In the matter of Palace Memories Pty Limited (Administrator Appointed)

HIS HONOUR: On 15 January 2015, for reasons given that day [see In the matter of Palace Memories Pty Ltd (Administrator Appointed) [2015] NSWSC 56], Black J, on the application of the administrator, made orders pursuant to (Cth) Corporations Act, s 447A, that Pt 5.3A of the Act operate in relation to the company Palace Memories Pty Ltd as if s 439B(2) permitted an adjournment of the creditors' meeting convened under s 439A to a date not later than 31 March 2015, notwithstanding that that exceeded the period of 45 business days referred to in s 439B(2). His Honour made other orders to which it is not necessary to refer for present purposes. The rationale for the orders was summarised in his Honour's judgment as follows:

Since those orders were made, the creditors' meeting was adjourned, first, to 25 March 2015. A sale of the business was negotiated and is well advanced, although the purchaser was, for a number of reasons, unable to complete on the expected date for completion and has sought an extension of time, which the administrator is prepared to allow upon certain conditions to which the purchaser has assented. At the adjourned meeting of creditors on 25 March, it was resolved – with only a director of the company opposing – that the meeting be adjourned to today, 31 March at 3pm.

Although one cannot be overly confident that the present sale will proceed to completion, there is at least a reasonable prospect that it will, and the purchaser has indicated a degree of commitment, by payments made and undertakings given to date. If the sale proceeds, it is likely that the secured creditors will be paid in full, and there may be some small dividend available for unsecured creditors.

If the administration does not continue, then there is a significant risk that the landlord would re-enter, the business would be closed, there would be no valuable assets available for sale, and there would unlikely be any assets of significance in a liquidation. The landlord's attitude to a further adjournment of the meeting has been sought, but the landlord has to date not expressed a view one way or the other. To the extent that the landlord is a creditor, it will be able to express its view at a creditors' meeting. The secured creditor who appointed the administrator, this being a s 436C administration, may be taken to consent. The attitude of the unsecured creditors is apparent from the result of the creditors' meeting on 25 March and seems to favour a further adjournment. In any event, as the order I make will simply permit and not require an adjournment, that remains a matter which the creditors can decide at this afternoon's creditors' meeting.

It is really the attitude of the secured creditors and landlord who are adversely affected by a moratorium that is most significant to my consideration and, as I have said, the landlord has not taken the opportunity of responding to a request for an indication of its attitude. It seems to me that an extension of the time in which the meeting must be concluded by a period of about four weeks as sought, is likely to occasion little prejudice to anyone but, on the other hand, may preserve the only opportunity for a significant benefit for the secured creditors and potentially creditors generally.

It is well established by authority that the Court may, by recourse to s 447A, extend the period for which a creditor's meeting may be adjourned beyond that otherwise limited by s 439B(2) [Collective Olive Groves Limited, in the matter of Collective Olive Groves Limited; application by Reidy [2009] FCA 177; Godfrey, in the matter of Drummoyne Sports Club Limited (Administrator Appointed) [2012] FCA 1210; In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd) [2014] NSWSC 1918, and other cases].

The Court therefore orders that:

These orders are to be entered forthwith.

The exhibits may be returned.