IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-002653UNDERPart 19 of the High Court Rules and ss239AT and 239ADO of the Companies Act1993IN THE MATTER OFan application pursuant ot s 239AT of theCompanies Act 1993 for orders extendingthe covering period by which theadministrators must convene the watershedmeeting for Tamarind Taranaki Limited(Administrators Appointed)AND IN THE MATTEROFTAMARIND TARANAKI LIMITD(ADMINISTRATORS APPOINTED)IN THE MATTER OF AN M W MANSFIELD and J A KARDACHIAPPLICATION BYApplicantsHearing:5 December 2019Appearances:J A McMillan and M L Broad for the ApplicantsS Barker for DOF Management Australia Pty Limited (Creditor)J Wass for China Oil Services Limited (Creditor)Date of Minute:6 December 2019MINUTE (NO. 2) OF MOORE JSolicitors:Kensington Swan, AucklandBuddle Findlay, WellingtonMr Wass, WellingtonIntroduction[1]Tamarind Taranaki Limited (Administrators Appointed) (“Tamarind”) appliesby a without notice originating application for orders extending the convening periodby which the administrators must convene the watershed meeting for Tamarind.
[2]The application is sought on a without notice basis for three reasons:(a)the convening period expires on 9 December 2019;(b)orders on notice to creditors would cause undue delay and/or prejudiceto the applicants; and(c)if the application is granted there is no prejudice to creditors as theyretain their right to challenge the orders.

Background and relevant law[3]The administrators are Mitchell Mansfield of the Cayman Islands and JasonKardachi of Singapore. Both are directors of the international insolvency firm,Borrelli Walsh. As administrators they are required to convene the watershed meetingby Monday, 9 December 2019. This is by virtue of the operation of s 239AT of theCompanies Act 1993 (“the Act”). A watershed meeting must be convened within theconvening period, defined as the period of 20 days after the date on which theadministrator is appointed and includes any period which may be extended by orderof the Court.1[4]A watershed meeting must be held within five days after the end of theconvening period or extended convening period, as the case may be.2[5]The general powers of the Court are contained in s 239ADO of the Act whichempowers the Court to make any order it thinks appropriate as to how Part 15A of theAct is to operate in relation to a particular company. The Court’s orders may be made1
2Companies Act 1993, s 239AT.
Section 239AV.subject to conditions and the Court may make an order under this section on theapplication of the administrator.3[6]In the present circumstances, with the convening period expiring on9 December 2019, the watershed meeting is required to be held no later than Monday,16 December 2019 at which time Tamarind’s creditors will decide on the future of thecompany.
What the administrators seek[7]By extending the convening period to 17 February 2020 the applicants hopecertain agreements will have been put in place to facilitate continuing production onprofitable terms. This will allow the administrators time to arrange a sale of thecompany’s assets or obtain further funding. If the convening period is not extended,it is the view of the administrators that they will be obliged to report to the creditorswith incomplete information and may be required to take a conservative approach inrespect of the prospects of continued production.
[8]Their concern is that if the convening period is not extended there is a greaterprobability that liquidators may be appointed as a consequence of the watershedmeeting. The administrators believe that liquidation would not be in the best interestsof the creditors of Tamarind. This includes its present and former employees.
[9]The administrators thus claim that a short extension until mid-February 2020will permit them to receive and consider information which is pertinent to their reportto creditors and their advice as to the best way to achieve an improved outcome forthe creditors. It is claimed that there are sound and practical reasons to support theprospect of a better outcome being achieved following an extension of time. This isbecause any decisions as to Tamarind’s future made will necessarily be betterinformed.

3Section 239ADO(3) and (4)(c).

Objectors[10]Consistent with their obligations of utmost candour, reflected in r 7.23(2)(b) ofthe High Court Rules 2016, counsel for the liquidators advise that on 3 December 2019they received an email from the solicitors acting for DOF Management Australia PtyLimited (“DOF”), one of Tamarind’s creditors. That email asked that any applicationby the administrators to extend the convening period be made on notice because it waslikely to be be opposed.
[11]Later on the afternoon of 4 December 2019 the Registry received an email fromBuddle Findlay advising that the firm acted for two of Tamarind’s creditors; that theyhad previously advised the applicants that any extension of the convening periodshould be made on notice because it was anticipated it would be opposed.
[12]In response, Mr McMillan, for the applicants, submitted that this advice didnot change the basis for seeking the granting of the application on a without noticebasis. He emphasised that it was not practical to serve each of Tamarind’s known 117creditors given the urgency of the application. But he did add that, as a matter ofcourtesy, the administrators would provide a copy of the application once it was madeto the following parties:(a)the five creditors who are members of the Creditors Committee electedat the first meeting of Tamarind’s creditors;(b)DOF Management Australia Pty Limited; and(c)COSL Offshore Management AS, a further creditor of Tamarind whichhas filed a notice of opposition to the s 280 application previouslygranted.

