is a statutory push for quick administrations, but the Court will slow things down if rushing would harm creditors' chances of getting a better return through a proper sale or restructure.
Paragraph [89] (adopting Great Southern): "The material consideration on such an application is whether the proposed arrangements are in the interests of the company's creditors and consistent with the objectives of Pt 5.3A of the Act. To put that proposition positively – the question is whether the court is satisfied the proposed arrangements are for the benefit of the company's creditors. To put it negatively – the question is whether the court is satisfied the company's creditors are not disadvantaged or prejudiced by the proposed arrangement."
Plain-English translation: The test for limiting administrators' personal liability is simple: does it help creditors overall and fit the rescue purpose of voluntary administration? If creditors are not worse off, the order should be made.
Paragraph [97]: "In the opinion of the Administrators, the orders being sought are the most efficient and cost effective way in which the Administrators can retain and continue to utilise the leased aircraft during the administration period. If the proposed orders are not made, the Administrators consider that it will be necessary to make a separate application to the Court in respect of each Aircraft Protocol..."
Plain-English translation: Asking for one blanket order now is cheaper and faster than coming back to Court for dozens of individual aircraft deals. The judge accepted this pragmatic commercial logic.
Paragraph [116]: "the programme being a new regime introduced by the Commonwealth Government in response to COVID-19, which remains untested and of which the Administrators have no historical experience dealing with... the Administrators having needed to rely substantially on information contained in the books and records of the Virgin Companies for the purpose of assisting the Virgin Companies in applying for payments, without having had sufficient time to confirm the accuracy of those records (given the magnitude of the business operated by the Virgin Companies)."
Plain-English translation: JobKeeper was brand new, the administrators inherited imperfect records for a huge business, and they could not possibly audit everything in the short time available. It would be unfair to make them personally repay any mistakes.
This judgment is likely to be invoked in any large or mid-sized group administration where:
The presence of national interest considerations (employment, critical infrastructure) and the absence of creditor opposition strengthen the case for relief. Conversely, the precedent is unlikely to assist where there is evidence of real prejudice, lack of notice to affected parties, or where the administrators' proposals appear designed to shield them from ordinary commercial risk rather than advance creditor interests.
The judgment itself carefully grounds every proposition in earlier authority. It follows the first Virgin Australia decision of 24 April 2020 at [8] and applies the balancing test from Re Riviera ([65]), the categories of suitable extension cases from Austin J, the liberal approach to s 1322 from Winpar and Re Wave Capital, the principles for liability limitation from Unlockd ([89]-[91]) and Ten Network ([90]), the intercompany loan analysis from Specialised Concrete Pumping ([150]), and the ROCAP flexibility from Daisytek ([83]). Middleton J expressly endorses the Mighty River summary that courts grant extensions where the evidentiary case is properly prepared, prejudice is absent and the administrator's time estimate is reasonable ([67]). The treatment of JobKeeper is presented as an application of the same Patrick Stevedores rationale that personal liability protects creditors while encouraging trading that benefits them ([115]-[116]). The COI leave analysis traces the statutory evolution from s 551 to s 80-55 and confirms that the fiduciary-like duty in liquidation does not preclude arm's-length trading in an ongoing administration ([178]-[182]). By requiring notice, COI reporting and liberty to apply, the judgment builds safeguards that later courts can readily adapt. The overall approach – pragmatic, evidence-based, creditor-focused – has become a template for balancing statutory rigidity against commercial reality in pandemic-era administrations.
The judgment leaves several practical questions unanswered because they were not before the Court. First, the precise duration and scope of JobKeeper protection beyond 31 August 2020 or in respect of entities not expressly named remains open; the orders were confined to three employing companies and carved out bad-faith conduct ([1] of 20 May orders). Second, whether a counterparty who receives notice of a limitation order but nevertheless refuses to deal can later complain of prejudice is untested; the judgment assumes rational commercial self-interest but does not address bad-faith counterparties. Third, the interaction between the limited-recourse clauses and any future DOCA or pooling deed is not resolved; if a DOCA extinguishes intercompany loans, the limitation may prove academic, but that was not before the Court. Fourth, the outer limits of "future specified agreements" are undefined; an entirely new category of contract invented during the administration might require fresh application. Fifth, the extent to which a single ROCAP satisfies the directors' obligations to "the company" under s 438B where one entity has unique creditors is left to future cases, although the Commonwealth's request for entity-level data suggests residual concern. Finally, the judgment notes that the administrators may seek further extensions before 18 August 2020 ([18] of 13 May orders); the evidentiary threshold for a second extension in the same administration is not addressed. These questions will be answered by later courts applying the same creditor-centric, commercially realistic approach Middleton J adopted.
INTRODUCTION AND OVERVIEW 1 On 13, 15 and 20 May 2020 I made a number of orders on the application of the First Plaintiffs in this proceeding. These are the reasons for those orders. 2 The First Plaintiffs, Vaughan Strawbridge, Salvatore Algeri, John Greig and Richard Hughes of Deloitte (together, the 'Administrators'), in their capacity as administrators of each of the Second Plaintiff, Virgin Australia Holdings Ltd (Administrators Appointed) ('Virgin'), and the Third to Thirty-Ninth Plaintiffs and the prospective Fortieth Plaintiff, which are various subsidiaries of Virgin (together, the 'Virgin Subsidiaries'), sought various orders in the Interlocutory Application filed on 11 May 2020. Virgin and the Virgin Subsidiaries are, together, referred to as the 'Virgin Companies'. Each of the Virgin Companies is a company incorporated and operating in Australia. Each is part of a corporate group comprised of other companies incorporated and operating in Australia, New Zealand and Singapore known as the Virgin group of companies (the 'Virgin Group'). The Virgin Group is an Australian-based corporate group that operates in the domestic and international passenger and cargo airline business. The Virgin Group also operates the 'Velocity Loyalty Program'. However, entities related to the Velocity Loyalty Program are not in any form of external administration. The Virgin Group offers a variety of aviation products and services to the Australian aviation market, including corporate, government, leisure, low cost, regional and charter travellers and air freight customers (collectively, the 'Business'). 3 Virgin is a public company whose shares are listed on the Australian Securities Exchange. On 20 April 2020, the Administrators were appointed as joint and several administrators of each of Virgin and the Virgin Subsidiaries other than the prospective Fortieth Plaintiff, Tiger International No. 1 Pty Ltd (Administrators Appointed) ('Tiger 1'). On 28 April 2020, the Administrators were appointed as joint and several administrators of Tiger 1. 4 Collectively, before the appointment of Administrators, the Virgin Group employed approximately 10,000 employees nationally and operated a fleet of 144 aircraft. The Business operates under, amongst others, the 'Virgin' and 'Tiger' brand names. 5 The application primarily seeks the following relief: (1) in respect of Tiger 1: (a) curative orders having regard to the fact that the notice to creditors for the first meeting of creditors held on 11 May 2020 was sent to creditors less than the five business days required by s 436E(3) of the Corporations Act 2001 (Cth) (the 'Corporations Act'); (b) similar administrative-type orders to those sought in the first court application in this proceeding on 24 April 2020 (the 'Initial Application'), including to hold meetings of creditors by video-link or telephone and to send notices to creditors electronically where email addresses are available to the Administrators; and (c) orders varying those orders the Court made on 24 April 2020 so that the existing committee of inspection also encompasses Tiger 1; (2) orders extending the period for the convening of the second meeting of creditors of each of the Virgin Companies (the 'Second Meeting'), for approximately three months, to 18 August 2020 (the 'Convening Period'); (3) orders permitting the Second Meeting to be convened at any time within the Convening Period; (4) orders limiting the Administrators' personal liability with respect to obligations entered into after their appointment, including with respect to: (a) specific charter flights provided to a particular customer, Rio Tinto Services Limited ('Rio Tinto'); (b) future arrangements to be entered into by the Administrators in connection with the operation of the Virgin Companies' business; (c) the Commonwealth's JobKeeper programme ('JobKeeper'); and (d) intercompany loans between various entities within the Virgin Companies; (5) directions that the Administrators would be justified in offering a conditional credit to customers of the Virgin Companies who have been unable to take flights booked with the Virgin Companies because those flights were cancelled in response to the COVID-19 pandemic (the 'Conditional Credits Proposal') (and an associated limitation of the Administrators' personal liability in connection with the Conditional Credits Proposal); (6) orders modifying the requirement in s 438B(2) of the Corporations Act that the directors of each of the Virgin Companies provide a report as to the company's activities and property, and instead requiring that a single report be prepared for Virgin and various of the Virgin Subsidiaries (with the directors of the other Virgin Companies preparing reports in the usual manner); (7) orders that the members of the committee of inspection be given leave to derive a profit or advantage from the external administration of each of the Virgin Companies (so as, for example, to permit the Administrators to cause the Virgin Companies to enter into arrangements to permit ongoing trading with members of the committee during the administration period); and (8) orders dispensing with the requirement that the Administrators open and operate a separate bank account for each of the Virgin Companies. 6 In these circumstances I make the observation that the Court should support innovative measures that are considered appropriate by the Administrators as long as the interests of the relevant creditors are taken into account. It is important that there be an efficient progression of the administration and in a timely manner as far as the circumstances permit. Obviously, the role of the airline industry in Australia as a whole, of which Virgin is a part, is important to the whole community and to the national interests generally. 7 Before turning to the background to the application the subject of these reasons, I note that on 24 April 2020, following the Initial Application, I made orders (the '24 April Orders'), which: (1) provided administrative-type relief to the Plaintiffs to permit them to hold meetings of creditors by video-link or telephone, to send notices to creditors electronically where email addresses were available to the Administrators, and for the formation of a single committee of inspection for the Second to Thirty-Ninth Plaintiffs; and (2) granted the Administrators a four-week extension of the time in s 443B of the Corporations Act for the Administrators to give notice to lessors of property leased, used or occupied by the Second to Thirty-Ninth Plaintiffs as to whether to retain or give up possession of that property (together with a corresponding extension of the period in which the Administrators were not personally liable for obligations under those leases). 8 On 29 April 2020, the Court published reasons for judgment in respect of the 24 April Orders: Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571 (the 'First Judgment').
FACTUAL BACKGROUND 9 The Administrators rely upon the affidavits of: (1) Vaughan Neil Strawbridge dated: (a) 15 May 2020 (the 'Fourth Strawbridge Affidavit'); (b) 11 May 2020 (the 'Second Strawbridge Affidavit'), as amended by affidavit dated 15 May 2020, which corrects a minor error in the Second Strawbridge Affidavit; (c) 11 May 2020, being the further affidavit of Mr Strawbridge (the 'Supplementary Strawbridge Affidavit'); (d) 23 April 2020, which was relied upon in the Initial Application; (2) Kassandra Suzann Adams dated 15 May 2020 (the 'Adams Affidavit'); and (3) Elizma Bolt dated 19 May 2020 (the 'Bolt Affidavit'). 10 The following statement of the factual background to these proceedings should be read in addition to the factual background in the First Judgment.
The Virgin Companies 11 The Administrators have currently identified that the Virgin Companies have approximately 12,808 known creditors in total (other than bondholders). The creditors identified thus far comprise the following: (1) 26 lenders under secured corporate debt and aircraft financing facilities, who are together owed approximately $2,283,639,303; (2) unsecured noteholders who are together owed approximately $1,988,250,000; (3) 1,070 trade creditors, who are together owed approximately $166,704,085.69; (4) 50 aircraft lessors, who are together owed approximately $1,883,914,848; (5) 81 landlords, who are together owed approximately $71,209,929; (6) 9,020 employees, who are together owed approximately $450,777,961; and (7) in addition to the unsecured noteholders in respect of notes issued by Virgin Australia, Tiger 1 has the following creditors: (a) the Ninth Plaintiff, Tiger Airways Australia Pty Ltd (Administrators Appointed), in the amount of approximately $38.5 million; (b) the Tenth Plaintiff Virgin Australia Airlines Pty Ltd (Administrators Appointed) ('VAA'), in the amount of approximately $11.9 million; (c) the Fifth Plaintiff, Virgin Australia International Airlines Pty Ltd (Administrators Appointed), in the amount of approximately $3.5 million; and (d) the Deputy Commissioner of Taxation (the 'ATO'), the value of whose claim is not currently known. 12 The COVID-19 pandemic has led to a substantial downturn in the operations and revenue of the Virgin Companies. Between 18 March 2020 and 5 April 2020, the Commonwealth, State and Territory Governments took various steps that placed severe restrictions on overseas and inter-state travel; and similar restrictions were adopted worldwide to reduce the spread of COVID-19. Specifically, on 18 March 2020, the National Cabinet announced that the National Security Committee of Cabinet had issued 'Level 4' travel restrictions, being advice to Australians in relation to overseas travel of 'do not travel'. Then, effective from 20 March 2020, the Commonwealth Government closed Australia's borders to all non-citizens and non-residents. Effective from various times between 20 March 2020 and 5 April 2020, the Northern Territory, Tasmanian, Western Australian, Queensland and South Australian Governments imposed further travel restrictions for interstate travellers with some of these States and Territories closing their borders to all non-essential interstate travel for non-residents. 13 These actions have resulted in a significant reduction in the demand for international and domestic air travel, which is a significant part of the business operations of the Virgin Companies. It was Mr Strawbridge's evidence that the COVID-19 pandemic has had a considerable adverse effect on the revenues of the Virgin Companies. 14 Since their appointment, the Administrators have sought to continue to trade the Virgin Companies on a 'business as usual' basis, albeit that, due to the travel restrictions arising from COVID-19: (1) the airline is not operating any international passenger routes (with the exception of limited repatriation flights to and from Hong Kong and Los Angeles) and only limited domestic passenger routes (about 128 flights per week); (2) the business is not being operated at full capacity; and (3) it is likely that the Virgin Companies will continue to generate losses throughout the administration period whilst these restrictions are in place. 15 As the First Judgment noted at [14], the Virgin Companies comprise a very significant enterprise with substantial operations, complex affairs, considerable assets and a very large number and type of creditors; accordingly, the administrations are likely to be sophisticated and complex. 16 The Virgin Companies are, together, a very large commercial enterprise that carries on a very substantial aviation business. The administrations of the Virgin Companies are complex, involving both the operation of the business (where possible, due to constraints occasioned by the COVID-19) and an ongoing effort to sell the business as a going concern, or recapitalise it through a proposal for a deed of company arrangement ('DOCA').
Progress of the administrations 17 Since the Initial Application and the 24 April Orders, the Administrators have continued to progress the administration of the Virgin Companies, which include the following: (1) General administration tasks, including: (a) undertaking preliminary investigations into the financial position of the Virgin Companies and forensic imaging of the Virgin Companies' electronic records; (b) investigating the security held in relation to the assets and property of the Virgin Companies, including a review of the financing statements lodged against the Virgin Companies on the register established and maintained under the Personal Property Securities Register ('PPSR') and liaising with the relevant secured parties; (c) undertaking preliminary calculations of the secured debt position of the Virgin Companies; (d) locating and securing owned and leased assets, assessing the condition of those assets and ensuring that those assets are appropriately insured; (e) taking steps to resolve retention of title claims, noting that many of these claims have taken (and may continue to take) some time to be resolved; (f) dealing with the Virgin Companies' banks and bank accounts; (g) facilitating the ongoing trading of the Virgin Companies and the operation of the Business (subject to the restrictions imposed by the COVID-19 pandemic); (h) reviewing various lease documentation and liaising with landlords in relation to rent relief; (i) holding discussions with and requesting information from various key staff members and advisers in relation to the assets, liabilities and operations of the Virgin Companies; (j) liaising with Government bodies and Government representatives at the State and Commonwealth level in relation to the administration of the Virgin Companies; (k) liaising with employees and union representatives in relation to the administration of the Virgin Companies; (l) continuing the employment of staff and facilitating the payment of employee wages, including assisting the Virgin Companies with accessing JobKeeper; (m) undertaking calculations of employee entitlements; (n) liaising with certain shareholders of the Virgin Companies in relation to the administration of the Virgin Companies; (o) considering the books and records of the Virgin Companies to identify secured and unsecured creditors of the Companies; (p) liaising with a large number of secured and unsecured creditors and various other stakeholders of the Virgin Companies in relation to the administration of the Virgin Companies; (q) establishing, monitoring and managing six separate email addresses to deal with enquiries and correspondence in relation to the administration for: (i) general enquiries: ; (ii) trade creditors and suppliers: ; (iii) employees: ; (iv) customer queries: ; (v) aircraft lessors: ; and (vi) secured lenders: , and together, these email addresses have received approximately 4,900 emails from creditors and other stakeholders of the Virgin Companies; (r) establishing and maintaining a database to record the various creditor claims and assist with ongoing management of creditor claims; and (s) conducting meetings with directors, senior management and staff of the Virgin Companies; (2) tasks relevant to the Administrators' statutory obligations, including: (a) filing of requisite notices with ASIC in respect of the appointment of the Administrators, and the convening of the first meeting of creditors of the Second to Thirty-Ninth Plaintiffs on 30 April 2020 (the 'First Meeting') and the first meeting of creditors of Tiger 1 on 11 May 2020 (the 'Tiger 1 First Meeting'); (b) issuing the requisite statutory notices to creditors of the Virgin Companies; and (c) notifying the ATO of the appointment of the Administrators; (3) tasks relevant to the First Meeting, including: (a) preparing the requisite notices and the circular to creditors; (b) making an application to the Court for various orders including to permit the First Meeting to be held by electronic means; (c) arranging for the use of a Microsoft Teams Live Event to be used to host the meeting; (d) preparing for and attending the First Meeting; (e) collecting and adjudicating proofs of debt and proxies lodged by secured and unsecured creditors before the First Meeting; (f) conducting the First Meeting; (g) preparing the minutes of the First Meeting; and (h) preparing and issuing the proposal to creditors for their ratification of the (i) proposed members of the committee of inspection selected by the Administrators; (4) an application to the Court for orders with respect to, amongst other things, providing electronic notices to creditors and an extension of time to consider the position of leases entered into by the Virgin Companies; (5) tasks relating to a process for a sale of the Business in respect of the Virgin Companies, including: (a) commencing a short competitive process in respect of the recapitalisation of the Business and/or acquisition of the assets of the Virgin Companies including the entering into of non-disclosure agreements following receipt of expressions of interest (the 'Sale Process'); (b) engaging advisers Houlihan Lokey and Morgan Stanley to progress the Sale Process; (c) instructing Houlihan Lokey to: (i) issue a flyer ('Flyer') and non-disclosure agreement to interested parties on and from 21 April 2020 seeking binding offers to recapitalise or acquire the assets of Virgin Australia; (ii) prepare an information memorandum and establish a secure data room containing documents regarding the Business and the financial position of the Virgin Companies (the 'Data Room'); and (iii) contact all known interested parties and potential buyers; and (d) liaising with Houlihan Lokey and Morgan Stanley on the commencement of discussions with a number of interested parties. 18 On 30 April 2020, the Administrators held the First Meeting. 19 In accordance with the 24 April Orders, the First Meeting was held on 30 April 2020 at 11:30am via a Microsoft Teams Live Event. 20 Before the First Meeting, creditors and observers were required to pre-register through an online form hosted by Microsoft and were permitted to submit questions prior to the meeting. 21 At the First Meeting: (1) there were approximately 898 creditors and 661 observers in attendance; (2) creditors could submit questions via the live question and answer function within the Microsoft Teams Live Events virtual platform ('Live Q&A Function'); and (3) 137 questions were asked through the Live Q&A Function (with any questions asked in the Live Q&A Function that were not answered by the Chairperson having been answered by the Administrators FAQs on their website). 22 Following the First Meeting, on 5 May 2020, a circular to creditors was issued with a proposal as to the members of the committee of inspection (the 'Proposed Committee of Inspection') to be formed in accordance with the 24 April Orders (the 'COI Proposal'). In accordance with the COI Proposal, the Proposed Committee of Inspection is to comprise the following members: (1) 4 representatives of noteholder creditors; (2) 11 representatives of employee creditors; (3) 1 representative of other creditors; (4) 6 representatives of secured creditors; (5) 1 statutory representative; (6) 6 representatives of trade creditors; and (7) 1 statutory observer. 23 Creditors have until 12 May 2020 to vote on the COI Proposal. As at 11 May 2020, 99.47% of 4,541 votes that have been returned thus far have voted in favour of the Proposed Committee of Inspection. Thus, it is overwhelmingly likely that the members of the Proposed Committee of Inspection will be deemed to be the members of the committee by close of business on 12 May 2020 (the 'Committee of Inspection'). 24 On 28 April 2020, Tiger 1, which is part of the 'International Flying Rights Group' of the Virgin Group, went into administration. Tiger 1 is an otherwise dormant entity (in that it does not carry out any business or operations). However, it is a guarantor in respect of various USD and AUD notes issued by Virgin Australia (and therefore has a contingent liability to the noteholders). Besides the noteholders (which I referred to earlier), the only external creditor of Tiger 1 is the ATO (the value of whose debt is uncertain). Thus, the external creditors of Tiger 1 are also creditors of certain other Virgin Companies. 25 As with the First Meeting, the Tiger 1 First Meeting was successfully conducted by electronic means. I note that at the Tiger 1 First Meeting: (1) no proposal was sought for a committee of inspection to be formed solely for Tiger 1; and (2) there were no objections raised in relation to inadequate notice being provided to creditors.
