Case: Re Mentha; Hans Continental Smallgoods Pty Ltd (Administrators Appointed) [2008] FCA 1933
Outcome: considered
Re Mentha; Hans Continental Smallgoods Pty Ltd (Administrators Appointed) [2008] FCA 1933 , hereafter Mentha , Jacobson J had occasion to reflect upon whether, in the circumstances of the case before him, an order of the kind made in Hayes' case ought to be made. In the result, his Honour came to grant an extension of up to 90 days, as had been sought by the administrators, rather than to adopt a form of order akin to that made in Hayes' case. Regard to his Honour's reasons for judgment at para 27 and para 28 discloses that there were three particular reasons why, in the circumstances of that case, Jacobson J determined to grant an extension of up to 90 days to the administrators rather than to make an order similar to that made in Hayes' case. Those reasons were these: (a) The first was that the cases indicate than an extension of two and a half to three months is not unusual where there is a relatively complex sale process. In this case, by way of contrast, there is no such sale process. (b) The second reason evident in Mentha was that there was a disposition, sworn, it seems on behalf of the administrators, to convene a meeting in a shorter period of time than currently anticipated if the sale process concerned were able to be completed beforehand. Here, the administrators have a disposition likewise to convene a meeting earlier if, in their judgment, there is no advantage in delaying that particular meeting to the maximum permitted by the extension primarily sought. I have no doubt that that particular statement is one seriously made by responsible practitioners. In that sense, there is a similarity as between this case and Mentha , although, again, the occasion for the foreshortening is not, as it was in Mentha , the prospect or contingency of an earlier than anticipated completion of a sale process, but rather that of an earlier than anticipated completion, or at least practical completion, of investigations considered reasonably necessary. (c) The third reason found in Mentha was that the administrators considered that there was sufficient cashflow to enable the post-appointment liabilities to be met. Here, by way of contrast, the administrators have determined not to continue the trading operations of Storm Financial. In that sense, the outgoings, by way of wages and the like, have ceased upon the termination of staff. Nonetheless, the position, it seems to me, is different from Mentha in the sense that one does not have here the cost neutral situation of a business being continued and preserved for the purpose of sale by administrators. There are, thus, distinguishing features as between that which motivated, in what was undoubtedly a complex administration in Mentha , the granting of an extension of up to 90 days and the present case. Recognising this, the administrators, by way of an alternative, submitted that the Court might instead make orders which, in effect, hung off the receipt or otherwise of a written proposal for a deed of company arrangement on or before 23 March 2009. If such a proposal were not received by that date, the submission was that the convening period be extended to 7 April. If such a proposal were received by the date suggested, the submission was that the convening period then be extended to 7 May 2009. In a sense, the administrators and ASIC share a concern in relation to any proposal for a deed of company arrangement. That is that there is a need for the persons who would promote such a deed - be they the directors, insurers of Storm Financial or others - to act with the speed and dispatch envisaged by Parliament in the enactment of Pt 5.3A. A leisurely process is not, in any way, envisaged by Parliament.