FEDERAL COURT OF AUSTRALIA ADG Industries Pty Ltd (ACN 112 167 638) No 2 v ARA Group Pty Ltd (ACN 074 886 561) [2007] FCA 1952 ADG INDUSTRIES PTY LTD (ACN 112 167 638) AND ORS v ARA GROUP PTY LTD (ACN 074 886 561) AND ORS NSD2174 OF 2007 EMMETT J 30 NOVEMBER 2007 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD2174 OF 2007 BETWEEN: ADG INDUSTRIES PTY LTD ACN 112 167 638 First Plaintiff ADVANCED CONSOLIDATED HOLDINGS PTY LTD ACN 113 488 190 Second Plaintiff ARA GROUP MANAGEMENT PTY LTD ACN 122 697 027 Third Plaintiff T C TECHNOLOGIES (AUSTRALIA) PTY LTD ACN 071 253 971 Fourth Plaintiff ADVANCED SECURITY SYSTEMS PTY LTD ACN 003 656 371 Fifth Plaintiff ADVANCED GROUP RESOURCES PTY LTD ACN 109 257 927 Sixth Plaintiff ADVANCED MECHANICAL SYSTEMS PTY LTD ACN 002 948 218 Seventh Plaintiff ELECTOMECH PTY LTD ACN 071 253 908 Eighth Plaintiff BASS ELECTRICAL (NSW) PTY LTD ACN 102 626 666 Ninth Plaintiff AND: ARA GROUP PTY LTD ACN 074 886 561 First Defendant ENVIRONMENTAL AUTOMATION PTY LTD ACN 002 938 187 Second Defendant AIC SOLUTIONS PTY LTD ACN 063 676 415 Third Defendant AIR CONDITIONING ENGINEERING SERVICES PTY LTD ACN 122 466 693 Fourth Defendant BASS ELECTRICAL PTY LTD ACN 098 616 409 Fifth Defendant JUDGE: EMMETT J DATE OF ORDER: 30 NOVEMBER 2007 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to section 411(4)(b) and section 411(6) of the Corporations Act 2001 (the Act), the schemes of arrangement in relation to each Plaintiff, having been duly resolved upon in favour at meetings of the members of each Plaintiff in accordance with section 411(4)(a)(ii) of the Act , be approved, subject to the following alteration, namely the substitution in clause 19.1 of the schemes of arrangement of "5:00pm" for "12:00pm", so that the schemes of arrangement so approved and altered are in the form set out in annexure "A" to these orders (the Scheme). 2. Pursuant to section 411(12) of the Act, eachPlaintiff be exempted from the requirements of section 411(11) of the Act. 3. Pursuant to section 413(1) of the Act (using the definitions in the Scheme), as from the Effective Time, each of the following transactions will occur in the order set out below: (a) first, all of the Assets of First Plaintiff, save for and except for any Excepted Policy of the First Plaintiff, will be transferred to and become the Assets of First Defendant; (b) second, all of the Liabilities of First Plaintiff, save for and except for any Excepted Liability of the First Plaintiff, will be transferred to and become the Liabilities of First Defendant; and (c) third, First Plaintiff will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 4. Pursuant to section 413(1) of the Act (using the definitions in the Scheme), as from the Effective Time, each of the following transactions will occur in the order set out below: (a) first, all of the Assets of Second Plaintiff, save for and except for any Excepted Policy of the Second Plaintiff, will be transferred to and become the Assets of First Defendant; (b) second, all of the Liabilities of Second Plaintiff, save for and except for any Excepted Liability of the Second Plaintiff, will be transferred to and become the Liabilities of First Defendant; and (c) third, Second Plaintiff will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 5. Pursuant to section 413(1) of the Act (using the definitions in the Scheme), as from the Effective Time, each of the following transactions will occur in the order set out below: (a) first, all of the Assets of Third Plaintiff, save for and except for any Excepted Policy of the Third Plaintiff, will be transferred to and become the Assets of First Defendant; (b) second, all of the Liabilities of Third Plaintiff, save for and except for any Excepted Liability of the Third Plaintiff, will be transferred to and become the Liabilities of First Defendant; and (c) third, Third Plaintiff will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 6. Pursuant to section 413(1) of the Act (using the definitions in the Scheme), as from the Effective Time, each of the following transactions will occur in the order set out below: (a) first, all of the Assets of Fourth Plaintiff, save for and except for any Excepted Policy of the Fourth Plaintiff will be transferred to and become the Assets of Second Defendant; (b) second, all of the Liabilities of Fourth Plaintiff, save for and except for any Excepted Liability of the Fourth Plaintiff will be transferred to and become the Liabilities of Second Defendant; and (c) third, Fourth Plaintiff will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 7. Pursuant to section 413(1) of the Act (using the definitions in the Scheme), as from the Effective Time, each of the following transactions will occur in the order set out below: (a) first, all of the Assets