Federal Court of Australia

Twinza Oil Limited (Receivers and Managers Appointed), in the matter of Twinza Oil Limited (Receivers and Managers Appointed) [2025] FCA 939

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 411(1) and s 1319 of the Corporations Act 2001 (Cth):

(a)    the plaintiff convene and hold a meeting of the Scheme Creditors (Scheme Meeting), for the purpose of considering and, if thought fit, approving (with or without modification) a scheme of arrangement proposed to be made between the plaintiff, the Scheme Creditors and certain holders of subordinate claims against the plaintiff (Scheme), being the Scheme substantially in the form set out in annexure "SQ-19" to the affidavit of Stephen Richard Quantrill sworn on 23 July 2025;

(b)    the Scheme Meeting be held at 10:00am AWST on 12 September 2025 at FTI Consulting, Central Park, Level 47/152-158 St Georges Terrace, Perth WA 6000, and electronically;

(c)    the Scheme Booklet, which contains the explanatory statement required by section 412(1)(a) of the Corporations Act, at "SQ-20" of the affidavit of Stephen Richard Quantrill sworn on 23 July 2025, be approved for distribution to the Scheme Creditors, subject to:

(i)    correction of any minor typographical or grammatical errors;

(ii)    formatting or typesetting changes;

(iii)    any minor amendments required, requested or approved by the Australian Securities and Investments Commission following their review under s 412(7) of the Corporations Act; and

(iv)    any other amendments approved by the Court.

2.    Subject to these orders and pursuant to s 1319 of the Corporations Act, the Scheme Meeting is to be:

(a)    convened using the notice of scheme meeting substantially in the form contained in Annexure A of the Scheme Booklet, which is contained in annexure "SQ-20" of the affidavit of Stephen Richard Quantrill sworn on 23 July 2025 (with any necessary amendments contemplated above);

(b)    held and conducted pursuant to the arrangements for attending, participating and voting described in the notice of scheme meeting, including in respect of the effect of a Scheme Creditor's attendance at the Scheme Meeting on a proxy or attorney appointment by that creditor; and

(c)    convened, held and conducted as if r 2.15 of the Federal Court (Corporations) Rules 2000 (Rules) does not apply.

3.    Pursuant to s 1319 of the Corporations Act:

(a)    Mr Stephen Richard Quantrill, or failing him, Mr Stefan Vincent White, be the chairperson of the Scheme Meeting (Chairperson) and report the result of the Scheme Meeting to this Court;

(b)    the Chairperson of the Scheme Meeting have power to adjourn or postpone the Scheme Meeting in the Chairperson's absolute discretion for such time that the Chairperson thinks appropriate, to a time and place advised by the Chairperson;

(c)    at the Scheme Meeting, the Scheme Creditors entitled to vote, present in person or by proxy or by an attorney under power, shall constitute a quorum; and

(d)    at the Scheme Meeting, voting on the resolution on whether to approve the Scheme is to be conducted by way of a poll (declared by the Chairperson).

4.    Subject to the Court being satisfied that s 412(7) of the Corporations Act has been complied with, the plaintiff (by the Receivers) shall, on or before 7 August 2025, despatch the Scheme Booklet substantially in the form approved in paragraph 1(c) above to each Scheme Creditor by sending:

(a)    one hard copy of the Scheme Booklet (with all relevant annexures) to each of the Scheme Creditors by prepaid post or courier to the applicable physical address of each Scheme Creditor stipulated in the "Notice" section of the Syndicated Facility Agreement (as amended); and

(b)    one electronic copy of the Scheme Booklet (with all relevant annexures) to each of the Scheme Creditors by email to the applicable email address of each Scheme Creditor stipulated in the "Notice" section of the Syndicated Facility Agreement (as amended).

5.    The plaintiff (by the Receivers) must further:

(a)    send notices by email to all Subordinate Claim Holders and Twinza shareholders who have provided email contact details to Twinza and by post to all Subordinate Claim Holders and Twinza shareholders who have only provided mailing addresses informing them of the Scheme and directing them to the Twinza website (www.twinzaoil.com); and

(b)    upload to the Twinza website (www.twinzaoil.com) information regarding the Scheme, and a link that will allow Subordinate Claim Holders and Twinza shareholders to access an electronic copy of the Scheme Booklet from a portal hosted by the Receivers and subject to terms requiring the Subordinate Claim Holders and Twinza shareholders to keep the Scheme Booklet confidential.

6.    Despatch of the documents referred to above, in accordance with the terms of the orders above, shall be taken to be sufficient notice of the Scheme Meeting.

