Re Systems V International Pty Ltd [2003] NSWSC 250

New South Wales Supreme Court

CITATION : Re Systems V International Pty Ltd [2003] NSWSC 250 revised - 29/04/2003 HEARING DATE(S) : 24 March 2003 JUDGMENT DATE : 24 March 2003 JURISDICTION: Equity JUDGMENT OF : Campbell J DECISION : Termination date extended

CATCHWORDS : CORPORATIONS - voluntary administration - variation of deed of company arrangement by extending termination date of deed CASES CITED : Australasian Memory Pty Ltd v Brien [2000] HCA 30; 172 ALR 28 Re Application of Walker [2002] NSWSC 705 PARTIES : Phillip Patrick Carter and Gregory Winfield Hall in their capacity as Deed Administrators of Systems V International Pty Ltd - (P) FILE NUMBER(S) : SC 2020/03 COUNSEL : P Sibtain - (P) SOLICITORS : Gilbert & Tobin - (P)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

CAMPBELL J

MONDAY 24 MARCH 2003

SC2020/03 PHILLIP PATRICK CARTER & GREGORY WINFIELD HALL (in their capacity as Deed Administrators of Systems V International Pty Ltd) JUDGMENT – Ex tempore 1 HIS HONOUR: This is an application that a deed of company arrangement be varied so that the definition of "termination date" in the deed is altered to read "31 October 2003 or such date as amended at a meeting of creditors". 2 The application is made concerning a company, which was placed into administration on 21 April 2002. There have been two creditors' meetings. The first was on 29 April 2002, the second on 13 June 2002. 3 At the second creditors' meeting, the creditors resolved that the company enter into a deed of company arrangement. That deed was executed on 20 June 2002. Over the period from 20 June 2002 to 7 February 2003 the administrators continued the business of the company. A creditors' report, which was issued on 21 November 2002, reported that if a sale could be made of the business, or assets of the company, then secured creditors should receive a distribution. The report said that neither under a deed of company arrangement, nor upon a liquidation, would sufficient money be available to enable any return to the unsecured creditors. 4 On 29 November 2002 a creditors' meeting was convened, which resolved to extend the termination date of the deed to 31 March 2003 to allow a proposed sale of the company to be completed prior to termination of the deed. That proposed sale did not proceed. 5 However, another potential purchaser emerged. A contract for sale of certain of the assets of the company was exchanged on 7 February 2003. The final payment pursuant to that sale contract was due to be made on 14 March 2003. It has not in fact been paid at the moment, but the administrators expect it will be paid in the course of this week. 6 At present, the deed is due to terminate at the end of March. 7 However, there are still steps for the administrators to carry out to finalise the affairs of the company. There is one outstanding debtor, who owes an amount of a little less than 1900 Euros. There are some plant and equipment of the company which was not sold under the sale agreement, and which is proposed to be sold at an auction, which is scheduled to occur on 8 April 2003. 8 As a result of the sale of the business of the company, various employees will become redundant. It is not possible for those employees to make application under the GEERS scheme until the situation concerning their redundancy is clear. The administrators' experience is that payment to the administrator of amounts, which are payable to the administrator for passing on to employees under the GEERS scheme, can take months to be made after a claim is lodged. In all circumstances, the administrator seeks to have the deed extended. He estimates that the period of time which is sought, namely to have the deed terminate on 31 October 2003, is what is likely to be necessary to enable the administration of the deed to be concluded. 9 If a creditors' meeting is needed to be called, it would cost the company of the order of $4500. 10 The present application is one which is made under s 447A of the Corporations Act. Section 447A (1) provides: "The court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company". 11 The powers conferred under s 447A (1) are not restricted to making orders to cure defects, and there is nothing on the face of s 447A (1) which suggests it should be read down. In Australasian Memory Pty Ltd v Brien [2000] HCA 30; 172 ALR 28 the Full Court of the High Court so held. The powers under s 447A enable the court to enlarge the time for convening a first meeting of creditors (Re Application of Walker [2002] NSWSC 705). 12 In my view, there is power to make the present order. 13 Turning now to whether it is appropriate to make the order, the making of the order will enable the administration, which the creditors have already voted for, to be seen through to its end. I can see no way in which any creditor would be deleteriously affected by the extension of the time in the manner which is asked for. Some money will be saved for distribution to creditors, as a result of not needing to call another meeting. When the unsecured creditors will receive nothing under the deed, there is no reason to believe that any interest of theirs will be prejudiced by not having the opportunity to attend a meeting to vote on the extension. Those creditors who are employees would be benefited by the order made, as they will be able to receive amounts under the GEERS scheme in an orderly fashion. 14 I make the orders contained in paragraphs 2 and 3 of the originating process. This order may be entered forthwith. **********