of Fifth Plaintiff, save for and except for any Excepted Policy of the Fifth Plaintiff, will be transferred to and become the Assets of Third Defendant; (b) second, all of the Liabilities of Fifth Plaintiff, save for and except for any Excepted Liability of the Fifth Plaintiff will be transferred to and become the Liabilities of Third Defendant; and (c) third, Fifth Plaintiff will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 8. Pursuant to section 413(1) of the Act (using the definitions in the Scheme), as from the Effective Time, each of the following transactions will occur in the order set out below: (a) first, all of the Assets of Sixth Plaintiff, save for and except for any Excepted Policy of the Sixth Plaintiff, are to be transferred to and become the Assets of Fourth Defendant; (b) second, all of the Liabilities of Sixth Plaintiff, save for and except for any Excepted Liability of the Sixth Plaintiff, are to be transferred to and become the Liabilities of Fourth Defendant; and (c) third, Sixth Plaintiff will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 9. Pursuant to section 413(1) of the Act (using the definitions in the Scheme), as from the Effective Time, each of the following transactions will occur in the order set out below: (a) first, all of the Assets of Seventh Plaintiff, save for and except for any Excepted Policy of the Seventh Plaintiff, are to be transferred to and become the Assets of Fourth Defendant; (b) second, all of the Liabilities of Seventh Plaintiff, save for and except for any Excepted Liability of the Seventh Plaintiff, are to be transferred to and become the Liabilities of Fourth Defendant; and (c) third, Seventh Plaintiff will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 10. Pursuant to section 413(1) of the Act (using the definitions in the Scheme), as from the Effective Time, each of the following transactions will occur in the order set out below: (a) first, all of the Assets of Eighth Plaintiff, save for and except for any Excepted Policy of the Eighth Plaintiff, are to be transferred to and become the Assets of Fourth Defendant; (b) second, all of the Liabilities of Eighth Plaintiff, save for and except for any Excepted Liability of the Eighth Plaintiff, are to be transferred to and become the Liabilities of Fourth Defendant; and (c) third, Eighth Plaintiff will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 11. Pursuant to section 413(1) of the Act (using the definitions in the Scheme), as from the Effective Time, each of the following transactions will occur in the order set out below: (a) first, all of the Assets of Ninth Plaintiff, save for and except for any Excepted Policy of the Ninth Plaintiff, are to be transferred to and become the Assets of Fifth Defendant; (b) second, all of the Liabilities of Ninth Plaintiff, save for and except for any Excepted Liability of the Ninth Plaintiff, are to be transferred to and become the Liabilities of Fifth Defendant; and (c) third, Ninth Plaintiff will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 12. Pursuant to section 413(1)(c) of the Act, as from the Effective Time (as defined in the Scheme), any legal proceedings pending by or against each Plaintiff will be continued by or against: (a) The First Defendant in respect of the First Plaintiff, the Second Plaintiff and the Third Plaintiff; (b) The Second Defendant in respect of the Fourth Plaintiff; (c) The Third Defendant in respect of the Fifth Plaintiff; (d) The Fourth Defendant in respect of the Sixth Plaintiff, the Seventh Plaintiff and the Eighth Plaintiff; and (e) The Fifth Defendant in respect of the Ninth Plaintiff. 13. Liberty be reserved to the Plaintiffs and each of them is able to apply for any consequential orders as may be considered necessary or desirable under section 413 of the Act. 14. These orders be entered forthwith. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. ANNEXURE A Schemes of Arrangement (pursuant to section 411 of the Corporations Act 2001) between ADG INDUSTRIES PTY LTD ACN 112 167 638 ADVANCED CONSOLIDATED HOLDINGS PTY LTD ACN 113 488 190 ADVANCED GROUP RESOURCES PTY LTD ACN 109 257 927 ADVANCED MECHANICAL SYSTEMS PTY LTD ACN 002 948 218 ADVANCED SECURITY SYSTEMS PTY LTD ACN 003 656 371 ARA GROUP MANAGEMENT PTY LTD ACN 122 697 027 BASS ELECTRICAL (NSW) PTY LTD ACN 102 626 666 ELECTOMECH PTY LTD ACN 071 253 908 T.C. TECHNOLOGIES (AUSTRALIA) PTY LTD ACN 071 253 971 and their respective members for the reorganisation of the ARA Corporate Group CONTENTS CONTENTS............................................................................................................................... 7 Annexures.................................................................................................................................. 