Federal Court of Australia

Orr (Liquidator) v Redflow Limited (in liq), in the matter of Redflow Limited (in liq) [2026] FCA 815

ORDERS

THE COURT ORDERS THAT:

Pooling order

1.    Pursuant to s 579E(1) of the Corporations Act 2001 (Cth) (Act), the defendants are a pooled group for the purposes of s 579E of the Act.

2.    Pursuant to s 579G(1)(e) of the Act:

(a)    the plaintiffs are justified in opening a new bank account to be treated by them as an “administration account” for the purposes of s 65-10(2) of the Insolvency Practice Schedule (Corporations) (being Sch 2 to the Act) (IPSC) (New Account);

(b)    the plaintiffs are justified in depositing the assets of the defendants into the New Account;

(c)    the plaintiffs are justified in undertaking all administrative steps necessary to give effect to paragraphs 2(a) and 2(b), including but not limited to closing existing bank accounts operated by the plaintiffs for the defendants (Existing Accounts) and transferring the closing balances of the Existing Accounts to the New Account;

(d)    the plaintiffs are only required to lodge:

(i)    one annual administration return, within the meaning of s 70-5 of the IPSC, for the pooled group and not an annual administration return for each of the defendants; and

(ii)    one end of administration return, within the meaning of s 70-6 of the IPSC for the pooled group and not an end of administration return for each of the defendants.

Confidentiality

3.    Pursuant to s 37AF(1) of the Federal Court of Australia Act 1976 (Cth), on the ground specified in s37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), the unredacted versions of:

(a)    the affidavit of Richard John Hughes filed 17 June 2026; and

(b)    the affidavit of Neil Edward Williams filed 17 June 2026,

(Affidavits) be maintained on the Court’s electronic file as a confidential document and are not made available for inspection by any person without leave of the Court.

Validation of determination of creditors

4.    Pursuant to s 1322(4) of the Act, or alternatively s 90-15(1) of the IPSC, the following resolutions purportedly passed by creditors at the meetings of creditors of each of the defendants held on 23 June 2025 were validly passed by creditors:

Redflow Limited (First Defendant)

(a)    the sale of the intellectual property and specific assets of Redflow Limited, and the sale for shares of Redflow (Thailand) Limited, including the deferred settlement terms as summarised at paragraph 2.1.1 of the Report to Creditors dated 9 June 2025, is approved by creditors pursuant to s 477(2B) of the Act;

(b)    the remuneration of the joint and several administrators of Redflow Limited, for the period of the administration from 29 October 2024 to 15 November 2024, calculated at the hourly rates as detailed in the Initial Remuneration Notice of 27 August 2024, is approved for payment in the sum of $16,483 exclusive of GST, and that the plaintiffs can draw the remuneration immediately or as required;

(c)    the remuneration of the plaintiffs, for the period from 15 November 2024 to 6 June 2025, calculated at the hourly rates as detailed in the Initial Remuneration Notice of 27 August 2024, is approved for payment in the sum of $86,793 exclusive of GST, and that the plaintiffs can draw the remuneration immediately or as required;

(d)    the remuneration of the plaintiffs from 7 June 2025 to the completion of the liquidation, is determined at a sum equal to the cost of time spent by the plaintiffs and their partners and staff, calculated at the hourly rates as detailed in the Initial Remuneration Notice of 27 August 2024, up to a capped amount of $100,000 exclusive of GST, and that the plaintiffs can draw the remuneration on a monthly basis or as required;

Redflow International Pty Ltd (Second Defendant)

(e)    the sale of the intellectual property and specific assets of the second defendant, and the sale of shares of Redflow (Thailand) Limited, including the deferred settlement terms as summarised at paragraph 2.1.1 of the Report to Creditors dated 9 June 2025, is approved by creditors pursuant to s 477(2B) of the Act;

