IG Power (Callide) - Case Update

The Court has extended the convening period for the administrators of IG Power (Callide) (IGPC) to call a second meeting of creditors to 28 February 2025, while rejecting arguments by the administrators regarding the urgency of a hearing to deal with an issue that is relevant to a proposed sale of IGPC’s assets.

IGPC entered voluntary administration in March 2023. The administration has been complex, having involved both general purpose and special purpose administrators for a time. A sale process has been conducted and several extensions have been granted.

Recently, the administrators brought an application to extend the convening period. Initially, they sought to extend the period to 6 December 2024, but it quickly became apparent that this would not be enough time, including because of a judicial direction application that needs to be heard before a sale of IGPC’s interest in the Callide Power Station in Queensland can be completed. The power station has been operated by a joint venture between IGPC and Callide Energy Pty Ltd (CEPL), a company ultimately controlled by the State of Queensland, the proposed purchaser.

The sale agreement with CEPL includes certain conditions, one of which concerns the hearing of a judicial direction application and a decision being made in respect of it by a particular date. The administrators indicated that the sale agreement may be at risk if the conditions precedent were not met by the relevant dates, and argued in favour of an expedited hearing of the judicial direction application on that basis. However, this conflicted with submissions made by CEPL that there was no evidence that it would seek to terminate the sale agreement if the condition precedent concerning the judicial direction was not met by the due date in the agreement.

The Court ultimately rejected the administrators’ arguments that the judicial direction application should be heard before the end of this year, and made clear that it was not happy with the pressure put on the Court to determine the matter with such urgency. Key findings by the Court included:

• The submissions made on behalf of the administrators and CEPL appeared to conflict in several significant respects. This resulted in the administrators’ submissions that expedition was required due to the threat of CEPL terminating the agreement being severely undermined;

• It would have been clear to the administrators, CEPL, and their respective legal representatives when negotiating the terms of the sale agreement that agreeing to any particular date by which judicial advice was to be given would likely impose pressure on the Court to accommodate it. The administrators could have obtained a case management hearing to ascertain the Court’s availability to hear and determine their proposed application.

• In addition, if the administrators did know that the condition precedent would generate pressure on the Court to determine the application as a matter of urgency, it was concerning that they chose to enter into the sale agreement in the form in which it appeared.

• There may have been other good reasons to argue that the judicial direction application should be heard urgently, including the diminution of the value of IGPC’s assets if the time for the completion of the sale were extended into 2025. The existence of those matters may well have provided a complete justification for the due date for the judicial direction provided in the agreement. However, that was not the way the matter was argued.

The decision can be found here.