Bridgman & Bennett

[2016] NZHC 1050

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-1009 [2016] NZHC 1050

IN THE MATTER	of Part 15A of the Companies Act 1993
IN THE MATTER	of NICHOLAS JERMYN LIMITED (ADMINISTRATORS APPOINTED)
BETWEEN	DAVID BRIDGMAN AND LARA MAREE BENNETT AS ADMINISTRATORS OF NICHOLAS JERMYN LIMITED (ADMINISTRATORS APPOINTED Applicants

Hearing:	On the papers
Appearances:	L A O'Gorman for Applicants
Judgment:	19 May 2016

JUDGMENT OF LANG J

[on application for orders under Part 15A of the Companies Act 1993]

This judgment was delivered by me on 19 May 2016 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

BRIDGMAN & BENNETT as administrators of NICHOLAS JERMYN LTD [2016] NZHC 1050 [19 May

2016]

[1]      The  administrators  of  Nicholas  Jermyn  Limited  (Nicholas  Jermyn)  seek orders extending the period by which they must convene the watershed meeting of creditors,  and  the  period  within  which  they must  give  notice  of  termination  of employment contracts.1     In each case the administrators seek an extension to 6

September 2016 rather than the default end dates of 8 June 2016 and 24 May 2016 respectively.

Background

[2]      Nicholas Jermyn is a retail clothing company employing approximately 35 staff in seven retail stores and at Head Office.   It also operates on-line.   Nicholas Jermyn has had problems caused by insufficient cash flow.  This means that it has been unable consistently to meet its obligations to trade creditors as they fell due.  It has approximately 90 unsecured creditors and three secured creditors.  The company is also unable to meet lease payments and cannot repay secured debt owing to its bank. These issues led to the administrators being appointed on 10 May 2016.

[3]      The administrators are investigating several possibilities for the future of the company.    These  include  a  restructure  of  the  company’s  operations  to  improve trading performance.  This could involve the formulation of a proposal to address the current level of the company’s indebtedness to trade creditors, possibly under a deed of company arrangement.   In addition, the administrators are investigating the possibility that they might sell the company’s business as a going concern to a company based in New Zealand or abroad.

[4]      The  administrators  believe  these  options  are  likely  to  deliver  the  best outcome to the company’s creditors and employees, but they cannot be advanced to any great degree within the default period for the holding of a watershed meeting of creditors.   The administrators also naturally wish to retain the services of the company’s staff until they can decide which option is best suited to the needs of the company and its creditors.  Under the statutory regime the administrators must give

notice of termination of employment to all 35 employees no later than 24 May 2016.

1      Companies Act 1993, ss 239AT(3) and 239Y(4).

Decision

[5]      The principles to be applied in this context have already been canvassed in cases such as Re Nylex (New Zealand) Ltd, Re WGL Retail Holdings Ltd and Re Gourmet Foods Holdings New Zealand Ltd.2   It is not necessary for present purposes to restate those principles in this judgment.  I bear in mind, however, the cautionary note signalled by Heath J in the Nylex case to the effect that the Court must be wary of granting an extension in cases where it might be sought in order to delay matters and extend the statutory moratorium.3

[6]      I am satisfied this case does not fall within that category.  The administrators have genuine reasons for extending the time within which to hold the watershed meeting, and to give notice of termination of employment contracts.   If they are required to attend to both those matters within the statutory time periods the interests of creditors will not be advanced and unnecessary expense will be incurred.  There is no prejudice to any creditor or employee by the proposals, because each is in their best interests.

[7]      I am therefore satisfied that is appropriate to grant the application, and I make orders accordingly. The Registry may seal the draft orders that have been filed.

Lang J

Solicitors:

Buddle Findlay, Auckland

2      Re Nylex (New Zealand) Ltd HC Auckland CIV-2009-404-1217, 11 March 2009; Re WGL Retail

Holdings Ltd [2011] NZCCLR 22; Re Gourmet Foods Holdings New Zealand Ltd [2012] NZHC

3606.

3      Re Nylex (New Zealand) Ltd, above n 1, at [19].