Federal Court of Australia Transport Workers' Union of Australia, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 1218 File number: NSD 914 of 2020 Judgment of: MIDDLETON J Date of judgment: 21 August 2020 Date of publication of reasons: 24 August 2020 Catchwords: CORPORATIONS – administration – creditors' meeting – proxies – attendance of employees' unions as attorneys for employees – application for orders under Corporations Act 2001 (Cth) s 447A Legislation: Fair Work (Registered Organisations) Act 2009 (Cth) Cases cited: In the matter of Pasminco Limited (Subject to Deed of Company Arrangement) [2003] FCA 265 Mentha, in the matter of Arrium Limited (administrators appointed) [2016] FCA 1300 Re Ansett Australia Limited (admin apptd); Rappas v Ansett Australia Limited (admin apptd) [2001] FCA 1348 Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571 Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717 Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 3) [2020] FCA 726 Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 4) [2020] FCA 927 Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 5) [2020] FCA 986 Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 6) [2020] FCA 1172 Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 7) [2020] FCA 1182 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 20 Date of hearing: 21 August 2020 Counsel for the Plaintiffs: Mr C T Moller Solicitor for the Plaintiffs: Gordon Legal Counsel for the Defendants: Mr D Krochmalik Solicitor for the Defendants: Clayton Utz ORDERS NSD 914 of 2020 IN THE MATTER OF VIRGIN AUSTRALIA HOLDINGS LTD (ADMINISTRATORS APPOINTED) ACN 100 686 226 & ORS BETWEEN: TRANSPORT WORKERS' UNION OF AUSTRALIA First Plaintiff AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION Second Plaintiff FLIGHT ATTENDANTS' ASSOCIATION OF AUSTRALIA (and others named in the Schedule) Third Plaintiff AND: VAUGHAN STRAWBRIDGE, SALVATORE ALGERI, JOHN GREIG AND RICHARD HUGHES, IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS First Defendant VIRGIN AUSTRALIA HOLDINGS LTD (ADMINISTRATORS APPOINTED) ACN 100 686 226 Second Defendant VIRGIN AUSTRALIA INTERNATIONAL OPERATIONS PTY LTD (ADMINISTRATORS APPOINTED) ACN 155 859 608 (and others named in the Schedule) Third Defendant order made by: MIDDLETON J DATE OF ORDER: 21 August 2020 THE COURT ORDERS THAT: 1. The time for service of the plaintiffs' originating process is abridged and the originating process is made returnable at 10.15am on 21 August 2020. 2. Pursuant to section 447A(1) of the Corporations Act 2001 (the 'Act'), Part 5.3A of the Act and the Insolvency Practice Rules (Corporations) ('IPR') are to operate in relation to each of the second to forty-second defendants (the 'Virgin Companies') as if they provided that, at the concurrent meetings of creditors of the Virgin Companies held pursuant to section 439A of the Act ('Second Meetings') (including at the recommencement of the meetings, if adjourned), each employee of the Virgin Companies who is a member of any of the following industrial association: (a) Transport Workers' Union of Australia; (b) Australian Municipal, Administrative, Clerical and Services Union; (c) Flight Attendants' Association of Australia; (d) The Australian Licenced Aircraft Engineers Association; (e) VIPA; (f) Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; and (g) Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union, (A) who has not, by the "POD Lodgement Date" (as that term is defined in order 8 of the orders made on 12 August 2020 in proceeding NSD464/2020): (i) registered on the "Halo Platform" (as that term is defined in order 2 of the orders made on 11 August 2020 in proceeding NSD 464/2020); and (ii) lodged a proof of debt on the Halo Platform, is deemed (for the purposes of order 4 of the orders made on 11 August 2020 and order 12 of the orders made on 12 August 2020 in proceeding NSD464/2020) to have lodged a proof of debt on the Halo Platform for the amounts owing to that employee as recorded in the books and records of the Virgin Companies; and (B) who has not, by midday AEST on the business day prior to the Second Meetings: (i) lodged a proxy form; (ii) lodged an appointment of power of attorney; or (iii) indicated to the Administrators that he or she wishes to vote or participate at the Second Meetings himself or herself, or (iv) already voted through the Halo Platform, is deemed to have: (1) duly appointed the person whose name appears in column 2 of Appendix A to these orders applicable to the industrial association specified in column 1 of which the employee is a member, to be his or her attorney pursuant to section 75-155 of the IPR; and (2) satisfied the requirement to lodge an instrument evidencing the appointment of attorney. 