7.    The time by which the Scheme Creditors must return their Scheme Proxy Form (or lodge an electronic proxy in respect of the Scheme) is 10:00am AWST on 10 September 2025.

8.    The plaintiff is to give notice of the hearing of its application pursuant to s 411(4) of the Corporations Act, and that notice of the hearing of an application to s 411(4)(b) of the Corporations Act for orders approving the Scheme is to be published once in The Australian newspaper by an advertisement substantially in the form of Annexure A to these orders, with such advertisement to be published on or before 16 September 2025, and the plaintiff is to be otherwise exempted from compliance with r 3.4 of the Rules.

9.    Pursuant to s 411(16) of the Corporations Act, all further proceedings in any action or civil proceeding against the plaintiff (either directly or indirectly) be restrained, except by leave of the Court and subject to such terms as the Court imposes.

10.    The proceeding be adjourned to 10:30am AWST on 23 September 2025, for the hearing of an application to approve the Scheme.

11.    The plaintiff have liberty to apply upon giving 24 hours' notice, specifying the relief sought.

12.    Pursuant to r 2.13(1) of the Rules, leave is granted for the first to fourth interested persons to be heard without becoming a party to the proceeding.

13.    The third and fourth interested persons' application to adjourn the hearing of 6 August 2025 is refused.

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

ANNEXURE A

TWINZA OIL LIMITED (RECEIVERS AND MANAGERS APPOINTED) ACN 111 551 403

NOTICE OF HEARING TO APPROVE COMPROMISE OR ARRANGEMENT

TO: Senior Lenders and Other Senior Lenders

TAKE NOTICE that at 10:30am on 23 September 2025 the Federal Court of Australia (situated at the Peter Durack Commonwealth Law Courts Building, 1 Victoria Avenue, Perth, Western Australia 6000) will hear an application by Twinza Oil Limited (Receivers and Managers Appointed) seeking the approval of an arrangement between Twinza Oil Limited (Receivers and Managers Appointed), Scheme Creditors and certain holders of subordinate claims against the plaintiff, as agreed to by resolution considered by the Scheme Creditors of Twinza Oil Limited (Receivers and Managers Appointed) at a meeting of such creditors held on Friday, 12 September 2025 at 10:00am at FTI Consulting, Central Park, Level 47/152-158 St Georges Terrace, Perth WA 6000, and electronically.

If you wish to oppose the approval of the arrangement, you must file and serve on Twinza Oil Limited (Receivers and Managers Appointed) a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on Twinza Oil Limited (Receivers and Managers Appointed) at its address for service at least one day before the date fixed for the hearing of the application.

The address for service on Twinza Oil Limited (Receivers and Managers Appointed) is:

c/- Lavan 1 William Street Perth WA 6000

Attention: Joseph Abberton Telephone: 08 9288 6765

Email: Joseph.Abberton@lavan.com.au

Stephen Quantrill Executive Chairman

Twinza Oil Limited (Receivers and Managers Appointed)

REASONS FOR JUDGMENT

BANKS-SMITH J:

1    Since deeds of company arrangements became prevalent, creditors' schemes of arrangement have not been particularly common. However, they remain a mechanism by which the existing rights of creditors may be modified, whether a scheme company is solvent or insolvent.

2    The scheme company and plaintiff in the application before me is Twinza Oil Limited (Receivers and Managers appointed). Twinza is an Australian public company which has been pursuing an offshore gas project in Papua New Guinea for several years. That project is said to be on track to progress to the next phase, but the company does not have the funds to continue. Twinza is in default to its various senior lenders, and they moved to appoint receivers and managers in February 2025. Twinza owes some US$324 million (as at 31 May 2025), an amount which exceeds the value of its assets by between US$55 million and US$128 million.

3    Twinza seeks orders and directions pursuant to s 411(1) and s 1319 of the Corporations Act 2001 (Cth) to convene a meeting of certain creditors for the purposes of considering and, if thought fit, agreeing to a creditors' scheme of arrangement (Scheme). An order was also sought approving the scheme booklet for distribution.

4    The Scheme is pursued to restructure Twinza's debt and equity as an alternative to a winding up, and with the expectation that the Scheme will enable the company to proceed with the project.

5    I heard the application on 6 August 2025 and made orders. These are my reasons for doing so.

Affidavits read

6    Twinza relied upon affidavits filed by the following witnesses and addressing the following matters.

7    Mr Stephen Quantrill, the Executive Chair and Executive Director of Twinza provided evidence as to the business and corporate structure of Twinza; the background to the Scheme and its key features; verification of the draft scheme booklet; approval of the draft scheme booklet for lodging with ASIC; the proposed treatment of subordinate claims under the Scheme; the expected satisfaction of conditions precedent, and the various consents to act as chair of the proposed meeting.

