Federal Court of Australia

Emerald No 2 (SA) Pty Ltd v Matthews, in the matter of Sapphire (SA) Pty Ltd [2025] FCA 695

ORDERS

THE COURT NOTES THAT:

A.    On 11 December 2024, Mr Richard Trygve Rohrt of Kennedy Ryan Advisory Pty Ltd (KRA) signed a consent to act as liquidator of the second defendant (Company).

THE COURT ORDERS THAT:

Confidentiality

1.    Pursuant to sections 37AF(1)(a) and (b)(iv), and 37AG(1)(a) and (c) of the Federal Court of Australia Act 1976 (Cth), on the grounds that it is necessary to prevent prejudice to the proper administration of justice and to protect the safety of any person, subject to paragraph 2 below, the following annexures (Annexures) are to be marked “confidential” on the physical and electronic Court file and are not to be published or accessed, except pursuant to an order of the Court, for a period of 5 years from the making of this order:

(a)    “C-LAH-1” to the affidavit of Lynette Anne Harding sworn 17 March 2025; and

(b)    “C-NA-1” to the affidavit of Nikita Angelakis affirmed 14 April 2025.

2.    Paragraph 1 of these orders does not prevent the plaintiffs, defendants, Mr Rohrt or KRA, or their legal representatives, agents, or employees, from disclosing, publishing, or accessing the Annexures.

Appointment of liquidator

3.    Pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), being Sch 2 to the Corporations Act 2001 (Cth) (the Act and IPSC), the first defendant is removed, and Mr Rohrt is appointed, as liquidator of the Company.

Voluntary administration

4.    Pursuant to s 436B(2)(g) of the Act, Mr Rohrt has leave to be appointed as voluntary administrator of the Company.

5.    Pursuant to s 447A of the Act, Pt 5.3A of the Act is to operate in relation to the administration of the Company (and the administration of a deed of company arrangement made in relation to the Company), on the following terms and to prevail to the extent of any inconsistency with the provisions of Pt 5.3A of the Act:

(a)    there be no requirement that a first meeting of creditors in the administration of the Company be convened or held pursuant to s 436E of the Act;

(b)    sections 438A(a), 438B(2) and (2A) of the Act do not apply to the administration of the Company;

(c)    section 438D of the Act shall only apply to the administration in relation to conduct engaged in on and from the date of Mr Rohrt’s appointment;

(d)    the administrator may convene and hold the meeting required under s 439A of the Act at any time during the convening period, provided that notice of such meetings is provided in accordance with r 75-225 of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPRs);

(e)    the report required under r 75-225(3)(a) of the IPRs need not include information:

(i)    provided previously by the first defendant in a report in the course of the external administration of the Company; and

(ii)    that is not required to be included by r 75-225(3)(v) of the IPRs;

(f)    in and for the purposes of the administration, Mr Rohrt may accept as proofs of debt in the administration of the Company any proofs of debt submitted by creditors at any time during the course of the external administration of the Company, without adjustment for interest in respect of the claims the subject of such proofs of debt; and

(g)    section 439C(c) does not apply to the administration of the Company.

Winding up

6.    Pursuant to s 482 of the Act, with effect from the appointment of Mr Rohrt as administrator of the Company, the winding up of the Company be stayed until the end of the voluntary administration of the Company pursuant to s 435C of the Act.

7.    Pursuant to s 482 of the Act, the winding up of the Company be terminated upon the giving of written notice by Mr Rohrt to ASIC of the full effectuation of a deed of company arrangement substantially in the terms annexed to the affidavit of Brenton Jeffrey Strauss made 7 February 2025.

Other

8.    There is no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

NESKOVCIN J:

1    The first defendant is the liquidator (Liquidator) of the second defendant, Sapphire (SA) Pty Ltd (in Liq) (Company), which is presently being wound up.