(f)    the remuneration of the joint and several administrators of the second defendant, for the period of the administration from 29 November 2024 to 15 November 2024, calculated at the hourly rates as detailed in the Initial Remuneration Notice of 27 August 2024, is approved for payment in the sum of $203,607 exclusive of GST, and that the plaintiffs can draw the remuneration immediately or as required;

(g)    the remuneration of the plaintiffs, for the period of the liquidation from 15 November 2024 to 6 June 2025, calculated at the hourly rates as detailed in the Initial Remuneration Notice of 27 August 2024, is approved for payment in the sum of $136,190.50 exclusive of GST, and that the plaintiffs can draw the remuneration immediately or as required;

(h)    the future remuneration of the plaintiffs from 7 June 2025 to the completion of the liquidation is determined at a sum equal to the cost of time spent by the plaintiffs and their partners and staff, calculated at the hourly rates as detailed in the Initial Remuneration Notice of 27 August 2024, up to a capped amount of $300,000 exclusive of GST, and that the plaintiffs can draw the remuneration on a monthly basis or as required;

Redflow R&D Pty Ltd (Third Defendant)

(i)    the sale of the intellectual property and specific assets of the third defendant, and the sale of shares for Redflow (Thailand) Limited, including the deferred settlement terms as summarised at paragraph 2.1.1 of the Report to Creditors dated 9 June 2025, is approved by creditors pursuant to s 477(2B) of the Act;

(j)    the remuneration of the joint and several administrators of the third defendant, for the period of the administration from 29 October 2024 to 15 November 2024, calculated at the hourly rates as detailed in the Initial Remuneration Notice of 27 August 2024, is approved for payment in the sum of $9,412 exclusive of GST, and that the plaintiffs can draw the remuneration immediately or as required;

(k)    the remuneration of the plaintiffs, for the period of the liquidation from 15 November 2024 to 6 June 2025, calculated at the hourly rates as detailed in the Initial Remuneration Notice of 27 August 2024, is approved for payment in the sum of $41,656.50 exclusive of GST, and that the plaintiffs can draw the remuneration immediately or as required;

(l)    the remuneration of the plaintiffs from 7 June 2025 to the completion of the liquidation is determined at a sum equal to the cost of time spent by the plaintiffs and their partners and staff, calculated at the hourly rates as detailed in the Initial Remuneration Notice of 27 August 2024, up to a capped amount of $20,000 exclusive of GST, and that the plaintiffs can draw the remuneration on a monthly basis or as required.

Zcell Australia Pty Ltd (Fourth Defendant)

(m)    the sale of the intellectual property and specific assets of the fourth defendant, and the sale of shares of Redflow (Thailand) Limited, including the deferred settlement terms as summarised at paragraph 2.1.1 of the Report to Creditors dated 9 June 2025, is approved by creditors pursuant to s 477(2B) of the Act,

Approval of entry into of agreements

5.    Pursuant to s 477(2B) of the Act, the Court approves the entry by the plaintiffs nunc pro tunc into:

(a)    the Asset Sale and Purchase Agreement dated on or about 12 May 2025;

(b)    the Intellectual Property Mortgage dated on or about 30 May 2025; and

(c)    the Licence Deed dated on or about 30 May 2025.

Costs

6.    The costs of these proceedings be costs in the pooled windings up of the defendants.

THE COURT NOTES THAT:

7.    Redacted versions of the Affidavits have been filed, which may be inspected by any person.

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

REASONS FOR JUDGMENT

DERRINGTON J

Introduction

1    The plaintiffs, Mr David Orr and Mr Richard Hughes, are the liquidators of a group of companies referred to as the “Redflow group”. In these proceedings, they seek certain orders to assist in the administration of the liquidations and, in particular, the distribution of funds that will become available to creditors. The primary relief sought is the making of “pooling orders” pursuant to s 579E(1) of the Corporations Act 2001 (Cth) (Act), to the effect that the companies constitute a “pooled group” for the purposes of that section. Alternatively, the liquidators seek orders permitting an apportionment as between the several companies. Further orders are also sought to (a) validate resolutions passed at certain meetings, notwithstanding a minor defect in the provision of notice, and (b) approve, nunc pro tunc, the entry into certain agreements.