8 A. PRELIMINARY....................................................................................................... 9 1. DEFINITIONS.......................................................................................................... 9 2. INTERPRETATION.............................................................................................. 11 3. THE COMPANIES................................................................................................. 11 4. PURPOSE................................................................................................................ 14 5. OPINION OF DIRECTORS.................................................................................. 14 B. THE SCHEMES...................................................................................................... 14 6. SCHEMES............................................................................................................... 14 7. ADG SCHEME....................................................................................................... 14 8. ADVANCED CONSOLIDATED SCHEME......................................................... 15 9. ARA MGT SCHEME............................................................................................. 15 10. T.C. SCHEME......................................................................................................... 15 11. ADVANCED SECURITY SCHEME..................................................................... 16 12. ADVANCED GROUP SCHEME.......................................................................... 16 13. ADVANCED MECHANICAL SCHEME............................................................. 16 14. ELECTOMECH SCHEME.................................................................................... 17 15. BASS NSW SCHEME............................................................................................ 17 C. FURTHER TERMS OF THE SCHEMES............................................................ 17 16. LEGAL PROCEEDINGS....................................................................................... 17 17. SCHEMES BIND PARTIES.................................................................................. 18 18. AMENDMENT....................................................................................................... 18 19. EFFECTIVE TIME................................................................................................. 18 20. CONSTITUTIONS................................................................................................. 18 21. PROPER LAW........................................................................................................ 18 Annexures A. DIAGRAM OF AN EXTRACT OF THE ARA CORPORATE GROUP IMMEDIATELY BEFORE THE EFFECTIVE TIME B. DIAGRAM OF AN EXTRACT OF THE ARA CORPORATE GROUP IMMEDIATELY AFTER THE EFFECTIVE TIME A. PRELIMINARY 1. DEFINITIONS 1.1 In the Schemes, except where the context otherwise requires: ADG means ADG Industries Pty Ltd ACN 112 167 638. Advanced Consolidated means Advanced Consolidated Holdings Pty Ltd ACN 113 488 190. Advanced Group means Advanced Group Resources Pty Ltd ACN 109 257 927. Advanced Mechanical means Advanced Mechanical Systems Pty Ltd ACN 002 948 218. Advanced Security means Advanced Security Systems Pty Ltd ACN 003 656 371. AEDT means Australian Eastern Daylight Time. AIC means AIC Solutions Pty Ltd ACN 063 676 415. Air Conditioning means Air Conditioning Engineering Services Pty Ltd ACN 122 466 693. ARA means ARA Group Pty Ltd ACN 074 886 561. ARA Corporate Group means ARA and certain of its subsidiaries as set out in Annexure A of this document. ARA Mgt means ARA Group Management Pty Ltd ACN 122 697 027 Assets means real and personal property (including property within section 413(4) of the Corporations Act) and any interest in such property, wherever located, whether tangible or intangible, and extends to: (a) any part of the business or undertaking of a body corporate; (b) things in action, including rights under any contract or other arrangement; (c) any permit or licence; and (d) any other thing capable of being owned, transferred or otherwise dealt with. Bass means Bass Electrical Pty Ltd ACN 098 616 409. Bass NSW means Bass Electrical (NSW) Pty Ltd ACN 102 626 666 Book Value means the net book value attributed to any Asset, Liability or other thing in the books of account of each Scheme Company immediately before the Effective Time. Business Day means a day on which trading banks are open for business in New South Wales. Commission means the Australian Securities and Investments Commission. Corporations Act means the Corporations Act 2001 (Cth). Court means the Federal Court of Australia. Effective Time means the time at which