CBL Corporations Limited, re [2018] NZHC 1998 (7 August 2018)

Last Updated: 3 September 2018

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-000361 [2018] NZHC 1998

UNDER	Part 19 of the High Court Rules and section 239ADO of the Companies Act 1993
IN THE MATTER OF	CBL CORPORATION LIMITED, LBC HOLDINGS NEW ZEALAND LIMITED, LBC HOLDINGS AMERICAS LIMITED, LBC HOLDINGS UK LIMITED, LBC HOLDINGS EUROPE LIMITED, LBC HOLDINGS AUSTRALASIA LIMITED, LBC TREASURY COMPANY LIMITED, DEPOSIT POWER LIMITED, SOUTH BRITISH FUNDING LIMITED, CBL CORPORATE SERVICES LIMITED (ALL ADMINISTRATORS APPOINTED)
AND	NEALE JACKSON and BRENDON JAMES GIBSON Applicants

Hearing:	On the papers
Judgment:	7 August 2018

JUDGMENT OF COURTNEY J

RE CBL CORPORATION LTD & ORS (ADMINISTRATORS APPOINTED) [2018] NZHC 1998 [7 August 2018]

Introduction

[1] The administrators of CBL Corporation Ltd and its subsidiaries are in voluntary administration under the control of administrators Brendon Gibson and Neale Jackson. The watershed meeting for CBL was previously adjourned to 17 August 2018 and the convening period for the subsidiaries to 17 November 2018.¹ The administrators have applied for:

(a) An order further adjourning the watershed meeting of CBL to 17 November 2018; and

(b) An order further adjourning the convening period for the watershed meeting of the subsidiaries to 17 November 2018; and

(c) Other ancillary orders relating to service and the ability for parties to apply to be heard in relation to aspects of any order made.

[2] The application has been brought without notice pursuant to r 7.46 of the High Court Rules because the administrators consider that requiring it to proceed on notice would cause undue delay or prejudice. I accept that this is so.

[3] The CBL group is large and complex and including a number of overseas companies. The number of creditors means that service of the application would have been time-consuming and onerous. It would also have been impractical because of the imminent expiry of the previous adjournment of the CBL watershed meeting (and the desirability of the convening period for the watershed meeting of the subsidiaries to be aligned with the date for the CBL watershed meeting). Based on the liquidators’ experience with the previous adjournments, there is unlikely to be any objection or perceived disadvantage to creditors but any concern can be overcome by the requirement for the orders to be publicly advertised and an appropriate reservation of a right to apply to discharge or vary the orders.

1. Re CBL Corporation Ltd (Administrator Appointed) [2018] NZHC 1400 and Re CBL Corporation Ltd (Administrators Appointed) [2018] NZHC 1019.

Adjournment of watershed meeting

[4] The application to adjourn the watershed meeting for CBL is made under s 239AZ of the Companies Act 1993. Although s 239AZ(1) only permits an adjournment of the watershed meeting of 30 days, s 239AZ(2) permits the Court, on the administrator’s application, to order that the meeting be adjourned for longer. In my earlier decision allowing the first adjournment of the watershed meeting, I discussed the approach to take to such an application; the power under s 239AZ(2) may be regarded as analogous to the power to extend the convening period under s 239AT(3), to be exercised with the objects of the voluntary administration regime under Part 15A of the Companies Act in mind, namely to maximise the prospects of the company continuing or, if that is not possible, then to provide for a better return to creditors and shareholders than would result from immediate liquidation.

[5] The adjournment that is being sought would result in an overall adjournment of the watershed of some six months. I am satisfied that it is proper to make the order sought for the following reasons.

[6] First, the administration of CBL and its subsidiaries is extremely complex. When the administrators last applied to adjourn the watershed meeting of CBL and extend the convening period for the subsidiaries, they were pursuing an asset realisation strategy, undertaking an analysis of the events leading to the administrations and evaluating a proposal to restructure the group being developed by two of the directors of CBL. The administrators are still undertaking an asset realisation programme and still consider that a restructuring proposal ought to be fully developed and properly evaluated because it might provide the better outcome for creditors and shareholders.

[7] The administrators also considered (and still do consider) that the position of the group will be affected by the outcome of the Reserve Bank of New Zealand’s application to liquidate CBL Insurance Ltd (in interim liquidation) (CBLI). That application was scheduled to be heard at the end of July 2018 but has now been adjourned to a date (yet to be allocated) after mid-October 2018.
[8] In addition, the interim liquidators of CBLI have recently applied for directions regarding a proposed commutation agreement with CBLI’s largest creditor, Elite Insurance Company Ltd. It is expected that the outcome of the application, which is to be heard on 30 and 31 August 2018, will also affect the position of the wider group.

[9] Finally, the administrators consider that the adjournment being sought is in the best interests of creditors and other stakeholders and do not consider that any person, including creditors of CBL, will be prejudiced by the adjournment. As to the latter point, any unanticipated prejudice can be accommodated by reserving leave to any interested person to vary or set aside the order.

Extension of the convening period

[10] The application to extend the convening period for a watershed meeting for the subsidiaries is made under s 239AT(3). An application to extend the convening period under s 239AT has been the subject of previous consideration by this Court with periods of up to six months being granted.² In Re Pumpkin Patch Ltd (in receivership and administrators appointed) Heath J approached the matter by reference to the overall objectives of the voluntary administration regime, observing that, when exercising the discretion, the Court’s focus is on the promotion of the interests of creditors and ensuring that the objectives of Part 15A are met.³

[11] In the present case it is, clearly, desirable for the watershed meeting of the subsidiaries to be aligned with that of CBL itself. The administrators, in their affidavits, have referred to the complex corporate structure of this group, which engages three different insolvency regimes because of its off-shore interests. For the same reasons as I considered an adjournment of the watershed meeting of CBL to be appropriate, I also consider that extension of the convening period for the subsidiaries to be appropriate.

2. See e.g. Re Gourmet Food Holdings NZ Ltd [2012] NZHC 3606; Re Pumpkin Patch Ltd (in receivership and administrators appointed) [2016] NZHC 2771.

³ At [25].

Result

[12] The applications for adjournment of the watershed meeting of CBL Corporation Ltd to 17 November 2018 and the convening period for the watershed meeting of the subsidiaries to 17 November 2018 is granted on the terms set out in paragraph 1(a) – (g) of the interlocutory application dated 31 July 2018.








P Courtney J