Killer, in the matter of Scooter Group Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed)

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 29 March 2023
• Neutral Citation: [2023] FCA 320
• Date: 29 March 2023

Federal Court of Australia

Killer, in the matter of Scooter Group Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) [2023] FCA 320

File number:	QUD 473 of 2022
Judgment of:	DERRINGTON J
Date of judgment:	29 March 2023
Catchwords:	CORPORATIONS – administration – application to extend time for the convening of second meeting of creditors – extension directly benefits sale being undertaken by receivers of secured creditor – whether any benefits to be gained by unsecured creditors – possibility of some recovery in the future – application allowed
Legislation:	Corporations Act 2001 (Cth) Federal Court of Australia Act 1976 (Cth)
Cases cited:	Algeri; Re Colorado Group Ltd [2011] VSC 260 Diamond Press Australia Pty Ltd [2001] NSWSC 313 Hill, in the matter of Autocare Services Pty Ltd (administrators appointed) [2021] FCA 167 Kirk, in the matter of RL Adams Pty Ltd (Administrators Appointed) [2017] FCA 1111 Mann v Abruzzi Sports Club Ltd (1994) 12 ACSR 611 Mentha, in the matter of The Griffin Coal Mining Company Pty Ltd (administrators appointed) (ACN 008 667 285) (No 2) [2010] FCA 499 Owen v Madden (No 4) (2012) 92 ACSR 255 Owen, in the matter of Rivercity Motorway Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) v Madden [2011] FCA 295 Park, in the matter of Collection House Ltd (administrators appointed) [2022] FCA 1083 Re ABC Learning Centres Ltd; Application by Walker (No 8) (2009) 73 ACSR 478 Re Riviera Group Pty Ltd (2009) 72 ACSR 352 Re Strawbridge (No 2) (2020) 144 ACSR 347 Vickers, in the matter of JM Kelly Builders Pty Ltd (in liquidation) (No 2) [2019] FCA 1789
Division:	General Division
Registry:	Queensland
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	54
Date of hearing:	29 March 2023
Counsel for the Plaintiffs:	Mr AG Psaltis
Solicitor for the Plaintiffs:	MinterEllison

ORDERS

		QUD 473 of 2022
IN THE MATTER OF SCOOTER GROUP PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) ACN 128 286 411 & ORS
	GRAHAM ROBERT KILLER AND MATTHEW JAMES BYRNES IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF EACH OF SCOOTER GROUP PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) AND THE SECOND TO NINTH PLAINTIFFS NAMED IN THE SCHEDULE First Plaintiff ; SCOOTER GROUP PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) ACN 128 286 411 Second Plaintiff ; A.C.N. 169 352 443 PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) ACN 169 352 443 (and others named in the Schedule) Third Plaintiff

order made by:	DERRINGTON J
DATE OF ORDER:	29 MARCH 2023

THE COURT ORDERS THAT:

1. Pursuant to s 447A(1) of the Corporations Act 2001 (Cth) (Act), that Part 5.3A is to operate in relation to the second to ninth plaintiffs (Companies) as if the convening period, for the meeting of creditors required to be held under s 439A(1) of the Act, is the period ending on 30 June 2023.

2. Pursuant to s 447A(1) of the Act, and further or alternatively s 90-15 of the Insolvency Practice Schedule (Corporations) 2016, that Part 5.3A of the Act is to operate in relation to each of the Companies such that the meeting of creditors required by s 439A(1) of the Act may be held at any time during, or within five business days after the end of, the convening period as extended by Order 1 above, notwithstanding s 439A(2) of the Act.

3. Pursuant to ss 37AF and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), and in order to prevent prejudice to the proper administration of justice, the affidavit of Timothy Joseph Heenan sworn and filed on 28 March 2023 (other than in its redacted form as filed on that date) is to be treated as confidential and to be sealed on the Court file so as to be marked “Not to be opened except by leave of the Court or a Judge”.

4. Within 2 business days of these orders, the first plaintiffs are to cause notice of the orders made to be given to creditors of the Companies.

5. Any person who can demonstrate sufficient interest to vary or discharge Order 1 or Order 2 above has liberty to apply on not less than 72 hours’ notice to the first plaintiffs.

6. The first plaintiffs’ costs of and incidental to the application be costs and expenses in the administration of the Companies and be paid out of the property of the Companies.

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

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1. This is an application for a second extension of time for the convening of the second meeting of creditors in the administration of eight companies (the Companies). The first plaintiffs in the application are the current administrators, Mr Graham Killer and Mr Matthew Byrnes, and the Companies are the second to ninth plaintiffs.

2. The circumstances of the application are somewhat unusual. Receivers have been appointed to all of the Companies, except the ninth plaintiff, by a secured creditor, Westpac Banking Corporation (Westpac). The administrators effectively seek the extension of the convening period in order to advance the interests of Westpac by giving the receivers additional time to sell the relevant Companies’ businesses whilst permitting them to take advantage of the moratoria imposed by the administrations.

3. Despite my initial reluctance to make the order sought, which, prima facie, would only benefit the secured creditor, Mr Psaltis of Counsel persuaded me that a broader perspective was required and that the granting of the extension would, at least in theory, advance the interests of the unsecured creditors

Background

4. The second to eighth plaintiff companies were placed into administration on 28 November 2022, and a Mr Baskerville was appointed as the administrator of each.

5. Approximately a week later, on 5 December 2022, Westpac appointed Mr Heenan and Mr Marsden receivers of the assets of the second to eighth plaintiff companies.

6. At this point in time, no receiver has been appointed to the assets of the ninth plaintiff company.

7. Mr Graham Killer and Mr Matthew Byrnes were appointed as administrators to the second to eighth plaintiff companies on 8 December 2022 at the first meeting of creditors for those companies, and were appointed administrators of the ninth plaintiff on 15 December 2022 at that company’s first creditors’ meeting.

The circumstances prior to the administrations

8. The Scooter Group of companies, which includes the Companies, owns and operates one of Australia’s largest cabinetry manufacture and supply businesses.

9. That business is conducted primarily from premises located at Bells Creek, Queensland, and the evidence of Mr Killer was to the effect that the enterprise is substantial and incorporates state-of-the-art cabinet-making equipment, much of which is located in leased premises. That is particularly important, because the equipment is large and site-specific, in that it is located in the premises from which the manufacturing takes place. If no extension of the time for convening the second creditors’...