the Schemes become effective in accordance with clause 0 of the Schemes. Electomech means Electomech Pty Ltd ACN 071 253 908. Environmental means Environmental Automation Pty Ltd ACN 002 938 187. Excell means Excell Control Pty Ltd ACN 083 868 615. Excepted Liability means any liability of the Scheme Company to persons who have suffered or hereafter suffer injury to which an Excepted Policy responds. Excepted Policy means the property of the Scheme Companies consisting of its rights of indemnity under a policy against any insurer, which has not consented to either an assignment or a transfer under the Schemes of the Scheme Company's interest under the insurance policy and which responds to any liability of the Scheme Company to persons who have suffered or hereafter suffer injury. Liabilities means all liabilities (including 'liabilities' as defined within section 413(4) of the Corporations Act) however arising and whether present, unascertained, immediate, future or contingent, including liabilities for Tax whether assessed or to be assessed or quantified in the future. Schemes means this scheme of arrangement as it applies to each Scheme Company, in its present form or as it may be modified or amended under clause 0 of the Schemes. Scheme Company means each of ADG, Advanced Consolidated, ARA Mgt, T.C., Advanced Security, Advanced Group, Advanced Mechanical, Electomech and Bass NSW. Tax means any income tax, capital gains tax, recoupment tax, land tax, sales tax, payroll tax, fringe benefits tax, group tax, GST, profit tax, interest tax, property tax, withholding tax, municipal rates, stamp duties and other charges, levies and impositions, assessed or charged, or assessable or chargeable, by or payable to any governmental taxation or excise authority and includes any additional tax, interest, penalty, charge, fee or other amount imposed or made on or in relation to a failure to file a relevant return or to pay the relevant Tax. T.C. means T.C. Technologies (Australia) Pty Ltd ACN 071 253 971. Transferee Companies means ARA, Environmental, AIC, Air Conditioning and Bass. 2. INTERPRETATION 2.1 In the Schemes, except where the context otherwise requires: (a) a reference to any legislation or legislative provision includes any statutory modification or re-enactment of, or legislative provision substituted for, and any subordinate legislation issued under, that legislation or legislative provision; (b) the singular includes the plural and vice versa; (c) a reference to an individual or person includes a corporation, partnership, joint venture, association, authority, trust, state or government and vice versa; (d) a reference to any gender includes all genders; (e) a reference to a recital, clause, schedule, annexure or exhibit is to a recital, clause, schedule, annexure or exhibit of or to the Schemes; (f) a reference to "$" or to an amount in "dollars" is taken to be an amount in Australian dollars; (g) a recital, schedule, annexure or a description of the parties forms part of the Schemes; (h) a reference to any agreement or document is to that agreement or document (and, where applicable, any of its provisions) as amended, novated, supplemented or replaced from time to time; (i) a reference to any party to the Schemes or any other document or arrangement includes that party's executors, administrators, substitutes, successors and permitted assigns; (j) where an expression is defined, another part of speech or grammatical form of that expression has a corresponding meaning. 3. THE COMPANIES 3.1 Each Scheme Company is a member of the ARA Corporate Group. 3.2 Each Scheme Company is a company limited by shares and was incorporated as follows: Company Date of incorporation Place of incorporation ADG 13 December 2004 New South Wales Advanced Consolidated 22 March 2005 New South Wales Advanced Group 26 May 2004 New South Wales Advanced Mechanical 5 June 1985 New South Wales Advanced Security 21 November 1988 New South Wales ARA Mgt 15 November 2006 Victoria Bass NSW 25 October 2002 New South Wales Electomech 27 September 1995 New South Wales T.C. 27 September 1995 New South Wales 3.3 Each Scheme Company is a Part 5.1 body within Part 5.1 of the Corporations Act 2001 (Cth) 3.4 The principal activities of each Scheme Company are as follows: Company Principal Activity as at 30 June 2007 ADG A non-operating company which previously engaged in electrical contracting Advanced Consolidated A non-operating holding company Advanced Group A non-operating company which previously engaged in air conditioning installation, service and building automation Advanced Mechanical A non-operating company which previously engaged in air conditioning installation and service Advanced Security A non-operating company which previously engaged in installation of security systems ARA Mgt A non-operating company which was previously the licensee for ARA Corporate Group Bass NSW A non-operating company which previously engaged in tendering for electrical contracting Electomech A non-operating company which previously engaged in electrical contracting T.C. A non-operating company which previously engaged in installation of building automation systems 3.5 The registered office of each Scheme Company is C/- Moore Stevens, Sydney, Level 7, 20 Hunter Street, Sydney NSW 2000. 