8    Mr Hayden White, one of the receivers and managers of Twinza, and an insolvency practitioner and managing director of FTI Consulting, provided evidence as to the financial position of Twinza and the appointment of the receivers; communications with ASIC, and the opinion of the independent expert, being BDO Corporate Finance Pty Ltd (signed by two directors, Sherif Andrawes and Adam Myers).

9    Mr Henry Mancuso, a representative of the Senior Lenders (Tor Asia Credit Master Fund LP and Tor Asia Opportunity Master Fund LP), provided evidence of the senior debt; amendments to the facility agreement which will be made if the Scheme is implemented; the Senior Lenders commitment to Twinza and their intentions post-Scheme; the support of the Senior Lenders and Other Senior Lenders (Hendale PNG Limited, Pacific World Energy Ltd and Henry Aldorf); acknowledgments provided by certain holders of convertible redeemable preference shares (CRPS); verification of the Senior Lender information in the scheme booklet; confirmation that the FIRB application has been lodged; and as to the security trustee and agent deed polls.

10    Mr Lawrence Lee, a partner of Lavan, Twinza's solicitors, provided evidence as to further communications with ASIC; the notification of the Court hearing dates to interested parties; and the provision of deed polls provided by certain persons who provide releases under the Scheme.

11    Ms Kerrie Papamihail, a solicitor at Lavan, provided evidence as to communications between: each of Mr William (Bill) Clough and Twinza; Bennett (solicitors) acting for McRae Clough Pty Ltd and WM Clough Pty Ltd (as trustee for the WM Clough Family Trust and William Clough) in relation to certain debts said to be due to each of them by Twinza; Bennett acting for Mr Clough (as Twinza alternate director) to Twinza and each of Lavan and FTI in relation to the contents of Twinza's report as to affairs lodged by the receivers with ASIC, and referring to the report being undertaken by BDO for the proposed Scheme (9 May 2025); Mr Clough to Twinza, FTI and others indicating his intention to arrange for a review of the pending BDO report, and draft and executed non-disclosure agreements in that regard (17 June 2025 – 1 July 2025); letter of 25 June 2025 from Lavan to Mr Clough which relevantly included a chronology of communications and engagement by the receivers with him about the proposed Scheme Implementation Deed, Scheme and BDO report, and informing him of the expectation that the first court hearing relating to the scheme would be in mid to late July; letter from Lavan to Mr Clough dated 2 July 2025 permitting access in his capacity as an alternate director to Twinza information and indicating that such information was not to be further shared absent the express authority of Twinza and the receivers; letter of 16 July 2025 from Mills Oakley acting for Mr Clough in his capacity as alternate director and shareholder of Twinza to Lavan, and referring to 'copious' amounts of material provided to Mr Clough on 11 July 2025 by way of due diligence reports and scheme materials, and seeking 15 business days to review those documents; response from Lavan of 16 July 2025 indicating, relevantly, that Mr Clough as a shareholder was entitled to representation on the Scheme process; letter from Lavan to Mills Oakley of 30 July 2025 confirming the first court hearing for the Scheme was listed for 6 August 2025, and noting that no appearance had been filed by Mills Oakley; correspondence from Bennett at 3.23 pm on 5 August 2025 attaching an appearance for WM Clough Pty Ltd and McRae Clough Pty Ltd and requesting copies of documents for the hearing on 6 August 2025; and an email from Lavan in reply at 5.09 pm providing a link to the filed Court documents and ASIC position letter. Further 'released individual' deed polls were also attached.

12    I have referred in some detail to the correspondence attached to Ms Papamihail's affidavit because it is relevant to an oral adjournment application brought by Mr Bennett on behalf of WM Clough Pty Ltd and McRae Clough Pty Ltd (the third and fourth interested parties) at the commencement of the hearing of 6 August 2025. I will turn to that shortly.

Background to Scheme

13    The background matters below are taken primarily from the affidavits of Mr Quantrill and Mr Mancuso, as summarised in the Twinza's written submissions.

14    Twinza is an Australian public unlisted company. Twinza is the parent company of Twinza Oil (PNG) Ltd, a company incorporated under the laws of the British Virgin Islands and registered as a PNG overseas company. Twinza PNG is the operator and 95% equity holder of the Pasca A natural gas project being developed in the Gulf of Papua.