Sales process 26 I have already mentioned the tasks the Administrators have undertaken in terms of the selling of the Business. 27 As at 11 May 2020, a total of 19 commercial parties had been granted access to the Data Room. 28 The Sale Process' indicative timeline is as follows: (1) the Flyer and non-disclosure agreements were provided to parties on and from 21 April 2020; (2) on and from 27 April 2020, the information memorandum was distributed to parties that had entered into a non-disclosure agreement and the Data Room was opened; (3) non-binding indicative offers were due to be provided on 15 May 2020; (4) binding offers are due to be provided on 12 June 2020; (5) a binding implementation deed is proposed to be entered into by 21 June 2020, subject to any regulatory approvals that might be required; (6) the terms of any DOCA are to be progressed leading up to the second meeting of creditors, to be in held in early August; and (7) if applicable, a DOCA is to be executed shortly thereafter. 29 The Administrators are focused on seeking to achieve a successful outcome from the Sale Process, as a maximisation of the price paid for the business (through a DOCA or otherwise) is likely to provide the best result for creditors of the Virgin Companies.
TIGER 1 - MEETINGS BY ELECTRONIC MEANS, NOTICE BY EMAIL AND INCORPORATION INTO COMMITTEE OF INSPECTION 30 This matter is addressed in the Interlocutory Process at prayers 2-10 (which I will deal with in greater detail below), and in the Second Strawbridge Affidavit, which provides that: Tiger 1 25. On 28 April 2020, the Administrators were appointed as joint and several administrators of Tiger 1 by resolution of the directors of that company pursuant to section 436A of the Corporations Act. 26. Tiger 1 is a wholly owned subsidiary of the Fifth Plaintiff. … 27. At the time of swearing this affidavit, the directors of Tiger 1 have not provided to the Administrators a ROCAP for any of the Virgin Companies. 28. Tiger 1 is part of the 'International Flying Rights Group' as described in paragraph 14 of my First Affidavit. While Tiger 1 is an otherwise dormant entity in the Virgin Group (in that it does not carry out any business or operations), it is a guarantor in respect of various USD and AUD notes issued by Virgin Australia. For that reason, the directors of Tiger 1 resolved to appoint administrators on the basis that it was insolvent or likely to become insolvent. 29. The Administrators understand that in addition to the noteholders (who are the creditors I referred to as unsecured bondholders in my First Affidavit) in respect of notes issued by Virgin Australia, Tiger 1 has the following creditors: (a) the Ninth Plaintiff, Tiger Airways Australia Pty Ltd (Administrators Appointed), in the amount of approximately $38.5 million; (b) the Tenth Plaintiff Virgin Australia Airlines Pty Ltd (Administrators Appointed) (VAA), in the amount of approximately $11.9 million; (c) the Fifth Plaintiff, Virgin Australia International Airlines Pty Ltd (Administrators Appointed), in the amount of approximately $3.5 million; and (d) the Deputy Commissioner of Taxation (ATO), the value of whose claim is not currently known. 30. On 30 April 2020, the Administrators published a combined notice of appointment and first meeting of creditors (Tiger 1 First Meeting) in respect of Tiger 1 (Tiger 1 Notice of Meeting) on the ASIC Insolvency Notices website … . The Tiger 1 Notice of Meeting provides details for the Tiger 1 First Meeting, which is scheduled to be held (at Deloitte's offices) on 11 May 2020 at 2:00pm but with creditors being permitted to attend by electronic means only. 31. On 1 May 2020, the Administrators sent an initial notice of appointment and first meeting of creditors in respect of Tiger 1 dated 1 May 2020 to the ATO (Initial Tiger 1 Notice). 32. On 7 May 2020, the Initial Tiger 1 Notice was sent to each note trustee in relation to notes issued by Virgin Australia, being: (a) Bank of New York Mellon at ; (b) Sargon CT Pty Ltd at ; (c) Computershare at ; and (d) DF King at , (Note Trustees). … 33. The noteholders are contingent creditors as a result of guarantees provided by Tiger 1 in respect of the USD and AUD notes issued by Virgin Australia. The Administrators were delayed in providing the Initial Tiger 1 Notice to the Note Trustees as the Administrators were still ascertaining the nature of the claims that the noteholders had against the Virgin Companies (including ascertaining their status as contingent creditors). 34. Each of the noteholders, via the Note Trustees, was also provided with information about the affairs of the Virgin Companies and the impact of the administration of the Virgin Companies in the details provided in advance of, or at, the First Meeting. This information included that set out in: (a) the Notice of Appointment and First Meeting of Creditors sent to the noteholders on or about 21 or 22 April 2020, … ; and (b) Circular to Creditors dated 27 April 2020, sent to noteholders on the same date, … . 35. In addition, after the First Meeting, each of the noteholders was issued: (a) the circular to creditors dated 5 May 2020 (sent to noteholders on the same date), as I referred to above, which included information on the proposed Committee of Inspection; and (b) a notice to Virgin Australia's noteholders dated 6 May 2020 (sent to noteholders on the same date), which contained information about the appointment of a Special Noteholder Liaison Counsel, … . Attendance at Tiger 1 First Meeting 36. I refer to paragraphs 16-26 and 41-43 of the First Affidavit and paragraph 18 above. In light of those matters, in the opinion of the Administrators there was no practical impediment to holding the Tiger 1 First Meeting by electronic means only (other than conducting a poll of creditors). 37. I am aware that Mr Anthony Lowe, Director, Deloitte chaired the Tiger 1 First Meeting. I am informed by Mr Lowe and believe to be true that there were no technical issues with holding the first meeting electronically. 38. At the Tiger 1 First Meeting: (a) there was no proposal for an alternative person or persons to be appointed as administrators and, accordingly, the appointment of the Administrators continues for Tiger 1; (b) as set out below, no proposal was sought for a committee of inspection to be formed solely for Tiger 1; and (c) there were no objections raised in relation to inadequate notice being provided to creditors. Provision of electronic notices to creditors 39. I refer to paragraphs 56-61 of the First Affidavit. For the same reasons set out in those paragraphs, the Administrators consider that it is in the best interests of the creditors of Tiger 1 for the Administrators to be permitted to send notices by email to those creditors for whom an email address has been provided. Committee of Inspection 40. As set out above, a single Committee of Inspection has been formed for the Second to Thirty-Ninth Plaintiffs. 41. At the Tiger 1 First Meeting, the Administrators informed the meeting that the Administrators did not propose to provide the creditors with an option to propose and vote on a resolution that a committee of inspection for Tiger 1 be formed. No objections were raised by any creditors at the meeting on this issue and no creditor sought to propose a resolution that a committee of inspection be formed solely for Tiger 1. Instead, the Administrators seek orders: (a) that Tiger 1 form part of the entities to which the existing Committee of Inspection has been formed in respect of the Second to Thirty Ninth Plaintiffs; and (b) confirming that the members of the Committee of Inspection be those selected by the Administrators and voted for by creditors in accordance with the COI Proposal as set out in paragraphs 20 to 22 above. 42. In the opinion of the Administrators, and based on our experience as insolvency practitioners, an order of this type will enable the Administrators to streamline the administrations rather than having separate committees of inspection. It will save costs in the administration by reducing the need to run duplicative processes (which I consider to be in the best interests of the creditors of the Virgin Companies as a whole). 43. Also, as detailed in paragraph 29 above, the only creditors of Tiger 1 (other than creditors within the Virgin Group) are also creditors of Virgin Australia in any event. Accordingly, the Administrators do not consider that there will be any prejudice to the creditors of Tiger 1 in the making of this order, as the Committee of Inspection proposed to include four members representative of the noteholders creditors. 31 As set out above, Tiger 1 appointed the Administrators as joint and several administrators to that entity on 28 April 2020. Accordingly, the Initial Application did not address Tiger 1 and the 24 April Orders do not presently apply to Tiger 1.
Joinder 32 The Administrators seek an order pursuant to r 9.05 of the Federal Court Rules 2011 (Cth) (the 'Rules') that Tiger 1 be added to this proceeding as Fortieth Plaintiff. 33 Rule 9.05(1)(b)(iii) of the Rules (which applies by reason of r 1.3(2)(a) of the Federal Court (Corporations) Rules 2000 (Cth)), permits the Court to join a person to existing proceedings if the person proposed to be joined 'should be joined as a party in order to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings'. 34 Tiger 1 should be joined to these proceedings as it is part of the group of Virgin Companies now in external administration and common issues have and will continue to arise in the course of the various administrations.
Curing insufficient notice of first meeting 35 The Administrators seek an order pursuant to s 1322(4)(a) of the Corporations Act that the convening and holding of the Tiger 1 First Meeting in accordance with s 436E of the Corporations Act, pursuant to the notice sent to creditors in accordance with rr 75-225(1) and 75-15 of the Insolvency Practice Rules (Corporations) 2016 (Cth) (the 'IPR'), is not invalidated by reason of the notice having been issued on 7 May 2020 (resulting in less than five business days' notice of the meeting being given to the creditors of Tiger 1). 36 The Tiger 1 First Meeting was convened on 30 April 2020 and was held on 11 May 2020. 37 Notice of the Tiger 1 First Meeting was given to the ATO (on behalf of the Deputy Commissioner of Taxation) on 30 April 2020. However, notice to the noteholders was not given until 7 May 2020, which is less than the five business days required by s 436E(3) of the Corporations Act. 38 Section 1322(4) of the Corporations Act is a remedial provision that is able to be used to cure a notice period that is less than that prescribed by the statute. The powers under that section are to be exercised liberally, so as not unreasonably to stifle corporate and financial activity merely on technical grounds: Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd [2001] NSWCA 427 at [74]; Re Insurance Australia Group Ltd (2003) 128 FCR 581 at [27]; Re Wave Capital Ltd [2003] FCA 969 at [30]. 39 Subject to the requirements of s 1322(6), the section confers an unfettered discretion on the Court: In the matter of National Roads and Motorists' Association Ltd [2003] FCAFC 206 at [21]. Orders can be made under the section: (1) with retrospective effect: Re Wood Parsons Pty Ltd (in liq) [2002] NSWSC 1058 at [52]; In the matter of Golden Gate Petroleum Ltd [2010] FCA 40 at [42]; and (2) where there is a real question as to whether a contravention of a provision would even lead to invalidity, so as to avoid any uncertainty with respect to the matter: In the matter of Milgerd Nominees Pty Ltd [2019] NSWSC 311 at [13]. 40 In the present case, s 1322(4)(a) may be used to confirm that the holding of (and passage of resolutions at) the Tiger 1 First Meeting is not invalidated by the notice of the meeting being provided to creditors being less than the prescribed statutory period. 41 As I noted earlier, Mr Strawbridge's evidence is that Tiger 1 does not trade or carry out any business, but was placed into administration because it is a guarantor of the notes issued by Virgin Australia to the noteholders. Consequently, its creditors were already provided with details as to the administrations generally when the notice of the First Meeting was issued and sent to creditors. Those creditors of Tiger 1 were also able to attend the First Meeting on 30 April 2020. 42 Further, at the Tiger 1 First Meeting, no creditor raised any issue as to the inadequacy of any notice of the meeting. 43 In the circumstances, the order sought by the Administrators is appropriate and the requirements of s 1322(6) are satisfied.
Holding meetings by electronic means 44 The Administrators seek: (1) An order pursuant to s 447A(1) of the Corporations Act and s 90-15 of the Insolvency Practice Schedule (Corporations) 2016, which is Sch 2 to the Corporations Act (the 'IPSC'), that, to the extent not permitted specifically by rr 75-30, 75-35 and 75-75 of the IPR and the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (Cth) (the 'Determination'), the Administrators be permitted to hold meetings of creditors during the administration of Tiger 1 by telephone or audio-visual conference only at the place of the Administrators' offices (without creditors of Tiger 1 being able to attend physically at that place), with such details of the arrangements for using the telephone or audio-visual conference facilities to be specified in each of the notices issued to creditors. (2) An order pursuant to s 447A(1) of the Corporations Act and s 90-15 of the IPSC, that, to the extent not permitted specifically by r 75-35(2)(b) of the IPR and the Determination, the creditors of Tiger 1 who wish to participate at any meeting of Tiger 1 by telephone or audio-visual conference only at the place of the Administrators' offices (without creditors of Tiger 1 being able to attend physically at that place), must lodge with the Administrators, no later than the second last business day before the day on which the meeting is held, specific proxy forms containing the information in r 75-35(2)(b)(i)-(iii) of the IPR (with liberty to notify the Administrators of the withdrawal of that specific proxy and amended vote following any discussion at a meeting, in advance of a resolution being passed). 45 In the First Judgment at [25] I said that there was no practical impediment to meetings of creditors being held by electronic means and it is appropriate (if not necessary) that this occur. I see no reason why the same observation should not apply with equal force to meetings of creditors of Tiger 1. 46 In addition, it was Mr Strawbridge's evidence (which I referred to earlier), that the First Meeting was conducted successfully using electronic technology with creditors attending the meeting and participating without being physically present in the same location as the Administrators or one another. 47 For those reasons, the Administrators seek orders for Tiger 1 to the following effect, and in the same form as those made in the 24 April Orders with respect to the other Virgin Companies: (1) confirming that the meetings of creditors of Tiger 1 (including the Tiger 1 First Meeting) may be held exclusively by electronic means; and (2) requiring that, in respect of any creditor who wishes to participate in, and vote on, resolutions that are put to creditors at a meeting (to the extent that this may occur at meetings subsequent to the Tiger 1 First Meeting), special proxies must be provided to the Administrators no later than the second last business day before the meeting is held (although giving liberty to any creditor providing such a proxy to withdraw those voting instructions in advance of the resolution being passed). 48 It is appropriate to make those orders.
Electronic notice to creditors 49 The Administrators seek: (1) An order pursuant to s 447A(1) of the Corporations Act and s 90-15 of the IPSC, that Pt 5.3A of the Corporations Act is to operate, nunc pro tunc, in relation to Tiger 1, as if any notice ('Notice') required to be given pursuant to rr 75-225(1) and 75-15 of the IPR will have been validly given to creditors of Tiger 1 by reason of the following steps having been taken before the date of the meeting: (a) where the Administrators: (i) have an email address for a creditor, by sending the Notice by email to each such creditor; (ii) where the Administrators do not have an email address for a creditor, but have a postal address for the creditor (or have received notification of non-delivery of a notice sent by email in accordance with (a)(i) above), by sending the Notice by posting a copy of it to the postal address for each such creditor; (b) by causing the Notice to be published on the Australian Securities and Investments Commission ('ASIC') published notices website at https://insolvencynotices.asic.gov.au/; and (c) by publishing the Notice on the website maintained by the Administrators at https://www2.deloitte.com/au/en/pages/finance/articles/virgin-australia-holdings-limited-subsidiaries.html. 50 In the First Judgment, I observed at [27]-[29], by reference to the relevant authorities, that it is now commonplace for orders to be made, including at an early point in an administration, permitting external administrators to give notices to creditors by email and other electronic publication. 51 Because each of the noteholders is a creditor of Tiger 1, there are also a substantial number of creditors of that entity. In my view, as with the other Virgin Companies, notice to be given to creditors of Tiger 1 by email and publication on Deloitte's website fulfils the objective of notifying as many creditors as quickly and cheaply as possible. 52 Accordingly, I will make orders permitting electronic notices to be given to creditors of Tiger 1 on a similar basis to the 24 April Orders with respect to the other Virgin Companies.
Incorporation into existing Committee of Inspection 53 The Administrators seek: (1) An order pursuant to s 447A(1) of the Corporations Act and s 90-15 of the IPSC, that Divs 75 and 80 of the IPSC, and Div 75 of the IPR, are to operate as if the requirement in ss 80-10 and 80-15 of the IPSC for the creditors of a company to resolve that a committee of inspection be formed and to appoint members of the committee of inspection, be dispensed with. (2) An order that Order 6(b) of the orders made on 24 April 2020 be varied by deleting the words 'Thirty-Ninth Plaintiffs' and replacing them with the words 'Fortieth Plaintiffs', such that that order reads: … a single committee of inspection be formed in respect of the Second to Fortieth Plaintiffs. (3) An order pursuant to s 447A(1) of the Corporations Act and s 90-15 of the IPSC that the Administrators are not required to issue any further Proposal (as that term is defined in Order 6(d) of the orders made on 24 April 2020) to the creditors of the Second to Fortieth Plaintiffs. 54 In Order 6(b) of the 24 April Orders, I ordered that there was to be a single committee of inspection for the Second to Thirty-Ninth Plaintiffs. At that time, Tiger 1 had yet to appoint administrators. 55 In the First Reasons, at [34(1)] and [38(1)], I accepted Mr Strawbridge's evidence that, for administrations as large-scale and complex as those of the Virgin Companies, it would be appropriate and prudent for a committee of inspection to be formed and the Court concluded that it was in the best interests of creditors that a single committee be formed. 56 At the Tiger 1 First Meeting, the Administrators did not provide the creditors with an option to propose and vote on a resolution that a committee of inspection for Tiger 1 be formed; nor did any creditor at the Tiger 1 First Meeting request that a committee be formed. 57 Given that the external creditors of Tiger 1 are also creditors of other Virgin Companies, I accept the submissions of the Administrators that there is no reason for a separate committee of inspection to be formed. There will not be any prejudice to the creditors of Tiger 1 in the making of this order, as the Committee of Inspection is proposed to include four members representative of the noteholder creditors. 58 I accept the Administrators' view that having the existing Committee of Inspection operate to include all of the Virgin Companies (that is, including Tiger 1) will streamline the administrations and save costs by reducing the need to run duplicative processes, which Mr Strawbridge considers to be in the best interests of the creditors of the Virgin Companies as a whole. In the circumstances, to achieve this result, I will vary Order 6(b) of the 24 April Orders to include Tiger 1. 59 Finally, in circumstances where: (1) the COI Proposal has been issued to creditors; (2) the creditors have had an opportunity to vote on the identity of members who are proposed to be on the Committee of Inspection; (3) the proposed members come from a cross-section of the different categories of creditors of the Virgin Companies, including noteholders; and (4) the votes on the COI Proposal are overwhelmingly in favour; the Court will make an additional order confirming that no further proposal needs to be issued to creditors and that the members of the Committee of Inspection are those selected by the process set out in Orders 6(c)-(e) of the 24 April Orders.
