McCallum, in the matter of TM Lewin Australia Pty Ltd (Administrators Appointed) [2020] FCA 992

McCallum, in the matter of TM Lewin Australia Pty Ltd (Administrators Appointed) [2020] FCA 992

The extensions and directions were justified because the administrators had formed a considered view that maintaining the store network and extending the relevant periods would maximise the prospects of retail stock sales or a going-concern sale, thereby increasing returns to creditors and potentially preserving employment; the Company lacked funds to pay rent and the administrators would not accept personal liability; the expected prejudice to lessors was limited, no lessor opposed the orders as made, and affected persons were given liberty to apply for variation or discharge.

Jurisdiction
Australia
Judgment Date
10 July 2020
Procedural Posture
Corporations Application in Voluntary Administration / Originating Process Heard; Orders and Directions Made
Outcome
Applications allowed with modifications and liberty to apply.
Legal Topics
['voluntary Administration' "administrators' Personal Liability for Rent" 'extension of Time to Give Notice to Lessors' 'extension of Convening Period' 'directions Under Insolvency Practice Schedule' 'covid 19 Impact on Retail Leasing']
['corporations' 'corporate Insolvency'] ['voluntary Administration' "administrators' Personal Liability for Rent" 'extension of Time to Give Notice to Lessors' 'extension of Convening Period' 'directions Under Insolvency Practice Schedule' 'covid 19 Impact on Retail Leasing']

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Procedural Posture

Corporations Application in Voluntary Administration / Originating Process Heard; Orders and Directions Made

Legal Issues

  1. 1 ['Whether the Court should vary the operation of ss 443A(1)(c) and 443B(2) of the Corporations Act 2001 (Cth) so that the administrators were not personally liable for rent and other amounts under leases for stipulated periods.' 'Whether the time for the administrators to give notice to lessors under s 443B(3) of the Corporations Act 2001 (Cth) should be extended.' 'Whether the administrators should be directed or justified in causing the Company not to pay rent and other amounts payable for the stipulated periods.' 'Whether the convening period for the second meeting of creditors under s 439A of the Corporations Act 2001 (Cth) should be extended to 20 October 2020.']

Ratio Decidendi

The extensions and directions were justified because the administrators had formed a considered view that maintaining the store network and extending the relevant periods would maximise the prospects of retail stock sales or a going-concern sale, thereby increasing returns to creditors and potentially preserving employment; the Company lacked funds to pay rent and the administrators would not accept personal liability; the expected prejudice to lessors was limited, no lessor opposed the orders as made, and affected persons were given liberty to apply for variation or discharge.

Court Disposition

Applications allowed with modifications and liberty to apply.

Orders

  • ['Originating Process filed on 8 July 2020 made returnable at 10.00 am on 10 July 2020.' "Part 5.3A of the Act to operate so that the administrators' personal liability for rent or other amounts under the Queensland Lease and NSW Lease begins on 8 August 2020, and they are not personally liable for the period from...