15    Mineral Resources Development Company Limited (MRDC) holds the remaining 5% of the project, with an entitlement to acquire up to 50% subject to certain conditions. MRDC is a state-owned enterprise in PNG that relevantly manages government interests in resources projects.

16    On or about 19 December 2024, the Government of Papua New Guinea, MRDC (through a special-purpose vehicle, Hevehe Petroleum Limited) and Twinza PNG, entered into a gas agreement in relation to the project. The gas agreement is central to attracting investment in the company.

17    Twinza is in the process of launching the second phase of its front-end engineering design process, which will involve a series of technical and other studies to confirm the requirements and estimated cost of the project. The targeted date for completion of FEED is on or before 30 June 2026. The anticipated date for completion of the final investment decision is not confirmed but, pursuant to the gas agreement, must occur by 19 June 2027 (subject to extension).

18    Under the existing syndicated facility agreement (defined in the Scheme), four separate tranches of funding were made available to Twinza. The Senior Lenders are the exclusive lenders for 3 of those tranches (designated tranches A, C and D), and the Senior Lenders and Other Senior Lenders are collectively the lenders for the fourth (tranche B). Until the maturity date of 15 December 2024, the interest rate was set at 23% per annum on tranches A, B, and C, and 30% per annum on tranche D. From 15 December 2024, the interest rate increased to 35% per annum on tranches A, B, C, and D.

19    As at 31 May 2025, Twinza owes the Senior Lenders and Other Senior Lenders approximately US$324 million under the facility agreement.

20    Twinza remains in default and interest continues to accrue on the principal amount.

21    BDO has opined that if the Scheme does not proceed and Twinza is wound up within six months of the first court hearing, the value of the assets available to distribute to the Senior Lenders and Other Senior Lenders would be between US$179 million and US$254 million. BDO has also opined that Twinza's total debt is likely to hinder it from securing finance or attracting investment for the project.

22    The Senior Lenders therefore proposed a restructure of Twinza's debt and equity by way of the Scheme. The Scheme includes a debt for equity swap, such that tranches A, B and C will be exchanged for equity in Twinza. The interest rate for tranche D will be reduced to 10% per annum (with a default rate of 12% per annum).

23    The proposal for the restructure was accepted by the receivers. According to Mr Quantrill, the objective of the Scheme is to provide a framework for Twinza's continued operations and the repayment of the Senior Debt, and to enable Twinza to continue as a going concern and advance the project.

24    On 19 February 2025, Twinza and the Senior Lenders entered into a Scheme Implementation Deed. The Other Senior Lenders have signed a side letter deed expressing support for the Scheme.

25    The receivers have received funding support and Twinza has the benefit of a standstill agreement to maintain its liquidity during the Scheme process.

The Scheme

26    The key steps of the Scheme include the following:

(a)    the Senior Lenders and Other Senior Lenders will provide a release of up to 92% of the senior debt, so that there is a reduction from approximately US$324 million to US$30 million;

(b)    in exchange for the partial release of the debt, there will be an issue of ordinary shares in Twinza to the Senior Lenders and the Other Senior Lenders such that, following implementation of the Scheme, they will hold 85% of the total number of shares in Twinza on issue;

(c)    the CRPS on issue will be replaced and substituted with ordinary shares in Twinza such that, following implementation of the Scheme, the CRPS holders will hold 10% of the total shares on issue;

(d)    existing shareholders will retain the remaining 5% of the shares on issue following implementation of the Scheme;

(e)    the facility agreement will be amended by reducing the remaining debt, reducing the interest rate on the balance debt, removing the Other Senior Lenders from the facility agreement, removing the exiting fee structure and other associated amendments; and

(f)    there will be provisions that ensure the Scheme will have no effect on employees or List A creditors (being ordinary course of business trade creditors as determined in accordance with the Scheme, and MRDC (or Hevehe) in relation to the MRDC agreements).

Principles

27    The principles relating to the convening of a scheme meeting and the approval of the explanatory statement, in the context of a creditors' scheme, were recently summarised by Jackman J in One Funds Management Limited, in the matter of One Funds Management Limited [2025] FCA 475 at [15]:

The Court will order the convening of the scheme meeting and approve the explanatory statement if it is satisfied of the following matters:

(a)    the Plaintiff is a Pt 5.1 body;

(b)    the proposed scheme is an arrangement within the meaning of s 411 of the Corporations Act;

(c)    the scheme booklet will provide proper disclosure to scheme creditors

(d)    the scheme is bona fide and properly proposed;

(e)    ASIC has had a reasonable opportunity to examine, and make submissions in respect of, the terms of the scheme and the scheme booklet and has had 14 days' notice of the proposed first Court hearing date;

(f)    the procedural requirements have been met; and

(g)    the scheme of arrangement proposed is of such a nature and cast in such terms that, if it received the statutory majority at the scheme meeting, the Court would be likely to approve it on the hearing of a petition which is unopposed.

