Wave - Case Update

A company’s administrators have sought to review the maximum amount of remuneration approved by the company’s creditors.

Nicole Allmark, Jack James and Paula Smith of Rodgers Reidy, the joint and several administrators and deed administrators of Wave and Wave Projects, applied to the Court for additional remuneration in respect of work they undertook in connection with the administration and deed administration of Wave and Wave Projects.

The second creditors' meeting of Wave and Wave Projects was held on 6 July 2023. At each meeting, the majority of creditors by value voted against the proposed DOCA and the majority of creditors in number voted in favour. The chairman of the meeting, Mr James, one of the administrators, exercised a casting vote as chairman in favour of each company entering into the proposed DOCA. The resolution for each company was passed on that casting vote.

At each of those meetings, a number of resolutions were passed regarding the administrators’ remuneration reflecting charges on a time-costing basis with a cap on the amount of remuneration.

In July 2023, Paddington Gold obtained orders terminating the DOCAs and setting aside the casting vote. Paddington obtained interlocutory injunctive relief restraining each DOCA being carried into effect pending the determination of the proceedings.

The administrators then sought additional remuneration of $136,025 in respect of Wave (an extra $12,460 over and above the $25,000 approved for the period before the administration came to an end, and an extra $123,565 over and above the $15,000 approved for the period after the administration came to an end). The administrators also sought additional remuneration of $108,567.50 in respect of Wave Projects (an extra $20,000 over and above the $25,000 approved for the period before the administration came to an end, and an extra $88,567.50 over and above the $15,000 approved for the period after the administration came to an end).

The Court declined to conduct a review of the administrators’ remuneration for the period before the administration came to an end, but agreed that it was appropriate to review the administrators’ remuneration for the period after the administration came to an end.

With respect to the period before the administration came to an end, the Court accepted that the increased costs could not have been anticipated by the administrators when they issued their initial report. However, by the time the administrators issued their supplementary report, it must have been obvious to them that the value of the work they had undertaken well exceeded the proposed cap on remuneration to be imposed by the proposed remuneration resolutions. The administrators did not inform creditors prior to the second creditors' meeting that the value of their work exceeded the previous estimates, or that they wished to preserve their ability to seek a higher amount at a later stage. They did not submit any evidence explaining why that was not done.

However, the position regarding the period after the execution of the DOCAs was quite different, as much of the work that was done by the administrators was required because of Paddington’s challenge to the DOCAs. At the point in time that the creditors' resolutions were passed at the second creditors' meeting, the administrators could not have determined with any certainty whether proceedings would be brought to challenge the proposed DOCAs. Nor could the administrators have anticipated the scope of any such proceedings, or the extent to which they would need to be involved. As a result, it was appropriate for the Court to review the remuneration for that period.

Ultimately, the Court approved total remuneration for the post-DOCA period of $125,000 excluding GST in respect of Wave and $90,000 excluding GST in respect of Wave Projects.

The decision can be found here.

Professionals involved: Stefan Tomasich of Quayside Chambers and Lavan for the administrators.