2    By originating process filed on 28 February 2025, the Company’s director, Mr Brenton Strauss, and related entities (plaintiffs) sought orders to:

(a)    remove the Liquidator and appoint Mr Richard Trygve Rohrt to act as liquidator in his place;

(b)    grant leave for Mr Rohrt to appoint himself as voluntary administrator of the Company (who would become deed administrator of a deed of company arrangement in relation to the Company (DOCA));

(c)    dispense with the requirements of the Corporations Act 2001 (Cth) to convene a first meeting of creditors and report on certain matters, along with other truncated administration orders; and

(d)    stay the winding up during the period of voluntary administration and terminate it upon the effectuation of a DOCA.

3    The plaintiffs relied on an affidavit of Mr Strauss dated 7 February 2025, an affidavit of service of Ms Lynette Harding, solicitor, dated 17 March 2025 (Harding Affidavit) and an affidavit of notice of Mr Nikita Angelakis, solicitor, dated 14 April 2025 (Angelakis Affidavit).

4    The Liquidator consents to the order to remove him as liquidator and otherwise did not oppose or seek to be heard on the application. On 27 February 2025, O’Callaghan J made orders that the Liquidator be excused from the further conduct of the proceeding.

5    Notice of the application was given to the Australian Securities and Investments Commission (ASIC) and the Company’s creditors, none of whom opposed or otherwise sought to be heard on the application.

6    I heard the application on 11 June 2025, at the conclusion of which I made orders substantially in the form sought by the plaintiffs. These are my reasons for making those orders.

BACKGROUND

7    The Company formerly operated an agricultural commodities business in Murray Bridge, South Australia. Mr Strauss has been the director of the Company since its incorporation and is also the sole director of the first to fifth plaintiffs, which were referred to as the Emerald Group Companies.

8    On 14 March 2014, the Liquidator was appointed as administrator by a resolution passed by the Company pursuant to s 436A of the Corporations Act. On 5 May 2014, creditors of the Company voted in favour of a DOCA (Earlier DOCA). The Earlier DOCA was executed on 21 May 2014. The Company was subject to the earlier DOCA between 21 May 2014 and 12 February 2016. The Earlier DOCA terminated, for reasons that I will come to, and the Company was placed in liquidation by resolution of creditors passed pursuant to s 445E of the Corporations Act on 12 February 2016.

9    The claims in the liquidation total around $9.4 million, comprising:

10    The Company’s creditors are mainly trade creditors, save for:

(a)    National Australia Bank (NAB), which was the Company’s financier and a secured creditor. NAB appointed receivers who realised $2,333,978.58 from the security and retired in 2014. NAB maintains a PPSR registration for its security but the Company has no further property securing NAB’s debt; and

(b)    related creditors, being the Emerald Group Companies and Two Trees.

11    After the Company went into administration, Mr Strauss proposed the Earlier DOCA to creditors. Under the Earlier DOCA, Mr Strauss agreed to make a payment contribution that was structured to guarantee payment in full to priority creditors, and two dividends of 10 cents in the dollar for non-priority creditors.

12    Mr Strauss defaulted on the contribution he was required to make under the Earlier DOCA. Mr Strauss explained that, at the time of proposing and executing the Earlier DOCA, he understood that NAB would not participate in the Earlier DOCA, the debts of creditors participating in the Earlier DOCA would total around $7 million, and he would be obliged to make a total contribution of around $1.3 million. However, NAB informed the Liquidator that it intended to prove for its debt under the Earlier DOCA and the amount Mr Strauss was required to contribute increased.

13    Mr Strauss was unable to raise the additional funds needed to meet the required payments under the Earlier DOCA. Mr Strauss sought to negotiate a variation to the Earlier DOCA, however, creditors did not approve the variation.

14    The Earlier DOCA having failed, the Liquidator recommended to creditors that the Company be wound up and, on 12 February 2016, creditors passed a resolution to wind up the Company.

15    The Company has been in external administration for approximately 11 years.

16    The Liquidator has realised approximately $800,000 from the Company’s assets and claims, however, no dividend has been paid to creditors.

17    Mr Strauss wishes to put a proposal for a DOCA to enable payment of a dividend and to bring finality to the long-running winding up of the Company, by restoring it to solvency and have the winding up terminated upon its effectuation.

