New South Wales Supreme Court CITATION : Re Redrock Media & Ors [1999] NSWSC 182 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 1539/99 HEARING DATE(S) : 1 March 1999 JUDGMENT DATE : 1 March 1999 PARTIES : Re Redrock Media Pty Ltd (In Liquidation), Planet Media Group Pty Ltd (Administrator Appointed), The Axis Group (Aust) Pty Ltd (Administrator Appointed); application of John Vouris JUDGMENT OF : Austin J COUNSEL : R C Newlinds (P) SOLICITORS : Peter Kemp Solicitors (P) CATCHWORDS : Corporation - company - voluntary administration - court's power to postpone execution of deed of company arrangement - court's power to allow liquidator to appoint himself administrator - relevant considerations DECISION : Orders made to postpone execution of deeds and to grant leave for liquidator to appoint himself administrator THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION AUSTIN J MONDAY 1 MARCH 1999 1539/99 RE REDROCK MEDIA PTY LTD & ANORS JUDGMENT (EX TEMPORE) 1 HIS HONOUR: In this matter the plaintiff John Vouris has made an ex parte application to the Court today for orders with respect to three companies, namely, Redrock Media Pty Ltd (in liquidation) ('Redrock'), Planet Media Group Pty Ltd (Administrator Appointed) ('Planet') and The Axis Group (Aust) Pty Ltd (Administrator Appointed) ('Axis'). 2 Redrock, Planet and Axis are related companies with inter-company debit and credit accounts and common directors. They are insolvent. 3 Mr Vouris seeks an order pursuant to s 444B(2)(b) of the Corporations Law that the time for Planet and Axis to execute Deeds of Company Arrangement pursuant to resolutions of the creditors of those companies made on 10 February 1999 be extended up to and including Monday 7 March 1999. He also seeks on order that he be given leave to appoint himself administrator of Redrock pursuant to s 436B(2) of the Corporations Law. 4 The basis for these applications is as follows. On 17 December 1998 Mr Vouris was appointed the administrator of each of the three companies. In accordance with his statutory duties he convened a first meeting of creditors and then second meeting of creditors for each company. The latter meetings were originally convened for 20 January 1999 but were in each case adjourned to 10 February 1999. On 10 February Mr Vouris was required to be absent from New South Wales for business reasons and he appointed Mr Murray Godfrey, who is a chartered accountant employed by Mr Vouris' firm, to chair the three meetings of creditors. Arrangements were made for Mr Godfrey to exercise proxies and to vote under powers of attorney which had been made in favour of the chairman of those meetings. 5 At the adjourned meetings on 10 February 1999, creditors considered Mr Vouris' report, as administrator, in which he recommended that each company enter into interlocking deeds of company arrangement. The meetings for Planet and Axis were duly held and the creditors resolved to authorise each company to enter into a deed of company arrangement as recommended. Consequently under Corporations Law s 444B it would be necessary, unless the Court makes an order under s 444B(2)(b), that the deeds of company arrangement be entered into by this Wednesday 3 March 1999. 6 As to Redrock, a problem arose in this way. When a vote was taken on the proposal to enter into a deed of company arrangement Mr Godfrey made a mistake with respect to the value of the debt of one of the creditors who voted against the motion. He then calculated that however the proxies in his favour were used, the resolution would fail. Therefore, he did not vote the proxies in favour of the motion to approve the deed of company arrangement. Consequently, the resolution to enter into the deed of company arrangement failed and further, it was resolved that the company should be placed into liquidation. 7 The result is that the equivalent deeds of company arrangement for Planet and Axis have been approved by the creditors but the deed of company arrangement for Redrock has not been approved and that company is now in liquidation, with Mr Vouris as liquidator rather than administrator under the deed. That creates a problem for Mr Vouris in his role as administrator of the other two companies, because the deeds of company arrangement are interrelated in such a fashion that the deeds for the other two companies cannot be effectively implemented and acted upon in the absence of an equivalent deed for Redrock. 8 The ingenuity of counsel has been applied to that problem with the result that the present application comes before me. I am persuaded that provided certain safeguards are built into the orders I make, it is proper that I should exercise my discretion under the provisions to which I have referred. As far as s 444B(2)(b) is concerned, the orders sought will extend the time for executing the deeds for Planet and Axis for a period of only 7 days, at this stage. In those circumstances the concerns which the Court might otherwise have, especially as regards possible prejudice to parties affected by the moratorium produced by an administration under ss 440A-440D, is minimised. 9 The order sought under s 436B(2) is within a narrow compass. Mr Vouris, as liquidator, is empowered by writing to appoint an administrator of Redrock if he thinks that the company is insolvent or is likely to become insolvent at some future time (s 436B(1)). His affidavit evidence is that he believes the company is insolvent. The only reason that the leave of the Court is sought is to enable him to appoint himself as administrator. In this case I have no difficulty reaching the conclusion that that leave is appropriate to be given. He is already administrator of the other two companies under interlocking deeds of company arrangement. 10 The safeguards which I have in mind have been built into the short minutes of orders which counsel has handed up. They amount in effect to an undertaking by Mr Vouris to ensure that all creditors are properly notified of what is happening and that a further meeting the creditors of Redrock be held no later than 29 March 1999 to give them the opportunity to consider whether the deed of company arrangement should be entered into. 11 Accordingly, counsel for the plaintiff having handed up short minutes of orders, which I initial and date for the purposes of identification, upon the undertaking by Mr Vouris set out in that document, I make orders 1, 2 and 3. 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