EXTENSION OF THE CONVENING PERIOD 60 The Administrators seek: (1) An order pursuant to s 439A(6) of the Corporations Act that the convening period defined in s 439A(5)(b) of the Corporations Act in respect of each of the Virgin Companies, be extended until 18 August 2020. (2) An order, pursuant to s 447A(1) of the Corporations Act, that Pt 5.3A of the Corporations Act is to operate in relation to each of the Virgin Companies such that, notwithstanding s 439A(2) of the Corporations Act, the second meeting of the creditors of each of the Virgin Companies required under s 439A of the Corporations Act may be convened at any time before, or within, five business days after, the end of the convening period as extended by the order sought under (1) (provided that the Administrators give notice of the meetings to eligible creditors of each of the Virgin Companies (including the persons claiming to be creditors of the Virgin Companies) at least five business days before the meeting). 61 This matter is addressed in the Second Strawbridge Affidavit at [50]-[74], which provides that: Background 50. Unless extended, the convening period for the second meeting of creditors of each of the Virgin Companies (other than Tiger 1) pursuant to section 439A(5) of the Corporations Act (Second Meetings) will end on 18 May 2020, requiring the Second Meetings to be held on or before 25 May 2020. In the case of Tiger 1, the convening period for the second meeting of creditors will end on 26 May 2020, requiring the meeting to be held on or before 2 June 2020. I refer to the convening period for the second meeting of creditors of each of the Virgin Companies as the Convening Period. 51. The administrations of the Virgin Companies are complex and the Administrators have received a number of expressions of interest in relation to the assets and business of the Virgin Companies. It is the current view of the Administrators that the continued trading of the Virgin Companies' business as a going concern during the administration period with a view to a sale of the business and assets of companies or the entering into of a DOCA maximises the chances of the Business continuing in existence or may result in a better return to creditors than an immediate winding up. On this basis, the Administrators believe that it is in the best interests of the Virgin Companies' creditors that the Convening Period be extended for about 3 months, until 18 August 2020 noting that the Administrators will likely wish to convene the Second Meetings at the first opportunity following any sale of Business or the proposal for entry into a DOCA. Creditors 52. I refer to paragraphs 65 and 66 of the First Affidavit. 53. As at 21 April 2020, searches of the PPSR disclosed that 3,463 registrations had been made against assets or property of the Virgin Companies (in total) on the PPSR. Given the number of registrations on the PPSR, the Administrators are continuing to review all available information in relation to the claims of the apparent secured creditors with security interests over the assets or property of the Virgin Companies registered on the PPSR. 54. To date, no secured party has enforced its security interest over the assets and undertaking of the Virgin Companies or any specific property (for example, it has not appointed a receiver and manager). 55. I also refer to paragraphs 47 and 48 of my First Affidavit and the further update at paragraph 81 below. As at 6 May 2020, the Administrators had received a total of 1,100 claims from creditors across the Second to Thirty-Ninth Plaintiffs. This is not the total number of proofs of debt received, as a large number of proofs of debt lodged with the Administrators relate to multiple claims against the Second to Thirty-Ninth Plaintiffs, which should have been split between multiple proofs of debt. The Administrators are continuing to process the proofs of debt received in relation to the Second to Thirty-Ninth Plaintiffs, but estimate that a further two weeks will be required to ascertain accurate figures in relation to the total number of claims against each of the Second to Thirty-Ninth Plaintiffs and the total value of those claims, due to: (a) the significant volume of proofs of debt received; (b) a large number of creditors lodging multiple claims under a single proof of debt; and (c) some creditors lodging single claims against multiple entities in administration, without those claims being correctly apportioned between the various Virgin Companies. Basis for application to extend convening period 56. The Administrators propose that the Convening Period be extended for a period of about 3 months until 18 August 2020. 57. To date, the Administrators' efforts have been concentrated on identifying the Virgin Companies' assets and liabilities, trading the Business, dealing with stakeholders and commencing the Sale Process. 58. Pursuant to section 439A of the Corporations Act and section 75-225 of the Insolvency Practice Rules 2016 (IPR), at the Second Meetings, the creditors will consider the Administrators' report and recommendations as to whether or not it would be in the creditors' interests that: (a) the Virgin Companies execute a DOCA; (b) the administration should end and control of the Virgin Companies be returned to the directors; or (c) the Virgin Companies be wound up. 59. The Administrators are of the opinion that it would be in the interests of the Virgin Companies' creditors for the Convening Period for the Second Meetings to be extended for about 3 months for the following reasons: (a) as matters currently stand, the Administrators are of the view that we would be unable to make a comprehensive or complete recommendation to creditors on the future of the Virgin Companies in accordance with our obligations under section 439A of the Corporations Act and section 75-225 of the IPR and, in turn, the creditors will be unable to make an informed decision in that regard. That is because the Sale Process is ongoing and the indicative timetable provides for binding offers to be submitted by 12 June 2020 (this being after the date at which the Administrators need to issue the statutory report to creditors pursuant to section 75-225); (b) the sale of the Business as a going concern is likely to maximise the return to creditors, preserve employment for as many employees as possible, and permit the Virgin Companies' commercial relationships to continue; (c) an extension of the Convening Period will enable the Sale Process to be finalised, provide time for due diligence to be completed and offers to be made. It will provide the time needed for the Administrators to work with interested parties to ensure that offers are made in binding form and then allow for negotiations to be able to take place to lead to the execution of a binding agreement; (d) if the Second Meetings were required to be held on or before 25 May 2020, as matters presently stand the Administrators would likely recommend that the Virgin Companies be placed into liquidation as the Administrators and I have yet to receive a proposal for the purchase of the Business from any interested parties such that no DOCA could be recommended (and the Virgin Companies are insolvent such that no recommendation could be made that the administration should end and the Virgin Companies be returned to the control of the directors); and (e) permitting the Sale Process to be completed is likely (if successful) to produce a better price for the sale of the Business than a sale through a liquidation, not least because: (i) a sale of the Business and assets of the Virgin Companies as a going concern preserves existing relationships with employees, creditors and other stakeholders of the Virgin Companies (and therefore any goodwill of the Business); whereas (ii) a sale during a winding up will not have the benefits of preserving those relationships and, in addition, a liquidation sale may be perceived by the market as a "fire sale" of the assets of the Virgin Companies. 60. During the period in which it is proposed that the Convening Period be extended, the Administrators propose: (a) to continue to engage Houlihan Lokey and Morgan Stanley to complete the Sale Process; (b) subject to receiving an appropriate offer, to enter into a binding agreement for the sale of the Business and other assets of the Virgin Companies or, otherwise, to negotiate with a potential purchaser for a DOCA proposal to be put forward involving a restructure of the Business; and (c) to prepare a detailed report in accordance with section 439A of the Corporations Act and section 75-225 of the IPR such that, if there is a DOCA proposal, that report will assess the return to creditors from the DOCA as opposed to a winding up. 61. In addition, due to the size and complexity of the Virgin Companies and their operations, the Administrators are still in the process of: (a) obtaining and assessing valuations of the Virgin Companies' assets; (b) determining employee entitlements; (c) determining retention of title claims; (d) meeting with Companies' lessors and other key stakeholders in relation to the Companies' affairs; (e) responding to ongoing queries from creditors; (f) reviewing the Companies' accounts; (g) ascertaining the existence of any claims; and (h) continuing to trade the business. Effect of the proposed extension on creditors 62. The Administrators are of the view that, notwithstanding the statutory moratorium provided by Part 5.3A of the Corporations Act and its impact on the ability of creditors to enforce their rights, the proposed extension of the Convening Period will not unduly prejudice the Virgin Companies' creditors. 63. At the First Meeting, I (as Chairperson of the meeting) informed the creditors of the likelihood that the Administrators would make an application for an extension of the Convening Period for each of the Virgin Companies. I asked any creditor who had an objection to a potential extension of the convening period to raise these objections in writing and addressed to . I also noted that the extension would provide the Administrators with time to undertake a sale or recapitalisation of the Business. 64. I am informed by Mr Lowe and believe to be true that at the First Meeting of Tiger 1, the creditors were informed that the Administrators would shortly make an application for an extension of the Convening Period for Tiger 1 and that no objections were raised by the Tiger 1 creditors in relation to this proposal. 65. As at the date of this affidavit, the Administrators are not aware of there being any objections to the extension of the convening period from the creditors of the Virgin Companies. 66. On 11 May 2020, I received a letter via email from Mr Henry Carr, Senior Executive Lawyer and Assistant Secretary, Australian Government Attorney-General's Department Industrial Relations Group in response to my email dated 4 May 2020 seeking some form of endorsement of the decision of the Administrators to continue trading the Virgin Companies, referring to, among other things, the fact that the Department was aware that the Administrators were seeking an extension of the Convening Period. The letter and covering email do not contain any objection to the proposed extension of the Convening Period. … 67. The Administrators are of the opinion that no specific prejudice will be suffered by creditors of the Virgin Companies if the Convening Period is extended by about 3 months as sought. The reasons for this are as follows: (a) the Administrators are continuing to cause the Virgin Companies to pay employees of the Virgin Companies in accordance with their employment terms and the Administrators have paid pre-appointment arrears of wages to maintain the trading of the Business as usual; (b) it is likely that, in a sale of business (either directly or through a DOCA proposal), the employment of as many employees as possible will be preserved (especially compared to windings up), which would enhance continuity of employment for those employees and reduce the Virgin Companies' potential liability to employees (for example, for accrued leave and redundancy payments) and, consequently, reduce the size of the overall creditor pool; (c) with respect to the Aircraft Lessors (as defined below), while the Administrators have been negotiating an Aircraft Protocol (as defined below and referred to in paragraph 90), the Administrators are continuing to use aircraft to the extent possible given the current COVID-19 circumstances as set out in paragraph 79; (d) a number of current litigation proceedings against the Virgin Companies are on foot including: (i) a defamation case against the Tenth Plaintiff, VAA, which is continuing despite the moratorium in place; (ii) a matter in the Victorian Consumer Affairs Tribunal in relation to Worksafe Improvement Notices issued to Virgin Australia involving a number of other airlines; (iii) approximately 12 industrial litigation matters, including general protections and unfair dismissal claims brought with the Fair Work Commission. These claims are not subject to the moratorium on claims and the Fair Work Commission has refused an adjournment or stay of these claims; (iv) approximately 21 claims in the Administrative Appeals Tribunal, which have been commenced pursuant to the Virgin Group's self-insurance scheme. The AAT has indicated that these claims are not subject to the moratorium but the AAT has indicated that it will grant a stay until a date to be fixed and accordingly, these matters could proceed on an application by any party; and (v) approximately 14 personal injury claims, all of which are insured; (e) the Administrators are continuing to try and secure a sale of the Business (or facilitate a DOCA proposal) on a going concern basis, which will maximise the prospects of ongoing trade creditor relationships being preserved going forward. Convening the meeting as early as practicable 68. The Administrators also intend to convene the Second Meetings at the first opportunity following a binding sale of the Business or a binding proposal for a DOCA such that the Second Meetings may be held earlier than the latest possible time during the extended time for the convening of the meetings as sought by the Administrators in this application. The operation of the Business during the extended Convening Period 69. The Business is currently operating by utilising the following financial resources; (a) support from the Commonwealth of Australia in underwriting a minimal domestic schedule to transport passengers and keeping important freight corridors open; (b) support from the Commonwealth of Australia in underwriting minimal international repatriation flights between Australia and, Los Angeles and Hong Kong; and (c) with limited unrestricted cash at bank from the Virgin Companies which was available upon the Administrators' appointment. 70. The Administrators are in the process of considering whether an interim funding deed may be entered into or required to operate the Business during the extended Convening Period. A concluded view on whether an interim funding deed is required has not yet been formed. 71. The Administrators have opened separate bank accounts in respect of the Virgin Companies, plus additional bank accounts in US dollars due to a number of agreements that have been expressed to be in foreign currencies. 72. In practice and to reduce costs and complexity in the administrations, funding and expenses of the Virgin Companies since the appointment of the Administrators are being cleared through two bank accounts, which are held by the Tenth Plaintiff, VAA and the Twentieth Plaintiff, Virgin Australia Regional Airlines Pty Ltd (Administrators Appointed) (VARA). 73. The Administrators seek a direction that they not be required to open separate administration bank accounts for each of the Virgin Companies. The process for opening, operating and maintaining 39 different bank accounts for each of the Virgin Companies will add additional difficulties and expense to the administration. Therefore, in the Administrators [sic] opinion, operating two bank accounts will streamline and make the administration process more efficient. 74. As set out in further detail below, where one or other of the Virgin Companies other than VAA or VARA pay or receive money that is paid from or into the administration accounts operated by VAA or VARA and intercompany loan account entries are recorded in the financial records of the applicable Virgin Companies and the Administrators' records. This ensures that the accounts are properly reconciled.
Existing timing 62 Pursuant to s 439A(5) of the Corporations Act, the convening period for the second meeting of creditors of: (1) each of the Virgin Companies (other than Tiger 1), is scheduled to end on 18 May 2020, requiring each of the second meetings of creditors to be held on or before 25 May 2020; and (2) Tiger 1, is scheduled to end on 26 May 2020, requiring the second meeting to be held on or before 2 June 2020. 63 As noted above, the Administrators are currently undertaking a process for either the sale of the assets and business of the Virgin Companies as a going concern or a DOCA proposal that involves a recapitalisation of the Virgin Companies and continued trading of the Business. That process will not have completed by May 2020, when the future of the Virgin Companies will have to be decided by the creditors. It is in that context that the Administrators seek an extension of the Convening Period, for each of the Virgin Companies, to 18 August 2020.
Legal principles 64 The circumstances in which the Court will extend a convening period are well established. In making such an order, the Court must reach an appropriate balance between an expectation that the administration will be relatively speedy and summary, and the countervailing factor that undue speed should not be allowed to prejudice sensible and constructive actions directed to maximising a return for creditors: Mann v Abruzzi Sports Club Ltd (1994) 12 ACSR 611 (Young J); Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10] (Barrett J). 65 The approach to be adopted was recently set out by Thawley J in Farnsworth v About Life Pty Limited (Administrator Appointed), in the matter of About Life Pty Limited [2019] FCA 11 at [3]-[8], where his Honour endorsed the comments of Austin J in In the matter of Riviera Group Pty Ltd (admins apptd) (recrs & mgrs. apptd) [2009] NSWSC 585 ('Re Riviera') at [13] as to the categories of cases in which an extension is granted including, relevantly: (1) where the size and scope of the business in administration is substantial (citing Lombe, in the matter of Babcock & Brown Limited (Administrators Appointed) [2009] FCA 349; Worrell; In the matter of Storm Financial Ltd (Receivers and Managers Appointed) (Administrators Appointed) [2009] FCA 70; and ABC Learning Centres Limited, in the matter of ABC Learning Centres Limited; application by Walker (No 5) [2008] FCA 1947); (2) where the extension will allow sale of the business as a going concern, citing Lombe re Australian Discount Retail Pty Ltd [2009] NSWSC 110; Stewart, in the matter of Kleins Franchising Pty Ltd (administrators appointed) (ACN 007 348 236) [2008] FCA 721; Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619, in the matter of Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619 [2006] FCA 1423; and (3) more generally, where additional time is likely to enhance the return for unsecured creditors: Deputy Commissioner of Taxation v Scottsdale Homes No 3 Pty Ltd (No 2) [2009] FCA 190; Fitzgerald, In the matter of Primebroker Securities Limited (Administrator Appointed) (Receivers and Managers Appointed) [2008] FCA 1247; Ex parte Vouris; in the matter of Marrickville Bowling & Recreation Club Ltd (under Administration) [2008] FCA 622. 66 An extension of the administration period to facilitate either (or both) of: (a) the sale of the business of the company as a going concern, so as to maximise the value of the company's assets; or (b) the progression and assessment of a DOCA proposal that may provide a better return to creditors than a winding up, are well-recognised examples of situations where the Court has extended the convening period: Mentha, in the matter of Hans Continental Smallgoods Pty Ltd (Administrators Appointed) [2008] FCA 1933 (Jacobson J); Re Riviera (Austin J); Silvia, in the matter of Austcorp Group Ltd (Administrators Appointed) [2009] FCA 636 (Lindgren J) ('Re Austcorp'); and In the matter of Kavia Holdings Pty Limited (administrators appointed) (receivers and managers appointed) [2013] NSWSC 737 (Black J). 67 In Mighty River International Ltd v Hughes (as deed administrators of Mesa Minerals Ltd) (2018) 359 ALR 181 at 201-202, [73], Nettle and Gordon JJ (in dissent, but not relevantly in this respect) referred to a number of cases including Re Riviera and concluded: … Generally speaking, courts have been disposed to grant substantial extensions in cases where the administration has been complicated by, for example, the size and scope of the business, substantial offshore activities, large numbers of employees with complex entitlements, complex corporate structures and intercompany loans, and complex recovery proceedings, and, more generally, where the additional time is likely to enhance the return to unsecured creditors. Provided the evidentiary case for extension has been properly prepared, there has been no evidence of material prejudice to those affected by the moratorium imposed by the administration, and the administrator's estimate of time has had a reasonable basis, the courts have tended to grant extensions for the periods sought by administrators. … 68 Finally, the administrator's own opinion as to the need for an extension will be given weight in an application of this kind: Owen and Others in their capacity as joint and several administrators of Rivercity Motorway Pty Ltd (ACN 116 665 304) (admins apptd) (recs and mgrs. Apptd)) v Madden (No 4) (2012) 92 ACSR 255 at [26] (Logan J); In the matter of Belmont Sportsmans Club Co-Operative Limited (Administrators Appointed) [2015] NSWSC 543 at [9] (Black J); Jahani, in the matter of Northern Energy Corporation Ltd (Administrators Appointed) (No 2) [2019] FCA 382 at [67] (Farrell J); Bumbak (Administrator), in the matter of Duro Felguera Australia Pty Limited (Administrators Appointed) [2020] FCA 422 at [32] (Gleeson J).
