Danger Zone: Extension of convening period before the first meet of creditors

Do not seek an extension of time of the convening period in a Voluntary Administration until after the first meeting of creditors – that’s the veiled message I got from reading Justice Farrell’s comments in a recent Federal Court case.

The case is Clubb, in the matter of DS Opco Pty Ltd (administrators appointed) (receivers and managers appointed) [2019] FCA 2206

Due to the size of the Harris Scarfe collapse and the impending holiday closure period for Christmas, the Administrators took the cautious approach and applied to court seeking a 6 month extension before they had to hold the second meeting of creditors.

This, it was said, was to allow them time to deal with any sale of business/asset issues and liaise with the receivers and managers.

Sounds fair enough, given the size.

The court granted 4 months, but in doing so showed its displeasure in being asked to decide on this issue so early on in the Administration and without creditor involvement. There was, in the courts view, no emergency.

Presenting this application in front a of duty Judge in January or the convenience of counsel were also listed as other excuses that did not cut the mustard.

Ultimately, an extension was given here, but next time I’d wait a few more days as a prudent approach.

#svvoidables #insolvency #creditors

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