FEDERAL COURT OF AUSTRALIA Kijurina (as Administrator), in the matter of Mynetsale Pty Ltd (Administrators Appointed) v Mynetsale Pty Ltd (Administrators Appointed) [2014] FCA 776 Citation: Kijurina (as Administrator), in the matter of MyNetSale Pty Ltd (Administrators Appointed) v MyNetSale Pty Ltd (Administrators Appointed) [2014] FCA 776 Parties: BRENT TREVOR-ALEX KIJURINA AND RICHARD ALBARRAN IN THEIR CAPACITY AS VOLUNTARY ADMINISTRATORS OF MYNETSALE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 154 123 350) and MYNETSALE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 154 123 350) File number(s): NSD 754 of 2014 Judge(s): FARRELL J Date of judgment: 24 July 2014 Catchwords: CORPORATIONS – external administration – application pursuant to ss 439A(6) and 447A(1) of the Corporations Act 2001 (Cth) – extension of convening period – first application made – where extension might facilitate sale of business as going concern Legislation: Corporations Act 2001 (Cth) Date of hearing: 24 July 2014 Date of last submissions: 24 July 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 13 Counsel for the First Plaintiff: Mr S Lipp Solicitor for the First Plaintiff: Nelson McKinnon Lawyers Counsel for the Second Plaintiff: The Second Plaintiff did not appear IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 754 of 2014 IN THE MATTER OF MYNETSALE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 154 123 350) BETWEEN: BRENT TREVOR-ALEX KIJURINA AND RICHARD ALBARRAN IN THEIR CAPACITY AS VOLUNTARY ADMINISTRATORS OF MYNETSALE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 154 123 350) First Plaintiff AND: MYNETSALE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 154 123 350) Second Plaintiff JUDGE: FARRELL J DATE OF ORDER: 24 July 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to section 439A(6) of the Corporations Act 2001 (Cth) ("the Act"), the period within which the Administrators of the Second Plaintiff must convene a meeting of creditors of the Second Plaintiff under section 439A of the Act be extended up to and including 30 September 2014. 2. Pursuant to s 447A(1) of the Act, Part 5.3A of the Act is to have effect in relation to the Second Plaintiff such that the meetings of the creditors of the Second Plaintiff required by section 439A of the Act may be held at the any time during, or within 5 business days after the end of, the convening period as extended by order 1 above, notwithstanding the provisions of section 439A(2) of the Act. 3. An order that the costs and expenses of this application in respect of the Plaintiffs are costs and expenses of the Administration of the Second Plaintiff. 4. Liberty to apply to the Court to modify or discharge these orders be granted to any person who can demonstrate sufficient interest, upon at least 24 hours' notice to the Plaintiffs. THE COURT NOTES THAT: 5. The First Plaintiff will send a circular to the creditors of the Second Plaintiff informing them of the Orders extending the convening period by 28 July 2014. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 754 of 2014 IN THE MATTER OF MYNETSALE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 154 123 350) BETWEEN: BRENT TREVOR-ALEX KIJURINA AND RICHARD ALBARRAN IN THEIR CAPACITY AS VOLUNTARY ADMINISTRATORS OF MYNETSALE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 154 123 350) First Plaintiff AND: MYNETSALE PTY LTD (ADMINISTRATORS APPOINTED) (ACN 154 123 350) Second Plaintiff JUDGE: FARRELL J DATE: 24 July 2014 PLACE: SYDNEY REASONS FOR JUDGMENT 1 By originating process filed in Court on 24 July 2014, the first plaintiffs sought orders pursuant to s 439A(6) and s 447A(1) of the Corporations Act 2001 (Cth) (Act) to extend the convening period within which a meeting of the creditors of the second plaintiff (Company) (called the "second meeting" for convenience) must be convened and held. The first plaintiffs are the joint and several administrators of the Company (Administrators). Mr Brent Kijurina swore an affidavit in support of the application on 23 July 2014. 2 The directors of the Company resolved to appoint the Administrators on 1 July 2014. But for the extension sought by the Administrators, the convening period for the second meeting would expire on 29 July 2014 under s 439A(5)(b). The application is therefore made before the convening period expires. The Administrators seek an extension of the convening period up to and including 30 September 2014, a period of three months. 3 On 3 July 2014, the Administrators issued the first report to creditors and the first meeting of creditors was held on 11 July 2014. A creditors' committee was appointed comprising a trade creditor and three employees. I was informed that the creditors were given notice of this application by email on 23 July 2014 and the Administrators had received no notice of object to the application. 4 The Company carries on business as an online retailer of high-end clothing and fashion accessories as well as a range of designer homeware decor products. It also operates a retail store for clothing and fashion items from its business premises in Rosebery, New South Wales. 5 The Company sourced most of its product from European suppliers through the Company's parent shareholder MyNetSale SAS, a corporate entity in France (Parent). The Parent has an operations centre in Paris and employs approximately 25 employees there. The Parent has a management services agreement with the Company that deals with international logistics and supplies and under which the Parent provides services including: control and management of audit services; sourcing supplies; purchasing stock to be sold on the Company's website; making payments to suppliers; and managing and maintaining the Company's website. 6 The total estimated value of the Company's assets is $174,842 comprising $36,926 in cash at bank, $103,551 in inventory/stock on hand and (subject to a valuation which is being sought) $34,365 in plant and equipment. 7 The Administrators continue to trade the Company's business and are, and intend to continue, paying the Company's ten staff in the ordinary course of their employment terms during the Administration. They have continued trading under the existing arrangements in respect of logistics (international freight and Australia wide delivery) and also with suppliers of stock and products. The Administrators have continued to utilise the Company's online merchant facility in an attempt to reduce the risk for customers and the Company's banker with respect to chargebacks. 8 The Administrators hope to sell the business as a going concern. Although the Administrators have commenced preparation of an Information Memorandum, the sale of the business has not been advertised. Until 17 July 2014 the Administrators thought it realistic that the Parent would either put forward an offer to acquire the Company's business or propose a deed of company arrangement under which creditors would receive 100 cents in the dollar. On 17 July 2014 a meeting of the Parent's investors took place in France and the Administrators were subsequently told that the investors decided not to invest additional capital in the Parent or the Company. 9 The Company's primary creditor is the Parent for $10,339,302. The Administrators understand that this amount has built up since the Company's incorporation in November 2011 and comprises shareholder financial support and the cost of product paid for by the Parent and supplied to the Company. 10 The Administrators say that the Australian Taxation Office is a creditor for approximately $873,000 and that there are some trade creditors owed in the vicinity of $500,000. The Report as to Affairs provided on 11 July 2014 by Ms Todt, a director of the Company, indicates amounts of $13,433 for superannuation and $26,598 in annual leave entitlements are owing to employees. 11 The Administrators believe that they will be able to sell the business, but not before 5 August 2014, the last date on which a meeting could be held having regard to the current convening period. 12 As the Company's main asset is goodwill (comprising the value of its 700,000 strong customer base, being people who have accessed its website and bought products from it), the Company's best prospect of paying its creditors is if the business is sold as a going concern. 13 I will make the orders sought, including an order that liberty to apply to the Court to modify or discharge these orders be given to any person with a sufficient interest in the proceedings upon 24 hours' notice to the plaintiff. I note in the orders that the first plaintiff will notify the creditors of the second plaintiff of these orders. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell. Associate: Dated: 25 July 2014