See, in the context of a creditors' scheme, Re Boart Longyear Ltd [2017] NSWSC 567; (2017) 121 ACSR 328 at [75]-[76] (Black J) and [One Funds Management Limited, in the matter of One Funds Management Limited [2023] FCA 1212] at [9].

Formal matters

28    As is common in scheme applications, Twinza's solicitors provided a schedule which addressed the formal matters required by Part 5.1 of the Corporations Act and Schedule 8 of the Corporations Regulations 2001 (Cth). I have considered the schedule, and I am satisfied those formal matters have been addressed in the scheme booklet.

29    I am satisfied that the proposed scheme is an arrangement within the meaning of s 411 of the Corporations Act. Twinza is a Part 5.1 body.

The explanatory statement

30    The explanatory statement as required by s 412(1) of the Corporations Act, which with its annexures comprises the scheme booklet, must make appropriate disclosure to its intended recipients of information for the purpose of the proposed meeting. In this case, the explanatory statement runs to some 80 pages and attaches relevantly the notice of scheme meeting, proxy form, the scheme of arrangement, the BDO report, certified copies of financial statements, the ASIC form 507 (report on company activities and property), a list of the senior lenders together with amounts owing as at 31 May 2025, a summary of the terms and conditions of the CRPS and a summary of the terms and conditions of relevant warrants.

31    I am satisfied that the scheme booklet will make appropriate disclosure to scheme creditors.

Support for Scheme

32    As noted above, the evidence discloses that the Senior Lenders and Other Senior Lenders support the Scheme.

33    The most substantial CRPS holder, Kerogen Investments No 6 (Singapore) Pte Ltd, both in its own right and as agent for certain other CRPS holders, has provided an agreement and undertaking to Twinza and the Senior Lenders in acknowledgement of the Scheme. The agreement is to the effect that Kerogen will not take steps which would materially and adversely affect the implementation of the Scheme, absent an unsolicited proposal that is considered to be superior to the Scheme.

BDO expert opinion

34    I have summarised aspects of the BDO opinion above. A more detailed summary of the BDO conclusions, set out at part 2 of its report, is as follows (formatting edited):

(a)    In the event the Scheme does not proceed, the total debts owing to the Senior Lenders and Other Senior Lenders exceeds the value of Twinza's assets by between US$55 million and US$128 million.

(b)    Following the implementation of the Scheme, the Company does not appear to be insolvent. Although the Company is expected to remain cash flow solvent through to at least April 2026, it remains loss making in the short term and is reliant on ongoing external funding.

(c)    In the event the Scheme does not proceed, the expected dividend that would be available to Senior Lenders and Other Senior Lenders is between US$179 million (55% of the amount owing) and US$254 million (78% of the amount owing). The expected dividend to all Priority Creditors would be US$123k (100% of the amount owing), while unsecured creditors, CRPS holders and Shareholders would not receive any return.

(d)    In the event the Scheme proceeds, the Senior Debt will reduce to a balance of US$35 million. Therefore, the Senior Lenders and Other Senior Lenders would be satisfied with equity and the new US$35 million facility. We note that as a result of the Scheme, the Senior Lenders and Other Senior Lenders will also collectively hold at least 85% of the Company's issued capital.

(e)    Priority Creditors and Unsecured Creditors will also be paid in full (under the ordinary course of business). All CRPS on issue will be replaced and substituted with ordinary shares. The estimated surplus cash available to ordinary shareholders (including those holding new shares issued pursuant to the Scheme) is between US$135 million and US$208 million.

(f)    If the Scheme does not proceed, CRPS holders would receive US$ nil. If the Scheme is implemented, the CRPS on issue will be cancelled and replaced with ordinary shares. We have estimated the surplus cash that would be available to shareholders post-Scheme, with outcomes ranging from US$135 million to US$208 million. However, we note that shareholders do not receive a dividend following implementation of the Scheme, instead they retain their shareholding, albeit diluted in a going concern business.

(g)    If the Scheme is not implemented, and without additional funding, the Company will be insolvent and will need to enter applicable insolvency procedures in the various jurisdictions of its subsidiaries. If the Scheme is not implemented, there would also be a reduced return for Senior Lenders and Other Senior Lenders.

(emphasis added)

35    Further, at part 10 of its report, BDO addresses in some detail the expected dividend that would be available to the stakeholders if the Scheme does not proceed.

