Birch, in the matter of Geelong Fire Services Pty Ltd (Administrators Appointed)

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 12 August 2022
• Neutral Citation: [2022] FCA 963
• Date: 12 August 2022

Federal Court of Australia

Birch, in the matter of Geelong Fire Services Pty Ltd (Administrators Appointed) [2022] FCA 963

File number:	VID 451 of 2022
Judgment of:	MOSHINSKY J
Date of judgment:	12 August 2022
Date of publication of reasons:	18 August 2022
Catchwords:	CORPORATIONS – administration – application for order relieving the administrators of personal liability in relation to a funding agreement with parent of company in administration – application for order to give effect to a security interest over the company’s assets – order made
Legislation:	Corporations Act 2001 (Cth), ss 435A, 436A, 443A, 447A, 513C, 588FL, 588FM, Sch 2, Insolvency Practice Schedule (Corporations), s 90-15
Cases cited:	Dickerson, in the matter of McWilliam’s Wines Group Ltd (Administrators Appointed) (No 2) [2020] FCA 417 Hill, in the matter of Ovato Limited (Administrators Appointed) [2022] FCA 903 In the matter of RCR Tomlinson Ltd (administrators appointed) [2018] NSWSC 1859 Korda, in the matter of Ten Network Holdings Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2017] FCA 1144; 35 ACLC 17-044 Re Unlockd Ltd (administrators apptd) [2018] VSC 345 Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) (2020) 144 ACSR 347
Division:	General Division
Registry:	Victoria
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	37
Date of hearing:	12 August 2022
Counsel for the Plaintiff:	Ms RT Zambelli
Solicitor for the Plaintiff:	Hamilton Locke

ORDERS

		VID 451 of 2022
IN THE MATTER OF GEELONG FIRE SERVICES (ACN 073 604 163) (ADMINISTRATORS APPOINTED)
BETWEEN:	THOMAS DONALD BIRCH, GLENN JOHN SPOONER AND JEREMY JOSEPH NIPPS IN THEIR CAPACITY AS JOINT AND SEVERAL VOLUNTARY ADMINISTRATORS OF GEELONG FIRE SERVICES (ACN 073 604 163) (ADMINISTRATORS APPOINTED) Plaintiffs

order made by:	MOSHINSKY J
DATE OF ORDER:	12 AUGUST 2022

THE COURT ORDERS THAT:

Limitation of Administrators’ Liability

1. Pursuant to s 447A(1) of the Corporations Act 2001 (Cth) (Corporations Act), and s 90‑15 of the Insolvency Practice Schedule (Corporations), being Sch 2 to the Corporations Act (IPSC), Pt 5.3A of the Corporations Act is to operate in relation to the plaintiffs as if s 443A(1) of the Corporations Act provides that:

   1. the liabilities of the first plaintiffs (in their capacity as administrators of the second plaintiff) incurred with respect to any obligations arising out of, or in connection with any loan facility agreement substantially in accordance with the form exhibited to the affidavit of Thomas Donald Birch sworn on 11 August 2022 (Birch Affidavit) (Loan Facility Agreement), between the first plaintiffs and Firesafe Group Pty Ltd (ACN 619 974 033) (Firesafe) are in the nature of debts incurred by the first plaintiffs in the performance and exercise of their functions as joint and several administrators of the second plaintiff; and

   2. notwithstanding that the liabilities in subparagraph (a) are debts incurred by the first plaintiffs in the performance and exercise of their functions as joint and several administrators of the second plaintiff, the first plaintiffs will not be personally liable to repay such debts, or satisfy such liabilities to the extent that the property of the second plaintiff is insufficient to satisfy the debts and liabilities incurred by the first plaintiffs arising out of, or in connection with, the Loan Facility Agreement.

2. Pursuant to s 90-15 of Sch 2 of the IPSC, the first plaintiffs (in their capacities as administrators of the second plaintiff) are justified in causing the second plaintiff to enter into the Loan Facility Agreement and in drawing down funds pursuant to the Loan Facility Agreement.

Extension of Time for Registration of Security Interest

3. Pursuant to s 588FM of the Corporations Act, in respect of any security interests created, granted by or in connection with the “General Security Deed” dated 10 August 2022 in the form exhibited at pages 188 to 234 of Exhibit TDB-1 to the Birch Affidavit (General Security Deed), as amended by the deed exhibited as JN-1 to the affidavit of Jeremy Nipps sworn on 12 August 2022, the registration time for the collateral is fixed to be, for the purposes of s 588FL(2)(b)(iv) of the Corporations Act, 6 September 2022 (being the time that is the end of 20 business days after the date of the General Security Deed that gives rise to the security interests that come into force).

Notice of these orders and other matters

4. The first plaintiffs take all reasonable steps to cause notice of these orders to be given, within two (2) business days’ of making these orders to:

   1. the creditors (including persons claiming to be creditors) of the second plaintiff in the following manner:

      1. where the first plaintiffs have an email address for a creditor, by notifying each such creditor, via email, of the making of the orders;

      2. where the first plaintiffs do not have an email address for a creditor, but have a postal address for that creditor, by notifying each such creditor, by post, of the making of the orders; and

      3. where the first plaintiffs do not have an email address or postal address, by publishing the notice on the website maintained by the first plaintiffs;

   2. the Australian Securities and Investments Commission, by its street address, or email address.

5. Liberty to apply be granted to any person, including any creditor of the second plaintiff or the Australian Securities and Investments Commission, who can demonstrate sufficient interest to vary the orders sought on the giving of two (2) business days’ notice to the plaintiffs, and to the Court.

6. The first plaintiffs’ costs and expenses of and incidental to the originating process are to be treated as costs in the administration of the second plaintiff.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1. By their originating process filed on 11 August 2022, the first plaintiffs (the Administrators), who are the administrators of the second plaintiff (the Company), sought, in summary:

1. pursuant to s 447A(1) of the Corporations Act 2001 (Cth) and s 90-15 of the Insolvency Practice Schedule (Corporations), being Sch 2 to the Corporations Act (IPSC), an order relieving the Administrators of personal liability under s 443A of the Corporations Act in relation to a funding agreement between the Company and its parent, Firesafe Group Pty Ltd (Firesafe) dated 5 August 2022 (the Loan Facility Agreement); and

2. pursuant to s 588FM of the Corporations Act, an order giving effect to a security interest over the Company’s assets granted to Firesafe by a general security deed between the Company and Firesafe dated 10 August 2022 (the General Security Deed), in order to avoid the immediate vesting of the security interest in the Administrators that would otherwise occur by operation of ss 588FL(2)(b)(ii) and 588FL(7)(b) of the Corporations Act.

2. The application was heard on an urgent basis at 1.00 pm on 12 August 2022. At the conclusion of the hearing I made orders substantially to the...