COVID-19 wreaking havoc on delayed VAs

KPMG’s Gayle Dickerson.
KPMG’s Ryan Eagle

Another day, another judgement detailing the havoc wreaked on the voluntary administrations process (VAs) by COVID-9.

In Eagle, in the matter of Techfront Australia Pty Limited (administrators appointed) [2020] FCA 542 Justice Kathleen Farrell provided a conveniently succinct account of the obstacles the virus had placed in the path of KPMG partners Ryan Eagle and Gayle Dickerson, who were jointly appointed VAs to Techfront Australia Pty Ltd and two related entities on April 7.

“Since their appointment, the administrators have sought to continue to trade the Business on a “business as usual” basis, subject to the restrictions resulting from COVID-19, while assessing viable options to continue to keep the Business operating,” Justice Farrell said.

But according to the circumstances outlined by her honour, there is no “business as usual” for a company like Techfront, whose revenue depends on bums occupying seats en masse.

“The COVID-19 pandemic and the steps taken by the State and Federal Governments to respond to it have delayed the administrators’ conduct of the administration,” her honour said.

“(1)    All discussions and liaison with team members must be done by phone or email, which delays information becoming available.

“(2)    All discussions and liaison with officers and employees of the Companies must be done by phone or email, which has caused delays and incomplete information being obtained regarding the Business.

“(3)    Limited numbers of KPMG staff are able to access the Companies’ head office in Gladesville, New South Wales. At present, only two staff members are able to attend the office, with the result that review and assessment of the Companies’ books and records is taking substantially longer than would usually be the case.

“(4)    There are logistical difficulties arising from the inability to access secretarial support and office equipment (for instance printing), preventing the issuance of physical mail in a timely manner.”

Eagle and Dickerson had applied to the court for a two week extension of the time during which they must give notice under s 443B as to whether they would retain or give up possession of property leased by the company.

Their appointment on April 7 came two months after a former employee claiming unpaid salary and entitlements commenced proceedings to have the company wound up.

Setting aside for a moment the question of how practitioners will account for the havoc Covid-19’s wreaking on their timesheets, what’s clear from this judgment and others – think Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 472 – is that there’s never been a better time for an appointee needing more time or less personal liability to approach a court.

Further reading:

In the matter of Cresco Opus Fund No 4 Pty Limited (Administrator Appointed) [2019] NSWSC 941

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