Appropriate case for an extension of the convening period 69 For the reasons put forward by the Administrators and as set out in their written submissions to the Court, with which I agree, the convening period should be extended. 70 First, the administrations are complex. The Virgin Companies are substantial commercial entities with large-scale business operations and a number of different stakeholders such as lessors, trade creditors, noteholders, employees, unions and customers. 71 Secondly, there is an ongoing sale and recapitalisation process in place with a number of different interested parties (19 of which currently have access to the materials in the Data Room), the timetable for which extends over the next few weeks and months. Given the size of the assets and operations of the Virgin Companies, the need to allow potential bidders to complete due diligence, and the need to provide for time for the Administrators to select potential bidders and negotiate as to the terms of any arrangement, that is a process which cannot be completed in the current convening period. 72 There is a prospect that the Sale Process will culminate in a sale of the business as a going concern or a recapitalisation through a DOCA. A successful sale or recapitalisation of the business will be of potential benefit to specific creditors such as: (1) employees (as there may be continuity of employment if the business is able to continue trading with a new owner), which in Mr Strawbridge's evidence (which I accept) he says would also reduce the Virgin Companies' potential liability to employees (for example, for accrued leave and redundancy payments) and, consequently, reduce the size of the overall creditor pool; (2) lessors (as the business is likely to need at least certain of the existing property and equipment leased by the Virgin Companies); (3) trade creditors (who may be able and prepared to maintain a trading relationship with the Business); and (4) creditors generally, by enhancing the return for the general body of unsecured creditors by permitting the assets and business of the Virgin Companies to be realised in the greatest possible sum (either through a sale of the business or a restructure through a DOCA). 73 The extension of the Convening Period will provide sufficient time to complete the Sale Process and permit any possible DOCA to be presented to creditors. 74 Thirdly, the extension is also to be understood having regard to the time needed for the Administrators to investigate properly the Virgin Companies' affairs and then report meaningfully to creditors so that they can make a fully informed decision as to the future of the companies: see In the matter of Foodora Australia Pty Ltd (Administrators Appointed) [2018] NSWSC 1426 (Black J); Eagle, in the matter of Techfront Australia Pty Limited (administrators appointed) (No 2) [2020] FCA 618 at [31(2)] (Farrell J). Mr Strawbridge's evidence is that: … as matters currently stand, the Administrators are of the view that we would be unable to make a comprehensive or complete recommendation to creditors on the future of the Virgin Companies in accordance with our obligations under section 439A of the Corporations Act and section 75-225 of the IPR and, in turn, the creditors will be unable to make an informed decision in that regard. That is because the Sale Process is ongoing and the indicative timetable provides for binding offers to be submitted by 12 June 2020 (this being after the date at which the Administrators need to issue the statutory report to creditors pursuant to section 75-22) … . 75 Fourthly, if the second meeting of creditors of each of the Virgin Companies were required to be held without an extension of the Convening Period, as matters presently stand the Administrators would likely recommend that the Virgin Companies be placed into liquidation (as there is no DOCA proposal and the Administrators' view is that the Virgin Companies are insolvent). That is not in the interests of creditors. Permitting the Sale Process to conclude (if successful) is likely to produce a better price for the sale of the Business than a sale through liquidation and is also likely to preserve existing relationships with employees, creditors and other stakeholders. 76 Fifthly, the three month extension sought is relatively brief in the context of a business the size of the Virgin Companies. In In the matter of Harrisons Pharmacy Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) [2013] FCA 458 at [44], Farrell J noted the trend towards applications for more lengthy convening periods and referred to six month extensions being granted in a series of cases such as Re Chemeq Ltd 009 135 264 (Administrators Appointed) (Receivers and Managers Appointed), ex parte McMaster [2007] WASC 154; Stirling Lindley Horne and Petr Vrsecky (in their capacities as joint and several administrators of Australian Property Custodian Holdings Limited) (ACN 095 474 436) (Administrators appointed) (Receivers and Managers appointed) [2010] VSC 657; Strawbridge (Administrator) v Retail Holdings Pty Ltd (Administrators Appointed), In the Matter of Retail Adventures Holdings Pty Ltd (Administrators Appointed) [2013] FCA 151. 77 Furthermore, Mr Strawbridge's evidence is that the Administrators may convene the second meetings at an earlier date than the latest possible time during the extended time for convening of the meetings as sought by the Administrators in these proceedings, if that is possible. 78 Sixthly, as I have already mentioned, it is to be recognised that the Administrators have faced delays in the course of the administrations by reason of the COVID-19 pandemic. 79 Seventhly, there is unlikely to be any substantial prejudice to creditors from a continuation of the administrations. In particular, employees are being paid in accordance with their terms of employment, the stay on legal proceedings will affect few, if any, cases presently on foot, and there remains the prospect of ongoing trading of the Business during the administrations for the benefit of trade creditors. In this vain, Mr Strawbridge's evidence at [67] of the Second Strawbridge Affidavit is that: The Administrators are of the opinion that no specific prejudice will be suffered by creditors of the Virgin Companies if the Convening Period is extended by about 3 months as sought. The reasons for this are as follows: (a) the Administrators are continuing to cause the Virgin Companies to pay employees of the Virgin Companies in accordance with their employment terms and the Administrators have paid pre-appointment arrears of wages to maintain the trading of the Business as usual; (b) it is likely that, in a sale of business (either directly or through a DOCA proposal), the employment of as many employees as possible will be preserved (especially compared to windings up), which would enhance continuity of employment for those employees and reduce the Virgin Companies' potential liability to employees (for example, for accrued leave and redundancy payments) and, consequently, reduce the size of the overall creditor pool; (c) with respect to the Aircraft Lessors (as defined below), while the Administrators have been negotiating an Aircraft Protocol (as defined below and referred to in paragraph 90), the Administrators are continuing to use aircraft to the extent possible given the current COVID-19 circumstances as set out in paragraph 79; (d) a number of current litigation proceedings against the Virgin Companies are on foot including: (i) a defamation case against the Tenth Plaintiff, VAA, which is continuing despite the moratorium in place; (ii) a matter in the Victorian Consumer Affairs Tribunal in relation to Worksafe Improvement Notices issued to Virgin Australia involving a number of other airlines; (iii) approximately 12 industrial litigation matters, including general protections and unfair dismissal claims brought with the Fair Work Commission. These claims are not subject to the moratorium on claims and the Fair Work Commission has refused an adjournment or stay of these claims; (iv) approximately 21 claims in the Administrative Appeals Tribunal, which have been commenced pursuant to the Virgin Group's self-insurance scheme. The AAT has indicated that these claims are not subject to the moratorium but the AAT has indicated that it will grant a stay until a date to be fixed and accordingly, these matters could proceed on an application by any party; and (v) approximately 14 personal injury claims, all of which are insured; (e) the Administrators are continuing to try and secure a sale of the Business (or facilitate a DOCA proposal) on a going concern basis, which will maximise the prospects of ongoing trade creditor relationships being preserved going forward. 80 Eighthly, the proposed extension was raised by the Administrators at the First Meeting and the Tiger 1 First Meeting and none of the creditors expressed any opposition at those meetings. 81 Ninthly, the Commonwealth Attorney-General's Department, administering the Fair Entitlements Guarantee Scheme (the 'FEG'), has not expressed opposition to the application. Mr Strawbridge says at [66] of the Second Strawbridge Affidavit that: On 11 May 2020, I received a letter via email from Mr Henry Carr, Senior Executive Lawyer and Assistant Secretary, Australian Government Attorney-General's Department Industrial Relations Group in response to my email dated 4 May 2020 seeking some form of endorsement of the decision of the Administrators to continue trading the Virgin Companies, referring to, among other things, the fact that the Department was aware that the Administrators were seeking an extension of the Convening Period. The letter and covering email do not contain any objection to the proposed extension of the Convening Period. 82 For the reasons outlined above, Mr Strawbridge, an experienced insolvency practitioner, deposes that the Administrators consider that the extension of the Convening Period will not unduly prejudice the Virgin Companies' creditors. I accept Mr Strawbridge's evidence. 83 Finally, the Administrators seek an order in accordance with In the matter of Daisytek Australia Pty Limited [2003] FCA 575 at [10]-[18] (Lindgren J) permitting them to hold the second meetings at any time during the extended Convening Period. In my view, that is desirable so as to provide flexibility to the Administrators and not prolong the administrations if that is unnecessary: Re Austcorp at [18] (Lindgren J).
LIMITATION OF LIABILITY 84 The Administrators seek: (1) An order pursuant to ss 447A(1) and 443B(8) of the Corporations Act and s 90-15 of the IPSC, that Pt 5.3A of the Corporations Act is to operate in relation to the Plaintiffs as if s 443A(1) of the Corporations Act provides that: (a) the liabilities of the Administrators (in their capacity as administrators of the Twentieth Plaintiff, Virgin Australia Regional Airlines Pty Ltd (Administrators Appointed) ('VARA')) incurred with respect to any obligations arising out of, or in connection with, an agreement entered into with Rio Tinto Services Limited in respect of charter flights (the 'Rio Tinto Agreement'), are in the nature of debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of VARA; and (b) notwithstanding that the liabilities in subparagraph (a) are debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of VARA, the Administrators will not be personally liable to repay such debts or satisfy such liabilities to the extent that the assets of VARA are insufficient to satisfy the debt and liabilities incurred by the Administrators arising out of, or in connection with, the Rio Tinto Agreement. (2) An order pursuant to s 447A(1) of the Corporations Act and s 90-15 of the IPSC, that Pt 5.3A of the Corporations Act is to operate in relation to the Plaintiffs as if s 443A(1) of the Corporations Act provides that: (a) the liabilities of the Administrators (in their capacity as administrators of each of the Virgin Companies) incurred with respect to any obligations arising out of, or in connection with, any future: (i) agreement on the terms of, or substantially in accordance with, the 'Aircraft Protocols' document; (ii) alliance agreements, being international arrangements established with various global airlines that provide the Virgin Companies with a long distance international network; (iii) procurement contracts, including: in-flight services agreements, being agreements entered into for the provision of food and beverages and other retail on-board services, catering, entertainment and internet Wi-Fi on flights operated by the Virgin Companies; ground handling agreements, being agreements entered into for the provision of ground handling services for the Virgin Companies' flight arrivals and departures at national and international airports; operational systems agreements, being agreements entered into for the provision of support and maintenance services in relation to licensed software, systems, platforms and network infrastructure; fuel agreements, being agreements entered into for the supply and delivery of fuel to the Virgin Companies at various locations throughout Australia, New Zealand and the United States; maintenance and parts agreements, being agreements entered into for the provision of maintenance, repair and modification services for aircraft operated by the Virgin Companies, including the provision of the relevant component parts; IT agreements, being agreements entered into for the provision of core computer infrastructure and end user computing support services and business services to the Virgin Companies; (iv) trade mark licence agreements; (v) airport agreements, being agreements entered into with major airports across Australia, for the use of terminal gates, public spaces and facilities and for sub-leases in relation to each of the Virgin Companies' airport lounges; (vi) charter agreements, being agreements entered into with various major companies for the supply of scheduled air transport services for personnel and freight to nominated destinations agreed between the parties to the agreement; (vii) cargo agreements, being agreements entered into for the handling of cargo and the provision of management, administration and support services; (viii) corporate sales agreements, being agreements entered into with major travel agents and other platforms, including with both government and private counterparties, which set out incentives offered by the Virgin Companies for the sale of Virgin flights by the relevant agents; (ix) industry/agency agreements, being agreements entered into which provide for the preferred supply by the Virgin Companies of flight services to each of its clients, including with both government and private counterparties; (x) insurance arrangements, including contracts to support the ongoing operation of the Virgin Companies' self-insurance scheme; and (xi) training agreements, being agreements entered into to provide ongoing training to crew members, (together, the 'Applicable Agreements' and each, an 'Applicable Agreement') are in the nature of debts incurred by the First Plaintiffs in the performance and exercise of their functions as joint and several administrators of each of the Virgin Companies; and (b) notwithstanding that the liabilities in subparagraph (a) are debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of each of the Virgin Companies, the Administrators will not be personally liable to repay such debts or satisfy such liabilities to the extent that the assets of the particular Virgin Company or Virgin Companies that is or are a party to the particular Applicable Agreement are insufficient to satisfy the debt and liabilities incurred by the Administrators arising out of, or in connection with, the Applicable Agreements. (3) An order pursuant to s 447A of the Corporations Act and s 90-15 of the IPSC, that the Administrators provide notice, in the Applicable Agreement or otherwise, to any counterparty to an Applicable Agreement, prior to that counterparty entering into an Applicable Agreement. (4) An order pursuant to s 447A(1) of the Corporations Act and s 90-15 of the IPSC, that Pt 5.3A of the Corporations Act is to operate in relation to the Administrators as if s 443A(1) of the Corporations Act provides that: (a) any liabilities of the Administrators that may be incurred as a result of any JobKeeper application pursuant to the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) (the 'JobKeeper Rules') and as amended by the Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No 2) 2020 (Cth) arising out, of or in connection with, the employment of staff and facilitating the payment of employee wages for any employee of any of the Ninth, Tenth and Thirteenth Plaintiffs, are in the nature of debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of each of the Ninth, Tenth and Thirteenth Plaintiffs; and (b) notwithstanding that any liabilities that may arise in respect of subparagraph (a) are debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of each of the Ninth, Tenth and Thirteenth Plaintiffs, the Administrators shall not be personally liable to repay such debts or satisfy such liabilities to the extent that the assets of the particular companies or companies (of the Ninth, Tenth and Thirteenth Plaintiffs) that received the benefit of the JobKeeper payment are insufficient to satisfy the debt and liabilities incurred by the Administrators arising out of, or in connection with, the receipt of any JobKeeper payment. (5) An order pursuant to s 447A(1) of the Corporations Act and s 90-15 of the IPSC, that Pt 5.3A of the Corporations Act is to operate in relation to the Administrators as if s 443A(1) of the Corporations Act provides that: (a) any liability incurred by the Administrators arising out, of or in connection with, any loan or monies borrowed by a Virgin Company from another Virgin Company or Virgin Companies are in the nature of debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of each of the Virgin Companies; and (b) notwithstanding that the liabilities in subparagraph (a) are debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of each of the Virgin Companies, the Administrators will not be personally liable to repay such debts or satisfy such liabilities to the extent that the assets of the particular Virgin Company that has borrowed monies from any other Virgin Company or Virgin Companies are insufficient to satisfy the debt and liabilities incurred by the Administrators. 85 It is important to understand the complete background to this request and the context in which it is made by the Administrators. This matter is addressed in Mr Strawbridge's evidence in the Second Strawbridge Affidavit: Relevant arrangements 75. As at the day the Administrators were appointed on 20 April 2020, the Virgin Companies had entered into over 1,330 contracts with approximately 500 unique suppliers, which, if the Administrators caused the Virgin Companies to continue to perform, will (or, at least, may) cause the Virgin Companies to incur debts for which the Administrators would have personal liability under section 443A of the Corporations Act. 76. These contractual obligations or arrangements include, but are not limited to: (a) aircraft finance leases and aircraft operating leases, which were entered into for the purpose of financing, leasing and operating aircraft (including maintenance or aircraft) in order to carry out the operations of the Business (Aircraft Leases); (b) alliance agreements, being international arrangements established with various global airlines that provide the Virgin Group with a long distance international network; (c) procurement contracts, including: (i) in-flight services agreements, being agreements entered into for the provision of food and beverage and other retail on-board services, catering, entertainment and internet wifi on flights operated by the Business; (ii) ground handling agreements, being agreements entered into for the provision of ground handling services for the Virgin Group's flight arrivals and departures at national and international airports; (iii) operational systems agreements, being agreements entered into for the provision of support and maintenance services in relation to licenced software, systems, platforms and network infrastructure; (iv) fuel agreements, being agreements entered into for the supply and delivery of fuel to the Virgin Group at various locations throughout Australia, New Zealand and the United States; (v) maintenance and parts agreements, being agreements entered into for the provision of maintenance, repair and modification services for aircraft operated by the Virgin Group, including the provision of the relevant component parts; and (vi) IT agreements, being agreements entered into for the provision of core computer infrastructure and end user computing support services and business service; (d) trade mark licence agreements; (e) airport agreements, being agreements entered into with major airports across Australia, for the use of terminal gates, public spaces and facilities and for subleases in relation to each of the Virgin Group airport lounges; (f) charter agreements, being agreements entered into with various major companies for the supply of scheduled air transport services for personnel and freight to nominated destinations agreed between the parties to the agreement; (g) cargo agreements, being agreements entered into for the handling of cargo and the provision of management, administration and support services; (h) corporate sales agreements, being agreements entered into with major travel agents and other platforms, including with both government and private counterparties, which set out incentives offered by Virgin Companies for the sale of Virgin flights by the relevant agents; (i) industry/agency agreements, being agreements entered into which provide for the preferred supply by Virgin of flight services to each of its clients, including with both government and private counterparties; (j) Insurance arrangements, including contracts to support the ongoing operation of the Virgin Group's self-insurance scheme; and (k) Training Agreements, being agreements entered into to provide ongoing training to crew members, (together, the Applicable Agreements). Current status of arrangements 77. Since our appointment, the Administrators have sought to continue to trade the Business on a "business as usual" basis, to the extent it has been possible to do so in the context of COVID-19 restrictions, and while assessing viable options to continue to keep the Business operating. I refer to paragraphs 16 to 22 of the First Affidavit and note that, due to travel restrictions arising from COVID-19, the Business is not operating any international passenger routes (with the exception of limited repatriation flights to/from Hong Kong and Los Angeles) and only limited domestic passenger routes (approximately 128 flights per week). 78. As a result of these travel restrictions, certain of the contractual arrangements described in paragraph 75 above are either being partially performed or not able to be performed while the restrictions in relation to COVID-19 remain in place. However, if COVID-19 restrictions are partially eased and the Business of the Virgin Companies is permitted to operate to a greater extent, then the Administrators may cause the Virgin Companies to continue to perform their obligations under these agreements. 79. Further to paragraphs 16 to 22 of the First Affidavit, on 5 May 2020, the National Cabinet agreed with the New Zealand Prime Minister to start work on a Trans-Tasman COVID-19 safe travel zone which would ease travel restrictions between Australia and New Zealand once it is considered safe to do so. This change in policy could give rise to further passenger routes being operated by the Fifth Plaintiff, Virgin Australia International Airlines Pty Ltd, between Australia and New Zealand. A copy of the Media Statement issued by the Prime Minister on 5 May 2020 is located at Tab 11 or Exhibit VNS-2. 80. The ability of the Administrators to operate the Business on a larger scale is subject to the relaxation of the COVID-19 restrictions currently in place and the Administrators are unable to form a view on how those matters may progress into the coming weeks and months (until further clarity is provided by Governments). Liabilities associated with the existing arrangements 81. Further to paragraph 48 of the First Affidavit and by way of update: (a) the Administrators are continuing to investigate the total liabilities of the Virgin Companies. However, I estimate that at least a further two or more weeks is required to be able to provide an accurate and complete reconciliation of amounts owed; (b) the amount of AU$2,283,639,303 stated in paragraph 48(a) of the First Affidavit, in respect of amounts owed to lenders under secured corporate debt and aircraft financing facilities, needs to be corrected to the amount of approximately AU$2,003,447,473 (after conversion of some foreign currency claims into Australian dollars). The amount stated in paragraph 48(a) of my First Affidavit was required to be updated to remove a $225 million facility owing by a related Virgin Group entity, which is not in administration; and (c) the amount of $450,777,961 stated in paragraph 48(f) of the First Affidavit, in respect of employees comprises 'payment in lieu of notice' (PILN) and redundancy payments. Should these amounts not be required to be paid, due to the ongoing trading of the Business, the amount owed to employees is approximately $96,686,552 (excluding PILN and redundancy payments). Due to the large number of contracts and liabilities of the Virgin Companies, it is difficult to determine precisely the amount that is likely to become due and payable by the Virgin Companies during the course of the administrations up to the proposed expiration of the extended Convening Period (Current Liabilities). 82. The Administrators and our staff have had difficulties in obtaining a full breakdown of the creditors of each of the Virgin Companies due to: (a) complex record and data keeping by the Virgin Companies' head office, which consolidates the Virgin Group's accounts, making it difficult to understand, or readily obtain, a detailed creditor listing by each entity within the Virgin Group; and (b) the Virgin Group being currently in the process of reconciling its April 2020 accounts in its internal systems. 83. Accordingly, the Administrators are only able to ascertain the total debts owing by the consolidated Virgin Group at as 31 March 2020. 84. I am aware that, pursuant to: (a) section 443D of the Corporations Act, the Administrators are entitled to be indemnified out of the Virgin Companies' assets (other than PPSA retention of title property) for: (i) debts for which the Administrators are liable pursuant to 443A, 443B and 443BA; and (ii) any other debts or liabilities incurred, or damages sustained, in good faith and without negligence, by the Administrators in our performance or exercise, or purported performance or exercise, of any of our functions or powers as administrators; and (b) section 443F of the Corporations Act, the Administrators have a statutory lien over the assets of the Virgin Companies to secure the right of indemnity under section 443D. 85. Due to the size and complexity of the operations of the Virgin Companies, the Administrators are unable to determine a true and accurate valuation of the Virgin Companies' assets. Proposed contractual arrangements during the administration of the Virgin Companies 86. In accordance with the 24 April Orders, absent any additional orders being made, the Administrators need to make a determination, by 26 May 2020, as to which of the leased of the Virgin Companies it is intended that the Administrators will cause the Virgin Companies to continue to use. Proposed arrangements with aircraft lessors 87. There are some 117 leased aircraft and engines in the Virgin fleet. The aggregate monthly rentals for these aircraft and engines are in the order of $40 million. Because of the COVID-19 travel restriction period, only approximately 50 of the aircraft are presently operational with approximately 27 of those aircraft generating revenue at any one time (principally for charter arrangements and otherwise for limited domestic travel). These numbers can vary slightly on a day to day basis. The balance of the aircraft that are not operational are grounded in a long-term parking programme, which is expected to subsist for the foreseeable future. 88. A calculation of the net equity in the leased aircraft is not useful because: (a) there is a wide range of values that could be achieved on a sale of the aircraft, which range is rendered more uncertain by virtue of the current COVID-19 circumstances; (b) termination provisions and costs under both operating leases and finance leases (collectively, Aircraft Leases) resulting from defaults under those arrangements mean that the Virgin Companies may not benefit from the full value of the aircraft (and, in the case of aircraft leased under operating leases, all of the surplus recoveries over the amounts payable by Virgin Companies on termination will be retained by the lessors); and (c) a sale of the fleet as a whole is not consistent with a strategy to recapitalise and sell the Business and is not expected to achieve the best result for creditors as a whole. 