2    For the reasons which follow, the order sought that the companies be treated as a “pooled group” should be made, as should the orders validating the procedural defect and approving entry into the agreements.

Background

3    Redflow Limited (in liq) (RFL), was formerly listed on the Australian Securities Exchange (ASX). It has three Australian subsidiaries, being Redflow International Pty Ltd (in liq) (RFI), Redflow R&D Pty Ltd (in liq) (RFD), and Zcell Australia Pty Ltd (in liq) (Zcell) (collectively referred to hereinafter as “the Companies”).

4    Prior to their administration, the Companies carried on the business of researching, designing, manufacturing and selling “long-duration zinc-bromine flow batteries” for commercial and industrial power storage purposes.

5    RFL did not carry on business in its own right, though, as the head of the tax consolidated group, it received research and development tax refunds (R&D Refunds) of approximately $2.6 million for the 2024-25 financial year, and is likely to receive approximately $450,000 for the 2025-26 financial year.

6    RFI acted as the treasury company for the group and, in that capacity, it received all of the cash from sales and discharged almost all of the expenses of the group.

7    RFD was the intellectual property (IP) “holding company” in that it owned all the group’s patents and trademarks. By an Asset Sale and Purchase Agreement (Agreement), those IP assets were sold by the liquidators to Strike Energy Inc (together with certain other assets). However, as at the date of this application, only a portion of the purchase price has been paid, and Strike Energy is in breach of the Agreement by reason of its failure to pay the balance. Notwithstanding, it appears that it intends to complete the purchase in the near future.

8    Zcell did not trade and is dormant. It does not have any creditors and is somewhat irrelevant for present purposes.

9    The evidence shows that the affairs of the Companies were heavily intermingled and it appears that they collectively conducted a single business, with its constituent elements spread, or intended to be spread, across the members of the Redflow group. Importantly, RFI predominantly paid the Companies’ expenses, though they were not all recorded as intercompany transactions, such as loans or credits. As a result, in order to ascertain the true nature and status of the intercompany accounts, it would be necessary to conduct a detailed review of the transactions which have occurred over a period of about 16 years. The cost of doing so was estimated by Mr Hughes as being in excess of $1.1 million.

10    In the absence of a pooling order being made, the liquidators intend to apportion the R&D Refunds and the proceeds of the sale of the IP assets. Specifically, as to the R&D Refunds, the liquidators intend to apportion those funds amongst the Companies by reference to the apparent respective contributions by them to the research and development costs. In percentage terms, that would result in an apportionment of 79.83% to RFI, 6.04% to RFD, and 14.14% to RFL. None would be paid to Zcell, which made no contribution. As to the sale proceeds, the liquidators intend to apportion those funds between RFD as to 54.9%, and RFI as to the remaining 45.1%. That was based upon the apprehended proportions that the value of their respective assets bear to the combined value of the group’s assets.

11    On 1 May 2026, orders were made for the giving of notice of these proceedings to all creditors of the Companies and shareholders of RFL. The orders were complied with, and no person has filed a notice of appearance or informed the liquidators of their opposition to the relief sought.

Section 579E

12    For present purposes, it is appropriate to set out the first two subsections of s 579E, which are as follows:

579E    Pooling orders

Making of pooling order

(1)     If it appears to the Court that the following conditions are satisfied in relation to a group of 2 or more companies:

(a)     each company in the group is being wound up;

(b)     any of the following subparagraphs applies:

(i)     each company in the group is a related body corporate of each other company in the group;

(ii)     apart from this section, the companies in the group are jointly liable for one or more debts or claims;

(iii) the companies in the group jointly own or operate particular property that is or was used, or for use, in connection with a business, a scheme, or an undertaking, carried on jointly by the companies in the group;

(iv)     one or more companies in the group own particular property that is or was used, or for use, by any or all of the companies in the group in connection with a business, a scheme, or an undertaking, carried on jointly by the companies in the group;

the Court may, if the Court is satisfied that it is just and equitable to do so, by order, determine that the group is a pooled group for the purposes of this section.