3. The Plaintiffs' reasonable costs of and incidental to this application and the Defendants' costs of and incidental to this application, be costs in the administration of the Virgin Companies. 4. Each plaintiff take all reasonable steps to cause notice of these orders to be given, within two (2) business days of the making of these orders, to its members who are employees of any of the Virgin Companies, in the following manner: (a) where the plaintiff has an email address for a member, by notifying such member, via email, of the making of the orders and providing a link to a website where the member may download the orders and the originating process; (b) where the plaintiff does not have an email address for a member but does a postal address for that member (or has received notification of non-delivery of an email sent in accordance with paragraph 4(a) above), by notifying each such member, via post, of the making of the orders and the website link where the member may download the orders and the originating process; and (c) by placing scanned, sealed copies of the originating process and the orders on the website maintained by the plaintiff. 5. Any person who can demonstrate a sufficient interest has liberty to apply to vary or discharge any orders made pursuant to paragraph 2 above, on 3 business days' written notice to the plaintiffs, the defendants and the Associate to Justice Middleton. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. Appendix A REASONS FOR JUDGMENT MIDDLETON J: INTRODUCTION 1 On 21 August 2020 I made a number of orders on the application of the Plaintiffs in this proceeding. These are the reasons for those orders. 2 This is an application by seven unions (the 'unions') whose members include employees of companies in the "Virgin Group" of companies. The application is for orders enabling representatives from the unions to represent their members at the forthcoming second meetings of the companies' creditors. 3 The background to the events leading up to the forthcoming second meetings of the companies' creditors and the administration of the "Virgin Group" of companies is set forth in the following judgments: Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571 ('Strawbridge (No 1)'); Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717; Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 3) [2020] FCA 726; Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 4) [2020] FCA 927; Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 5) [2020] FCA 986; Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 6) [2020] FCA 1172 ('Strawbridge (No 6)'); Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 7) [2020] FCA 1182 ('Strawbridge No 7'). 4 The orders sought by the unions are orthodox in large administrations like the one administered by the Defendants as Administrators. In past cases, the Court has emphasised its concern, whenever creditors' meetings are called, to overcome any inhibitions upon, or barriers to, creditors having their voices heard or votes cast, especially where there is a large body of creditors, such as employees. 5 The second meetings will determine the future not only of the Virgin Group of companies but also the Virgin employees' jobs. The Administrators have had to implement special procedures for the conduct of the meetings, including the use of an electronic platform and tight "cut-off" dates for lodgement by creditors of meeting-related documents (such as proofs of debt or claim and proxies). Those procedures will affect, and may impede, the ability of union members to participate in the meetings. 6 By this application, the unions seek orders to ensure that their members have their voices heard and votes cast. BACKGROUND 7 The relevant background to the application by the unions is as follows. 8 Each of the unions is an organisation registered under the Fair Work (Registered Organisations) Act 2009 (Cth). Each is affiliated with the Australian Council of Trade Unions, with whom they have been liaising about the administrations of the Virgin Group. 9 A substantial number of the Virgin employees are members of the unions. Their employment is covered by enterprise agreements, to which the relevant Virgin Group of companies, the employees and the unions are parties. 10 Information provided by the Administrators shows that, of 10,247 known creditors (excluding customers entitled to credits for flights cancelled due to the COVID-19 pandemic), 9,020 are employees, whose unpaid entitlements are worth approximately $451 million. 11 The unions have represented their members' interests since the administrations began. For instance, each has been a member of the Committee of Inspection, established by the Court's orders made on 24 April 2020: Strawbridge (No 1). Those orders also provided for meetings to be held remotely, by video-link or telephone, and provided a regime by which creditors could provide proxies. 