18    Prior to bringing this application, Mr Strauss had proposed a further DOCA, which the committee of inspection rejected. Mr Strauss eventually reached an agreement with the Liquidator that he would fund the Liquidator to bring an application seeking orders similar to the orders sought in the present application. The application was progressed to an extent. However, Mr Strauss grew dissatisfied with delays, queries raised by the Liquidator’s former solicitors, and the Liquidator having changed solicitors a number of times.

19    By the time the present application was filed in February 2025, relations between the Liquidator and Mr Strauss had broken down. As a result, the plaintiffs sought orders to replace the Liquidator, and the Liquidator consents to that course.

The DOCA proposal

20    Mr Strauss has put forward a DOCA proposal with the following key terms:

(a)    Mr Rohrt will be appointed as deed administrator of the DOCA;

(b)    the DOCA will bind all creditors and impose a moratorium for its duration;

(c)    Mr Strauss will pay a contribution of $200,000 towards Mr Rohrt’s costs and to pay a dividend to participating creditors in the DOCA;

(d)    the Emerald Group Companies and Two Trees will:

(i)    not participate in a dividend in the DOCA, and will not have their claims compromised by the DOCA, but will be entitled to vote in any resolutions put to creditors in the DOCA;

(ii)    execute a deed poll by which they agree not to demand payment or enforce their claims unless the Company has sufficient property to satisfy them; and

(iii)    agree to be bound by a moratorium on their claims for 18 months after effectuation of the DOCA; and

(e)    upon payment of a distribution, all participating creditors’ debts or claims against the Company will be extinguished.

Power to remove and replace a liquidator

Relevant principles

21    The Court may make such orders as it thinks fit in relation to the external administration of a company: s 90-15(1) of the Insolvency Practice Schedule (Corporations) (IPSC), being Schedule 2 to the Corporations Act. Such orders include, for example, the power to remove and replace a liquidator: s 90-15(3)(c) of the IPSC.

22    A creditor or officer of the company has standing to apply for an order under s 90-15: s 90-20(1)(a)–(b), (d) of the IPSC.

23    The Court may exercise the power under s 90-15 of the IPSC to remove and replace a liquidator if it is satisfied that it is just and beneficial to do so: Nixon, in the matter of Nixon [2022] FCA 211 at [6] (Derrington J).

24    The discretion to remove and replace a liquidator will usually be favourably exercised where it is demonstrated that such an order would be for the better conduct of the liquidation or for the general advantage of the persons interested in the winding up: Nixon at [6] (Derrington J).

25    In applications of this kind, the question is whether it is in the best interests of creditors of the company to accede to the application: Fitz Jersey Pty Ltd v Fraser (2018) 129 ACSR 238; [2018] NSWSC 1189 at [79] (Ward CJ in Eq, as her Honour then was). However, proceedings of these kinds should not become a “vehicle for disgruntled creditors to endeavour to secure the appointment of a preferred liquidator”: Fitz Jersey at [132] (Ward CJ in Eq) citing Citrix Systems Inc v Telesystems Learning Pty Ltd (in liq) (1998) 28 ACSR 529 at 538–539 (Moore J). Further, the Court should not accede to a party’s preference for a particular liquidator on account of a threat or promise to fund that liquidator but no other: Fitz Jersey at [88] (Ward CJ in Eq) citing In the matter of Evcrop Grains (No 2) [2014] NSWSC 155 at [21] (Brereton J).

26    Where an incumbent liquidator recognises that it is in the best interests of creditors for them to be replaced, this may be considered relevant by the Court as to whether to make an order for their replacement by another liquidator: Fitz Jersey at [65], [112], [117] (Ward CJ in Eq).

Consideration

27    I was satisfied that it is appropriate to replace the Liquidator with Mr Rohrt due to irreconcilable differences between the Liquidator and Mr Strauss. In circumstances where Mr Strauss is proposing a DOCA, a good working relationship between Mr Strauss and the external administrator is desirable for the conduct of the administration of the Company. The Liquidator consents to the order to remove him as liquidator. Mr Rohrt consents to the appointment as liquidator and there is no apparent conflict of interest.