36    In summary, BDO is of the opinion that if Twinza is wound up within six months of the first court hearing (and the Scheme is not implemented):

(a)    the value of the assets available to distribute to the Senior Lenders is between US$179 million and US$254 million in a low and high scenario. The shortfall between the senior debt balance at 31 May 2025 and the value of the assets available to distribute to the secured lenders is between US$70 million and US$145 million in a low and high scenario;

(b)    the Senior Lenders would likely receive a dividend of between 55% in a low scenario and 78% in a high scenario;

(c)    priority creditors will be paid in full;

(d)    unsecured creditors would not receive any return in a low or high scenario; and

(e)    the expected dividend that would be paid to subordinated claim holders and shareholders is nil.

37    By contrast, BDO is of the opinion that if the Scheme is approved and implemented, immediately following implementation:

(a)    senior debt will reduce to a balance equal to US$35 million;

(b)    the expected dividend that would be paid to the Senior Lenders would be 100%;

(c)    the CRPS on issue will be cancelled and replaced with shares;

(d)    the surplus cash that would be available to shareholders post-Scheme is estimated at a range from US$135 million in a low scenario to US$208 million in a high scenario; and

(e)    shareholders do not receive a dividend following implementation of the Scheme, but instead retain their shareholding in a going concern business.

Class formation

38    The scheme creditors comprise the Senior Lenders and the Other Senior Lenders. Twinza submits that the scheme creditors form a single class.

39    The principles governing class formation were summarised by Bathurst CJ in First Pacific Advisors LLC v Boart Longyear Ltd [2017] NSWCA 116 at [80] (Beazley P and Leeming JA agreeing at [106]-[107]):

The test seems to me to involve three questions. First, what are the rights which existing creditors (or members) have against the company and to what extent are they different. Second, to what extent are those rights differently affected by the scheme. Third, does the difference in rights or different treatment of rights make it impossible for the creditors (or members) in question to consider the scheme as one class.

40    It is in this context that Mr Bennett moved for an adjournment of the first court hearing.

41    Mr Bennett appeared on behalf of WM Clough Pty Ltd (in its dual capacity as trustee of two trusts) and McRae Pty Ltd, clients which he said were interested parties in three capacities; as substantial shareholders, as the holder of CRPS and as creditors. I was informed that Mr Clough is a director of both of those entities.

42    Mr Bennett submitted that the proposed dilution of shares under the Scheme, such that existing shareholders would hold only 5% of issued shares, gave them rights which might place them in a separate class and that this question should be determined first, and after he had the opportunity to consider all the materials. Mr Bennett also raised the issue of the proposed 'stripping' of CRPS of their preference status and their conversion to ordinary shares, and suggested this should entitle the CRPS holders to convene a separate meeting.

43    I dismissed the adjournment application having regard to three matters.

44    First, the adjournment application was brought in the context that interest is accruing on the principal debt of some US$324 million at the default rate of 35% per annum, so that any delay has a significant financial impact.

45    Second, I consider McRae Clough Pty Ltd and WM Clough Pty Ltd apparently chose to change lawyers, could have entered appearances earlier and could have sought further advice earlier, so that the plaintiff should not be prejudiced by the adjournment.

46    Mr Bennett's firm acted for Mr Clough from (at least) April 2025 and although Mr Bennett urged that those instructions were provided to his firm by Mr Clough in a different capacity, and not on behalf of McRae Clough Pty Ltd or WM Clough Pty Ltd, the fact remains that Mr Clough was in a position to consider whether other entities in which he had some role might wish to intervene, seek separate legal advice or seek further information from the receivers or Twinza's lawyers (Lavan), from a time well before the Bennett correspondence of 5 August 2025. Both Bennett and Mills Oakley (from at least16 July 2025) had some knowledge about Twinza and the proposed Scheme, and could have sought authority from Lavan or the receivers to receive further information (on confidentiality conditions where appropriate) in order to seek legal advice prior to the hearing. Mills Oakley were instructed and had express notice of the proposed date of this hearing from at least 30 July 2025 and were invited by the receivers to lodge an appearance. The extent of the communications between the various law firms, the receivers and Mr Clough is apparent from the correspondence referred to at [11] above. As it happens, once Bennett asked Lavan for documents (Bennett having replaced Mills Oakley apparently late in the piece), Lavan responded within two hours by facilitating access to those documents. Senior counsel for Twinza noted at the hearing that the evidence disclosed that McRae Clough Pty Ltd is an aged creditor of Twinza, and that WM Clough Pty Ltd is a CRPS holder and a shareholder. Senior counsel also confirmed that as an appearance had now been filed by Bennett for those entities, there would be no difficulty with the provision of further relevant documents to that firm.

