FEDERAL COURT OF AUSTRALIA Playcorp Pty Ltd v Lineville Pty Ltd, in the matter of Lineville Pty Ltd [2014] FCA 224 Citation: Playcorp Pty Ltd v Lineville Pty Ltd, in the matter of Lineville Pty Ltd [2014] FCA 224 Parties: PLAYCORP PTY LTD (ACN 002 277 363) and HOUSE CORPORATE PTY LTD (ACN 006 348 205) v LINEVILLE PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) TRADING AS ROBINS KITCHENS File number(s): QUD 56 of 2014 Judge(s): GREENWOOD J Date of judgment: 12 March 2014 Catchwords: CORPORATIONS – consideration of an application under s 445D(1) of the Corporations Act 2001 (Cth) for an order terminating a Deed of Company Arrangement – consideration of an order that a winding-up order be made Legislation: Corporations Act 2001 (Cth), ss 445D(1), 447A, 466(2), 472(1) Federal Court (Corporations) Rules 2000, r 5.6(2)(b)(ii) Date of hearing: 12 March 2014 Date of last submissions: 12 March 2014 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 14 Counsel for the Plaintiffs: B Gibson Solicitor for the Plaintiffs: SBA Law Counsel for the Defendant: J Peden Solicitor for the Defendant: King & Wood Mallesons IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 56 of 2014 IN THE MATTER OF LINEVILLE PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 107 493 738 BETWEEN: PLAYCORP PTY LTD (ACN 002 277 363) First Plaintiff HOUSE CORPORATE PTY LTD (ACN 006 348 205) Second Plaintiff AND: LINEVILLE PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) TRADING AS ROBINS KITCHENS Defendant JUDGE: GREENWOOD J DATE OF ORDER: 12 MARCH 2014 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. Pursuant to ss 445D and 447A of the Corporations Act 2001 (Cth) (the "Corporations Act"), the Deed of Company Arrangement executed by Lineville Pty Ltd (Subject to Deed of Company Arrangement) (In Provisional Liquidation), trading as Robins Kitchen (the "Company"), John Richard Park, Kelly-Anne Trenfield and Quentin Olde and Klearin Pty Limited on 10 February 2014 be terminated. 2. Pursuant to ss 461(1)(k) and 447A of the Corporations Act, the administration end and the Company be wound up. 3. Pursuant to s 532(2) of the Corporations Act, that John Richard Park, Kelly-Anne Trenfield and Quentin Olde have leave to seek or consent to be appointed, and to act, as liquidators of the Company. 4. Pursuant to s 472(1) of the Corporations Act, that John Richard Park, Kelly-Anne Trenfield and Quentin Olde be appointed jointly and severally liquidators of the Company. 5. Compliance with r 5.6(2)(b)(ii) of the Federal Court (Corporations) Rules 2000 be dispensed with. 6. The plaintiffs' costs of the proceeding be paid from the assets of the Company in accordance with s 466(2) of the Corporations Act. 7. The reserved costs of the application filed on 7 March 2014 be costs in the winding-up of the Company. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 56 of 2014 IN THE MATTER OF LINEVILLE PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) ACN 107 493 738 BETWEEN: PLAYCORP PTY LTD (ACN 002 277 363) First Plaintiff HOUSE CORPORATE PTY LTD (ACN 006 348 205) Second Plaintiff AND: LINEVILLE PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) TRADING AS ROBINS KITCHENS Defendant JUDGE: GREENWOOD J DATE: 12 MARCH 2014 PLACE: BRISBANE EX TEMPORE REASONS FOR JUDGMENT 1 This is an application for an order that a Deed of Company Arrangement be terminated on grounds identified in s 445D(1)(d), (e) and (f) of the Corporations Act 2001 (Cth). In addition, reliance is placed upon the general ground in s 445D(1)(g) having regard to the affidavit material. 2 Fundamentally however, the matter seems to me to resolve into a central question which, on the affidavit material, plainly justifies the termination of the Deed of Company Arrangement. 3 The particular facts which are material to that question are the factual matters recited at paras 19 to 26 of the affidavit of Mr John Richard Park sworn 12 March 2014 and also material deposed to by Ms Kelly-Anne Lavina Trenfield in her affidavit of 7 March 2014, and particularly at para 18 and following. 4 The nub of the matter seems to me to be this. 5 The entity in question bound by the Deed of Company Arrangement as the primary operating entity, is a company described as Lineville Pty Ltd which trades as "Robins Kitchen". That entity is subject to the Deed of Company Arrangement in question, however, official liquidators were appointed provisionally pursuant to s 472(2) of the Corporations Act 2001 (Cth) by force of a recent order of Logan J made on 7 March 2014. The Deed of Company Arrangement proceeds on the basis that the management of the undertaking will be returned to the conduct of the director on the footing that the director will conduct all of the operations of the entity in the ordinary course and in a proper and business-like manner (see cl 4(j)(iii) of the Deed of Company Arrangement dated 10 February 2014 being Annexure "SL-2" to the affidavit of Mr Steven Lew affirmed on 12 February 2014). 6 This really means that two things need to subsist in order for the Deed of Company Arrangement to have any continuing utility. 7 The first matter is that the entity, operating under the Deed, fundamentally needs to secure control over the various sites from which the "Robins Kitchen" undertaking is conducted and, secondly, the entity needs to have an orthodox and consistent relationship with its suppliers. 8 Neither of those things is presently in place. 9 The present position is that the entity has lost control of virtually all of its many leasehold sites and no longer has the confidence of the two primary suppliers of stock which are the applicant in this proceeding and "Myers". 10 I am entirely satisfied that it is in the interests of the creditors that the Deed of Company Arrangement be terminated on the footing that there has been a material contravention of the Deed by the entity operating under the provisions of the Deed and that effect cannot be given to the Deed without injustice or undue delay (grounds 445D(1)(d) and (e)) and that a winding-up order be made. The evidence, in the papers, supports the proposition that the interests of the creditors are best served by a winding-up order being made with the administration of the entity in insolvency rather than a continuation of the administration of the company under the Deed of Company Arrangement. 11 It is not necessary in these brief reasons to recite all of the factual matters. 12 It is sufficient to say that I am entirely satisfied on the face of the material that it is in the interests of the creditors that the Deed of Company Arrangement be terminated on the grounds identified and that the company be wound up in insolvency. The affidavit material contains an analysis of the position the creditors would find themselves in as a result of an administration of the company in insolvency as compared with their position under the Deed of Company Arrangement. 13 In the course of hearing the application, I have given consideration to the question of whether interested parties have been sufficiently put on notice of the hearing and determination on the merits of the present application. I am satisfied that steps were taken pursuant to the orders of Logan J that enabled the relevant interested persons to be put on notice of the present application. 14 It will be necessary to make a further order abridging time under the seven day rule. However, I am satisfied that such an order ought to be made. For all of these reasons, I make orders in terms of the orders proposed by the plaintiffs which are not opposed by the provisional liquidators, John Richard Park, Kelly-Anne Lavina Trenfield and Quentin James Olde. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate: Dated: 12 March 2014