28    Further, there will be utility and benefit to creditors in Mr Rohrt’s appointment, which must be viewed in the context of the connection with the DOCA proposal. The appointment of Mr Rohrt will secure the prospect of the DOCA proposal and the opportunity for creditors to vote on the same.

leave to appoint the liquidator as voluntary administrator

Relevant principles

29    Section 436B of the Corporations Act provides:

Liquidator may appoint administrator

(1) A liquidator or provisional liquidator of a company may by writing appoint an administrator of the company if he or she thinks that the company is insolvent, or is likely to become insolvent at some future time.

(2) A liquidator or provisional liquidator of a company must not appoint any of the following persons under subsection (1):

(a) himself or herself;

…

unless:

(f) at a meeting of the company’s creditors, the company’s creditors pass a resolution approving the appointment; or

(g) the appointment is made with the leave of the court.

30    The principles relevant to the exercise of the Court’s discretion under s 436B(2) were conveniently summarised by O’Bryan J in Brooks, in the matter of 351 Property Management & Maintenance Pty Ltd (in liq) [2023] FCA 1426 at [18]–[19]:

[18] The principles that govern an application by a liquidator for leave to be appointed as voluntary administrator pursuant to s 436B(2)(g) are well-established. Those principles were summarised by Halley J in Mansfield (liquidator), in the matter of NR Complex Pty Ltd (in liq) (recs and mgrs apptd) [2023] FCA 614 (NR Complex) at [18]-[22]:

(a)    The test for leave is not an onerous one: Re Cobar Mines Pty Ltd (rec & mgr apptd) (in liq) (1998) 30 ACSR 125 (Re Cobar) at 126 (Bryson J); In the matter of Equiticorp Australia Ltd (in liq) [2020] NSWSC 143 (Equiticorp) at [21] (Gleeson J). Nevertheless, the grant of leave should not be treated as a “mere formality or mere procedural obstacle”: In the matter of Keldane Pty Limited (in liq) [2011] VSC 385 at [13] (Pagone J); Australian Securities and Investments Commission v Diploma Group Limited (No 5) [2017] FCA 1147 (Diploma Group) at [40] (McKerracher J); Deputy Commissioner of Taxation (Cth) v Foodcorp Pty Ltd (1994) 13 ACSR 796 (Foodcorp) at 799 (Hodgson J).

(b)    A liquidator will generally be granted leave to appoint themselves as the administrator, unless there are distinct reasons why they are not a suitable person. This reflects the “desirability of continuity” of persons in charge of the management of the company: Parkes Leagues Club Co-op Limited (in liq) [2004] NSWSC 16 at [5] (Hamilton J) citing Re Cobar at 126.

(c)    The primary question on an application for leave for self-appointment as a voluntary administrator is whether the liquidator is “an appropriate person to be an administrator”: Foodcorp at 799. A Court should generally grant leave if the person is an official liquidator with no prior association with the company and its officers, and there is no distinct reason why their appointment would be inappropriate: Foodcorp at 799.

(d)    The appropriateness of an appointment requires consideration of whether there are is “any matter such as a conflict of interest, a threat to independence, or anything else offensive to commercial reality in such an appointment”: Diploma Group at [40]; Schwarz, in the matter of Gordon Smith Marketing Pty Ltd (administrator appointed) [2016] FCA 1378 (Gordon Smith) at [11] (Jagot J, as her Honour then was).

(d)    Relevant considerations on an application of this kind include: the proposed appointee’s familiarity with the business and affairs of the subject company; the likely reduction in duplication and associated costs where a liquidator is appointed as administrator including where considerable work has already been undertaken; and where continuity of appointees is desirable having regard to ongoing negotiations and/or complex arrangements: Equiticorp at [23]; Diploma Group at [58]; Gordon Smith at [32(b)].