47    Third, there was a practical way to address Mr Bennett's stated concern as to potential classes, being the course followed by Jackman J in One Funds Management, where interested parties were granted leave to be heard and then sought an adjournment of the first court hearing on the basis that they were not then ready to present their arguments opposing the revised scheme. His Honour said at [11]:

In the ordinary case, it may well be appropriate to deal with issues such as class composition at the first Court hearing on a final basis. However, in circumstances where the objectors need further time to prepare their argument, and will not be ready until just before the second Court hearing, in my view, the preferable course is to refuse the adjournment and not to determine any of those matters on a final basis until the second Court hearing. Accordingly, the reasons which I give now should be understood as expressing no more than preliminary views as to whether there is a sufficient basis to justify convening the Scheme Meeting and approving the Explanatory Statement.

48    Twinza endorsed this approach, senior counsel acknowledging that the risk of such an approach would fall on the plaintiff if there were any substance to submissions Mr Bennett might seek to make.

49    Accordingly, I refused the adjournment and, as was the case in One Funds Management, although I now turn to address the issues (which raise the question of subordinated claims) to the extent necessary to determine whether it is appropriate to make the orders sought, I do not purport to express final views.

Subordinate claims

CRPS

50    Twinza submits that the CRPS claims are treated as subordinate claims. In short, it is proposed that the CRPS shares are replaced by a pro rata entitlement to 10% of the ordinary shares in Twinza post Scheme.

51    The CRPS holders are identified in Mr Quantrill's affidavit. There is a range of types of CRPS disclosed, but it is readily apparent that the entity that holds the most CRPS, by a significant margin, is Kerogen. As noted above, Kerogen has agreed it will not take steps which would materially and adversely affect the implementation of the Scheme.

52    Although there are some differences in the terms of the various types of CRPS, the plaintiff seeks to treat all of them as subordinate claims. Its justification for doing so rests on the meaning of s 563A of the Corporations Act and the treatment of subordinate shareholder claims in authorities such as Atlas Iron Limited, in the matter of Atlas Iron Limited [2016] FCA 366 (Gleeson J) and In the matter of Boart Longyear Limited [2017] NSWSC 567 (Black J).

53    Section 563A of the Corporations Act provides:

Postponing subordinate claims

(1)    The payment of a subordinate claim against a company is to be postponed until all other debts payable by, and claims against, the company are satisfied.

(2)    In this section:

claim means a claim that is admissible to proof against the company (within the meaning of section 553).

debt means a debt that is admissible to proof against the company (within the meaning of section 553).

subordinate claim means:

(a)    a claim for a debt owed by the company to a person in the person's capacity as a member of the company (whether by way of dividends, profits or otherwise); or

(b)    any other claim that arises from buying, holding, selling or otherwise dealing in shares in the company.

54    In Atlas, the proposed scheme provided that any existing subordinate claims within the meaning of s 563A would be released. Gleeson J observed at [40]:

The scheme releases the claims of subordinate claimants within the meaning of s 563A(2) of the Act, except to the extent of the net proceeds of any policy of insurance that would respond to the subordinate claim. The effect of s 411(5A) is that, if the scheme is approved by the Court, those claimants are bound by the scheme despite the fact that they have not voted on it at a meeting convened under s 411(1).

55    Her Honour then acknowledged the history to the introduction of s 411(5A) (at [41]):

Section 411(5A) was introduced into the Act by the Corporations Amendment (Sons of Gwalia) Act 2010 (Cth). The same legislation also introduced s 600H, which provides, relevantly, that a subordinate claimant within the meaning of s 563A is entitled to vote in their capacity as a creditor of the company at a meeting ordered under s 411(1) or during the external administration of the company only if the Court so orders.

56    Relevantly, her Honour also included an extract from the Supplementary Explanatory Memorandum to the Bill (at [45]):

The Bill provides that in relation to a meeting convened under s 411(1) in relation to a compromise or arrangement under Part 5.1 of the Corporations Act, creditors subordinated under section 563A are only entitled to vote as creditors if they obtain leave of the Court. The Bill provides that creditors who are subordinated under section 563A are bound by the compromise or arrangement under Pt 5.1 of the Corporations Act, even if they do not obtain the leave of the Court under section 600H (as inserted by this Act) to vote at the creditors meeting convened by the Court under subsections 411 and 411(1A) of the Corporations Act.