89. The Administrators expect that usage of aircraft currently the subject of Aircraft Leases will be a dynamic issue during the course of the administration so that, for example, certain aircraft are likely to come in and out of use during that period. 90. In light of those matters, on 1 May 2020, the Administrators proposed to each of the relevant aircraft lessors and financiers (collectively, Aircraft Lessors) a protocol (Aircraft Protocol) in relation to the ongoing possession and, where applicable, usage of the aircraft and engines. A draft version of the proposed Aircraft Protocol sent to the Aircraft Lessors on 1 May 2020 is located at Tab 12 of Exhibit VNS-2. The Aircraft Protocol remains subject to negotiation with the Aircraft Lessors and may not be accepted by each relevant Aircraft Lessor. Each Aircraft Protocol, among other matters proposes: (a) a limitation of the Administrators' personal liability in relation to the lease of the aircraft (more details of which are set out in paragraph 98 below); (b) a standstill by the relevant Aircraft Lessors in relation to certain rights under the Aircraft Leases; (c) an extension of the time periods for repossession of the aircraft under the Cape Town Convention (where applicable); (d) an undertaking by the Administrators to use reasonable endeavours to identify as soon as practicable whether the aircraft or engines are surplus to business requirements and to notify the Aircraft Lessors as soon as reasonably practicable after such a determination is made (to enable them to repossess their aircraft and engines and to remarket them) (e) the provision of information to the Aircraft Lessors through a secure website; (f) payment by the Administrators of a usage charge for the aircraft and engines at a specified rate (with the Aircraft Lessors of the aircraft and engines not in usage not being entitled to any payments); (g) certain undertakings in relation to usage of the aircraft and engines; (h) provision for maintenance of the aircraft and engines; and (i) maintenance of insurances over the aircraft and engines. 91. The purpose of the Aircraft Protocol is to ensure that: (a) the Aircraft Lessors have appropriate information regarding their aircraft and engines; and (b) the value of those aircraft and engines is preserved during the administration, with the Administrators seeking to obtain the support of the Aircraft Lessors during the period of the administration such that the aircraft remain available to an intended purchaser of the Business. 92. The proposed payments to be made to the Aircraft Lessors will not fully compensate them for the foregone rent and other payments due to them under the Aircraft Leases. 93. Having regard to the significant debts and obligations that would be imposed by continuing to use the leased aircraft, and the impact of the COVID-19 travel restrictions on the revenue of the Virgin Companies (such revenue having been reduced to an insignificant sum), the Administrators are not willing to take on personal liability for liabilities that arise in relation to those debts and obligations. 94. While aircraft remain grounded, such aircraft do not generate any revenue in the administration. Despite this, the Administrators are of the opinion that operation of the aircraft when there is demand during the administration period (and retention of the arrangements with aircraft lessors in some form) is beneficial for the Virgin Companies (including creditors and other stakeholders) due to: (a) the desire to have the Business continuing to operate as a going concern; (b) the desire to maintain active employment of the Virgin Companies' staff where at all possible; (c) the availability of aircraft allowing the Business to operate at the highest capacity it can in the interests of selling the assets and the business of the Virgin Companies as a going concern; and (d) this providing the Business, or any acquirer of the Business, the ability to recommence operations following a relaxation of the COVID-19 restrictions from a moving start rather than a standing start. 95. The Administrators are also of the opinion that the continued utilisation of the aircraft that are leased by the Virgin Companies will assist the prospects of being able to sell the Business as a going concern or the potential that the Business may be positively restructured through any DOCA proposal. As set out further below, that course will also increase the prospect of being able to make some usage payments to the Aircraft Lessors. 96. In addition, the Administrators are of the view that arrangements that facilitate the Business being able to retain leased aircraft (and that do not require the Administrators to decide to cause the Virgin Companies not to remain in possession of the leased aircraft) are consistent with the objective of selling the Business as a going concern in the best interests of all creditors. The practicalities, costs and time associated with the acquisition, financing and mobilisation of new aircraft are such that if the required leased aircraft forming part of the existing fleet of aircraft are not retained in the Business then the cost and time associated with acquiring new aircraft would make the sale of the Business as a going concern impractical. In the absence of the limited recourse and limitation of liability clauses described below, the Administrators may need to cause the Virgin Companies to give up possession of the relevant aircraft. 97. In the opinion of the Administrators, the orders being sought are the most efficient and cost effective way in which the Administrators can retain and continue to utilise the leased aircraft during the administration period. If the proposed orders are not made, the Administrators consider that it will be necessary to make a separate application to the Court in respect of each Aircraft Protocol that the Administrators propose to enter into with the Aircraft Lessors, seeking an order pursuant to section 447A of the Corporations Act to limit the personal liability of the Administrators under each particular agreement with the Aircraft Lessors. In our opinion, seeking a separate order for each such agreement will impose a substantial cost in the administration and is likely to result in substantial delays as a result of the time required to obtain such orders. The Administrators therefore consider that the proposed orders, in respect of the Aircraft Protocol generally, are in the best interests of the creditors of the Virgin Companies. 98. Notwithstanding the draft Aircraft Protocol, it is intended that clauses to the following effect be included: (a) a limited recourse clause, which provides that the Administrators will only be liable under section 443A on a limited recourse basis, namely limited to the assets of the particular Virgin Company or Virgin Companies (which is the counterparty to the relevant Aircraft Protocol) from which the Administrators are indemnified for their personal liability under section 443D of the Corporations Act and of which the Administrators have a lien over the assets of the particular Virgin Company or Virgin Companies (which is the counterparty to the relevant Aircraft Protocol) under section 443F of the Corporations Act; and (b) a limitation of liability clause, which provides that the Administrators will not have any personal liability arising from entry into the Aircraft Protocol or the performance of any services to the Lessor or any of the Finance Parties (as those terms are defined in the Aircraft Protocol) in accordance with the terms of the Aircraft Protocol or the relevant Aircraft Leases, except to the extent of the limited recourse described in paragraph (a) above. 99. The Administrators intend to give notice of any orders made to limit the liability of the Administrators to any counterparty prior to entering into the Aircraft Protocol or Aircraft Lease. Proposed arrangements with other contractors 100. As I set out in paragraph 75 above, the Virgin Companies had approximately 1,330 agreements in place at the date of our appointment with approximately 500 unique suppliers. 101. As at the date of the affidavit the Administrators have modified and adopted one contract on behalf of the Twentieth Plaintiff, VARA and Rio Tinto Services Limited (Rio Tinto) in respect of charter flights (Rio Tinto Agreement). Pursuant to the Rio Agreement, Rio Tinto agreed, among other things: (a) that if the Administrators incur any personal liability under or in connection with the Rio Tinto Agreement, the Administrators' liability is limited to the extent to which the Administrators are entitled to be indemnified for that liability out of the assets of VARA under the Corporations Act or are otherwise entitled to be indemnified under any applicable insurance policy; and (b) if the assets of VARA and the proceeds of any insurance coverage are insufficient to satisfy in full the liability referred to above, Rio Tinto covenants not to claim, demand, sue or seek to recover any shortfall against the Administrators personally. A copy of the varied Rio Tinto Agreement has not been exhibited to this affidavit on the basis that it is confidential. 102. As the Administrators progress negotiations with other counterparties in respect of the Applicable Agreements, the Administrators' liabilities will steadily increase. An estimate of the likely increase is unable to be determined at this stage as: (a) the use and requirement of the Applicable Agreements is being determined on a day to day basis and the costs associated are unable to be quantified at this stage as the actual quantum of Applicable Agreements to be entered into is presently unable to be determined; (b) the variation of each of the Applicable Agreements changes by virtue of the current COVID-19 circumstances. However, each of the Applicable Agreements are necessary for the day to day operations of the Business; and (c) termination provisions and costs under the Applicable Agreements resulting from defaults under those arrangements mean that the Virgin Companies may not benefit from the full value of the Applicable Agreements. 103. The Administrators are also of the opinion that the operation of the Applicable Agreements by the Virgin Companies will assist the prospects of being able to sell the Business as a going concern or the potential that the Business may be positively restructured through any DOCA proposal. 104. In addition, the Administrators are of the view that arrangements that facilitate the Business being able to use the Applicable Agreements (and that do not effectively force the Administrators to decide not to continue to perform the Applicable Agreements) are consistent with the objective of selling the Business as a going concern in the best interests of all creditors. The practicalities, costs and time associated with sourcing new counterparties and negotiating new agreements are such that if the Applicable Agreements are not retained in the operation of the Business, then the cost and time associated with new counterparties at a future date would make the sale of the Business as a going concern impractical. In the absence of the limited recourse and limitation of liability clauses described below, the Administrators may need to cause the Virgin Companies to give up the Applicable Agreements which form part of the day to day operations of the Business. 105. In the opinion of the Administrators, the orders being sought are the most efficient and cost effective way in which the Administrators can retain and continue to utilise the goods and services that are provided to the Virgin Companies on the terms of the Applicable Agreements during the administration period. If the proposed orders are not made, the Administrators consider that it will be necessary to make a separate application to the Court in respect of each Applicable Agreement that the Administrators propose to enter into with counterparties, seeking an order pursuant to section 447A of the Corporations Act to limit the liability of the Administrators under each of the Applicable Agreements in the future. In our opinion, seeking a separate order for each such agreement will impose a substantial cost in the administration and is likely to result in substantial delays as a result of the time required to obtain such orders. The Administrators therefore consider that the proposed orders, in respect of the Applicable Agreements generally, are in the best interests of the creditors of the Virgin Companies. 106. The Administrators will include the following clauses in each of the Applicable Agreements as adopted during the administration period going forward: (a) a limited recourse clause, which provides that the Administrators will only be liable under section 443A on a limited recourse basis, namely limited to the assets of the particular Virgin Company or Virgin Companies (which is the counterparty to the relevant Applicable Agreement) from which the Administrators are indemnified for their personal liability under section 443D of the Corporations Act and of which the Administrators have a lien over the assets of the particular Virgin Company or Virgin Companies (which is the counterparty to the relevant Aircraft Protocol) under section 443F of the Corporations Act; and (b) a limitation of liability clause, which provides that the Administrators will not have any personal liability arising from entry into the Applicable Agreement or the performance of any services to the counterparty in accordance with the terms of the Applicable Agreement, except to the extent of the limited recourse described in paragraph (a) above. 107. The Administrators do not consider that: (a) the lessors of the aircraft leased by the Virgin Companies under the Aircraft Leases that are to be used in accordance with the Aircraft Protocol; and (b) the relevant counterparty to each of the Applicable Agreements, will be materially prejudiced by the making of the proposed orders. Relevant considerations for personal liability 108. The Aircraft Lessors and the counterparties to the Applicable Agreements are not required to reach an agreement with the Administrators in accordance with the Aircraft Protocol or the Applicable Agreement. However, if no agreement is reached in accordance with the Aircraft Protocol or the relevant Applicable Agreement, it is unlikely that the Administrators will utilise those particular aircraft or Applicable Agreements, and the aircrafts will remain grounded from no later than 26 May 2020 and the goods and services used pursuant to the Applicable Agreements will not be required or rendered. 109. Further, I consider that the Aircraft Lessors will potentially be in a better position by agreeing to the arrangements with the Administrators in accordance with the proposed orders, because it will enhance the prospect of the ongoing use, by the Virgin Companies, of as many leased aircraft as possible following a recapitalisation and sale of the Business. Other suppliers may also continue to receive revenue if the Applicable Agreements are adopted in the administration period. 110. The Administrators intend to give notice of any orders made to limit the liability of the Administrators to any counterparty prior to entering into any Applicable Agreement. 111. Finally, at the First Meeting, the Administrators informed creditors that the Administrators intended to make an application to the Court, in the near term, to seek a further order to limit the personal liability of the Administrators under certain contracts entered into, adopted or continued to be performed by the Administrators. No creditor at the First Meeting expressed any opposition to such an application being made. JobKeeper and the ATO 112. On the appointment of Administrators, applications for the Commonwealth Government's JobKeeper programme (JobKeeper) had already been commenced by the Ninth Plaintiff, Tiger Airways Australia Pty Limited (Administrators Appointed), the Tenth Plaintiff, VAA and the Thirteenth Plaintiff, Virgin Tech Pty Ltd (Administrators Appointed), with the majority of the data collection and nomination process having already been completed. 113. Following our appointment, the Administrators' staff undertook a review process to scrutinise the pre-appointment work undertaken by the Ninth, Tenth and Thirteenth Plaintiffs in relation to JobKeeper, to ensure all aspects of the claims were considered and appropriately actioned. Pursuant to the requirements of the JobKeeper scheme, the Administrators were required to assist these Virgin Companies in assessing their eligibility for the programme, providing supporting materials to the ATO and assessing the eligibility of the Companies' employees. 114. The Administrators assisted the Ninth, Tenth and Thirteenth Plaintiffs to access JobKeeper on behalf of 8,313 employees for the first fortnight of the programme and 8,228 employees for the second fortnight of the programme. For the first two fortnights of JobKeeper, a total of $24,811,500 has been claimed, split between: (a) the Ninth Plaintiff: $22,186,500; (b) Tenth Plaintiff: $1,083,000; and (c) Thirteenth Plaintiff: $1,542,000. 115. JobKeeper payments are received by these entities but are passed onto the employees of those entities directly. 116. While the Administrators have taken steps to ascertain how the JobKeeper scheme works, the Administrators are seeking that their liability in connection with JobKeeper be limited due to: (a) the programme being a new regime introduced by the Commonwealth Government in response to COVID-19, which remains untested and of which the Administrators have no historical experience dealing with; (b) the Administrators having needed to undertake activities to assist the Virgin Companies in applying for JobKeeper payments in a relatively short amount of time; (c) the Administrators having needed to rely substantially on information contained in the books and records of the Virgin Companies for the purpose of assisting the Virgin Companies in applying for payments, without having had sufficient time to confirm the accuracy of those records (given the magnitude of the business operated by the Virgin Companies); (d) the significant number of employees of the Virgin Companies that have been approved for JobKeeper; and (e) the nature of the programme, whereby employees are paid upfront and, if there are any inaccuracies in the applications made by or on behalf of the Virgin Companies, the Administrators will be personally liable to repay amounts after the event. 117. The Administrators are therefore seeking that their liability in connection with the JobKeeper programme be limited to the assets of the relevant Virgin Company or Virgin Companies that receive any JobKeeper payment in case the Virgin Companies are required to repay any money to the ATO in connection with JobKeeper. Intercompany Loans 118. To date, payments received by the Virgin Companies have been made directly into their relevant accounts and the Administrators have not received any cash or cheque payments. However, due to the complexity of the administration and as described in paragraphs 71 and 72 above, the Administrators currently make payments from two bank accounts only, one held by each of the Tenth Plaintiff, VAA and the Twentieth Plaintiff, VARA. 119. When a Virgin subsidiary incurs a debt and it is paid from an account held by VAA or VARA and the Administrators record a journal entry detailing the transaction. The Administrators are currently personally liable for these amounts, which may constitute intercompany loans between VAA and VARA. 120. The Administrators therefore seek an order that, should intercompany loans be made Administration, the Administrators liability is limited to the assets of the relevant Virgin or Virgin Companies that are the recipient of any intercompany loan. 86 Further to Mr Strawbridge's evidence, he says in the Supplementary Strawbridge Affidavit: 22. While the Administrators believe that the prospects of sale will be maximised by the Conditional Credits Proposal, they are not willing to offer such credits unless relieved of personal liability for those credits. The number of customers who may be entitled to Conditional Credits is simply too large for the Administrators to expose themselves to personal liability in this regard. For example, if a customer books a flight with a conditional credit and that flight is cancelled by Virgin Australia Airlines Pty Ltd or Virgin Australia Regional Airlines Pty Ltd, the customer might assert that the Administrators were personally liable to pay a refund to the customer. That is not a risk that the Administrators are willing to accept. 23. In addition, there is potential risk that the Virgin Companies may have substantial liabilities including but not limited to taxes, airline surcharges and ancillary fees associated to the Conditional Credits Proposal. Accordingly, the Administrators are seeking an order limiting their liability in relation to any taxation liabilities that may arise in respect of the Virgin Companies.
Legal principles 87 The effect of s 443A of the Corporations Act is to impose on administrators personal liability for liabilities incurred by a company after their appointment as administrators. 88 Section 447A can be utilised to limit this personal liability of administrators. 89 The principles that apply in an application of this type were very usefully summarised by Sloss J in In the matter of Unlockd Limited (administrators appointed) [2018] VSC 345 at [60]-[64]: [60] In the leading case of Secatore, in the matter of Fletcher Jones and Staff Pty Ltd (admins apptd) [2011] FCA 1493 (Secatore), Gordon J stated (at [23]): Section 447A(1) of the Act empowers the Court, in an appropriate case, to modify the operation of s 443A to exclude personal liability on the part of a voluntary administrator, and to provide that a loan taken by the company via the voluntary administrator is repayable on a limited recourse basis. Orders in similar terms have frequently been made in circumstances where the Court is satisfied that an administrator has entered into a loan agreement or other arrangement to enable the company's business to continue to trade for the benefit of the company's creditors: see, for example, Re Ansett Australia Ltd (No 1) at [49]; Re Spyglass Management Group Pty Ltd (admin apptd) (2004) 51 ACSR 432 at [6]; Sims; Re Huon Corporation Pty Ltd (admins apptd) (2006) 58 ACSR 620 at [12]; Re Malanos [2007] NSWSC 865 at [13]. [61] In such circumstances, courts have held that it is not to be expected that the voluntary administrators should expose themselves to substantial personal liabilities: see e.g. Re Renex Holdings (Dandenong) 1 Pty Ltd [2015] NSWSC 2003, [13] (Black J); Preston, in the matter of Hughes Drilling Limited [2016] FCA 1175 (Hughes Drilling), [18] (Yates J). See also Korda, in the matter of Ten Network Holdings Ltd [2017] FCA 1144, [43]-[44] (Markovic J). [62] In Secatore, Gordon J also observed (at [29]) that if orders are made relieving administrators from personal liability in respect of borrowings, it will permit them to make commercial decisions about the ongoing operations by focussing on what is in the best interests of the creditors 'uninfluenced by concerns of personal liability.' [63] In Re Great Southern Infrastructure Pty Ltd [2009] WASC 161 (Great Southern) at [13], Sanderson M observed that: The material consideration on such an application is whether the proposed arrangements are in the interests of the company's creditors and consistent with the objectives of Pt 5.3A of the Act. To put that proposition positively - the question is whether the court is satisfied the proposed arrangements are for the benefit of the company's creditors. To put it negatively - the question is whether the court is satisfied the company's creditors are not disadvantaged or prejudiced by the proposed arrangement. These principles have been confirmed in a large number of cases. [64] In Re Mentha (in their capacities as joint and several administrators of the Griffin Coal Mining Company Pty Ltd (admins apptd) (2010) 82 ACSR 142; [2010] FCA 1469, Gilmour J summarized the principles governing the granting of an application for orders under s 447A to vary the liability of administrators under s 443A as follows (at [30]): (a) the proposed arrangements are in the interests of the company's creditors and consistent with the objectives of Part 5.3A of the Corporations Act: Re Great Southern at [13]. (b) typically the arrangements proposed are to enable the company's business to continue to trade for the benefit of the company's creditors: Re Malanos at [9] and Re View at [17]. (c) the creditors of the company are not prejudiced or disadvantaged by the types of orders sought and stand to benefit from the administrators entering into the arrangement: Re View at [18], and also Re Application of Fincorp Group Holdings Pty Ltd [2007] NSWSC 628 at [17]. (d) notice has been given to those who may be affected by the order: Re Great Southern at [12]. 90 Orders are commonly sought limiting an administrator's personal liability where a company borrows funds from an external financier to fund the ongoing trading of the business during the administration: Korda, in the matter of Ten Network Holdings Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2017] FCA 1144 at [42] ('Ten Network') (Markovic J). 91 There can be no doubt that in the appropriate circumstances, personal liability can be excluded with respect to any arrangement where that enables the company's business to continue to trade for the benefit of the company's creditors. Further, s 447A can also be used to avoid liability before it is imposed: Silvia v FEA Carbon Pty Ltd (2010) 185 FCR 301 at [14] (Finkelstein J).
Ambit of limitation of the Administrators' personal liability 92 The Administrators seek to limit their personal liability to the assets of the Virgin Company or Virgin Companies that relevantly incur(s) any obligations in the administration period with respect to the following arrangements: (1) the Rio Tinto Agreement; (2) future core contracts with counterparties necessary to allow the business of the Virgin Companies to operate (the 'Future Specified Agreements'); (3) possible obligations to the ATO with respect to applications in connection with JobKeeper; and (4) intercompany loans between different Virgin Companies. 93 At the outset I should emphasise that the orders sought are of an extraordinary nature. They are sought and will be made in response to the particular circumstances confronting the Administrators. In addition, there are national interests at stake having regard to the fact that that Virgin is one of two national airlines, and is facing severe restrictions on its operations by virtue of the COVID-19 pandemic. Then there is the fact that Virgin employs thousands of people, whose lives have been dramatically impacted by Virgin entering into administration.
Rio Tinto Agreement 94 With respect to the Rio Tinto Agreement, Rio Tinto has agreed to terms limiting the Administrators' liability to the extent to which the Administrators are entitled to be indemnified for that liability out of the assets of VARA or under any applicable insurance policy, and providing that it may not recover any shortfall from the Administrators personally (if the assets of VARA and the proceeds of any insurance coverage are insufficient to satisfy any liability to Rio Tinto in full). In the Second Strawbridge Affidavit, Mr Strawbridge explains that: [101] As at the date of the affidavit the Administrators have modified and adopted one contract on behalf of the Twentieth Plaintiff, VARA and Rio Tinto Services Limited (Rio Tinto) in respect of charter flights (Rio Tinto Agreement). Pursuant to the Rio Agreement, Rio Tinto agreed, among other things: (a) that if the Administrators incur any personal liability under or in connection with the Rio Tinto Agreement, the Administrators' liability is limited to the extent to which the Administrators are entitled to be indemnified for that liability out of the assets of VARA under the Corporations Act or are otherwise entitled to be indemnified under any applicable insurance policy; and (b) if the assets of VARA and the proceeds of any insurance coverage are insufficient to satisfy in full the liability referred to above, Rio Tinto covenants not to claim, demand, sue or seek to recover any shortfall against the Administrators personally. A copy of the varied Rio Tinto Agreement has not been exhibited to this affidavit on the basis that it is confidential. 95 It was submitted that only Rio Tinto could be prejudiced by a limitation of the Administrators' personal liability in connection with this agreement; however, it has agreed to that course by including a provision to that effect in the agreement itself. 96 Further, Mr Strawbridge deposes at [134(b)] of the Second Strawbridge Affidavit that Rio Tinto has been notified of the present application. 97 I will make the orders sought in respect of the Rio Tinto Agreement.
