SKYAIRWORLD: Management to take "Leave?

[ruidoso y fuerte]

How to replace an administrator, Skulduggery and shadow directors

Voluntary administration

In a voluntary administration you are given an opportunity to replace an administrator at the first meeting of creditors, if there is another administrator who has consented to taking on the role and a majority of creditors (in number and value) approve the appointment of that replacement administrator. If you are a creditor, see ASIC’s information sheet INFO 74 Voluntary administration: a guide for creditors for more information about this meeting. http://www.asic.gov.au/asic/pdflib.n..._creditors.pdf

The purpose of the first meeting is for creditors to decide two questions:

1. whether they want to form a committee of creditors, and, if so, who will be on the committee, and
2. whether they want the existing voluntary administrator to be removed and replaced by a voluntary administrator of their choice.

When a poll is conducted, a resolution is passed if:

1. more than half the number of creditors who are voting (in person or by proxy) vote in favour of the resolution, and
2. those creditors who are owed more than half of the total debt owed to creditors at the meeting vote in favour of the resolution.

This is referred to as a ‘majority in number and value’. If a majority in both number and value is not reached under a poll (often referred to as a deadlock), the chairperson has a casting vote.

This meeting can be chaired by either the voluntary administrator or one of their senior staff.


Herein lies the problem.

The two “secured” creditors are the CEO and his father in law, they have the majority “weight’ of the debt. It must be tested how the CEO can claim 10 mill of debt to a company he drove and dispersed. The benefactor (20 odd mill) has also been calling the shots for many months and was well aware of cash and trading position.
Remember that a director is not simply the person who has his or her name so recorded at ASIC. The Corporations Act gives an expansive meaning to the word “director” to embrace not only those who have been properly appointed as directors but those who act as de facto and shadow directors

Who is a shadow director?
As a general rule, a person is a shadow director if that person, though not for*mally appointed a director of the com*pany, is one in accordance with whose instructions or wishes, the company’s other directors are accustomed to act. That is, the appointed directors effectively defer to the instructions of the shadow director.

Actions may be maintained against directors for the insolvent trading of their companies
l Actions may be brought against directors who obtained the benefit of unrea*sonable director-related transactions involving their companies
l The timeframe for recovery of pay*ments from transactions which have the character of unfair preferences and which benefit directors is greater than in the case of transactions with unrelated par*ties
l Recovery actions may be pursued against directors of companies which engaged in an insolvent transaction even though the transactions directly benefited other persons
l Actions will lie against directors for breach of their duties to their companies.

The problem:
So we have the “weight” of the vote sitting with the very two “directors”. How can the rest of the creditors, the genuine creditors, vote in a new Administrator?

Some legalese will be required before next Wednesday!