In the Matter of Martin Mining Pty Ltd (Administrator appointed) ACN 059 349 236 [1995] FCA 1176

C A T C H W O R D S CORPORATIONS - External administration - voluntary administration - meetings of creditors - grounds for granting extension of time for convening second meeting. Corporations Law s.439A Mann v. Abruzzi Sports Club Ltd (1994) 12 ACLC 137 Re ATG Developments Pty Ltd (1994) 12 ACLC 333 IN THE MATTER OF MARTIN MINING PTY LTD (Administrator appointed) ACN 059 349 236 No. WAG 3044 of 1995 CARR J. PERTH 18 SEPTEMBER 1995

IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) No. WAG 3044 of 1995 DISTRICT REGISTRY ) GENERAL DIVISION ) IN THE MATTER OF MARTIN MINING PTY LTD (Administrator appointed) ACN 059 349 236 CORAM: CARR J. PLACE: PERTH DATE: 18 SEPTEMBER 1995 MINUTE OF ORDERS THE COURT ORDERS THAT: 1. The convening period prescribed by section 439A(5) of the Corporations Law be extended, in its application to the affairs of the abovementioned company, until 19 October 1995. 2. The applicant's costs be taxed and reimbursed out of the property of that company. NOTE: Settlement and entry of Orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WAG 3044 of 1995 GENERAL DIVISION ) IN THE MATTER OF MARTIN MINING PTY LTD (Administrator appointed) ACN 059 349 236 CORAM: Carr J. PLACE:Perth DATE: 18 September 1995 REASONS FOR JUDGMENT Introduction This is an ex parte application made by the administrator of Martin Mining Pty Ltd ("Martin Mining") for an extension of the convening period referred to in s.439A(5) of the Corporations Law. The applicant seeks a 24 day extension of the convening period in which the second creditors' meeting in the administration must be held. The administrator, who was appointed by a resolution of the board of directors on 31 August 1995, has filed a detailed affidavit explaining why such an extension is sought. I shall summarise the contents of that affidavit. Martin Mining carries on the business of "rise mining" which is a form of underground mining at an upward angle from a lower shaft to follow a particular ore body. These services are of a special nature. The company has at least six current mining contracts and is negotiating some potentially very large contracts for such mining in Indonesia. Martin Mining has gross revenues of approximately $1.5 million per month. The company has approximately 284 known creditors with total debts of approximately $3.5 million. At the first meeting of creditors of the company, held in Kalgoorlie on 7 September 1995, 28 creditors were present in person with a total of 64 creditors being present either in person or by proxy. Those creditors claimed to be owed debts totalling $2.9 million. Creditors represented at that meeting included representatives of the major creditors, being the Australian Taxation Office ($1,002,257.37), the State Taxation Department ($650,000) and National Australia Bank Ltd ($400,000 secured by a fixed and floating charge). The basic reason why the administrator seeks an extension of the convening period, and hence an extension of the time by which the second creditors' meeting in the administration must be held, relates to his reporting obligations under s.439A(4) of the Corporations Law. Due to the specialised nature of Martin Mining's business the administrator has retained the services of an expert mining consultant. That consultant is Mr John Dunlop of John S. Dunlop & Associates Pty Ltd who had been engaged by Martin Mining shortly prior to the applicant's appointment. The nature of the work which Mr Dunlop has to carry out and the time which it will take are set out in the applicant's affidavit. I am satisfied that Mr Dunlop will be unable to furnish his report until the second week of October 1995. The administrator is also giving consideration to the possibility of attracting investors to contribute further capital to enable Martin Mining to continue operations. To that end, he has retained an investment banker, Oakvale Capital Ltd and in particular Mr E. Hooper of that company. Mr Hooper proposes to distribute an information memorandum for the purposes of attracting a new major shareholder for the company, if possible. Mr Hooper will require information from Mr Dunlop in order to prepare that information memorandum. Mr Hooper will then report to the administrator by way of giving his initial assessment of the prospects of finding financial backing for the company and how this may be achieved. The applicant's affidavit indicates that this will take approximately two weeks from the time when the information memorandum has been distributed. At the first meeting of creditors in Kalgoorlie (referred to above) the applicant informed the meeting that he did not expect to be in a position to present to the creditors an informed report as to the company's prospects or to be able to make appropriate recommendations at the next meeting of creditors. He also informed them of his intention to seek an extension of time within which to convene the second meeting of creditors, due to the complexity of the administration. No creditor present voiced any concern or made any comment in relation to that statement of intention. The applicant states that he believes the extension of time is necessary to maximise the prospects of the company continuing in business and that this would be to the benefit of the unsecured creditors generally. The first reported application of this type was heard by Young J. in Mann v. Abruzzi Sports Club Ltd (1994) 12 ACLC 137. His Honour referred to the explanatory memorandum issued by the Attorney-General at the time when Part 5.3A was introduced by the Corporate Law Reform Bill No. 1 of 1992. That memorandum indicates (and the provisions of Part 5.3A imply) that it is of the essence of this relatively new Part of the Corporations Law that there be speed of administration and minimisation of expensive and time consuming court involvement and formal meeting procedures. It was not expected, so the memorandum stated, that the power to extend the time for convening of meetings would be exercised frequently because it was an important objective of the new provisions for creditors to be fully informed about the company's position as early as possible and to have an opportunity to vote on its future as soon as possible. As Young J. noted in that case, these statutory provisions are intended to cover companies from the smallest to the greatest. Martin Mining, with a turnover of about $18 million per annum cannot be regarded as a small company. I have taken into account the legislative policy referred to above. However, given the size and nature of the company's affairs and the matters referred to in the applicant's supporting affidavit, I am satisfied that there should be a reasonable extension of time for the experts' reports to be obtained so that, through the administrator, the creditors can be put in a position where they can make an informed decision about the future of the company. Consistent with the policy reflected in the above case and the subsequent case (also decided by Young J.) of Re ATG Developments Pty Ltd (1994) 12 ACLC 333, this decision should not be taken as an encouragement to administrators of smaller companies with less complicated affairs to rely upon obtaining extensions of the convening period. There was one matter in relation to the present application which caused me some concern. It appears that the directors have not yet furnished their statement to the administrator. Section 438B(2) requires the directors to give that statement to the administrator within seven days after the administration of a company begins or such longer period as the administrator allows. I raised that matter with counsel in the course of the hearing but no explanation was tendered to explain why the directors have not yet furnished their statement. In my view, that factor does not preclude the conclusion to which I have come; namely, that time should be extended. For the above reasons the application will be granted. I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment of Justice Carr. Associate: Date: 11 December, 1995 Counsel for the Applicant: Mr G.A. Flynn Solicitors for the Applicant: Mallesons Stephen Jaques Date of Hearing: 18 September, 1995 Date of Judgment: 18 September, 1995