In the matter of IOUpay Limited ACN 091 192 871 (Administrators Appointed) [2023] NSWSC 568

Supreme Court New South Wales

Medium Neutral Citation: In the matter of IOUpay Limited ACN 091 192 871 (Administrators Appointed) [2023] NSWSC 568 Hearing dates: 23 May 2023 Date of orders: 23 May 2023 Decision date: 26 May 2023 Jurisdiction: Equity - Corporations List Before: Williams J Decision: See orders in Appendix 1 Catchwords: CORPORATIONS – voluntary administration – administration should end because the company is solvent – consideration of the relevance of debt falling due in 13 months' time to the analysis of present solvency – orders made pursuant to s 447A(2)(a) of the Corporations Act 2001 (Cth) Legislation Cited: Corporations Act 2001 (Cth) ss 95A, 198G(3)(b), 436A, 437D(2), 447A, 447A(2)(a) Cases Cited: Anchorage Capital Master Offshore Ltd v Sparkes [2023] NSWCA 88 Texts Cited: N/A Category: Principal judgment Parties: David Halliday (Plaintiff) IOUpay Limited (ACN 091 192 871) (Administrators Appointed) (Defendant) Representation: Counsel: Mr D L Cook SC with Mr G McDonald (Plaintiff) Mr D Krochmalik (Defendant)

Solicitors: Marque Lawyers (Plaintiff) Johnson Winter Slattery (Defendant) File Number(s): 2023/144858 Publication restriction: N/A

Judgment

Introduction 1. The plaintiff, Mr David Halliday, is a director of the defendant company, IOUpay Limited (ACN 091 192 871) (Administrators Appointed) (the Company). 2. Mr Halliday, Mr Gregory Wosczalski and Mr Mohammad Shahruddin, were appointed as directors of the Company at an extraordinary general meeting held on 3 May 2023. 3. Mr Daniel Walley and Mr Philip Carter of PricewaterhouseCoopers were appointed as voluntary administrators of the Company pursuant to s 436A of the Corporations Act 2001 (Cth) on 26 April 2023 (the Administrators). The resolution of the Company's former directors appointing the Administrators recorded that the directors had formed the opinion that the Company was likely to become insolvent at some future time. 4. As will be referred to in more detail below, the Company presently has debts of approximately AUD$2.8 million, including a loan of approximately AUD$2.002 million from one of its wholly owned subsidiaries. The Company and its controlled entities have net assets of approximately AUD$47.011 million. 5. A shareholder of the Company, Finran Pty Limited, has offered to provide debt funding to the Company of up to AUD$4.5 million over a term of 13 months at an interest rate of 6 per cent per annum. The terms of the offer are recorded in a proposed Loan Agreement between Finran Pty Ltd as lender and the Company as borrower, which was attached to the form of orders sought by the plaintiff as provided to the Court during the hearing on 23 May 2023 (the Finran Loan Agreement). 6. The orders sought by the plaintiff, with the support of his co-directors, are set out in Appendix 1 to these reasons. [1] They included: 1. an order pursuant to ss 198G(3)(b) and 437D(2) of the Corporations Act 2001 (Cth) approving the directors exercising their powers and functions to cause the Company to enter into the Finran Loan Agreement; 2. an order pursuant to s 447A of the Corporations Act that the administration of the Company is to end immediately upon the Company and Finran Pty Ltd entering into the Finran Loan Agreement, the Company issuing a drawdown notice under that agreement in the sum of AUD$1.75 million and the Company receiving that sum from Finran Pty Ltd into the trust account of the Company's solicitors pursuant to the terms of the Finran Loan Agreement; and 3. a stay for a period of 72 hours of the operation of the order ending the administration, pending the filing and service of an affidavit of the plaintiff providing evidence that the Finran Loan Agreement has been entered into and that the funds referred to above have been received by the Company (failing which the order ending the administration is set aside). 1. The application to end the administration was premised on the plaintiff's submission that the Company will be solvent upon entering into the Finran Loan Agreement. The sum of AUD$1.75 million to be drawn down under that agreement immediately has been calculated to cover the Company's existing debts (save for the debt owed to its subsidiary) and the Administrators' remuneration and expenses. 2. The Administrators, who have defended the proceedings on behalf of the Company, informed the Court at the commencement of the hearing on 23 May 2023 that they did not oppose the orders sought by the plaintiff. 3. The plaintiff read on his affidavits sworn on 5 May, 16 May, 22 May and 23 May 2023, an affidavit of Mr Shahruddin sworn on 22 May 2023 and an affidavit of Mr Woszczalski sworn on 22 May 2023, and tendered two expert reports of Mr Andrew Sallway, a registered liquidator with business restructuring expertise. The Company read an affidavit of Mr Walley affirmed on 18 May 2023. 4. On the basis of that evidence and the submissions made by the parties, I was satisfied by the end of the hearing on 23 May 2023 that it was appropriate for the Court to exercise its discretion to make orders bringing the administration to an end on the terms proposed by the plaintiff and set out in Appendix 1, including the undertakings that were given to the Court by the directors of the Company in the terms recorded in paragraph 8 of Appendix 1. I made those orders on 23 May 2023 on the basis that my reasons would be published as soon as possible thereafter. These are those reasons.