Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 472

Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 472

Given the exceptional impact of the COVID-19 pandemic forcing closure of stores and uncertainty about business prospects, and balancing likely prejudice to landlords (being no greater than if the premises were vacated) against creditor interests, it was appropriate and consistent with the objectives of Pt 5.3A to make orders excusing the administrators from personal liability for rent for 1–14 April 2020, and to direct that they are justified in not causing the companies to pay those rents.

Parties
Plaintiffs: Vaughan Strawbridge, Sam Marsden and Jason Tracy in their capacity as joint and several administrators of CBCH Group Pty Ltd ACN 600 219 841, CBCH Australia Pty Ltd ACN 137 924 791, CBCH Buying Co Pty Ltd ACN 162 989 335 and Colette International Pty Ltd ACN 158 346 046; Interested Party: GPT RE Limited, GPT Funds Management Limited, Melbourne Central Custodian Pty Ltd, GPT Funds Management 2 Pty Limited (Interested Party)
Jurisdiction
Australia
Judgment Date
01 April 2020
Procedural Posture
Corporations Application (administration) / Application for Orders and Directions
Outcome
Application allowed. Orders made as sought by administrators.
Legal Topics
Voluntary Administration, Administrators' Liability, Rent Relief During Administration, COVID 19 Impact on Commercial Leases, Court Directions to Administrators
Corporations Law Insolvency Law Voluntary Administration Administrators' Liability Rent Relief During Administration COVID 19 Impact on Commercial Leases Court Directions to Administrators

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Parties

Vaughan Strawbridge, Sam Marsden and Jason Tracy in their capacity as joint and several administrators of CBCH Group Pty Ltd ACN 600 219 841, CBCH Australia Pty Ltd ACN 137 924 791, CBCH Buying Co Pty Ltd ACN 162 989 335 and Colette International Pty Ltd ACN 158 346 046

Plaintiffs

GPT RE Limited, GPT Funds Management Limited, Melbourne Central Custodian Pty Ltd, GPT Funds Management 2 Pty Limited (Interested Party)

Interested Party

Procedural Posture

Corporations Application (administration) / Application for Orders and Directions

Legal Issues

  1. 1 Whether orders should be made pursuant to s 447A(1) of the Corporations Act 2001 (Cth) varying the operation of s 443A(1)(c) and s 443B(2) to excuse administrators from personal liability for rent for a two week period.
  2. 2 Whether directions should be made under s 90-15 of the Insolvency Practice Schedule (Corporations) justifying administrators not causing companies to pay rent for that period.

Ratio Decidendi

Given the exceptional impact of the COVID-19 pandemic forcing closure of stores and uncertainty about business prospects, and balancing likely prejudice to landlords (being no greater than if the premises were vacated) against creditor interests, it was appropriate and consistent with the objectives of Pt 5.3A to make orders excusing the administrators from personal liability for rent for 1–14 April 2020, and to direct that they are justified in not causing the companies to pay those rents.

Court Disposition

Application allowed. Orders made as sought by administrators.

Orders

  • Certain confidential evidence and transcript to be suppressed until 15 April 2020.
  • Administrators not personally liable for rent or amounts payable under specified leases for the period from the date of the order to 5 pm on 14 April 2020.