[19] There is also authority which suggests that, although the main consideration upon an application such as the present one is the suitability of the appointee as administrator, the Court is nevertheless interested in a general sense to see that there is some point in the move from winding up to voluntary administration: Kukulovski, in the matter of Corrimal Leagues Club Ltd (in liq) [2013] FCA 697 at [17] (Farrell J); Rupert Co Ltd v Chameleon Mining NL [2005] NSWSC 719 at [5] (Barrett J); see also Smith, in the matter of Actively Zones Pty Ltd (in liq) [2012] FCA 605 at [4]-[5] (Jacobson J); Diploma Group at [28]. In the present context, this requires consideration of whether there is a prospect that entry into the DOCA, for which the appointment of an administrator is proposed, will lead to a better outcome for creditors than liquidation.

[Emphasis in original]

Consideration

31    The Company has been in liquidation for approximately 11 years. The Liquidator has thoroughly investigated the Company’s affairs and has realised its assets. No dividend has been paid in the liquidation, and none will be paid as there are no realisable assets left in the Company. If creditors are unable to vote upon the DOCA, or do not vote in favour of the DOCA proposal, the Company will likely be deregistered.

32    The DOCA proposal provides the prospect of a dividend to creditors, which is not available to the Liquidator. The DOCA proposal will not produce a sizeable dividend. The plaintiffs submit, however, that the Company’s creditors should be given an opportunity to vote on a resolution that the Company execute a DOCA in the form of the DOCA proposal.

33    The function of the Court on an application of this kind is not to assess the commerciality of the DOCA proposal. Courts usually take the view that the creditors are in the best position to consider what is to their commercial advantage: Re Ansett Australia Ltd (No 3) (2002) 115 FCR 409; [2002] FCA 90 at [86] (Goldberg J) citing Re English Scottish & Australian Chartered Bank [1893] 3 Ch 385 at 409; Re Spedley Securities Ltd (In liq) (1992) 9 ACSR 83; 10 ACLC 1742 at 186 (Giles J); Mentha v GE Capital Ltd (1997) 154 ALR 565 at 570 (Finkelstein J).

34    The Court need only satisfy itself that there is no issue of propriety that should prevent the DOCA proposal being put to creditors. It was submitted by the plaintiffs that there is no such reason, and the benefit to creditors is readily apparent.

35    I was satisfied that the order sought is appropriate on the following grounds.

36    First, there is no risk that Mr Strauss’ agreed contribution under the DOCA proposal will not be paid, as he has paid $200,000 into his solicitors’ trust account.

37    Secondly, the DOCA will enable a dividend to be paid, which will not otherwise be paid in the liquidation. The DOCA proposal will not endanger the payment of a dividend through increased costs. Mr Strauss has agreed to fund Mr Rohrt’s costs as liquidator and administrator up to an agreed cap.

38    Thirdly, the proposed orders will not disrupt or frustrate the conduct of an active liquidation; that liquidation is at an end.

39    Fourthly, creditors’ claims will only be extinguished – and the liquidation will only be terminated – if creditors are given the opportunity to vote, the vote is in favour of the DOCA, and the DOCA is effectuated.

40    Finally, notice of this application has been given to ASIC and creditors of the Company, including the Committee of Inspection, and it has been served on the Liquidator. The Liquidator and ASIC have not sought to be heard and there was no opposition to the orders sought in this application.

truncation of the voluntary administration

Relevant principles

41    The plaintiffs sought orders, pursuant to s 447A of the Act and upon Mr Rohrt’s appointment as administrator under s 436B(1) of the Act, that Pt 5.3A of the Act is to operate in relation to the administration of the Company (and the administration of a DOCA made in relation to the Company), on the following terms and to prevail to the extent of any inconsistency with the provisions of Pt 5.3A of the Act:

(a)    there be no requirement that a first meeting of creditors in the administration of the Company be convened or held;

(b)    sections 438A(a), 438B(2) and (2A) of the Act do not apply to the administration of the Company;

(c)    section 438D of the Act shall only apply to the administration in relation to conduct engaged in on and from the date of Mr Rohrt’s appointment;

(d)    the administrator may convene and hold the meeting required under s 439A of the Act at any time during the convening period, provided that notice of such meetings is provided in accordance with r 75-225 of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPRs);

(e)    the report required under r 75-225(3)(a) of the IPRs need not include information:

(i)    provided previously by the first defendant in a report in the course of the external administration of the Company; and

(ii)    that is not required to be included by r 75-225(3)(v) of the IPRs;

(f)    in and for the purposes of the administration, Mr Rohrt may accept as proofs of debt in the administration of the Company any proofs of debt submitted by creditors at any time during the course of the external administration of the Company, without adjustment for interest in respect of the claims the subject of such proofs of debt; and

(g)    section 439C(c) does not apply to the administration of the Company.