3.6 The issued capital of each Scheme Company is as follows: Company Number of shares issued Total issued & paid up capital ADG 1 $1.00 Advanced Consolidated 4,800,000 $4,800,000 Advanced Group 2 $2.00 Advanced Mechanical 2,500,000 $2,500,000 Advanced Security 2,000,002 $2,000,002.13 ARA Mgt 1 $1.00 Bass NSW 100 $100.00 Electomech 2 $2.00 T.C. 2 $2.00 3.7 The members of each Scheme Company are as follows: Company Member ADG ARA Advanced Consolidated ARA Advanced Group Advanced Consolidated Advanced Mechanical Advanced Consolidated Advanced Security Advanced Consolidated ARA Mgt ARA Bass NSW Bass Electomech Advanced Mechanical T.C. Environmental 3.8 An extract of the ownership structure of the ARA Corporate Group both immediately before and immediately after the Effective Time, are set out in Annexures A and B of this document. 3.9 None of the issued shares in the capital of each Scheme Company is quoted on the official list of Australian Stock Exchange Limited. 3.10 The directors of each Scheme Company are as follows: Company Directors ADG Brett Chambers Leo Browne Edward Federman Norbert Schweizer Advanced Consolidated Leo Browne Norbert Schweizer Edward Federman Advanced Group Leo Browne Norbert Schweizer Edward Federman Advanced Mechanical Leo Browne Norbert Schweizer Edward Federman Advanced Security Leo Browne Norbert Schweizer Edward Federman ARA Mgt Edward Federman Bass NSW Brett Chambers Edward Federman Electomech Leo Browne Norbert Schweizer Edward Federman T.C. Leo Browne Norbert Schweizer Edward Federman 4. PURPOSE 4.1 The purpose of the Schemes is to transfer : (a) all of the Assets and Liabilities, excluding the Excepted Polices and the Excepted Liabilities, of each Scheme Company; and (b) deregister each Scheme Company without winding up pursuant to section 413(1)(d) of the Corporations Act, with each of the transactions contemplated to take effect sequentially at and with effect from the Effective Time. 5. OPINION OF DIRECTORS 5.1 The directors of each Scheme Company have expressed the opinion that having considered the terms of the Schemes, the directors of each Scheme Company consider that the relevant Scheme is in the best interest of the members of the Scheme Company of which he is a director, and recommends that the members agree to the Schemes for the following reasons: (a) the Schemes will concentrate the ownership of various business undertakings within the ARA Corporate Group into a smaller number of companies following a number of recent acquisitions that the ARA Corporate Group has made; (b) the number of companies in the ARA Corporate Group will be rationalised thereby eliminating the duplication of functions across the various companies and the freeing of capital for more effective use; and (c) economies in administration, accounting, audit, reporting and compliance costs will be achieved. B. THE SCHEMES 6. SCHEMES 6.1 The provisions of the Schemes apply to each Scheme Company independently of any other Scheme Company. Clauses 1, 2 and Part C of this document form part of each of the Schemes. 7. ADG SCHEME 7.1 As from the Effective Time and by virtue of the order of the Court, pursuant to section 413(1) of the Corporations Act, each of the following transactions will occur in the order set out below, without any further act or deed: (a) first, all of the Assets of ADG, save for and except for any Excepted Policy of ADG, will be transferred to and become the Assets of ARA; (b) second, all of the Liabilities of ADG, save for and except for any Excepted Liability of ADG, will be transferred to and become the Liabilities of ARA; and (c) third, ADG will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 8. ADVANCED CONSOLIDATED SCHEME 8.1 As from the Effective Time and by virtue of the order of the Court, pursuant to section 413(1) of the Corporations Act, each of the following transactions will occur in the order set out below, without any further act or deed: (a) first, all of the Assets of Advanced Consolidated, save for and except for any Excepted Policy of Advanced Consolidated, will be transferred to and become the Assets of ARA; (b) second, all of the Liabilities of Advanced Consolidated, save for and except for any Excepted Liability of Advanced Consolidated, will be transferred