57    Her Honour observed at [46]:

The significance of subordinate claimants' financial interest in the company is highlighted in the Supplementary Explanatory Memorandum by clause [1.15] which states that, in determining whether to exercise its discretion under s 600H, a court might be expected to have regard to whether the person might reasonably be considered to possess 'a real financial interest in the external administration'.

58    The nexus between the person's voting position and whether they possess a real financial interest in the scheme is therefore apparent.

59    In Boart Longyear, Black J considered the potential release of subordinate claims in a creditors' scheme, and confirmed the appropriateness of comparing the hypothetical return to such a creditor in a liquidation, stating relevantly at [87]:

It appears the Plaintiffs have not identified any particular subordinate claim holder or any circumstances which might be expected to give rise to such a claim. I am satisfied that, to the extent that such claims may exist, such an order may properly be made in this case, to avoid the result that subordinated shareholder claims which would not be recoverable on the insolvency of companies within the BLY Group would continue beyond implementation of the scheme and potentially rank ahead of equity issued to higher ranking creditors in exchange for their claims.

60    In this case, as I have foreshadowed, I will not make a final determination as to the position of the CRPS as subordinate claims until the second court hearing (assuming it proceeds).

61    However, having regard to these authorities and the BDO opinion that if the Scheme does not proceed, unsecured creditors, CRPS holders and Shareholders will not receive any return, there is at least sufficient authority to support on a preliminary basis Twinza's submission that the CRPS holders have no economic interest such as would justify their participation by voting. So much is sufficient for the purpose of considering whether the orders currently sought are appropriate.

Options

62    The options are presently held by a former employee and by the partner of a former consultant. The evidence indicates their value is not material, and by parity of reasoning, Twinza submits that the options are subordinate claims for the purpose of the Scheme. This will be further addressed at any second court hearing.

Warrants

63    The warrants are also treated as subordinate claims. No real issue appears to arise in this regard, as the Senior Lenders hold the warrants and support the Scheme.

Unsecured creditors and employees

64    The Scheme does not involve any compromise of List A creditors.

65    The Scheme should have no effect on employees of Twinza who, subject to ordinary course changes in employment arrangements, will continue their employment with Twinza (cl 6 of the Scheme).

66    All other unsecured creditor claims, for example, any claims in relation to unpaid director fees, will be compromised under the Scheme. BDO is of the view that unsecured creditors would get a nil return in a liquidation scenario.

Deed polls

67    A number of deed polls were required by the terms of the Scheme Implementation Deed. They have been provided and were in evidence.

Notice to shareholders

68    The evidence of Mr White satisfies me that various updates have been provided to the shareholders and CRPS about the proposed Scheme. ASIC made some suggestions in relation to the mode of service, and the proposed orders were amended accordingly.

69    Further, Mr White deposed that a notice was placed on the Twinza website on 30 July 2025 which, via certain links, took the reader to a formal notice in relation to the Scheme and advice as to the first court hearing date of 6 August 2025.

ASIC

70    The evidence of Mr White also satisfies me that the board of Twinza resolved to approve the draft scheme booklet and a copy was duly lodged with ASIC. A checklist confirming compliance with the requirements of Schedule 8 of the Corporations Regulations was also provided to ASIC.

71    It is apparent that ASIC received the relevant documents, as it made certain recommendations for amendments (see [68] above). It was also given notice of the first court hearing date.

72    On 5 August 2025 ASIC wrote to the directors of Twinza (care of Lavan) confirming that it had had a reasonable opportunity to examine the terms of the proposed Scheme, and that it did not intend to appear at the first court hearing to make submissions or oppose the Scheme. Nor did it intend to provide a statement under s 411(17)(b) of the Corporations Act.

Distribution of Scheme materials

73    The plaintiff proposes dispatch of the Scheme materials in a manner that is conventional and appropriate. There is no issue with the orders proposed in that regard.

Scheme is bona fide

74    Having regard to the Scheme Implementation Deed and the fact that the Other Senior Lenders have signed a side letter deed expressing support for the Scheme, it is apparent that Twinza and the Senior Lenders have committed to propounding the Scheme and that it is bona fide and has been properly proposed.

Interested parties

75    The first and second interested parties supported the orders made and made no submissions. I have already dealt with Mr Bennett's submissions on behalf of the third and fourth interested parties.

Conclusion

76    I was satisfied at the end of the hearing that the jurisdictional requirements for the orders sought were met. I therefore made the orders on the basis that the proposed Scheme is of such a nature and is cast in such terms that, if it were to receive the expected requisite statutory majority, the Court would be likely to approve the Scheme on the hearing of an unopposed application.

Associate:

Dated:    11 August 2025