Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 8) [2020] FCA 1344

Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 8) [2020] FCA 1344

Administrators, by entering into a binding sale agreement for the Virgin Companies’ assets, have lawfully limited the range of options available to creditors, and there is no requirement that administrators place a rival DOCA on the ballot or appoint a facilitator. The relief sought to compel administrators or direct procedural steps was dismissed as inconsistent with the statutory scheme and administrators’ powers.

Parties
First Plaintiff: Vaughan Strawbridge, Salvatore Algeri, John Greig and Richard Hughes, in their capacity as joint and several voluntary administrators of each of Virgin Australia Holdings Ltd (administrators appointed); Second Plaintiff: Virgin Australia Holdings Ltd (administrators appointed); Third Plaintiff: Virgin Australia International Operations Pty Ltd (administrators appointed) (and others named in the Schedule); Applicants: Broad Peak Investment Advisers Pte Ltd (for and on behalf of Broad Peak Master Fund II Ltd and Broad Peak Asia Credit Opportunities Holdings Pte Ltd) and Tor Investment Management (Hong Kong) Ltd; Interested Person: BC Hart Aggregator, L.P. and BC Hart Aggregator (Australia) Pty Ltd (Bain Capital); Interested Person: Commonwealth of Australia; Bondholders' Representative Group / Interested Person: Alexander Funds Management Pty Ltd, Morgans Financial Limited, Crestone Wealth Management Limited, Mason Stevens Limited, Escala Partners Pty Ltd, Yarra Funds Management Limited, Realm Pty Ltd, Cameron Harrison Private Pty Ltd
Jurisdiction
Australia
Judgment Date
18 September 2020
Procedural Posture
Voluntary Administration; Interlocutory Application / Decision on Interlocutory Application Prior to Second Meeting of Creditors
Outcome
application dismissed with costs
Legal Topics
Voluntary Administration, Deed of Company Arrangement (doca), Administrator Powers, Creditors’ Meetings, Facilitator Appointment, Information Provision to Creditors
Corporations Corporate Insolvency Voluntary Administration Deed of Company Arrangement (doca) Administrator Powers Creditors’ Meetings Facilitator Appointment Information Provision to Creditors

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Parties

Vaughan Strawbridge, Salvatore Algeri, John Greig and Richard Hughes, in their capacity as joint and several voluntary administrators of each of Virgin Australia Holdings Ltd (administrators appointed)

First Plaintiff

Virgin Australia Holdings Ltd (administrators appointed)

Second Plaintiff

Virgin Australia International Operations Pty Ltd (administrators appointed) (and others named in the Schedule)

Third Plaintiff

Broad Peak Investment Advisers Pte Ltd (for and on behalf of Broad Peak Master Fund II Ltd and Broad Peak Asia Credit Opportunities Holdings Pte Ltd) and Tor Investment Management (Hong Kong) Ltd

Applicants

BC Hart Aggregator, L.P. and BC Hart Aggregator (Australia) Pty Ltd (Bain Capital)

Interested Person

Commonwealth of Australia

Interested Person

Alexander Funds Management Pty Ltd, Morgans Financial Limited, Crestone Wealth Management Limited, Mason Stevens Limited, Escala Partners Pty Ltd, Yarra Funds Management Limited, Realm Pty Ltd, Cameron Harrison Private Pty Ltd

Bondholders' Representative Group / Interested Person

Procedural Posture

Voluntary Administration; Interlocutory Application / Decision on Interlocutory Application Prior to Second Meeting of Creditors

Legal Issues

  1. 1 Whether administrators must place an alternative deed of company arrangement (DOCA) on the ballot at the second meeting of creditors
  2. 2 Whether administrators’ contractual obligations under sale agreement preclude consideration of rival DOCA proposals
  3. 3 Whether a facilitator should be appointed to assist creditors prior to the second meeting

Ratio Decidendi

Administrators, by entering into a binding sale agreement for the Virgin Companies’ assets, have lawfully limited the range of options available to creditors, and there is no requirement that administrators place a rival DOCA on the ballot or appoint a facilitator. The relief sought to compel administrators or direct procedural steps was dismissed as inconsistent with the statutory scheme and administrators’ powers.

Court Disposition

application dismissed with costs

Orders

  • Interlocutory Process filed by Broad Peak and Tor dismissed
  • Applicants (Broad Peak and Tor) to pay Plaintiffs’ costs of interlocutory process