to and become the Liabilities of ARA; and (c) third, Advanced Consolidated will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 9. ARA MGT SCHEME 9.1 As from the Effective Time and by virtue of the order of the Court, pursuant to section 413(1) of the Corporations Act, each of the following transactions will occur in the order set out below, without any further act or deed: (a) first, all of the Assets of ARA Mgt, save for and except for any Excepted Policy of ARA Mgt, will be transferred to and become the Assets of ARA; (b) second, all of the Liabilities of ARA Mgt, save for and except for any Excepted Liability of ARA Mgt, will be transferred to and become the Liabilities of ARA; and (c) third, ARA Mgt will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 10. T.C. SCHEME 10.1 As from the Effective Time and by virtue of the order of the Court, pursuant to section 413(1) of the Corporations Act, each of the following transactions will occur in the order set out below, without any further act or deed: (a) first, all of the Assets of T.C., save for and except for any Excepted Policy of T.C., will be transferred to and become the Assets of Environmental; (b) second, all of the Liabilities of T.C., save for and except for any Excepted Liability of T.C., will be transferred to and become the Liabilities of Environmental; and (c) third, T.C. will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 11. ADVANCED SECURITY SCHEME 11.1 As from the Effective Time and by virtue of the order of the Court, pursuant to section 413(1) of the Corporations Act, each of the following transactions will occur in the order set out below, without any further act or deed: (a) first, all of the Assets of Advanced Security, save for and except for any Excepted Policy of Advanced Security, will be transferred to and become the Assets of AIC; (b) second, all of the Liabilities of Advanced Security, save for and except for any Excepted Liability of Advanced Security, will be transferred to and become the Liabilities of AIC; and (c) third, Advanced Security will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 12. ADVANCED GROUP SCHEME 12.1 As from the Effective Time and by virtue of the order of the Court, pursuant to section 413(1) of the Corporations Act, each of the following transactions will occur in the order set out below, without any further act or deed: (a) first, all of the Assets of Advanced Group, save for and except for any Excepted Policy of Advanced Group, are to be transferred to and become the Assets of Air Conditioning; (b) second, all of the Liabilities of Advanced Group, save for and except for any Excepted Liability of Advanced Group, are to be transferred to and become the Liabilities of Air Conditioning; and (c) third, Advanced Group will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 13. ADVANCED MECHANICAL SCHEME 13.1 As from the Effective Time and by virtue of the order of the Court, pursuant to section 413(1) of the Corporations Act, each of the following transactions will occur in the order set out below, without any further act or deed: (a) first, all of the Assets of Advanced Mechanical, save for and except for any Excepted Policy of Advanced Mechanical, are to be transferred to and become the Assets of Air Conditioning; (b) second, all of the Liabilities of Advanced Mechanical, save for and except for any Excepted Liability of Advanced Mechanical, are to be transferred to and become the Liabilities of Air Conditioning; and (c) third, Advanced Mechanical will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 14. ELECTOMECH SCHEME 14.1 As from the Effective Time and by virtue of the order of the Court, pursuant to section 413(1) of the Corporations Act, each of the following transactions will occur in the order set out below, without any further act or deed: (a) first, all of the Assets of Electomech, save for and except for any Excepted Policy of Electomech, are to be transferred to and become the Assets of Air Conditioning; (b) second, all of the Liabilities of Electomech, save for and except for any Excepted Liability of Electomech, are to be transferred to and become the Liabilities of Air Conditioning; and (c) third, Electomech will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. 