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Raise your virtual hand! Post-pandemic meetings in external administrations

By Sam Kingston & Michael Wells

• 09 March 2022 • 9 min read
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The Probuild and Virgin Australia administrations confirm that virtual meetings in external administrations are now an integral part of insolvency in a post-pandemic world. Although recent changes to the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR) provide greater flexibility, there are aspects that insolvency practitioners need to consider and Court directions may be necessary.

Most recently, in the administration of the Probuild companies, the Federal Court of Australia affirmed the use of a proprietary virtual platform maintained by the administrators’ firm for the first creditor meeting.[1] Relevantly, orders were made confirming that:

  1. the administrators’ platform satisfied the requirements of the IPR
  2. the requirement for the inclusion of a proxy form with the notice for the first meeting of creditors was satisfied by the administrators providing a link to the administrators’ platform and informing creditors that electronic proxy forms were available on the platform.

As similar orders were made in the Virgin Australia administration,[2] it is clear Courts are prepared to assist practitioners by authorising the use of particular platforms, particularly where there are a large number of creditors. The time and expense of Court directions will not be justified for all administrations, and practitioners will need to be careful to ensure the requirements of the IPR are met.

Commencing on 11 February 2022, the IPR were amended to ensure virtual meetings in external administrations operate as intended.[3] In summary, the key changes to the IPR are:

Information

A notice of a virtual meeting lodged with the Australian Securities and Investments Commission (ASIC) must include a statement that the persons entitled to attend a virtual meeting have been given sufficient information to attend the meeting. While there are no examples of what ‘sufficient information’ means, administrators should at least ensure meeting attendees are given all necessary platform and access details. The amendments acknowledge that the convenor may limit meeting access information to persons entitled to attend the meeting (such as proven creditors), so some security is justified.

Show of hands

Convenors of virtual meetings must specify in the notice of the meeting whether the vote will be taken on a poll. If the notice does not require votes to be taken on a poll, votes must be taken on a ‘show of hands’ using any electronic mechanism unless a poll is requested. A ‘show of hands’ is a broad and inclusive concept. Any electronic mechanism used to indicate a person’s intentions in respect of the vote is included. This could include an attendee clicking a ‘raise hand’ or similar button on a virtual meeting computer program, as well as verbally indicating their vote if dialling-in to the meeting by phone.

    Real time voting

    Where virtual meeting technology is used, each participant must be given the opportunity to participate in the vote in real time. This applies to the poll and show of hands voting methods. Convenors of meetings may allow voting on some matters in advance of the meeting, but also restrict voting on other matters to real-time votes. Although this gives greater flexibility, care must be taken to ensure all participants are able to vote and their votes are recorded.

    Documents

    Documents can be tabled at meetings if they are made reasonably accessible to the attendees. This includes using ‘screen sharing’ and providing an electronic or physical copy of the document before or during the meeting. Allowing screen sharing to table documents rather than ‘giving’ the documents to meeting attendees gives greater flexibility, but could cause complications where, for example, a creditor is dialling-in to a virtual meeting by phone and cannot view documents tabled.


      Table 1 summarises how these changes compare to the 2020 iteration of the IPR.

      The latest changes complement the Federal Government’s reforms to electronic signing of company documents. Companies can execute agreements electronically under section 127 of the Corporations Act 2001 (Cth).[4] Further, as of 22 February 2022, companies are now able to use electronic signatures as a means of executing company documents, including deeds, notices, minutes and resolutions.[5]

      These changes are a net positive for insolvency practitioners and largely reflect the realities of doing business in a post-pandemic world. However, practitioners should be mindful that ambiguity still lingers as refinements continue. In view of this, where possible, it is reasonable to seek directions similar to those obtained by the Probuild and Virgin Australia administrators.


      Provision

      2020 rule

      New rule

      Description

      Section in Insolvency Practice Rules

      Place of a virtual meeting

      ss 75-15(1)(a)(iii), 75-40(2)(db), and 75-75(6)(a)

      The place of a virtual meeting was deemed to be the registered office of the company under external administration, or the contact address specified in the pooling determination in the case of a pooled group.

      Where there are no physical attendees to a meeting, the convenor of the virtual meeting may nominate a physical address in Australia in the notice of the meeting. This provides the convenor with the flexibility to nominate the place that is most appropriate for the stakeholders in an external administration.

      Notice of a virtual meeting

      section 75-40(2)(db)

      The convenor of a meeting must lodge a notice of a meeting with ASIC providing prescribed information relating to the company under external administration and the purpose and details of the meeting.

      A notice of a virtual meeting lodged with ASIC must include a statement that the persons entitled to attend a virtual meeting have been given sufficient information to attend the meeting.

      While there are no examples of what ‘sufficient information’ means, administrators should at least ensure meeting attendees are provided with connection details such as:

      • what software platform will be used (i.e. Zoom, Teams, WebEx);
      • the URL, link or meeting ID; and
      • any access passwords (if used).

      The amendments acknowledge that the convenor may limit meeting access information to persons entitled to attend the meeting, such as:

      • proven creditors and members of the company for creditor or member meetings;
      • committee members for a meeting of a committee of inspection; or
      • employees for a meeting of eligible employee creditors.[6]

      This is intended to prevent the information to access the meeting being circulated publicly and potentially allowing persons to attend a meeting where they are not entitled to do so.

      Method of voting in a virtual meeting

      ss 75-15(1), 75-75(3), 75-110(1), and 75-110(2)

      Resolutions put to the vote at virtual meetings were required to be decided on a poll.

      The convenor of a virtual meeting must specify in the notice of the meeting whether the vote must be taken on a poll. If the notice does not require votes to be taken on a poll, votes must be taken on a ‘show of hands’ using any electronic mechanism (see below) unless a poll is requested.

      section 5-5

      -

      A ‘Show of hands’ is broadly defined and includes any electronic mechanism used to indicate a person’s intentions in respect of the vote. This could include an attendee clicking a ‘raise hand’ or similar button on a virtual meeting platform, as well as verbally indicating their vote if dialling-in to the meeting on the telephone.

      ss 50-6(4) and 75-75(4)

      Members of a virtual meeting could record a vote in advance of a meeting (at the election of the member).

      Where virtual meeting technology is used in holding the virtual meeting, each member must be given the opportunity to participate in the vote in real time (if a vote is considered necessary)

      Tabling of documents in a virtual meeting

      section 50-6(7), 75-75(7)

      A document is taken to have been tabled at a virtual meeting if the document is given to the persons entitled to attend the meeting before or at the meeting.

      Documents can be tabled at meetings if they are made reasonably accessible to the attendees.

      This includes using ‘screen sharing’ technology to share the document during a virtual meeting and providing an electronic or physical copy of the document before or during the meeting.


      [1] Algeri, in the matter of WBHO Australia Pty Ltd (Administrators Appointed) [2022] FCA 169.
      [2] See for example Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 7) [2020] FCA 118
      [3] Insolvency Practice Rules (Corporations) Amendment (Virtual Meetings and Electronic Communication) Rules 2022 (Cth)
      [4] Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth).
      [5] Corporations Amendment (Meetings and Documents) Act 2021 (Cth).
      [6] IPR, s 75-10.

      Looking for more information on changes to the Insolvency Practice Rules (Corporations) 2016?

      Contact our Restructuring & Insolvency team

      By Sam Kingston & Michael Wells

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