Future Specified Agreements 98 Mr Strawbridge gives evidence that as at the date of the Administrators' appointment, the Virgin Companies had approximately 1,330 agreements in place with approximately 500 unique suppliers. The core agreements to maintain the operation of the business are set out at [76] of the Second Strawbridge Affidavit (which is reproduced earlier in these reasons) and encompass (the 'Applicable Agreements'): (1) aircraft finance leases and aircraft operating leases (the 'Aircraft Leases'); (2) alliance agreements; (3) procurement contracts, including: (a) in-flight services agreements; (b) ground handling agreements; (c) operational systems agreements; (d) fuel agreements; (e) maintenance and parts agreements; (f) IT agreements; (4) trade mark licence agreements; (5) airport agreements; (6) cargo agreements; (7) charter agreements; (8) corporate sales agreements; (9) industry/agency agreements; (10) insurance arrangements; and (11) training agreements. 99 The business of the Virgin Companies has been adversely affected by the COVID-19 pandemic. However, as Mr Strawbridge says in his evidence (see extracts of [77]-[80] of the Second Strawbridge Affidavit above), as circumstances change, the Administrators may seek to operate the business of the Virgin Companies to a greater capacity and, if that occurs, they will enter into negotiations with other counterparties in respect of the Applicable Agreements and, if adopted, the Administrators' potential personal liability under those arrangements would steadily increase. 100 The Administrators have already commenced negotiations with aircraft lessors under the Aircraft Leases and have issued an Aircraft Protocols document in which dealings with the aircraft lessors have sought to be streamlined (see extract of [90] of the Second Strawbridge Affidavit above). 101 The Administrators submit that they wish to enter into arrangements with contractual counterparties if there remains an opportunity to continue carrying on and expanding the scope of the business of the Aircraft Companies. Importantly, though, the Administrators contend that if they are exposed to the risk of personal liability under those arrangements, then it is unlikely that they will adopt the Applicable Agreements (including it being unlikely that they would utilise the aircraft that are leased by the Virgin Companies under the Aircraft Leases) with the consequence that goods and services provided under the Applicable Agreements will not be required or rendered (see extract of [108] in the Second Strawbridge Affidavit above). 102 The Administrators are of the view that arrangements that facilitate the ongoing trading of the Business and the entry into arrangements with counterparties are consistent with the objective of selling or recapitalising the Business as a going concern in the best interests of all creditors. It is Mr Strawbridge's evidence that the practicalities, costs and time associated with sourcing new counterparties and negotiating new agreements are such that, if the Applicable Agreements are not retained in the operation of the Business, then the cost and time associated with a new owner entering into new arrangements with counterparties at a future date would make the sale of the Business as a going concern impractical (see extract of [96] of the Second Strawbridge Affidavit above). 103 Furthermore, Mr Strawbridge says that ongoing trading will provide additional revenue to counterparties that they may not receive if the Administrators do not adopt these arrangements during the administration period (see extract of [109] of the Second Strawbridge Affidavit above). 104 The Court's main concern is to consider what is in the best interests of creditors as a whole, particularly in the circumstances of the current uncertainty that arises from the COVID-19 pandemic. 105 Three matters can be observed at the outset: (1) There is no obligation for creditors to enter into any Applicable Arrangements - so it will be a matter for each potential counterparty as to whether they are willing to limit their recourse to the indemnity from company assets. (2) The Administrators will include notification of the orders limiting their liability in any agreements subsequently entered into during the administration period, so that any contractual counterparty is aware that the Administrators will not have personal liability for obligations under those agreements (and preserving to that counterparty the opportunity to apply to the Court to vary the orders if they so wish): see extracts of [99] and [110] of the Second Strawbridge Affidavit above. (3) The making of a general forward looking order with respect to the Applicable Agreements provides an efficient and cost effective way in which the Administrators can retain and continue to utilise the goods and services that are provided to the Virgin Companies without having to make multiple applications to the Court: see extract of [97] of the Second Strawbridge Affidavit. 106 The extent to which the operations of the Virgin Companies may be able to be expanded (so that, for example, more flights may be offered to customers) depends largely on matters beyond the control of the Administrators, such as Commonwealth and State Governments lessening travel restrictions and permitting gatherings of larger groups of people. Mr Strawbridge says in the Second Strawbridge Affidavit that: 78. As a result of these travel restrictions, certain of the contractual arrangements described in paragraph 75 above are either being partially performed or not able to be performed while the restrictions in relation to COVID-19 remain in place. However, if COVID-19 restrictions are partially eased and the Business of the Virgin Companies is permitted to operate to a greater extent, then the Administrators may cause the Virgin Companies to continue to perform their obligations under these agreements. 79. Further to paragraphs 16 to 22 of the First Affidavit, on 5 May 2020, the National Cabinet agreed with the New Zealand Prime Minister to start work on a Trans-Tasman COVID-19 safe travel zone which would ease travel restrictions between Australia and New Zealand once it is considered safe to do so. This change in policy could give rise to further passenger routes being operated by the Fifth Plaintiff, Virgin Australia International Airlines Pty Ltd, between Australia and New Zealand. A copy of the Media Statement issued by the Prime Minister on 5 May 2020 is located at Tab 11 or Exhibit VNS-2. 80. The ability of the Administrators to operate the Business on a larger scale is subject to the relaxation of the COVID-19 restrictions currently in place and the Administrators are unable to form a view on how those matters may progress into the coming weeks and months (until further clarity is provided by Governments). 107 The Administrators contend they may have to move quickly to expand the current trading of the Business in response to any such developments and, in that regard, require flexibility to allow them to enter into future agreements with counterparties in the knowledge that their personal liability under such agreements is limited. The alternative, which would involve separate negotiations with each relevant counterparty and the need to approach the Court on multiple occasions as each large-scale agreement is entered into by the Administrators, is apt to be inefficient, expensive and disadvantageous to the administration of the Virgin Companies. 108 Importantly, and as confirmed in the correspondence with the solicitors for Adelaide Airport Limited on 14 May 2020, these orders are directed only to future agreements that may be entered by the Administrators on behalf of the Virgin Companies. 109 A notable aspect of the order sought is its temporal aspect: the Administrators are seeking, in advance of entering into the relevant contracts, to limit their personal liability for debts incurred under those contracts; rather than the alternative course of negotiating such an arrangement with each applicable counterparty and then approaching the Court to ratify that limitation. 110 As I have already noted and this is a matter I place significance upon in making the orders sought, counterparties will have the protection of being expressly informed of the order limiting the Administrators' personal liability and have liberty to approach the Court to seek to vary the order if so advised. 111 The Administrators have proposed a further order to provide an additional layer of oversight of the contracts that may be entered into during the course of the administration. This order involves providing to the Committee of Inspection details of all Applicable Agreements that are entered into and the estimated value of the debts to be incurred under those agreements. A regime of this kind renders transparent, to the Committee of Inspection, the kinds of liabilities that the Administrators may cause the Virgin Companies to incur during the administration period. 112 The proposed further order the Administrators seek also directly accommodates a concern expressed in the communication made on behalf of the Commonwealth by its solicitors, King & Wood Mallesons, dated 14 May 2020. In that regard, the Commonwealth's submissions confirm that, given the circumstances surrounding the Virgin administration, it does not oppose Orders 2-4 of the Administrators' proposed orders. 113 As an interested entity, the Commonwealth filed submissions on this point, acting through the Attorney-General's Department. The Attorney-General's Department has responsibility for administering the FEG. If the companies in administration were to proceed to liquidation, the amount that may be paid by the scheme to eligible employees in the Virgin group would likely be substantial. The Administrators have estimated that employee entitlements that would crystalise on the liquidation of the group is approximately $450 million. The Commonwealth will be subrogated to the priority rights of employees in relation to any amount paid in satisfaction of employee entitlements in that event. For this reason, the Commonwealth, through the FEG, will be a primary party impacted by the Administrators continuing to trade if the Virgin Group ultimately fails. 114 The Commonwealth made a number of submissions to assist the Court. 115 The Commonwealth reminded the Court that s 443A is a central feature of the legislative scheme governing external administration. In Patrick Stevedores Operations No 2 Proprietary Limited v Maritime Union of Australia [No 3] (1998) 195 CLR 1, Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ said at [51]-[52]: [51] Although an administrator has power to conduct the business of the company during administration (s 437A(l)) the administrator is personally liable under s 443A for debts he or she incurs in doing so. The administrator then has a right of indemnity against the company's assets (ss 443D, 443E), ranking in priority to unsecured debts and, generally speaking, debts secured by a floating charge (s 443E(l)). The administrator has a lien over the company's property to secure that right (s 443F). But if an administrator forms the view that the company is and is likely to remain insolvent, it is unlikely that a decision would - or ought - be taken to continue trading. Personal liability of the administrator for the debts incurred would be the price of unsuccessful trading by an insolvent company. If the employer companies are indeed insolvent and if there be no prospect of supplying their employees' labour to a stevedore under a profitable contract, the administrators are not likely to incur debts in carrying on trading, without a third party indemnity. [52] An administrator has the power to carry on trading though the company is insolvent, the personal liability of the administrator being the protection given by the Corporations Law to the company's creditors. 116 I accept that the protection granted to creditors who deal with a company in administration has several purposes. One is to encourage third parties to deal with the company during the administration whilst the company's affairs are reviewed. There is nothing in Pt 5.3A or elsewhere in the Corporations Act that obliges those who have dealt with the company before the administration to continue to do so during the administration. The Australian Law Reform Commission Report 45 (tabled 13 December 1988), General Insolvency Inquiry (the 'Report') summarised the purpose of the provision (at pp 44-45, footnotes omitted): One of the criticisms made in relation to official management and, in some cases, to schemes of arrangement is that there is little or no assurance that persons who engage in business with a company that is under either type of administration will be paid any debt resulting from that business. Although a person who becomes a creditor as a result of a transaction during such an administration may have a priority right to payment, there are instances where that right has proved worthless. Where it is appropriate that a company under administration should continue to trade, it is desirable to encourage that trade. Prospective creditors therefore need to have a reasonable assurance of payment. This section provides that assurance by requiring the administrator to be personally liable. The administrator has a choice. The business of the company need not be continued or supplies of goods or services can be obtained for cash, if the business is continued. However, the main protection for an administrator against any personal liability is the provision of an indemnity for such liability out of the assets of the company. 117 Another purpose of the imposition of personal liability on administrators is to discourage continued trading in circumstances where liquidation is inevitable, or where those with a stake in the survival of the company, such as substantial shareholders, are not prepared to indemnify the administrators for debts incurred during the administration, and where continuing to trade is not otherwise warranted. 118 The Commonwealth in the end submitted that caution should be exercised by the Court before the usual statutory framework is altered in a fundamental way. However, given the circumstances surrounding the Virgin administration, the Commonwealth did not oppose the order sought, in which it had an interest. 119 In my view, the order sought in relation to Future Specified Agreements should be made.
JobKeeper 120 The Administrators have made efforts to cause certain of the Virgin Companies to apply for payments from the Commonwealth Government under JobKeeper. These payments are passed directly onto employees of those Virgin Companies. 121 The Administrators seek to exclude any personal liability that they may have with respect to any possible repayment of monies advanced by the Commonwealth of Australia under the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Cth) (the 'JobKeeper Act') and the JobKeeper Rules (together, the 'JobKeeper Legislation'). 122 These matters are dealt with in Mr Strawbridge's evidence in the Second Strawbridge Affidavit: 112. On the appointment of Administrators, applications for the Commonwealth Government's JobKeeper programme (JobKeeper) had already been commenced by the Ninth Plaintiff, Tiger Airways Australia Pty Limited (Administrators Appointed), the Tenth Plaintiff, VAA and the Thirteenth Plaintiff, Virgin Tech Pty Ltd (Administrators Appointed), with the majority of the data collection and nomination process having already been completed. 113. Following our appointment, the Administrators' staff undertook a review process to scrutinise the pre-appointment work undertaken by the Ninth, Tenth and Thirteenth Plaintiffs in relation to JobKeeper, to ensure all aspects of the claims were considered and appropriately actioned. Pursuant to the requirements of the JobKeeper scheme, the Administrators were required to assist these Virgin Companies in assessing their eligibility for the programme, providing supporting materials to the ATO and assessing the eligibility of the Companies' employees. 114. The Administrators assisted the Ninth, Tenth and Thirteenth Plaintiffs to access JobKeeper on behalf of 8,313 employees for the first fortnight of the programme and 8,228 employees for the second fortnight of the programme. For the first two fortnights of JobKeeper, a total of $24,811,500 has been claimed, split between: (a) the Ninth Plaintiff: $22,186,500; (b) Tenth Plaintiff: $1,083,000; and (c) Thirteenth Plaintiff: $1,542,000. 115. JobKeeper payments are received by these entities but are passed onto the employees of those entities directly. 123 However, the Administrators say they are concerned that there may be a possibility that the Virgin Companies may become liable to repay money to the ATO if any JobKeeper payments were incorrectly claimed. Mr Strawbridge gives evidence in the Second Strawbridge Affidavit that: 116. While the Administrators have taken steps to ascertain how the JobKeeper scheme works, the Administrators are seeking that their liability in connection with JobKeeper be limited due to: (a) the programme being a new regime introduced by the Commonwealth Government in response to COVID-19, which remains untested and of which the Administrators have no historical experience dealing with; (b) the Administrators having needed to undertake activities to assist the Virgin Companies in applying for JobKeeper payments in a relatively short amount of time; (c) the Administrators having needed to rely substantially on information contained in the books and records of the Virgin Companies for the purpose of assisting the Virgin Companies in applying for payments, without having had sufficient time to confirm the accuracy of those records (given the magnitude of the business operated by the Virgin Companies); (d) the significant number of employees of the Virgin Companies that have been approved for JobKeeper; and (e) the nature of the programme, whereby employees are paid upfront and, if there are any inaccuracies in the applications made by or on behalf of the Virgin Companies, the Administrators will be personally liable to repay amounts after the event. 117. The Administrators are therefore seeking that their liability in connection with the JobKeeper programme be limited to the assets of the relevant Virgin Company or Virgin Companies that receive any JobKeeper payment in case the Virgin Companies are required to repay any money to the ATO in connection with JobKeeper. 124 These matters are also dealt with in the Fourth Strawbridge Affidavit and the Bolt affidavit. 125 The Administrators contend that if any such liability were to arise, it should not be recoverable from them personally (just as if a company that is not in external administration had a liability to repay JobKeeper payments, the directors of that company would not have personal liability for those repayments). 126 The Administrators say the orders, if made, would facilitate the payment of ongoing JobKeeper subsidies to employees of the Virgin Companies. In the absence of those ongoing subsidies, employee creditors stand to suffer great hardship. Accordingly, it was submitted that a limitation of personal liability in relation to JobKeeper is consistent with the object of Pt 5.3A of the Corporations Act: Re Ansett Australia (No 1) (2002) 115 FCR 376 at [49]. The ATO has been notified of this application. 127 The JobKeeper Legislation establishes a regime through which the Commonwealth Government makes payments to businesses to assist those businesses and their employees during the COVID-19 pandemic. 128 The essential features of that regime for present purposes are as follows: (1) an employer entity is generally eligible to receive JobKeeper payments if it carried on business in Australia as at 1 March 2020 and satisfies the specified decline in turnover test applicable to that entity (which compares the employer's turnover in a given period in 2020 with a relevant comparison period in 2019); (2) where an employer entity satisfies the requirements in (1), it is entitled to receive a payment for each of its eligible employees who, in the relevant fortnight, received salary, wages, commissions, bonuses and certain other allowances and contributions from the employer of $1,500 or more; (3) the amount of the JobKeeper payment which an employer entity receives in respect of each such employee is $1,500 per fortnight; (4) JobKeeper payments are effected through the ATO. Where the ATO is satisfied that an employer entity is entitled to a JobKeeper payment for a fortnight, the ATO must pay the payment to the entity. Necessarily, this means that the JobKeeper payment is paid to employers in arrears; (5) the JobKeeper payments are payable only in respect of the period commencing on 30 March 2020 and ending on 27 September 2020; (6) payment of a JobKeeper payment by the ATO does not have the effect of entitling the entity to that payment if the entity was not otherwise entitled to that payment under the scheme; (7) if the ATO pays an amount by way of JobKeeper payment and either the employer entity was not entitled to the payment or the ATO paid more than that to which the employer was entitled, the employer entity is liable to repay the overpayment to the Commonwealth. Interest is payable on any unpaid amount; (8) section 11 of the JobKeeper Act provides for joint and several liability in respect of any overpayment amount in certain circumstances. For example, s 11(1) of the JobKeeper Act would allow the ATO to be satisfied that an employee should be jointly and severally liable with the employer where the relevant overpayment resulted from the employer's reasonable reliance on a false or misleading statement made without reasonable care by the employee. Section 11(2) of the JobKeeper Act operates to similar effect in cases of fraud. Notably, however, even in these cases, the entity receiving the JobKeeper payment from the ATO (ie the employer) remains liable to the Commonwealth for the amount of any overpayment, even if it acted honestly, reasonably and without knowledge of any falsity or fraud. 129 Having regard to s 443A of the Corporations Act, an administrator who chooses to keep employees on during the COVID-19 pandemic and takes the benefit JobKeeper, is exposed to the risk of incurring personal liability in connection with that scheme in various ways. That is because, as noted above, s 9 of the JobKeeper Act makes the relevant employing entity strictly liable for any overpayments under the scheme, regardless of how they arose, with interest payable on such amounts under s 10. 130 Administrators face particular risks in this regard given that they necessarily inherit the pre-administration systems and records of the relevant employing entity. Inaccuracies in those systems may affect JobKeeper eligibility. 131 Similarly, administrators are not well-placed to guard against unintentionally false or fraudulent representations by third parties as to their eligibility for the purposes of the JobKeeper scheme. Where the ATO makes overpayments under the scheme based on such false or fraudulent statements, the third party may become jointly and severally liable for any overpayment by operation of s 11 of the JobKeeper Act, but the employing entity nevertheless remains liable. 132 I should observe that I am satisfied that the Administrators have acted diligently in seeking to confirm the eligibility of both the Virgin Companies and their employees under the JobKeeper scheme. They have not accepted at face value the information supplied by the management team and have taken steps to verify the accuracy of the data. It remains the case, however, that the Administrators are necessarily reliant to a large degree on the accuracy of the Virgin Companies' underlying records. 133 The relevant Virgin Companies have made payments to a substantial number of employees in connection with the JobKeeper scheme. There are over 8,000 such employees in respect of whom such claims have been made and, in the first two fortnights, almost $25 million has been claimed. These are all amounts prepaid to employees and in respect of which JobKeeper payments to the companies are expected. In this respect, Ms Bolt's evidence is that: 19. I am informed by Mr Wood and verily believe to be true that on 15 May 2020, the ATO confirmed, in respect of: (a) Virgin Tech Pty Ltd, the Thirteenth Plaintiff: (i) the JobKeeper application was processed on 14 May 2020; (ii) the estimated payment date is 19 May 2020; (iii) the number of eligible employees for 30 March 2020 to 26 April 2020, being Period 1 is 514 and Period 2 is 514; and (iv) details of 37 employees were still to be provided via the Single Touch Payroll (STP) system, and are required to be provided by 31 May 2020. (b) Virgin Australia Airlines Pty Ltd, the Tenth Plaintiff: (i) the JobKeeper application was processed on 15 May 2020; (ii) the estimated payment date is 20 May 2020; (iii) the number of employees for, 30 March 2020 to 26 April 2020, being Period 1 and Period 2 is 7402 and 7389 respectively; and (iv) details of 98 employees were still to be provided via the STP system, and are required to be provided by 31 May 2020. (c) Tiger Airways Aust Pty Ltd, the Ninth Plaintiff: (i) the JobKeeper application was processed on 14 May 2020; (ii) the estimated payment date is 19 May 2020; (iii) the number of employees for 30 March 2020 to 26 April 2020, being Period 1 and Period 2 is 397 and 325 respectively; and (iv) details of 77 employees were still to be provided via the STP system, and are required to be provided by 31 May 2020. 20. The total of each of the JobKeeper payments that are to be paid by the ATO to the Eligible Entities on 19 and 20 May 2020 were pre-paid to eligible employees, and were paid by the Eligible Entities by 8 May 2020. 21. The ATO JobKeeper timetable is as follows: 22. Consistent with what occurred with respect to the JobKeeper payments that are expected to be received on 19 and 20 May, the manner in which further JobKeeper payments will be received by the Eligible Entities for the various fortnightly periods above, will involve payment by the Virgin Companies to those employees in advance followed by receipt of JobKeeper payments from the ATO about one to two weeks after lodgement of the JobKeeper claim at the end of each month. 134 As is apparent, s 443A imposes personal liability on administrators of a company for certain debts incurred by the company during the period in which the company is under administration in the exercise of their functions and powers as administrators. The section applies to debts incurred by an administrator where he or she is taken to be acting as the company's agent under s 437B: Australian Liquor, Hospitality & Miscellaneous Workers' Union v Terranora Lakes Country Club Ltd (1996) 19 ACSR 687 at 688 (Davies J); Energy & Resource Conservation Co Ltd (In Liq) v Abigroup Contractors Pty Ltd (1997) 41 NSWLR 169 at 171 (McLelland CJ). 135 The particular debts incurred in respect of which personal liability is imposed on administrators are set out in s 443A(1) (in its present form) as follows: (1) services rendered; (2) goods bought; (3) property hired, leased, used or occupied, including property consisting of goods that is subject to a lease that gives rise to a Personal Property Securities Act 2009 (Cth) security interest in the goods; (4) the repayment of money borrowed; (5) interest in respect of money borrowed; or (6) borrowing costs, and administrators are not otherwise personally liable for the company's debts: Corporations Act, s 443C. 136 There is a question about whether, by causing the Virgin Companies (or the relevant Virgin Companies that are employer entities) to apply for JobKeeper payments, the Administrators are: (1) 'incurring a debt', for the purposes of the chapeau to s 443A(1); and (2) 'for services rendered', for the purposes of s 443A(1)(a) (it being accepted that any repayment obligation is unlikely to fall within the other limbs of the subsection). 137 As to the first issue, a company incurs a debt when, by act or omission, it is rendered liable for a debt, even one imposed by a statute: Standard Chartered Bank of Australia Ltd v Antico [Nos 1 and 2] (1995) 38 NSWLR 290 at 314, 317 (Hodgson J); Commissioner of State Taxation v Pollock (1993) 11 WAR 64 at 233-234 (Ipp J). A debt may include a contingent debt (Hawkins v Bank of China (1992) 26 NSWLR 562), including in the context of s 443A (Park, in the matter of Surfstitch Group Ltd (Administrators Appointed) [2017] FCA 1244 at [14]-[16] (Markovic J)). 138 Thus, in the circumstances that may arise, if it becomes the case that the Virgin Companies are obliged to repay money (including interest) to the ATO as prescribed by ss 9 and 10 of the JobKeeper Act, then a debt will be incurred to the Commonwealth. Such a debt is contingently incurred when the application is made for the JobKeeper payment (or, alternatively, when the payment is received from the ATO), which is at a time during the ongoing administration of the Virgin Companies. Accordingly, in that scenario, the Administrators will relevantly be incurring a debt for the purposes of s 443A. 139 As to the second issue, the question is whether an obligation to repay monies to the ATO (in connection with a statutory scheme such as JobKeeper) constitutes the rendering of services. 140 It is not necessary for the Court to reach a concluded view on that issue. The order sought is framed in such a way as to exclude the Administrators' personal liability for any repayments due to the ATO in connection with the JobKeeper Legislation, only to the extent that such liability arises. 141 Then, I am satisfied of a number of important matters: (1) The Administrators have made efforts to cause certain of the Virgin Companies to apply for payments from the Commonwealth Government under JobKeeper. These payments are passed directly onto employees of those Virgin Companies. (2) The Administrators express a concern that there may be a possibility that the Virgin Companies may become liable to repay money to the ATO if any JobKeeper payments were incorrectly claimed. This justifiable concern arises from: the untested nature of the JobKeeper programme; the short period of time in which to make applications for JobKeeper payments; and the Administrators relying substantially on information contained in the books and records of the Virgin Companies for the purpose of applying for JobKeeper payments without having had sufficient time to confirm the accuracy of those records (given the magnitude of the business operated by the Virgin Companies). (3) The orders made facilitate the payment of ongoing JobKeeper subsidies to employees of the Virgin Companies. In the absence of those ongoing subsidies, employee creditors stand to suffer hardship. 142 There are other matters which support the limitation of liability orders sought by the Administrators. 143 Under the JobKeeper Legislation, the Administrators remain potentially liable to repay amounts, plus interest, for an indeterminate period of time after receipt of the payments by the relevant Virgin Companies. That means that, to the extent that they are personally liable for such debts, their exposure may continue beyond the administration of each of the Virgin Companies. 144 Then, to the extent that the Administrators may be personally exposed to such potential liability, they would be entitled to retain the proceeds of the sale or positive restructure of the assets and business of the Virgin Companies, as security over which they have a lien for their right of indemnity out of the companies' assets under s 443D of the Corporations Act (or pursuant to equitable principles). Therefore, while the possibility of personal liability remains, there may be a corresponding delay in making a distribution (or further distribution) to participating creditors of the Virgin Companies under a prospective DOCA proposal. Ms Bolt's evidence on this point, which I accept, is that 'the Administrators are concerned that they would have a potential liability to make any repayments to the ATO after the JobKeeper payments are received and that, as a result, the Administrators may withhold funds that might otherwise be available to be paid to creditors until that time passes'. 145 It is also to be understood that the removal of personal liability does not immunise the Administrators from their obligations generally as administrators, such as their obligations to act in good faith and for a proper purpose. 146 The ATO did not oppose the orders made in the circumstances of the application. Senior Counsel for the ATO properly emphasised that the orders sought were very peculiar to the particular situation faced by the Administrators and the nature of the companies involved.