12 The second meetings of the Virgin Group of companies is scheduled to be held on 4 September 2020. 13 The Court has already made orders for the conduct of the second meetings. For instance, on 11 August 2020, the Court made orders permitting the Administrators to require creditors intending to vote to register on the "Halo platform", requiring use of that platform for submitting material to establish their entitlement to vote, and allowing the platform to be used to communicate with creditors about the administrations and creditors' proofs of debt or claim: Strawbridge (No 6). On 12 August 2020, the Court made orders for the second meetings, including orders prescribing cut-off dates for the lodgement of proofs of debt and proxy forms or powers of attorney via the Halo system and for the meetings to be held (using Microsoft Teams technology) as an event on the Halo platform: Strawbridge (No 7). 14 The unions are concerned about the ability of their members to participate in, and have their interests represented at, the second meetings. In particular: (a) their members are dispersed throughout the country, including in remote locations and in Victoria where "Stage 4" restrictions have been imposed in relation to the COVID-19 pandemic; (b) the relatively short timeframe before the second meetings may impede members' ability to participate, in particular, to receive and understand the report and recommendations to be provided by the Administrators and decide what action to take. Normally, the unions would have the opportunity to meet and consult with members (including at their worksites) about those issues but, because of the effects of COVID-19, will not be able to; (c) these difficulties will be accentuated by the processes that the Administrators have had to adopt for the second meetings, especially: (i) the use of electronic communications to send material and conduct the meetings, in circumstances where it is not clear that all union members have reliable access to electronic resources, including stable or reliable internet; (ii) the effect of the "cut off dates" as envisaged by the process; and (iii) the fact that the unions will not have the opportunity (as they would normally) to consult with members, especially at on-site meetings. CONSIDERATION AND DISPOSITION 15 It is appropriate in the circumstances to make the orders sought by the unions and agreed to by the Administrators and not otherwise opposed. I should indicate that despite this agreement and lack of opposition (whilst relevant to the Court's consideration of the application by the unions) does not relieve the Court of its obligation to consider whether the orders sought are appropriate. 16 The orders made in this proceeding are consistent with orders that have been made in other large administrations and are based upon the principles enunciated by judges of this Court: Re Ansett Australia Limited (admin apptd); Rappas v Ansett Australia Limited (admin apptd) [2001] FCA 1348; In the matter of Pasminco Limited (Subject to Deed of Company Arrangement) [2003] FCA 265; Mentha, in the matter of Arrium Limited (administrators appointed) [2016] FCA 1300 at [4]. 17 The resolutions passed at the second meetings will determine the fate of the Virgin Group, and will have an important and significant impact upon employees of Virgin and the nation as a whole. Given the entitlements of Virgin employees and the implications for their employment, employees – including union members – have an interest in the meetings and their outcome. Employees represent approximately 88% of Virgin creditors by number. 18 The circumstances in which the meetings have been convened, that is, in the midst of an historic global pandemic, and the steps that have been implemented to respond to it (that is, from the general public health perspective as well as the specific steps relating to the administrations and the meetings), mean that there may be difficulties for a considerable number of the unions' members in having their voices heard or their votes recorded. 19 The effective representation of the interests of employee creditors' at the second meetings of creditors is critical, given their numbers, the amount of money they are owed by way of entitlements, and the implications of the decisions made at the second creditors' meetings for their ongoing employment. Moreover, as I have indicated, many of those employees are isolated and more vulnerable than usual because of the restrictions relating to the COVID-19 pandemic. Those restrictions also exacerbate the difficulties for them in participating in the second meetings. 