42    Orders pursuant to s 447A of the kind sought by the plaintiffs (known as “truncated administration orders”) are typically sought in an administration where an administrator is appointed to a company in liquidation, seeking to modify and truncate the manner in which Pt 5.3 of the Act is to operate in relation to the company: In the matter of Equiticorp Australia Ltd (In Liq) [2020] NSWSC 143 at [32]–[40] (Gleeson J); Hughes, in the matter of Vah Newco No. 2 Pty Ltd (in liq) [2020] FCA 1121 at [30]–[32], [41]–[45] (Middleton J); Mansfield (liquidator), in the matter of NR Complex Pty Ltd (in liquidation) (receivers and managers appointed) [2023] FCA 614 at [32], [34] (Halley J); Guerin v Rose Guerin and Partners Pty Ltd (in liq) (receivers and managers appointed), in the matter of Rose Geurin and Partners Pty Ltd (in liq) (receivers and managers appointed) [2023] FCA 816 (Halley J) at [27]–[37]; 351 Property at [31]–[37] (O’Bryan J); Lucas, as liquidator of Blackwater Mine Workers’ Club Limited (in liq) v Blackwater Mine Workers’ Club Limited (in liq) [2023] FCA 1636 at [36]–[37], [39]–[47] (Derrington J).

43    The first order sought by the plaintiffs is an order dispensing with the requirement to hold a first meeting of creditors under s 436E of the Corporations Act. Orders of this nature are generally sought where the creditors have already had the opportunity to familiarise themselves with the company’s affairs and the requirement to convene a first meeting would be wasteful or impose a costly administrative burden: Sims, in the matter of Destra Corporation Limited [2009] FCA 1199 at [24] (Lindgren J); Schwarz, in the matter of Gordon Smith Marketing Pty Ltd (Administrator Appointed) [2016] FCA 1378 at [17]–[18] (Jagot J); Vah Newco at [30] (Middleton J); Equiticorp at [34] (Gleeson J); 351 Property at [32] (O’Bryan J); NR Complex at [32] (Halley J); Guerin at [32] (Halley J). I was satisfied that the order is appropriate. The avoidance of unnecessary cost in the administration will be to the benefit of creditors.

44    The second order sought by the plaintiffs is an order dispensing with s 438A(a) which requires the administrator to investigate the Company’s business, property, affairs and financial circumstances. The Company has been in liquidation for some time. The Liquidator has already conducted such investigations, including examinations, and has prepared a report for ASIC. The Liquidator and ASIC have not sought to oppose or be heard on this application. I was satisfied that it is appropriate to dispense with the requirement in s 438A(a).

45    The third order sought by the plaintiffs is an order dispensing with the requirements of ss 438B(2) and (2A) which require that a director give, and an administrator lodge, a report about the company’s business, property, affairs and financial circumstances. Mr Rohrt will have the benefit of Mr Strauss’ earlier report to the Liquidator and the Liquidator’s published reports. I am satisfied that a further report would have no utility and it is appropriate to dispense with the requirements in ss 438B(2) and (2A).

46    The fourth order sought by the plaintiffs is an order that Mr Rohrt will not be obliged to report on historical misconduct but will be obliged to report on misconduct occurring after his appointment, under s 438D of the Corporations Act. These matters have been investigated by the Liquidator and were the subject of reports provided to ASIC. The Liquidator has pursued some claims and ASIC has decided not to take further action on the basis of the Liquidator’s reports. ASIC has not opposed or sought to be heard on this application. I was satisfied that it is appropriate to dispense with the requirements under s 438D.