15. BASS NSW SCHEME 15.1 As from the Effective Time and by virtue of the order of the Court, pursuant to section 413(1) of the Corporations Act, each of the following transactions will occur in the order set out below, without any further act or deed: (a) first, all of the Assets of Bass NSW, save for and except for any Excepted Policy of Bass NSW, are to be transferred to and become the Assets of Bass; (b) second, all of the Liabilities of Bass NSW, save for and except for any Excepted Liability of Bass NSW, are to be transferred to and become the Liabilities of Bass; and (c) third, Bass NSW will be deregistered without winding up pursuant to section 413(1)(d) of the Corporations Act. C. FURTHER TERMS OF THE SCHEMES 16. LEGAL PROCEEDINGS 16.1 As from the Effective Time, and by virtue of the order of the Court, any legal proceedings pending by or against each Scheme Company will be continued by: (a) ARA in respect of ADG, Advanced Consolidated and ARA Mgt; (b) Environmental in respect of T.C.; (c) AIC in respect of Advanced Security; (d) Air Conditioning in respect of Advanced Group, Advanced Mechanical and Electomech; and (e) Bass in respect of Bass NSW. pursuant to section 413(1)(c) of the Corporations Act, without any further act or deed other than an appropriate amendment of the record of the relevant court or tribunal. 17. SCHEMES BIND PARTIES 17.1 The Schemes will bind each Scheme Company and their respective members. 18. AMENDMENT 18.1 Each Scheme Company may, by their counsel or solicitor, consent on behalf of all persons bound by the Schemes to any modification of or amendment to the Schemes prior to the making of the order referred to in clause 19.1 or to any conditions that the Court may think fit to make or impose and, in such a case, the Schemes will take effect subject to such modification or amendment. 19. EFFECTIVE TIME 19.1 The Schemes will become effective as at 5:00 pm AEDTon 30 November 2007 or such other time or date as the Court determines if on or before that time: (a) the Court makes orders under section 411(4) of the Corporations Act approving the Schemes; and (b) an office copy of the order of the Court approving the Schemes is lodged with the Commission. 20. CONSTITUTIONS 20.1 The Schemes will, for all purposes, have effect notwithstanding any provision in the constitutions of any of the parties. 21. PROPER LAW 21.1 The proper law of each Schemes is the law in force in New South Wales. annexure A DIAGRAM OF AN EXTRACT OF THE ARA CORPORATE GROUP IMMEDIATELY BEFORE THE EFFECTIVE TIME annexure B DIAGRAM OF AN EXTRACT OF THE ARA CORPORATE GROUP IMMEDIATELY AFTER THE EFFECTIVE TIME IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD2174 OF 2007 BETWEEN: ADG INDUSTRIES PTY LTD ACN 112 167 638 First Plaintiff ADVANCED CONSOLIDATED HOLDINGS PTY LTD ACN 113 488 190 Second Plaintiff ARA GROUP MANAGEMENT PTY LTD ACN 122 697 027 Third Plaintiff T C TECHNOLOGIES (AUSTRALIA) PTY LTD ACN 071 253 971 Fourth Plaintiff ADVANCED SECURITY SYSTEMS PTY LTD ACN 003 656 371 Fifth Plaintiff ADVANCED GROUP RESOURCES PTY LTD ACN 109 257 927 Sixth Plaintiff ADVANCED MECHANICAL SYSTEMS PTY LTD ACN 002 948 218 Seventh Plaintiff ELECTOMECH PTY LTD ACN 071 253 908 Eighth Plaintiff BASS ELECTRICAL (NSW) PTY LTD ACN 102 626 666 Ninth Plaintiff AND: ARA GROUP PTY LTD ACN 074 886 561 First Defendant ENVIRONMENTAL AUTOMATION PTY LTD ACN 002 938 187 Second Defendant AIC SOLUTIONS PTY LTD ACN 063 676 415 Third Defendant AIR CONDITIONING ENGINEERING SERVICES PTY LTD ACN 122 466 693 Fourth Defendant BASS ELECTRICAL PTY LTD ACN 098 616 409 Fifth Defendant JUDGE: EMMETT J DATE: 30 NOVEMBER 2007 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 5 November 2007, the Court ordered that meetings of the members of the nine plaintiffs be convened for the purpose of considering schemes of arrangement affecting the plaintiffs. Meetings were held and the plaintiffs have now applied to the Court for approval of the schemes pursuant to s 411 of the Corporations Act 2001 (Cth) (the Act). 2 The first defendant in the proceeding, ARA Group Pty Limited (ARA Group), is the parent company of the ARA Group. In February 2007, ARA Group acquired Advanced Consolidated Holdings Pty Ltd (ACN 113 488 190), the second plaintiff and its subsidiaries (the Advanced Group), including the fourth to eighth plaintiffs. The Advanced Group operated a number of businesses that were similar and complementary to the businesses of the ARA Group. 3 In late 2006, the Advanced Group was insolvent and on 21 December 2006 administrators were appointed. On that day, the third plaintiff entered into a licence agreement with the administrators of the Advanced Group relating to the businesses of the Advanced Group during the administration period. 4 On 7 February 2007, the creditors of each of the companies in the Advanced Group, including the second plaintiff and the fourth to eighth plaintiffs, resolved that the companies should execute deeds of company arrangement; such deeds were duly executed on 28 February 2007 (the Deeds). 5 The Deeds provide, inter alia, for the establishment of a Deed Fund into which certain sums were to be paid and for the release of all claims of creditors against the companies. The Deeds provide for the creditors of those companies to share in the Deed Fund in accordance with provisions of the Deeds. The effect is that the claims of creditors against the second and fourth to eighth plaintiffs have been extinguished by the Deeds. 