Intercompany loans 147 Matters relevant to the order made in respect of limitation of liability for intercompany loans between the Virgin Companies during the administration period are dealt with in paragraphs [71]-[74] and [118]-[120] of the Second Strawbridge Affidavit, which are extracted earlier in these reasons. 148 With respect to the Virgin Companies, the Administrators have opened separate administration bank accounts for two entities: VAA and VARA. 149 The funding and expenses of the Virgin Companies since the appointment of the Administrators have been cleared through the bank accounts opened in the names of VAA and VARA. Where one or other of the Virgin Companies other than VAA or VARA pays or receives money, that is paid from or into the account in the name of VAA or VARA and intercompany loan account entries are recorded in the financial records of the applicable Virgin Companies and those of the Administrators to ensure that the accounts are properly reconciled. 150 I accept that that practice may be regarded as the Administrators causing the Virgin Companies to borrow money from VAA and/or VARA, for which the Administrators would ordinarily be personally liable pursuant to s 443A(1)(d) of the Corporations Act: McKinnon, in the matter of Specialised Concrete Pumping Victoria Pty Ltd (Administrators Appointed) [2016] FCA 325 at [23] ('Specialised Concrete Pumping') (Middleton J). 151 Limiting the liability of the Administrators for intercompany loans where that facilitates the ongoing trading of the business of the companies in administration is consistent with the objectives in s 435A of the Corporations Act: Specialised Concrete Pumping at [29]; In the matter of Nexus Energy Ltd [2014] NSWSC 1041. 152 While there is a potential prejudice to creditors if the intercompany debts are unable to be repaid from the assets of companies other than VAA and VARA, that will only arise in the scenario that a DOCA proposal or a winding up does not involve a pooling of assets and extinguishing of intercompany debts. 153 However, that possibility is not a reason to limit the Administrators' personal liability in circumstances where the issue arises because of the way in which the financial affairs of the Virgin Companies were structured prior the Administrators' appointment. 154 The Commonwealth does not oppose an order limiting the Administrators' liability for intercompany loans, so long as the Administrators record journal entries for intercompany debts between the Virgin Companies that are incurred for the remainder of the administration period. 155 Mr Strawbridge has given evidence that the Administrators have thus far made such accounting entries, and, as confirmed in the solicitors' correspondence, the Administrators agree to continue to do so for the remainder of the administration period. 156 In the circumstances I have outlined, I am satisfied that the order concerning the limitation of liability for intercompany loans is warranted.
CONDITIONAL CREDIT PROPOSAL 157 The Administrators seek: (1) A direction pursuant to s 90-15 of the IPSC, that the Administrators would be justified in issuing conditional credits to customers of the Virgin Companies in accordance with the proposal set out in Schedule 2 to the Interlocutory Process (the 'Conditional Credits'). (2) An order pursuant to s 447A(1) of the Corporations Act and s 90-15 of the IPSC, that Pt 5.3A of the Corporations Act is to operate in relation to the Plaintiffs as if s 443A(1) of the Corporations Act provides that: (a) the liabilities of the Administrators incurred with respect to any obligations arising out of, or in connection with, the issuing of Conditional Credits, including but not limited to taxes, airline surcharges and ancillary fees associated to the Conditional Credits Proposal, are in the nature of debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of each of the Virgin Companies; and (b) notwithstanding that the liabilities for the Conditional Credits are debts incurred by the Administrators in the performance and exercise of their functions as joint and several administrators of each of the Virgin Companies, the Administrators shall not be personally liable to repay such debts or satisfy such liabilities to the extent that the assets of the particular Virgin Company or Virgin Companies that are the issuers of the Conditional Credits are insufficient to satisfy the debt and liabilities incurred by the Administrators arising out of, or in connection with, the issuance of the Conditional Credits. 158 The essential features of the Conditional Credits Proposal, which is reflected in the 'Virgin Australia Guest Compensation Policy', are as follows: (1) Conditional credits will be issued to customers who purchased: (a) a ticket for a flight operated by Virgin Australia Airlines Pty Ltd ('Virgin Australia'), VARA, Tiger Airways Australia Pty Ltd or Virgin Australia International Airlines Pty Ltd (each a 'Virgin Australia Group Entity'); or (b) a holiday package from Virgin Australia; where the flight or holiday was cancelled (other than by the customer), or where the customer cancelled their ticket or holiday in circumstances entitling the customer to a refund or credit, and where no refund, credit or other compensation has been provided to the customer. (2) The Conditional Credits would be redeemable only against domestic flights operated by Virgin Australia and VARA. (3) The Conditional Credits would only be redeemable for a limited period of time and until the earlier of: (i) a restructuring or recapitalisation of the Virgin Australia Group Entity that issues the credit (unless the right to redeem such credits, or their equivalent, is expressly preserved and extended as part of that restructuring or recapitalisation); or (ii) the liquidation of the Virgin Australia Group Entity that issues the credit. (4) A customer will only 'use' a Conditional Credit once the flight booked with the credit has been provided or, where a credit has been used to book a flight, if the customer does not turn up for the booked flight or cancels otherwise than in accordance with the applicable terms and conditions. Where a Conditional Credit has been 'used' in this sense, the customer would no longer be entitled to a refund or credit arising from the original cancellation. (5) Where a customer either elects not to receive a Conditional Credit, or receives such a credit but fails to use it before the restructuring, recapitalisation or liquidation of the relevant Virgin Australia Group Entity, the customer would retain the customer's general law and statutory rights against that entity in accordance with the original cancellation. 159 The rationale for the Administrators offering Conditional Credits is to preserve, to the extent possible, the goodwill associated with the Virgin Companies. While the travel industry has been detrimentally impacted by the COVID-19 pandemic, it was submitted that the Virgin Companies are currently at a competitive disadvantage given their inability to offer customers refunds or credits for flights cancelled before the companies entering into voluntary administration. Mr Strawbridge's evidence is that the Administrators believe that this may negatively affect the prospects of any sale of the Virgin Companies. If a large number of customers lose money in connection with the Virgin Companies' administration, those and other customers may be less willing to fly with the Virgin Companies (or their successors) in the future. Conversely, if the Virgin Companies are able to offer credits to customers now, the position of the Virgin Companies will not significantly differ from other travel businesses who have had to cancel flights and other services during the COVID-19 pandemic. 160 In assessing the merits of the Conditional Credits Proposal, it is necessary to have regard to the present circumstances of customers who are entitled to, but have not received, refunds in respect of flights and holidays cancelled before the Virgin Companies entered voluntary administration. At present, those customers are, at best, contingent unsecured creditors or unsecured creditors of one of the Virgin Companies and, as such, are unlikely to receive a 100% return if the Virgin Companies are restructured or if those companies go into liquidation. In these circumstances, a Conditional Credit offers the customer the prospect of improving their position by realising the full value of the lost fare on a future domestic flight operated by Virgin Australia or VARA, should those companies resume commercial flights during the administration. 161 There is no guarantee that it will be possible or practical for Virgin Australia and VARA to resume such flights in this period. This is made clear in paragraph 5 of the Conditional Credits Proposal itself, which states that it may not be possible or practical for Virgin Australia and VARA to resume commercial flights during the period of administration. If that does not occur, the Conditional Credits would not be useable during this time but the credits would still have some utility as there would be at least a prospect that the credit scheme would be extended following any restructuring or recapitalisation of the Virgin Companies. As Mr Strawbridge explains, there is good reason to think that any successor or successors to the Virgin Companies would be keen to preserve, as much as possible, the goodwill associated with the Virgin Companies and one way of doing so would be to extend the effect of the conditional credit scheme. 162 As things presently stand, it appears that the worst case scenario for customers under the Conditional Credit scheme would be if Virgin Australia and VARA do not resume domestic flights during the course of the administration and the scheme is not extended beyond the administration. Even in this scenario, however, it was submitted that it is the intention of the Conditional Credits Proposal that customers who have pre-administration entitlements to receive a refund or credit from a Virgin Australia Group Entity would be no worse off than they are today: they would retain their pre-administration contractual or statutory rights to a refund and would stand as unsecured creditors of the relevant Virgin Australia Group Entity. This reflects the fact that the Conditional Credits Proposal seeks to offer the prospect that customers will improve their position relative to the status quo, but does not involve any risk that they will be worse off. 163 I am satisfied that the Conditional Credit Proposal offers the prospect of a better outcome for customers and, in doing so, preserves the goodwill associated with the Virgin Companies. This, in turn, maximises value of the Virgin Companies pending any sale, which is to the ultimate benefit of all creditors. In these circumstances, and having regard to the fact that the proposal does not appear apt to disadvantage any creditor, I will make a direction under s 90-15 of the IPSC that the Administrators would be justified in issuing Conditional Credits to customers of the Virgin Companies in accordance with the Conditional Credits Proposal. 164 In these circumstances, it is also appropriate that orders are made to relieve the Administrators of personal liability for the debts and liabilities incurred by the Administrators arising out of, or in connection with, the issuance of the Conditional Credits. 165 The Conditional Credits Proposal is not intended to convert a pre-administration entitlement to a refund or credit against the Virgin Companies into a right enforceable against the Administrators. The Administrators should not risk personal liability in seeking only to improve the position of certain customers and the prospect of a successful sale of the business. 166 In any event, the Administrators are unwilling to offer Conditional Credits without protection from personal liability. That being so, there is no prospect that Conditional Credits will be offered to customers in the absence of orders that relieve the Administrators of personal liability for those credits. Mr Strawbridge's evidence in the Supplementary Strawbridge Affidavit is that: 22. … The number of customers who may be entitled to Conditional Credits is simply too large for the Administrators to expose themselves to personal liability in this regard. For example, if a customer books a flight with a conditional credit and that flight is cancelled by Virgin Australia Airlines Pty Ltd or Virgin Australia Regional Airlines Pty Ltd, the customer might assert that the Administrators were personally liable to pay a refund to the customer. That is not a risk that the Administrators are willing to accept. 23. In addition, there is potential risk that the Virgin Companies may have substantial liabilities including but not limited to taxes, airline surcharges and ancillary fees associated to the Conditional Credits Proposal. Accordingly, the Administrators are seeking an order limiting their liability in relation to any taxation liabilities that may arise in respect of the Virgin Companies.
COMPANY REPORT 167 The Administrators seek an order pursuant to s 447A(1) of the Corporations Act and s 90-15 of the IPSC, that Pt 5.3A of the Corporations Act is to operate in relation to the Plaintiffs as if: (1) a single report in the prescribed form about the business, property, affairs and financial circumstances of the Second, Third, Seventh to Tenth, Thirteenth, and Nineteenth to Twenty-Fourth Plaintiffs be prepared by each of the directors of the Second Plaintiff; (2) the requirement in s 438B(2) that the directors of each of the Second, Third, Seventh to Tenth, Thirteenth, and Nineteenth to Twenty-Fourth Plaintiffs prepare a separate report about the business, property, affairs and financial circumstances of each of those companies, be dispensed with; and (3) the requirement in s 438B(2) that the directors of each of the Fourth to Sixth, Eleventh to Twelfth, Fourteenth to Eighteenth, and Twenty-Fifth to Fortieth Plaintiffs prepare a separate report about the business, property, affairs and financial circumstances of each of those companies, be maintained. 168 As to this matter, Mr Strawbridge's evidence in the Second Strawbridge Affidavit is that: REPORT ON COMPANY ACTIVITIES AND PROPERTY 121. The Administrators are aware that the following Virgin Companies are party to a deed of cross guarantee: (a) the Second Plaintiff, Virgin Australia Holdings Limited (Administrators Appointed); (b) the Third Plaintiff, Virgin Australia International Operations Pty Ltd (Administrators Appointed); (c) the Seventh Plaintiff, Virgin Australia Airlines Holdings Pty Ltd (Administrators Appointed); (d) the Eighth Plaintiff, VAH Newco No.1 Pty Ltd (Administrators Appointed); (e) the Ninth Plaintiff, Tiger Airways Australia Pty Limited (Administrators Appointed); (f) the Tenth Plaintiff, Virgin Australia Airlines Pty Ltd (Administrators Appointed); (g) the Thirteenth Plaintiff, Virgin Tech Pty Ltd (Administrators Appointed); (h) the Nineteenth Plaintiff, A.C.N. 098 904 262 Pty Ltd (Administrators Appointed); (i) the Twentieth Plaintiff, Virgin Australia Regional Airlines Pty Ltd (Administrators Appointed); (j) the Twenty-First Plaintiff, Virgin Australia Holidays Pty Ltd (Administrators Appointed); (k) the Twenty-Second Plaintiff, VB Ventures Pty Ltd (Administrators Appointed); (l) the Twenty-Third Plaintiff, Virgin Australia Cargo Pty Ltd (Administrators Appointed); and (m) the Thirty -Fourth Plaintiff, VB Leaseco Pty Ltd (Administrators Appointed), (Deed of Cross Guarantee Companies). 122. I refer to paragraph 9 of my First Affidavit and the current and historical extracts of the records maintained by ASIC obtained on 22 April 2020 in respect of the Second to Thirty-Ninth Plaintiffs as well as the current and historical extracts of the records maintained by ASIC in relation to Tiger 1 located at Tab 3 of Exhibit VNS-2. 123. The Administrators are aware that each of the Deed of Cross Guarantee Companies have common directors, being Paul Darren Scurrah and Keith Antony Neate, with the exception of: (a) the Second Plaintiff, Virgin Australia Holdings Limited (Administrators Appointed), whose directors are: (i) Elizabeth Blomfield Bryan; (ii) Meng Hung Marvin Tan; (iii) Kenneth Alfred Dean; (iv) Warwick Negus; (v) Trevor Bourne; (vi) Allan Grant Houston; (vii) Raymond Gammell; (viii) Paul Darren Scurrah; (ix) Wei Hou; (x) Judith Swales; and (xi) Qiping Xing; and (b) the Twenty-Fourth Plaintiff, VB Leaseco Pty Ltd (Administrators Appointed), whose directors are: (i) Steven James Fouracre; and (ii) Keith Antony Neate. 124. The Administrators are also aware from our investigations that each of the Virgin Companies party to the deed of cross guarantee prepare financial reports on a consolidated basis for the purposes of yearly reporting. 125. Given the overlap in directorships of the Deed of Cross Guarantee Companies (with the exception of Virgin Australia and the Twenty-Fourth Plaintiff) and the preparation of financial reports on a consolidated basis by these entities, it is the Administrators' opinion that a single ROCAP in relation to each of the Deed of Cross Guarantee Companies will be more informative than the Administrators receiving a separate report for each individual one of the Deed of Cross Guarantee Companies. 126. Given the complexity of the affairs of the Virgin Companies, and to assist in relation to the preparation of ROCAPs by the directors of the Virgin Companies more broadly, the Administrators have granted the directors of the Virgin Companies an extension of time for the preparation of the ROCAPs to 21 May 2020. COMMITTEE OF INSPECTION 127. Pursuant to 80-55(1) of the IPSC, members of the Committee of Inspection must not directly or indirectly derive any profit or advantage from the external administration of any of the Virgin Companies (subject to the leave of the Court). 128. The Administrators seek an order that leave be granted to the members of the Committee of Inspection to derive a profit or advantage from the administrations. 169 I will make the orders the Administrators seek for the following reasons. 170 Section 438B(2) of the Corporations Act provides that directors of a company are required to give to the administrator a report about the company's business, property, affairs and financial circumstances (the 'ROCAP'), within five business days after the administration of a company begins or such longer period as the administrators allow. As Mr Strawbridge states, the Administrators have extended the period for the ROCAPs to be provided by the directors of the various Virgin Companies, to 21 May 2020. 171 The Business of the Virgin Companies overlaps between different entities. Virgin Australia and a number of the Virgin Subsidiaries (the Third, Seventh, Eighth, Ninth, Tenth, Thirteenth, Nineteenth, Twentieth, Twenty-First, Twenty-Second, Twenty- Third, and Thirty-Fourth Plaintiffs) (together, the 'Deed of Cross Guarantee Companies') are each party to a deed of cross guarantee and prepare financial reports on a consolidated basis for the purposes of yearly reporting. 172 The Administrators have expressed the view that the provision of a single ROCAP for the Deed of Cross Guarantee Companies will be more informative than the Administrators receiving a separate report for each individual one of the Deed of Cross Guarantee Companies. 173 The preparation of a single such ROCAP will be a simpler and more straightforward exercise for the directors of the Deed of Cross Guarantee Companies (who would otherwise have to prepare multiple reports in respect those entities). 174 The Administrators therefore seek an order that one ROCAP be prepared for the Deed of Cross Guarantee Companies as a whole and otherwise dispensing with a requirement of the directors of the other Deed of Cross Guarantee Companies to prepare a ROCAP. 175 I note that the Commonwealth requested that information about the financial position of each of the employing entities of the Virgin Companies (as at the date of the Administrators' appointment) be provided, so that the Commonwealth has information about the quantum of circulating assets available to each of those companies. The nature of the material to be provided by the Administrators was refined in the solicitors' correspondence, and the Administrators have agreed to provide the Commonwealth with certain financial information for each of the employing entities. That course appears to have alleviated any concern that the Commonwealth has in respect of this order.
