Supreme Court New South Wales Medium Neutral Citation: In the matter of Montpac Pty Ltd (Administrators Appointed) and Anor [2013] NSWSC 857 Hearing dates: 18 June 2013 Decision date: 18 June 2013 Jurisdiction: Equity Division - Corporations List Before: White J Decision: Refer to paras [11] and [12] of judgment. Catchwords: CORPORATIONS - voluntary administration - creditor's meeting - meeting of creditors pursuant to s 439A of the Corporations Act 2001 (Cth) - period available for holding meeting pursuant to s 439B and reg 5.6.18(2) - whether period should be extended under s 447A - balance between efficiency of administration and maximising return for creditors Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Re Collective Olive Groves Limited [2009] FCA 177 Category: Interlocutory applications Parties: Stephen Wesley Hathway (1st Plaintiff) Terry Grant van der Velde (2nd Plaintiff) Representation: Counsel: E Finnane (Plaintiffs) Solicitors: Slater & Gordon (Plaintiffs) File Number(s): 2013/186105 Judgment 1HIS HONOUR: This is an application under s 447A of the Corporations Act 2001 (Cth) to extend the permitted period for the adjournment of the second meeting of creditors of the two plaintiff companies. Administrators were appointed to the plaintiffs on 15 March 2013. The first meeting of creditors was held on 27 March 2013. The second meeting of creditors was held on 23 April 2013. At the second meeting of creditors it was resolved that the meeting be adjourned for up to 45 business days. Section 439B(2) and reg 5.6.18 fixed 45 business days as the maximum period of adjournment. 2The application is brought under s 447A to modify the operation of Pt 5.3A in relation to the affairs of these companies. (See Re Collective Olive Groves Limited [2009] FCA 177 at [17].) Jacobson J said in that case (at [18]): "It seems to me that the principles which should inform the exercise of the discretion are those which have been referred to in earlier authorities. What I need to do is to strike an appropriate balance between the expectation that the administration would be a relatively speedy and summary matter and the requirement that undue speed not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders." 3The companies were placed in voluntary administration following the rejection by the Australian Taxation Office ("ATO") of an objection to a review of an indirect tax decision. The administrator's report to creditors records that they were appointed as voluntary administrators following the receipt of statutory demand from the ATO in respect of GST amounts deemed to be payable by the company. The Australian Taxation Office has lodged a proof of debt in the administration of Montpac Pty Ltd (administrators appointed) ("Montpac") in the sum of $444,973.44. It has lodged a proof of debt in the administration of Global Network Link Pty Ltd (Administrators appointed) ("Global") in the sum of $342,849. 4The administrators have filed an application with the Administrative Appeals Tribunal against the ATO's decision. Those proceedings are listed for directions on 15 August 2013. The administrators propose that the review proceedings might be resolved by consent on or before that date, but if they are not so resolved, it is expected that the proceedings would be set down for a hearing. 5The administrator deposes that if the debts provable by the ATO are substantially reduced or reduced to nil, that would be of great significance to the overall financial position of Montpac and Global. The reports as to creditors disclose a number of other debts. Many of them are owed to related party creditors. The administrator deposes that from his discussions with the director, he understands that it is the director's intention to propose a deed of company arrangement when the second meetings of creditors are reconvened. 6It appears that such proposals may provide for the deferral of debt owed to related parties or perhaps to some other non-related party. A determination of what amount is owed to the ATO is likely to be critical to what deed of company arrangement might be proposed. 7The administrators have also experienced difficulty in valuing the principal assets of both companies. Montpac owns the land on which there is a pine tree plantation. The administrator has had difficulty in obtaining a valuation, or even a proper appraisal, of the value of the pine trees. Global owns land intended to undergo development. It is not expected that valuations will be available in sufficient time for the preparation of a report to creditors before the holding of the adjourned second meeting of creditors in both companies if the period of adjournment is not extended. If the period of adjournment is not extended both meetings must be held by 27 June and reports to creditors will need to be sent on or prior to 20 June 2013. 8It does not appear that there would be prejudice to anyone if the second meeting of creditors is adjourned for a longer period than that prescribed by Pt 5.3A. The companies are not trading. I accept that it is in the interests of creditors generally that further time be allowed for the holding of the adjourned meetings to enable the administrators to complete their work as far as that can be done, and to increase the prospect of the companies arriving at a resolution of their claims for the review of the taxation decisions. 9The administrator is seeking an extension of the adjournment period to 30 September 2013. He says that if by 15 August 2013, the ATO proceedings have not been resolved he expects that they will be given a hearing date and he would then be in a position to apply to the court for a further extension of time to accommodate that date. I express no views as to whether such a further extension of time would be appropriate, but I accept that an extension of time up to 30 September 2013 to allow the valuations of assets and to allow at least the possibility of the resolution of the tax position, is in the interests of creditors. 10The orders proposed include provision for the reservation of leave to any person claiming to be interested, including any creditor of Montpac or Global, to apply to vary the orders on notice to the plaintiffs. The orders also provide that a notification of the orders to creditors and the advertising of the date, time and location of the reconvened meetings on the website of ASIC. 11For these reasons I make orders in accordance with the short minutes of order which I initial and date today and place with the papers. The effect of those orders is to extend the period for the holding of the adjourned meeting of creditors to 30 September 2013 with liberty to the affected persons to vary those orders. 12I will add paragraph 14 that these orders may be entered forthwith. All of the exhibits can be returned, including the confidential exhibit. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 June 2013