[13]As Mr McMillan observed, providing a copy of the application to thesecreditors is not required but in the circumstances, would be done as a matter ofcourtesy to enable those creditors to engage with the application.Judicial telephone conference[14]Having been appraised of the likely opposition to the application and thelikelihood that certain creditors wished to be heard I convened a telephone conferencewith the parties on 5 December 2019. Those appearing for the applicants wereMessrs McMillan and Broad. Mr Barker appeared for DOF. Mr Wass, for China OilServices Limited (“China Oil”), joined the conference shortly after it commenced.
[15]Mr McMillan submitted that having reviewed the caselaw, of the 19 ordersmade by this Court under s 239AT none was made on notice. He referred me toRe Webster Holdings (NZ) Ltd where I discussed the statutory scheme and how thetight time limits necessarily make extension of the convening period routine, adding:4“… Indeed, an extension is likely to provide the best opportunity to maximisereturns to unsecured creditors and the prospects of continuity of employmentand benefits for employees if a sale of the business as a going concern can beachieved. In the meantime, the administrators are meeting the ongoingobligations owed to landlords and employees from [the] trading of thebusiness and any assets available to creditors are not being diminished.”[16]Mr McMillan also referred me to the judgment of Heath J in Re Nylex(New Zealand) Limited5 where he observed that applications of this type will,necessarily, be made without notice.
[17]In response, Mr Barker accepted that applications of this sort are ordinarilymade without notice. But he observed that while that may be the usual practice itcannot mean it is the invariable or correct practice, as least in cases such as the present.
DOF is a substantial creditor. China Oil’s debt is approximately US$15 million. Thelargest creditor is the Crown with a claim of approximately US$100 million. Thatdebt represents something of the order of 40 per cent of the total debt.
[18]At a watershed meeting the threshold for decisions requires a 75 per centmajority calculated by value and a 50 per cent majority calculated by the number ofcreditors. It was for this reason, Mr Barker submitted, that the decision really comesdown to one of maths.

4
5Re Webster Holdings (NZ) Ltd [2017] NZHC 297 at [19].
Re Nylex (New Zealand) Ltd HC Auckland CIV-2009-404-1217, 11 March 2009 at [13].[19]Both he and Mr Wass were opposed to the application being dealt with on awithout basis notice and orders made to extend the convening period until midFebruary 2020. It was their clients’ client wish that the issues be confronted at awatershed meeting convened before Christmas.
Discussion[20]I am prepared to grant the application but not until February 2020. My reasonsfollow.
[21]First, the situation confronted by the Court in the present case is materiallydifferent from that in the cases referred to me by counsel. Here at least two creditorshave expressed a strong view that the watershed meeting should take place beforeChristmas. They point out that this is not an insolvency which is “awash with cash”.
At the present time Tamarind is unable to carry on its business of pumping oil becauseit is subject to an Environmental Protection Agency abatement notice. Furthermore,before Tamarind went into voluntary administration it terminated the charter of thevessel into which the oil was pumped. It is for that reason Mr Barker and Mr Wassexpressed the view that no real or useful purpose would be served by “kicking the candown the road” until February.
[22]Secondly, and in my view most importantly, whether the company shouldcontinue in administration is properly a matter for those most directly affected todecide. And that is the creditors.
[23]In making that observation I do not overlook Mr McMillan’s forcefulsubmission that it will be difficult, if not impossible, for the administrators to be in aposition to put to the creditors an arrangement option or options. They simply will nothave the time to do so. However, I accept Mr Barker’s submission that if the requisitemajority of creditors at the watershed meeting determine that they do not wishTamarind to continue in voluntary administration then it will be a matter for them todecide at the watershed meeting.
administration.

Alternatively they may agree to continued[24]Thirdly, I do not accept that it will be unduly difficult or expensive to givenotice to the 117 creditors. In the context of insolvency matters 117 creditors is not aparticularly large number. Furthermore, electronic communication means that theprovision of the notice, including the transmission of voluminous documents, can beundertaken at the press of a button. Although Mr McMillan was unable to confirmthat the administrators have the email addresses of all creditors, he was able to confirmthere were email addresses for most.
[25]I also note that in his memorandum of 4 December 2019 Mr McMillansuggested that notice of the application might also be conveyed by posting notice onBorrelli Walsh’s website on the webpage relating to the administration of Tamarind.
[26]Fourthly, I observe that the administrators suggest that if the orders soughtwere granted, an order should also be made that any person, including Tamarind’screditors, will be able to apply to modify or discharge the orders “on appropriate noticeto the administrators”. The orders I intend to make will, in a practical sense, have thateffect.
[27]For these reasons I am prepared to grant the application but on considerablymore limited terms than the applicants seek. That course will provide the creditorswith the opportunity before Christmas to determine the future of Tamarind’sadministration. As I have already observed, that is properly a matter left to them asthe most directly affected parties.
Orders[28]Leave is granted for this application to be made on a without notice basis.

[29]The convening period for the watershed meeting is extended fromMonday, 9 December 2019 to 5:00 pm on Monday, 16 December 2019.
[30]Within three working days of the date of this Minute copies of the application,supporting documents, orders and this Minute be given to creditors of Tamarind by:(a)email, where an email address has been provided to Tamarind; or(b)posted on Borrelli Walsh’s website (www.borrelliwalsh.com) on thewebpage in respect of the administration of Tamarind.

[31]Leave is granted to any person who can demonstrate sufficient interest to applyto modify or discharge these orders including any creditor of Tamarind on notice beinggiven to the applicants.
[32]Leave is reserved to the applicants or any creditor to apply for further ordersas may be necessary to give effect to my orders.
[33]The costs of this application are to be paid from the assets of Tamarind.

Moore J