47    The fifth order sought by the plaintiffs is an order allowing the meeting required by s 439A to be convened at any time in the convening period. Such an order is appropriate in cases, such as the present, where the administrator is otherwise ready to convene the meaning: Blackwater at [45] (Derrington J); Destra Corporation at [25] (Lindgren J); Equiticorp at [36] (Gleeson J). I was satisfied that the order is appropriate to allow Mr Rohrt to convene a meeting for the purpose of considering the DOCA proposal as soon as possible to facilitate the efficient conduct of the administration, while ensuring that creditors are properly notified of the meeting in accordance with r 75-225 of the IPRs: 351 Property at [34] (O’Bryan J).

48    The sixth order sought by the plaintiffs is an order modifying Mr Rohrt’s reporting requirement under r 75-225(3)(a) of the IPRs so that it need not include information provided in reports prepared by the Liquidator. The order will avoid the provision of information that has already been reported to creditors by Liquidators and avoid unnecessary cost incurred in the administration. I was satisfied that it is appropriate to modify Mr Rohrt’s reporting requirement under r 75-225(3)(a).

49    The seventh order sought by the plaintiffs is an order that Mr Rohrt can accept as proofs of debt in the administration those proofs of debt lodged in the liquidation, without adjustment for interest. This order will avoid additional work and cost involved in considering and addressing new proof of debt forms, which have already been provided to the Liquidator. This is an accepted course: Destra Corporation at [26] (Lindgren J). I was satisfied that it was appropriate to make the order for those reasons.

50    The eighth order sought by the plaintiffs is the disapplication of s 439C(c) of the Corporations Act, which sets out the options to be voted upon by creditors at a meeting convened under s 439A. The order will prevent the creditors from resolving to wind up the Company (s 439(c)) in circumstances where it is presently in liquidation and the liquidation will remain on foot (albeit that it is stayed) for the duration of the administration. This order is appropriate to avoid the possibility of two parallel winding up processes: 351 Property at [36] (O’Bryan J). If the administration ends by resolution passed under s 439C(b), then the stay on the liquidation (which is addressed next), will be lifted: s 435C(2)(b).

STAY AND TERMINATION OF WINDING UP

Relevant principles

51    The plaintiffs sought an order pursuant to s 482 of the Act that, with effect from the appointment of Mr Rohrt as administrator of the Company, the winding up of the Company be stayed until the end of the voluntary administration of the Company pursuant to s 435C of the Act.

52    The plaintiffs also sought an order terminating the winding up upon the giving of written notice by Mr Rohrt to ASIC of the full effectuation of a DOCA substantively in the terms of the DOCA proposal.

53    Section 482 of the Act relevantly provides:

(1)    At any time during the winding up of a company, the Court may, on application, make an order staying the winding up either indefinitely or for a limited time, or terminating the winding up on a day specified in the order.

    (1A)    An application may be made by:

(a)    in any case—the liquidator, or a creditor or contributory, of the company;

…

54    The Court’s power to make an order under s 482 is discretionary and in exercising the decision the Court is required to determine whether a stay or termination of the winding up is justified: Re Lorie Najjar & Sons Pty Ltd (in liq) (2013) 94 ACSR 561; [2013] NSWSC 798 (Black J) at [24]. In exercising the discretion, the Court considers the interests of creditors, the liquidator, contributories, and the public, including the public interest in matters of commercial morality, and the public interest that insolvent companies should be wound up: Vero Workers Compensation v Ferretti (2006) 57 ACSR 103; [2006] NSWSC 292 at [17] (Austin J). However, the discretion is not confined by imposing limitations not found in the express words of the statute, a checklist of criteria developed by the case law, or factors considered in other cases: Re Lorie at [24] (Black J). A stay of a winding up on the appointment of an administrator may be appropriate where its purpose is to facilitate a proposed restructuring transaction and to finalise the external administration (rather than to restore the company to ordinary trading operations): NR Complex at [50] (Halley J) citing Vah Newco at [32], Equiticorp at [53] (Gleeson J).