Consequences of pooling order

(2)     If a pooling order comes into force in relation to a group of 2 or more companies:

(a)     each company in the group is taken to be jointly and severally liable for each debt payable by, and each claim against, each other company in the group; and

(b)     each debt payable by a company or companies in the group to any other company or companies in the group is extinguished; and

(c)     each claim that a company or companies in the group has against any other company or companies in the group is extinguished.

13    The nature of a pooling order was considered in Morgan v McMillan Investment Holdings Pty Ltd (2024) 98 ALJR 1200 at 1202 [1] (Morgan), where it was described in the following terms:

[1]     A “pooling order” is an order made by a court under s 579E(1) of the Corporations Act 2001 (Cth) which permits the assets and liabilities of a group of companies in liquidation to be pooled for the general benefit of the companies’ unsecured creditors, instead of the ordinary application of separate entity principles to the simultaneous liquidation of companies within the group. The order is made in relation to two or more companies where all companies are being wound up, a gateway requirement is established, the court is satisfied that the pooling order is “just and equitable”, and no prohibition exists on making the order. The effects of a pooling order include each company in the pooled group being taken to be jointly and severally liable for the debts of each other company and intercompany debts within the pooled group being extinguished.

14    The reference of their Honours to the absence of any prohibition relates to the operation of subsection (10), which is discussed below.

15    In Re Lombe, Kirby Street (Holding) Pty Ltd (2011) 87 ACSR 84 at 88 [7] (Kirby Street), Barrett J identified that an application for a pooling order requires consideration of six questions:

(1)     Is there “a group of 2 or more companies” (s 579E(1), introductory words)?

(2)     Is each company in the group being wound up (s 579E(1)(a))?

(3)     Is at least one of the conditions in subparas (i)–(iv) of s 579E(1)(b) satisfied?

(4)     What does the evidence show with respect to the matters in s 579E(12) as they may affect the answer to the following question 5?

(5)     Is it just and equitable that the order sought be made (s 579E(1)(b) concluding words)?

(6)     Does s 579E(10) preclude the making of a pooling order?

16    This is an appropriate matrix in which to consider the present application.

Question 1 – Is there “a group of 2 or more companies”?

17    This case concerns four companies which act as a group. RFL is the parent, owning all of the shares in the other three companies, and it generally appears that they collectively conducted or intended to conduct one business. This meets the requirement that there be a group of two or more companies, as was identified by Barrett J in Kirby Street at 88 [8]:

… the expression “group” in the opening words of s 579E(1) means no more than a collection or plurality; so that a “group” exists merely through identification of several companies, without any need to find any connection or shared characteristic.

Question 2 – Is each company being wound up?

18    The second criteria is satisfied in this case where, on 15 November 2024, the creditors of the Companies resolved that each of them be wound up. This followed the earlier directors’ resolution, on 23 August 2024, appointing the liquidators as administrators of the Companies.

Question 3 – The satisfaction of one of the matters in s 579E(1)(b)(i) – (iv)

19    The third question is referred to as the “gateway requirement” of the section: see Morgan at 1202 [1] (supra [13]): presumably because it establishes the essential underlying rationale for making a pooling order, namely, the necessary connection between the companies in question.

20    On the facts of this case, RFL is the sole shareholder of each of RFI, RFD and Zcell, with the consequence being that each of the Companies is a “related body corporate” of the others. This satisfies s 579E(1)(b)(i).

21    The following steps undergird that conclusion.

22    Section 9 of the Act defines the term “related body corporate” as being “a body corporate that is related to the first-mentioned body, as determined in accordance with section 50”.

23    In turn, s 50 provides that a body corporate that is (a) a holding company of another body corporate, or (b) a subsidiary of another body corporate, or (c) a subsidiary of a holding company of another body corporate, is related to the other body corporate.