LEAVE TO MEMBERS OF COMMITTEE OF INSPECTION TO DERIVE A PROFIT 176 The Administrators seek an order pursuant to ss 80-55 and 90-15 of the IPSC that leave be granted to the members of the Committee of Inspection formed in respect of the Virgin Companies to derive a profit or advantage from the external administration of each of the Virgin Companies. 177 Mr Strawbridge's evidence in the Second Strawbridge Affidavit is that: 127. Pursuant to 80-55(1) of the IPSC, members of the Committee of Inspection must not directly or indirectly derive any profit or advantage from the external administration of any of the Virgin Companies (subject to the leave of the Court). 128. The Administrators seek an order that leave be granted to the members of the Committee of Inspection to derive a profit or advantage from the administrations. 129. As described in paragraphs 45 to 49 above, the Administrators are currently undertaking the Sale Process for the Business as well as conducting ongoing negotiations with counterparties in relation to the Aircraft Leases (for example, under the Aircraft Protocol) and other operational agreements affecting the Virgin Companies. 130. It is likely, or at least possible, that some of the proposed members of the Committee of Inspection (for example, secured creditors such as Aircraft Lessors) will be counterparties as part of: (a) ongoing negotiations during the administrations; and / or (b) any agreement reached in connection with a sale of the Business (through a DOCA or otherwise). 131. In the absence of an order giving leave to the members of the Committee of Inspection, directly or indirectly, to derive any profit or advantage from the administrations, the Administrators are concerned that the negotiation of ongoing arrangements with creditors and potential purchasers of the Business may be hampered. 132. The Administrators are of the opinion that it is in the best interests of the creditors of each of the Virgin Companies generally, that such leave be granted to members of the Committee of Inspection so as to preserve maximum flexibility to the Administrators during the administrations. 178 Section 80-55 of the IPSC, prohibits, without the approval of the creditors or the leave of the Court, a member of the Committee of Inspection deriving a profit or advantage from the company. The section operates broadly and the words 'profit or advantage' capture a transaction 'for or on account of' the company. 179 The statutory predecessors to that provision were s 551 of the Corporations Act and s 435 of the Companies Code 1982 (NSW) (and its equivalents). Those provisions applied when the company was being wound up and the proscriptive obligations imposed on committee members were consistent with the principle that members of committees of inspection are regarded as occupying fiduciary positions relative to the creditors, such that the section was directed to avoiding a conflict between interest and duty: Re F.T. Hawkins & Co., Ltd [1952] 2 All ER 467; In the matter of DH International Pty Ltd (in liq) (No 2) [2017] NSWSC 871 at [30], [34] (Gleeson JA). 180 However, the 2017 amendments to the Corporations Act, by the repeal of s 551 and the insertion of s 80-55 of the IPSC, have brought about a change to the practical operation of that provision. Previously, it operated only where the company was in liquidation; it now applies to an 'external administration', which includes where the company is under administration. 181 In an administration, the business of a company may continue to be traded; whereas, in a winding up, a company's business comes to an end as part of the realisation of all its assets. Thus, in the case of a winding up, there would not be the potential for ongoing dealings between the company and its creditors. But the position is often different in the case of an administration, where the business is continuing to trade. 182 In those circumstances, unless the Court grants leave, the effect of the section may curtail the ability of the Administrators to trade the business of the Virgin Companies by preventing the Virgin Companies, without leave of the Court or the creditors, from continuing to contract with any counterparty who is a member of the Committee of Inspection. 183 Indeed, the current evidence is that it is likely, or at least possible, that some of the members of the Committee of Inspection (such as the Aircraft Lessors) will be counterparties as part of ongoing arrangements during the administrations (and/or parties to any agreement reached in connection with a sale of the business of the Virgin Companies (through a DOCA or otherwise)). That possibility is increased given that there are proposed to be 34 different members of the Committee of Inspection. 184 In the absence of an order granting leave to the members of the Committee of Inspection to transact with the Virgin Companies during the administrations, the Administrators' flexibility to carry on the Business may be hampered. 185 The Administrators, who are experienced insolvency practitioners, have expressed the opinion that it is in the best interests of the creditors of each of the Virgin Companies generally, that such leave be granted. No creditor or other interested party opposes the leave being granted. 186 The purpose for the order sought then is to permit the Administrators to cause the Virgin Companies to enter into arms-length transactions during the administration with creditors who may be members of the Committee of Inspection. In my view this is a valid purpose and leave should be granted. 187 The order as originally sought had the potential to operate with great amplitude, which basically sought leave on an open ended basis. To address that concern, the orders (a) narrow the scope of the leave to be granted to provide that no gift or remuneration may be provided to any member of the Committee of Inspection by reason of their membership of the committee; and (b) require the Administrators to provide, both to the Committee of Inspection and to all creditors (in their report in advance of the second meeting of creditors), a list of all agreements entered into during the administration period with any of the members of the Committee of Inspection or their related entities. 188 For the above reasons, I make the orders sought in this matter.
COMMON BANK ACCOUNTS 189 The Administrators seek an order pursuant to ss 65-45 and 90-15 of the IPSC, that the Administrators (in their capacity as administrators of each of the Virgin Companies) are not required to maintain a separate administration account in relation to each of the Virgin Companies (as otherwise required by the operation of Div 65 of the IPS). 190 This matter is addressed in Mr Strawbridge's evidence at [71]-[74] of the Second Strawbridge Affidavit, an extract of which is reproduced earlier in these reasons. 191 Division 65 of the IPSC deals with bank accounts required to be operated in an external administration. 192 Section 65-5(1) of the IPSC provides that an external administrator of a company must pay all money received by the external administrator on behalf of, or in relation to, the company into an administration account (as defined by s 60-10) for the company within five business days after receipt. Section 65-15 requires an administrator not to pay other monies into an administration account. Section 65-25 prohibits an administrator from paying money out of an administration account other than for purposes related to the administration of that company (or otherwise in accordance with the Corporations Act or an order of the Court). 193 As I have already noted, the Administrators have opened separate 'administration bank accounts' for VAA and VARA, with funding and expenses of the Virgin Companies being cleared through the bank accounts opened in the names of VAA and VARA (with corresponding intercompany loan account entries being made). 194 Given that there are now 39 companies within the Virgin Group that are in external administration, opening a separate bank for each entity would increase cost and bring added complexity to the administration. Further, some of the Virgin Companies are dormant entities and did not actively trade prior to the Administrators' appointment such that that step might be unnecessary. 195 In circumstances where accounting entries are made to record transactions between the Virgin Companies, there is no utility in requiring the Administrators to open a separate bank account for each of the Virgin Companies. 196 In Ten Network, Markovic J noted at [91]-[94] that s 65-45 of the IPSC provides a plenary power, equivalent to s 447A with respect to Pt 5.3A of the Corporations Act, to make orders modifying the arrangements with respect to the operation of administration accounts. 197 Each of the Virgin Companies forms part of the same group of companies; further, any DOCA proposal or a winding up of the Virgin Companies is likely to involve a pooling of the companies' assets and an extinguishment of intercompany loans. Finally, the Administrators are maintaining records of post-administration dealings between the Virgin Companies. 198 In light of those matters, the cost of opening and maintaining separate bank accounts for each of the Virgin Companies would be disproportionate given that, prior to the administration, most of the Virgin Companies did not have separate dealings with external creditors in any event. 199 Accordingly, I will make orders under s 65-45 dispensing with the requirements for administration accounts to be opened and operated for the Virgin Companies other than VAA and VARA. 200 It is to be noted that the Commonwealth's position as to the order made concerning the ROCAPs also applies to this order regarding the operation of a common bank account. On the basis that the Administrators have agreed to provide financial information about each of the employing entities of the Virgin Companies, the Commonwealth does not oppose an order in this form. I certify that the preceding two hundred (200) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.
SCHEDULE OF PARTIES NSD 464 of 2020 Plaintiffs Fourth Plaintiff: VIRGIN AUSTRALIA INTERNATIONAL HOLDINGS PTY LTD (ADMINISTRATORS APPOINTED) ACN 155 860 021 Fifth Plaintiff: VIRGIN AUSTRALIA INTERNATIONAL AIRLINES PTY LTD (ADMINISTRATORS APPOINTED) ACN 125 580 823 Sixth Plaintiff: VIRGIN AUSTRALIA AIRLINES (SE ASIA) PTY LTD (ADMINISTRATORS APPOINTED) ACN 097 892 389 Seventh Plaintiff: VIRGIN AUSTRALIA AIRLINES HOLDINGS PTY LTD (ADMINISTRATORS APPOINTED) ACN 093 924 675 Eighth Plaintiff: VAH NEWCO NO.1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 160 881 345 Ninth Plaintiff: TIGER AIRWAYS AUSTRALIA PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 124 369 008 Tenth Plaintiff: VIRGIN AUSTRALIA AIRLINES PTY LTD (ADMINISTRATORS APPOINTED) ACN 090 670 965 Eleventh Plaintiff: VA BORROWER 2019 NO. 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 633 241 059 Twelfth Plaintiff: VA BORROWER 2019 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 637 371 343 Thirteenth Plaintiff: VIRGIN TECH PTY LTD (ADMINISTRATORS APPOINTED) ACN 101 808 879 Fourteenth Plaintiff: SHORT HAUL 2018 NO. 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 622 014 831 Fifteenth Plaintiff: SHORT HAUL 2017 NO. 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 617 644 390 Sixteenth Plaintiff: SHORT HAUL 2017 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 617 644 443 Seventeenth Plaintiff: SHORT HAUL 2017 NO. 3 PTY LTD (ADMINISTRATORS APPOINTED) ACN 622 014 813 Eighteenth Plaintiff: VBNC5 PTY LTD (ADMINISTRATORS APPOINTED) ACN 119 691 502 Nineteenth Plaintiff: A.C.N. 098 904 262 PTY LTD (ADMINISTRATORS APPOINTED) ACN 098 904 262 Twentieth Plaintiff: VIRGIN AUSTRALIA REGIONAL AIRLINES PTY LTD (ADMINISTRATORS APPOINTED) ACN 008 997 662 Twenty-first Plaintiff: VIRGIN AUSTRALIA HOLIDAYS PTY LTD (ADMINISTRATORS APPOINTED) ACN 118 552 159 Twenty-second Plaintiff: VB VENTURES PTY LTD (ADMINISTRATORS APPOINTED) ACN 125 139 004 Twenty-third Plaintiff: VIRGIN AUSTRALIA CARGO PTY LTD (ADMINISTRATORS APPOINTED) ACN 600 667 838 Twenty-fourth Plaintiff: VB LEASECO PTY LTD (ADMINISTRATORS APPOINTED) ACN 134 268 741 Twenty-fifth Plaintiff: VA HOLD CO PTY LTD (ADMINISTRATORS APPOINTED) ACN 165 507 157 Twenty-sixth Plaintiff: VA LEASE CO PTY LTD (ADMINISTRATORS APPOINTED) ACN 165 507 291 Twenty-seventh Plaintiff: VIRGIN AUSTRALIA 2013-1 ISSUER CO PTY LTD (ADMINISTRATORS APPOINTED) ACN 165 507 326 Twenty-eighth Plaintiff: 737 2012 NO.1 PTY. LTD (ADMINISTRATORS APPOINTED) ACN 154 201 859 Twenty-ninth Plaintiff: 737 2012 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 154 225 064 Thirtieth Plaintiff: SHORT HAUL 2016 NO. 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 612 766 328 Thirty-first Plaintiff: SHORT HAUL 2016 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 612 796 077 Thirty-second Plaintiff: SHORT HAUL 2014 NO. 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 600 809 612 Thirty-third Plaintiff: SHORT HAUL 2014 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 600 878 199 Thirty-fourth Plaintiff: VA REGIONAL LEASECO PTY LTD (ADMINISTRATORS APPOINTED) ACN 127 491 605 Thirty-fifth Plaintiff: VB 800 2009 PTY LTD (ADMINISTRATORS APPOINTED) ACN 135 488 934 Thirty-sixth Plaintiff: VB LEASECO NO 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 142 533 319 Thirty-seventh Plaintiff: VB LH 2008 NO. 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 134 280 354 Thirty-eighth Plaintiff: VB LH 2008 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 134 288 805 Thirty-ninth Plaintiff: VB PDP 2010-11 PTY LTD (ADMINISTRATORS APPOINTED) ACN 140 818 266
Cases cited: ABC Learning Centres Limited, in the matter of ABC Learning Centres Limited; application by Walker (No 5) [2008] FCA 1947 Australian Liquor, Hospitality & Miscellaneous Workers' Union v Terranora Lakes Country Club Ltd (1996) 19 ACSR 687 Bumbak (Administrator), in the matter of Duro Felguera Australia Pty Limited (Administrators Appointed) [2020] FCA 422 Commissioner of State Taxation v Pollock (1993) 11 WAR 64 Deputy Commissioner of Taxation v Scottsdale Homes No 3 Pty Ltd (No 2) [2009] FCA 190 Eagle, in the matter of Techfront Australia Pty Limited (administrators appointed) (No 2) [2020] FCA 618 Energy & Resource Conservation Co Ltd (In Liq) v Abigroup Contractors Pty Ltd (1997) 41 NSWLR 169 Ex parte Vouris; in the matter of Marrickville Bowling & Recreation Club Ltd (under Administration) [2008] FCA 622 Farnsworth v About Life Pty Limited (Administrator Appointed), in the matter of About Life Pty Limited [2019] FCA 11 Fitzgerald, In the matter of Primebroker Securities Limited (Administrator Appointed) (Receivers and Managers Appointed) [2008] FCA 1247 Hawkins v Bank of China (1992) 26 NSWLR 562 In the matter of Belmont Sportsmans Club Co-Operative Limited (Administrators Appointed) [2015] NSWSC 543 In the matter of Daisytek Australia Pty Limited [2003] FCA 575 In the matter of DH International Pty Ltd (in liq) (No 2) [2017] NSWSC 871 In the matter of Foodora Australia Pty Ltd (Administrators Appointed) [2018] NSWSC 1426 In the matter of Golden Gate Petroleum Ltd [2010] FCA 40 In the matter of Harrisons Pharmacy Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) [2013] FCA 458 In the matter of Kavia Holdings Pty Limited (administrators appointed) (receivers and managers appointed) [2013] NSWSC 737 In the matter of Milgerd Nominees Pty Ltd [2019] NSWSC 311 In the matter of National Roads and Motorists' Association Ltd [2003] FCAFC 206 In the matter of Nexus Energy Ltd [2014] NSWSC 1041 In the matter of Riviera Group Pty Ltd (admins apptd) (recrs & mgrs. apptd) [2009] NSWSC 585 In the matter of Unlockd Limited (administrators appointed) [2018] VSC 345 Jahani, in the matter of Northern Energy Corporation Ltd (Administrators Appointed) (No 2) [2019] FCA 382 Korda, in the matter of Ten Network Holdings Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2017] FCA 1144 Lombe, in the matter of Babcock & Brown Limited (Administrators Appointed) [2009] FCA 349 Lombe re Australian Discount Retail Pty Ltd [2009] NSWSC 110 Mann v Abruzzi Sports Club Ltd (1994) 12 ACSR 611 McKinnon, in the matter of Specialised Concrete Pumping Victoria Pty Ltd (Administrators Appointed) [2016] FCA 325 Mentha, in the matter of Hans Continental Smallgoods Pty Ltd (Administrators Appointed) [2008] FCA 1933 Mighty River International Ltd v Hughes (as deed administrators of Mesa Minerals Ltd) (2018) 359 ALR 181 Owen and Others in their capacity as joint and several administrators of Rivercity Motorway Pty Ltd (ACN 116 665 304) (admins apptd) (recs and mgrs. Apptd)) v Madden (No 4) (2012) 92 ACSR 255 Park, in the matter of Surfstitch Group Ltd (Administrators Appointed) [2017] FCA 1244 Patrick Stevedores Operations No 2 Proprietary Limited v Maritime Union of Australia [No 3] (1998) 195 CLR 1 Re Ansett Australia (No 1) (2002) 115 FCR 376 Re Chemeq Ltd 009 135 264 (Administrators Appointed) (Receivers and Managers Appointed), ex parte McMaster [2007] WASC 154 Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 Re F.T. Hawkins & Co., Ltd [1952] 2 All ER 467 Re Insurance Australia Group Ltd (2003) 128 FCR 581 Re Wave Capital Ltd [2003] FCA 969 Re Wood Parsons Pty Ltd (in liq) [2002] NSWSC 1058 Silvia v FEA Carbon Pty Ltd (2010) 185 FCR 301 T Silvia, in the matter of Austcorp Group Ltd (Administrators Appointed) [2009] FCA 636 Standard Chartered Bank of Australia Ltd v Antico [Nos 1 and 2] (1995) 38 NSWLR 290 Stewart, in the matter of Kleins Franchising Pty Ltd (administrators appointed) (ACN 007 348 236) [2008] FCA 721 Stirling Lindley Horne and Petr Vrsecky (in their capacities as joint and several administrators of Australian Property Custodian Holdings Limited) (ACN 095 474 436) (Administrators appointed) (Receivers and Managers appointed) [2010] VSC 657 Strawbridge (Administrator) v Retail Holdings Pty Ltd (Administrators Appointed), In the Matter of Retail Adventures Holdings Pty Ltd (Administrators Appointed) [2013] FCA 151 Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571 Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619, in the matter of Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619 [2006] FCA 1423 Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd [2001] NSWCA 427 Worrell; In the matter of Storm Financial Ltd (Receivers and Managers Appointed) (Administrators Appointed) [2009] FCA 70
[2018] VSC 345
[2007] WASC 154
[2010] VSC 657
[2009] WASC 161
(1993) 11 WAR 64
(1997) 41 NSWLR 169
(1992) 26 NSWLR 562
(2018) 359 ALR 181
(1998) 195 CLR 1
(2002) 115 FCR 376
(2003) 128 FCR 581
(2010) 185 FCR 301
(1995) 38 NSWLR 290
All orders sought granted with minor refinements including notice requirements, COI reporting obligations, good-faith carve-outs for JobKeeper, and liberty to apply. Costs ordered as costs in the administrations.