Ellen Jay Health and Beauty Ltd, Re [2011] QSC 219

1-1 SUPREME COURT OF QUEENSLAND CITATION: Re Ellen Jay Health and Beauty Ltd [2011] QSC 219 PARTIES: BLAIR ALEXANDER PLEASH & RICHARD ALBARRAN as deed administrators (applicants) ELLEN JAY HEALTH AND BEAUTY LTD (subject to a deed of company arrangement) (controller appointed) ACN 087 057 056 (respondent) FILE NO/S: SC No 5560 of 2011 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland DELIVERED ON: Delivered ex tempore 13 July 2011 DELIVERED AT: Brisbane HEARING DATE: 13 July 2011 JUDGE: Atkinson J ORDERS: 1. The amended deed of company arrangement of the respondent carried by resolution at a meeting of the company's creditors on 9 March 2011 be terminated pursuant to section 445D(1)(d) and section 445D(1)(e) of the Corporations Act 2001 (Cth); 2. The respondent be wound up pursuant to regulation 5.3A.07 of the Corporations Regulations 2001 (Cth); 3. Blair Alexander Pleash and Richard Albarran be appointed joint and several liquidators for the purposes of the said winding up; 4. The costs of this application be costs in the liquidation pursuant to section 556(1)(b) of the Corporations Act 2001 (Cth). CATCHWORDS: CORPORATIONS – VOLUNTARY ADMINISTRATION – DEEDS OF COMPANY ARRANGEMENT – TERMINATION OR AVOIDANCE – where the applicants were the administrators of the respondent company – where they made an application to terminate the deed of company arrangement and sought orders that the company be wound up and they be appointed liquidators – whether the deed arrangement should be terminated and the company wound -- 1 of 6 -- 1-2 ORDER up Corporations Act 2001 (Cth), s 435A, s 445D Corporations Regulations 2001 (Cth) Re Spargold Enterprises Pty Ltd (subject to a deed of company arrangement); ex parte McDonald and anor (1999) 32 ACSR 363, cited COUNSEL: M D Sill for the applicants The respondent did not appear SOLICITORS: DLA Piper for the applicants The respondent did not appear -- 2 of 6 -- 1-3 ORDER HER HONOUR: This is an application for an order pursuant to section 445D(1)(d) and (e) of the Corporations Act 2001 (Cth) (the Act) for the Court to make an order terminating a deed of company arrangement. The deed of company arrangement which is sought to be terminated is an amended deed of company arrangement carried by resolution at a meeting of the company's creditors on 9 March 2011. The application is made by the deed administrators. Further, an order is sought that the company be wound up and that the administrators be appointed joint and several liquidators for the purposes of the winding up. Section 445D(1) of the Act provides that the Court may make an order terminating a deed of company arrangement if satisfied of one of a number of things set out in the sub-sections to that section. Subsection (d) provides for a circumstance where there has been a material contravention of the deed by a person bound by the deed and subsection (e) provides for a circumstance where effect cannot be given to the deed without injustice or undue delay. There is no respondent present in Court. I am satisfied that the application and supporting affidavit material have been properly served on the respondent company and there is detailed affidavit material to that effect. In addition the material has been appropriately served on the directors of the company. It is apparent that only one director of the company has acknowledged receipt of that material. The rest of the -- 3 of 6 -- 1-4 ORDER material was returned to the administrators, however, the service was carried out in accordance with the addresses which have been notified to ASIC and which appear on the company's records. The response from the only director who responded indicating his receipt of the material was by email which contained only initials suggesting a derisory response to the material, and nothing else. Hence I have not been assisted by any submissions by any party opposed to the orders sought. Clearly, the deed administrators have standing to bring the application as interested persons under the deed of administration: see Re Spargold Enterprises Pty Ltd (subject to a deed of company arrangement); ex parte McDonald and anor (1999) 32 ACSR 363. The purposes of the administration of a company are set out in section 435A of the Act. It provides that administration is to provide for the business, property and affairs of an insolvent company to be administered in a way that maximises the chances of the company or as much as possible of its business continuing in existence, or if it is not possible for the company or its business to continue in existence, results in a better return for the company's creditors and members than would result from an immediate winding up of the company. If neither of those objects is able to be achieved, then it is obviously in the public interest for an insolvent company to be wound up, and hence the provisions in the Act for a transition of a company under voluntary administration to a creditors’ voluntary winding up. -- 4 of 6 -- 1-5 ORDER The history of the administration in this case is set out in detail in the affidavit material and submissions. The deed of company arrangement which was originally put in place at a meeting of creditors on 25 May 2010 was not complied with by the directors and, as a means of avoiding it, various amendments to the deed of company arrangement have been made reducing and further reducing the obligations of the directors to the extent of including a vote not to make payments to the company's administrators; however, part of the administrator's rights were that they had a fixed and voting charge over the company's assets and they have now sold those assets at public auction so the company has been left essentially as a shell. In those circumstances, it cannot be in the interests of the company, its creditors or its members for it to continue in administration and it should proceed in an orderly way to liquidation. Accordingly I make the order provided to me in draft form that the amended deed of company arrangement of the respondent carried by resolution at a meeting of the company's creditors on 9 March 2011 be terminated pursuant to section 445D(1)(d) and section 445D(1)(e) of the Corporations Act 2001; that the respondent be wound up pursuant to regulation 5.3A.07 of the Corporations Regulations 2001 and that Blair Alexander Pleash and Richard Albarran be appointed joint and several liquidators for the purposes of the said winding up. I order further that the costs of this application be costs in -- 5 of 6 -- 1-6 ORDER the liquidation pursuant to section 556(1)(b) of the Corporations Act 2001. ----- -- 6 of 6 --