24    The term “holding company” is defined by s 9 to mean “in relation to a body corporate, … a body corporate of which the first body corporate is a subsidiary” and the term “subsidiary” is defined to mean “in relation to a body corporate, … a body corporate that is a subsidiary of the first-mentioned body by virtue of Division 6”.

25    Division 6 includes s 50. It also includes s 46, which provides that a body corporate is a subsidiary of another body corporate if, and only if, the other body corporate (relevantly) holds more than one-half of the issued share capital of the first body corporate.

26    In Re Krejci (liquidator), Neway Holdings Pty Ltd [2025] FCA 1233 at [45] – [46] (Re Krejci), Markovic J addressed a corporate structure which was relevantly identical to the present in that there existed a number of subsidiaries, each of which was wholly owned by a single holding company (and a further holding company). Her Honour concluded in relation to the above provisions:

45    As the evidence establishes, Holdings is the sole shareholder of each of NT QLD, NT SA, NT WA and NT VIC and BRN Holdings is the sole shareholder of Holdings. It follows that:

(1)     BRN Holdings is the holding company of Holdings;

(2)     Holdings is a subsidiary of BRN Holdings;

(3)     Holdings is the holding company of each of NT QLD, NT SA, NT WA and NT VIC; and

(4)     each of NT QLD, NT SA, NT WA and NT VIC are a subsidiary of both Holdings and BRN Holdings.

46     Thus, each of Holdings, NT QLD, NT SA, NT WA and NT VIC is a related body corporate to each other and the requirement in s 579E(1)(b)(i) of the Act is satisfied.

27    A similar conclusion was reached in Re IMO Atlas Gaming Holdings Pty Ltd (2023) 70 VR 540 at 552 [53] (Re IMO).

28    It follows that s 579E(1)(b)(i) is satisfied in this case.

Question 4 – the evidence of the matters in s 579E(12) going to the “just and equitable” criteria

29    Section 579E(12) provides:

(12)     In determining whether it is just and equitable to make a pooling order, the Court must have regard to all of the following matters:

(a)     the extent to which:

(i)     a company in the group; and

(ii)     the officers or employees of a company in the group;

were involved in the management or operations of any of the other companies in the group;

(b)     the conduct of:

(i)     a company in the group; and

(ii)     the officers or employees of a company in the group;

towards the creditors of any of the other companies in the group;

(c)     the extent to which the circumstances that gave rise to the winding up of any of the companies in the group are directly or indirectly attributable to the acts or omissions of:

(i)     any of the other companies in the group; or

(ii)     the officers or employees of any of the other companies in the group;

(d)     the extent to which the activities and business of the companies in the group have been intermingled;

(e)     the extent to which creditors of any of the companies in the group may be advantaged or disadvantaged by the making of the order;

(f)     any other relevant matters.

30    The import of the Court’s consideration of these requirements was identified by Barrett J in Kirby Street at 98 [70] – [71] where his Honour observed:

[70]     In deciding whether, according to the concluding words of s 579E(1)(b), it is “just and equitable” that a pooling order be made, the court must, in obedience to s 579E(12), “have regard to” all of the matters specified in s 579E(12).

[71]     The direction to “have regard to” the specified matters requires that the court “give weight to” those matters “as a fundamental element” in coming to a conclusion: R v Toohey; Ex parte Menelong Station Pty Ltd (1982) 158 CLR 327 at 333; 44 ALR 63 at 66–7; [1982] HCA 69 per Gibbs CJ. The inquiry in the course of which the specified matters must be given that weight is as to what is “just and equitable”.

31    Of course, the requirement to “give weight” to a criterion necessarily encompasses giving it little weight, if that be appropriate. Indeed, in some circumstances, it may include giving it minimal weight, amounting to little more than affording it some active intellectual consideration in the course of the evaluative process.