20 The orders provide for the unions to notify their members of the orders, such that their members will know of them and their effect during the period for lodgement of proofs and proxies, and will also be able to contact the relevant union for assistance. The unions have an important role in this regard. The orders also reserve liberty for any person with a sufficient interest (which would include a union member) to make application to the Court to vary or discharge the orders made in order 2. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Middleton. Associate: Dated: 24 August 2020 SCHEDULE OF PARTIES NSD 914 of 2020 Plaintiffs Fourth Plaintiff: THE AUSTRALIAN LICENCED AIRCRAFT ENGINEERS ASSOCIATION Fifth Plaintiff: VIPA Sixth Plaintiff: COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA Seventh Plaintiff: AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION Defendants Fourth Defendant: VIRGIN AUSTRALIA INTERNATIONAL HOLDINGS PTY LTD (ADMINISTRATORS APPOINTED) ACN 155 860 021 Fifth Defendant: VIRGIN AUSTRALIA INTERNATIONAL AIRLINES PTY LTD (ADMINISTRATORS APPOINTED) ACN 125 580 823 Sixth Defendant: VIRGIN AUSTRALIA AIRLINES (SE ASIA) PTY LTD (ADMINISTRATORS APPOINTED) ACN 097 892 389 Seventh Defendant: VIRGIN AUSTRALIA AIRLINES HOLDINGS PTY LTD (ADMINISTRATORS APPOINTED) ACN 093 924 675 Eighth Defendant: VAH NEWCO NO.1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 160 881 345 Ninth Defendant: TIGER AIRWAYS AUSTRALIA PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 124 369 008 Tenth Defendant: VIRGIN AUSTRALIA AIRLINES PTY LTD (ADMINISTRATORS APPOINTED) ACN 090 670 965 Eleventh Defendant: VA BORROWER 2019 NO. 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 633 241 059 Twelfth Defendant: VA BORROWER 2019 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 637 371 343 Thirteenth Defendant: VIRGIN TECH PTY LTD (ADMINISTRATORS APPOINTED) ACN 101 808 879 Fourteenth Defendant: SHORT HAUL 2018 NO. 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 622 014 831 Fifteenth Defendant: SHORT HAUL 2017 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 617 644 443 Sixteenth Defendant: SHORT HAUL 2017 NO. 3 PTY LTD (ADMINISTRATORS APPOINTED) ACN 622 014 813 Seventeenth Defendant: VBNC5 PTY LTD (ADMINISTRATORS APPOINTED) ACN 119 691 502 Eighteenth Defendant: A.C.N. 098 904 262 PTY LTD (ADMINISTRATORS APPOINTED) ACN 098 904 262 Nineteenth Defendant: VIRGIN AUSTRALIA REGIONAL AIRLINES PTY LTD (ADMINISTRATORS APPOINTED) ACN 008 997 662 Twentieth Defendant: VIRGIN AUSTRALIA HOLIDAYS PTY LTD (ADMINISTRATORS APPOINTED) ACN 118 552 159 Twenty First Defendant: VIRGIN AUSTRALIA HOLIDAYS PTY LTD (ADMINISTRATORS APPOINTED) ACN 118 552 159 Twenty Second Defendant: VB VENTURES PTY LTD (ADMINISTRATORS APPOINTED) ACN 125 139 004 Twenty Third Defendant: VIRGIN AUSTRALIA CARGO PTY LTD (ADMINISTRATORS APPOINTED) ACN 600 667 838 Twenty Fourth Defendant: VB LEASECO PTY LTD (ADMINISTRATORS APPOINTED) ACN 134 268 741 Twenty Fifth Defendant: VA HOLD CO PTY LTD (ADMINISTRATORS APPOINTED) ACN 165 507 157 Twenty Sixth Defendant: VA LEASE CO PTY LTD (ADMINISTRATORS APPOINTED) ACN 165 507 291 Twenty Seventh Defendant: VIRGIN AUSTRALIA 2013-1 ISSUER CO PTY LTD (ADMINISTRATORS APPOINTED) ACN 165 507 326 Twenty Eighth Defendant: 737 2012 NO.1 PTY. LTD (ADMINISTRATORS APPOINTED) ACN 154 201 859 Twenty Ninth Defendant: 737 2012 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 154 225 064 Thirtieth Defendant: SHORT HAUL 2016 NO. 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 612 766 328 Thirty First Defendant: SHORT HAUL 2016 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 612 796 077 Thirty Second Defendant: SHORT HAUL 2014 NO. 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 600 809 612 Thirty Third Defendant: SHORT HAUL 2014 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 600 878 199 Thirty Fourth Defendant: VA REGIONAL LEASECO PTY LTD (ADMINISTRATORS APPOINTED) ACN 127 491 605 Thirty Fifth Defendant: VB 800 2009 PTY LTD (ADMINISTRATORS APPOINTED) ACN 135 488 934 Thirty Sixth Defendant: VB LEASECO NO 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 142 533 319 Thirty Seventh Defendant: VB LH 2008 NO. 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 134 280 354 Thirty Eighth Defendant: VB LH 2008 NO. 2 PTY LTD (ADMINISTRATORS APPOINTED) ACN 134 288 805 Thirty Ninth Defendant: VB PDP 2010-11 PTY LTD (ADMINISTRATORS APPOINTED) ACN 140 818 266 Fortieth Defendant: TIGER INTERNATIONAL NUMBER 1 PTY LTD (ADMINISTRATORS APPOINTED) ACN 606 131 944 Forty First Defendant: VAH NEWCO NO. 2 PTY LTD (IN LIQUIDATION) (ADMINISTRATORS APPOINTED) ACN 160 881 354 Forty Second Defendant: VB INVESTCO PTY LTD (IN LIQUIDATION) (ADMINISTRATORS APPOINTED) ACN 101 961 095