Consideration

55    The plaintiffs submit that a liquidation of the Company running in parallel with an administration would be duplicative and wasteful: 351 Property at [46]–[47] (O’Bryan J); NR Complex at [51] (Halley J). Further, the stay of the liquidation will only take effect if Mr Rohrt is appointed voluntary administrator, and will only endure for the length of the voluntary administration: 351 Property at [46]–[47]. I accept those submissions.

56    The plaintiffs candidly raised issues regarding Mr Strauss’ conduct, recognising that it is relevant to whether control of the Company should be returned to him. The matters raised included opinions expressed by the Liquidator in the report to ASIC that the Company may have traded while insolvent and may have engaged in phoenix activity, various claims brought by the Liquidator against companies controlled by Mr Strauss and a charge brought by ASIC for dishonestly using his position, in March 2014, to gain an advantage for another person, contrary to s 184(2) of the Corporations Act.

57    As the plaintiffs submit, the conduct issues are historical. In relation to the charge brought by ASIC, Mr Strauss eventually entered a plea of guilty and was sentenced without conviction. No further charges or complaints have been made regarding Mr Strauss’ conduct as a director arising out of matters in the 11 years that have passed since the Company went into administration.

58    The claims brought by the Liquidator against Mr Strauss and related entities have been resolved, largely without adjudication. The Liquidator has investigated the Company’s affairs and decided to take no further action against Mr Strauss. The Liquidator has also prepared a report for ASIC raising various potential claims against Mr Strauss and others. ASIC has decided not to take any action and expressed the view that this application did not raise any issues that required regulatory intervention or warrant submissions by the regulator.

59    Mr Strauss’ associated companies have made payments of around $1.7 million to approximately 111 creditors in respect of their debts owed by the Company (some of whom have been paid in full). Moreover, Mr Strauss has made payments of around $663,000 into the liquidation, which included contributions towards the Liquidator’s costs. They were not obliged to make the payments, but Mr Strauss said that they did so to mitigate the stigma and reputational fallout he has felt from the administration.

60    Ultimately, control of the Company may revert to Mr Strauss once the DOCA has been effectuated. However, Mr Strauss does not intend that the Company will undertake a business of the kind that it did before it went into administration, rather he intends to use the Company as an investment vehicle.

61    As mentioned, the creditors and ASIC have not opposed or sought to be heard on the application. For those reasons, I was satisfied that it is appropriate to exercise the discretion conferred on the Court under s 482(1) of the Act to stay the winding up.

62    The plaintiffs also sought an order terminating the winding up upon the effectuation of a DOCA. It is not intended that the Company will carry on its former business, and so it is not necessary for the Court to assess the viability of that business. The Company will be solvent upon the effectuation of the DOCA due to releases and covenants not to sue under the DOCA proposal. I was satisfied that it is appropriate to make the order sought.

CONFIDENTIALITY ORDERS

63    Mr Strauss sought suppression and non-publication orders under ss 37AF(1)(a) and (b)(iv) and 37AG(1)(a) and (c) of the Federal Court of Australia Act 1976 (Cth), in respect of documents addressed to creditors of the Company and the list of the names of creditors together with their physical and email addresses and other contact details. Some of the creditors are individuals, and their information is likely to be “personal information” within the meaning of the Privacy Act 1988 (Cth).

64    The plaintiffs submitted that it would bring the administration of justice into disrepute if the Court were to publish sensitive personal financial information or details which would leave persons vulnerable to identity theft: Australian Securities and Investments Commission v 24-U Pty Ltd [2025] FCA 321 at [57]–[63] (Stewart J).

65    I am satisfied that it is appropriate to make an order under ss 37AF(1)(a) and (b)(iv), on the grounds that the order is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a) and to protect the safety of persons under s 37AG(1)(c), for the suppression and non-publication of annexure “C-LAH-1” in the Harding Affidavit and annexure “C-NA-1” in the Angelakis Affidavit.

CONCLUSION

66    For the foregoing reasons, I was satisfied that it is appropriate to make orders substantially in the form sought in the originating process.

Associate:

Dated:    26 June 2025

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