32    The authorities which have considered s 579E(12) have identified a number of indicia which generally weigh in favour of the making of a pooling order. As identified by Mr Wacker, Counsel for the liquidators, in his written submissions, the circumstances which commonly support the making of a pooling order are as follows:

(1)    Where the companies and their officers and employees are involved in the operations of the other companies (in essence, the group being managed as a single unit with a central management team responsible for all material decisions relating to strategy): Kirby Street 98 [72(1)], 99 [75]; Re Walker, ZYX Learning Centres Ltd (formerly ABC Learning Centres Ltd) (recs & mgrs apptd) [2015] FCA 146 [36] (ZYX); Re Hutson, WDS Limited (in liq) (recs & mgrs apptd) (2020) 143 ACSR 273, 291 [82] (Re Hutson); Re IMO 552 [54(a)], 553 [54(g)]; Re Krejci [47(1)].

(2)    Where the companies, by their respective officers and employees, hold out to creditors that they are a group of companies in respect of indebtedness incurred by the group: Kirby Street 99 [75]; Re Aboriginal Connections Aboriginal Corporation (in liq) and Another (2012) 263 FLR 121, 128 [31]; Re Krejci [47(2)].

(3)    Where the group operates the business collectively and the business fails as a consequence of a number of issues being experienced by it as a whole: ZYX [36]; Re Hutson 291 – 292 [83], 292 – 293 [90]; Re IMO 553 [54(f)]; Re Krejci [47(3)].

(4)    Where there is an intermingling of the activities and assets of the companies in the group: Re Krejci [47(4)]; Kirby Street 99 [75]: which is revealed by:

(a)    the absence of any intercompany accounts reflecting balances between the entities, or any provisioning for employee entitlements: Re Hutson 291 – 292 [83];

(b)    the preparation of consolidated accounts: ZYX [36]; Re Hutson 292 [86];

(c)    the consolidation of the companies for tax purposes, with a head company of the consolidated group: ZYX [36]; Re Hutson 292 [87];

(d)    only one company holding bank accounts, borrowing moneys and acting as the “treasury company”: Kirby Street 98 [72(4)]; ZYX [36]; Re Hutson 292 [88];

(e)    the inability to assess the independent asset and liability position of each company (including the true liability for some debts): Re Hutson 293 [91]; Re IMO 553 [54(e)]; and

(f)    difficulties confronting any attempt to reconstruct the intercompany balances, consequent upon a high degree of intermingling of activities and businesses: Kirby Street 99 – 100 [76]; Re IMO 553 [54(e)].

(5)    Where unsecured creditors are advantaged by the pooling order: Kirby Street 99 [72(7)] – [72(8)], 99 – 100 [76]; Re IMO 553 [54(h)]; Re Krejci [47(5)].

(6)    Where the making of a pooling order likely results in significant savings across the administration of the companies (for example, due to avoiding the need for the liquidator to engage in the time-consuming and costly exercise of reconstructing individual company accounts, as well as saving administration costs due to being able to complete the windings up more quickly): Kirby Street 99 [72(8)], [74], 99 – 100 [76]; Re Krejci [47](6).

33    In Kirby Street, Barrett J was particularly concerned with the advantages or disadvantages to unsecured creditors which would flow from the liquidators being required to spend some hundreds of thousands of dollars in reconstructing the accounts of the members of the group, were a pooling order not made. His Honour observed at 99 – 100 [76] that:

[76]     Section 579E(12)(e) requires that the court have regard to the extent to which creditors of any of the 40 companies may be advantaged or disadvantaged by the making of the pooling order. It is clear from the liquidator’s evidence that the creditors of all companies, taken as a single body, will be advantaged by pooling because of the savings that will be achieved by avoiding the need to reconstruct the intercompany balances and otherwise to attempt to unravel the intermingled finances of the several companies. Because there is no information that enables the court to judge how a particular company’s separate creditors would fare in a separate winding up of that company and how the situations of the several groups of creditors would compare if there were 40 separate windings up, it is not possible to see that the creditors of any company would be disadvantaged by pooling. The only available conclusion, therefore, is that there will be advantage to creditors.