6 Immediately following the execution of the Deeds on 28 February 2007 the shares in the second plaintiff were transferred to the first defendant and the Advanced Group thereby became part of the ARA Group. The proposed schemes of arrangement are designed to streamline the business operations of the expanded ARA Group. The first plaintiff, the third plaintiff and the ninth plaintiff were originally members of the ARA Group and the second, and fourth to eighth plaintiffs were part of the Advanced Group. The effect of the proposed schemes will be that the business and undertakings of the plaintiffs will be transferred to the defendants and the plaintiffs will be deregistered. 7 When I ordered the convening of the meetings, I indicated that I would expect to see some evidence of the financial position of all of the companies to ensure that outside creditors of the companies, both the transferring companies and the transferee companies, would not be prejudiced by the effect of the schemes. 8 I have considered the affidavit of Edward Federman, sworn 29 November 2007. I am satisfied from the evidence furnished by that affidavit that the meetings were convened substantially in accordance with the directions and orders that I gave and made on 5 November 2007. I am satisfied that resolutions in favour of the proposed arrangement were passed by a majority of the shareholders being all of the shareholders of the plaintiffs. I am also satisfied from the evidence of Mr Federman that there is no likely prejudice to any of the creditors of any of the companies involved in the schemes. 9 The schemes provide that certain policies of insurance and possible claims under such policies of insurance are not transferred by the operation of the schemes. The intention is that, to the extent that there are claims or policies outstanding, they will be dealt with, by operation of law through Australian Securities and Investments Commission (the Commission). The affidavit sworn by Mr Federman sets out the underwriters in relation to relevant policies and indicates that, after appropriate inquiry, it seems highly unlikely that there are going to be claims made under those policies. 10 The Commission has been notified of the proposed schemes and has written to the solicitors for the plaintiffs indicating that the Commission has no objection to the schemes, on the basis that it is satisfied that they have not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 of the Act. The Commission indicated, therefore, that it did not propose to appear to make submissions or intervene to oppose the schemes at the hearing today. When the matters were called on for hearing there was no appearance for any person other than Senior Counsel for the plaintiffs. 11 Counsel for the plaintiffs drew the Court's attention to clause 19 of the scheme document. Clause 19 contains a provision that the schemes are to become effective as at 12 noon Australian Eastern Daylight Time (AEDT) on 30 November 2007, or such other time or date as the Court determines if, on or before that time, the Court makes orders under s 411(4) of the Act approving the schemes and an office copy of the order of the Court approving the schemes is lodged with the Commission. 12 It is arguable that, if those things do not occur before 12 noon today, then the scheme will not be effective. Having regard to the timing of the hearing today it will not be practicable for the office copy of the Court's order approving the schemes to be lodged with the Commission prior to 12 noon today. The Court has therefore been asked to vary the terms of the schemes to provide that they will become effective at 5 pm AEDT on 30 November 2007 in lieu of 12 noon on that day. 13 The proposed alteration does not in any way affect the details of the schemes and the proposed amendment has the effect of improving the smooth working of the schemes without affecting their substance. I have no doubt that the Court has a discretion to make the amendment to the schemes that is now sought and I am satisfied in the circumstances that the schemes should be approved subject to amendment of clause 19.1 to make clear that they will become effective at 5 pm on 30 November 2007 rather than 12 noon. 14 In all of the circumstances I consider that it is appropriate to approve the schemes as amended pursuant to s 411(4)(b) of the Act. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 17 December 2007 Counsel for the Plaintiffs: Mr MB Oakes SC Solicitor for the Plaintiffs: Blake Dawson The Defendants did not appear. Date of Hearing: 30 November 2007 Date of Judgment: 30 November 2007