34    The same considerations arise in the present case, where the expected cost of reconstructing the accounts over a period of 16 years is likely to exceed $1.1 million.

35    In the circumstances of this case, nearly all of the commonly recognised indicia supporting the making of a pooling order are present.

36    Firstly, the liquidators gave evidence that the Companies were centrally managed by the same directors and employees, and that the overarching decisions in relation to the group were made by the management and board of RFL. That is consistent with the business being operated by the Redflow group as a whole.

37    Second, the Companies shared two common directors, and decisions in respect of each company were, in substance, made by RFL’s board.

38    Third, though there is no direct evidence that the directors of the Companies held them out as a group, several creditors have lodged proofs of debt in the liquidation of RFL in respect of debts recorded in the accounts as being owed by RFI. Further, some US-based creditors have lodged proofs of debt in the liquidations of both RFL and RFI in circumstances where they are not creditors of any of the Companies, but rather of Redflow LLC, an entity incorporated in the United States and owned by RFL. Whilst it is possible that these proofs were lodged by mistake, they nonetheless provide some evidential foundation for the conclusion that creditors are acting on the assumption that the Companies comprise a group, as a result of the manner in which they have held themselves out. That is supported by the fact that almost all creditors were paid by RFI and the assets were collectively used between the Companies.

39    Fourth, the evidence before the Court demonstrates that the Companies generally operated in a collective manner and that the business failed as a consequence of a number of issues which affected the group as a whole. As mentioned, the business of the research, design, manufacture and sale of long duration zinc-bromine batteries was carried on by the Companies as a single enterprise. For that purpose, the assets of each of the Companies were used collectively without distinction. In particular, whilst RFD held the IP rights in the batteries being developed, those rights were used for the benefit of the group as a whole. The costs associated with securing and maintaining those rights were borne by RFI, as the group’s treasury company. Notwithstanding those matters, RFL received, and will receive, the R&D Refunds. Whilst such arrangements might be unusual if the Companies were operating as separate entities, they are quotidian in the context of a single, integrated business.

40    In his affidavit, the liquidator, Mr Hughes, opined that the primary cause of the Redflow group’s failure was the Companies’ inability to match funding from the Queensland Government in relation to the manufacture of the “X10” battery. That battery was being developed with a view to targeting larger megawatt-hour scale projects, and the Companies were pursuing plans to commission a new facility in Queensland for its manufacture.

41    Otherwise, Mr Hughes gave evidence that:

… the failure of the Companies was intertwined and attributable to common factors. In other words, once RFL began experiencing financial difficulties, so did each of the other companies within the “Redflow group”. This was the primary reason that all the Australian companies in the “Redflow group” went into administration at the same time.

42    Fifth, there can be little doubt that the affairs of the Companies were intermingled in a comprehensive way:

(a)    Though RFL was the holding company of RFI, RFD and Zcell, and did not trade in its own right, the members of RFL’s board made decisions for all of the subsidiaries. It also received the R&D Refunds in respect of the research and development undertaken by RFD;

(b)    The IP rights through which the Companies sought to pursue their business were held by RFD; and

(c)    RFI operated as a treasury company, in that it received deposits from sales to customers and made payments to nearly all of the Companies’ suppliers.

43    A significant indicator of the intermingling of the corporate affairs is that the Companies did not maintain intercompany accounts which recorded the related expenditures and receipts. In this respect, the Companies were consolidated for accounting purposes and lodged tax returns as a consolidated group. This was appropriate given that RFL’s management effectively treated the cash of RFI as being available to other entities in the group. More importantly, that cash was used to meet the financial obligations of the other Companies without recording any corresponding intercompany loan transactions. Examples of this are:

(a)    All employee costs were paid by RFI, despite seven employees being employed by RFL and RFD. Those costs, which totalled in excess of $2.2 million per annum (inclusive of superannuation), were neither apportioned nor recognised through the recording of intercompany credits and debits.

(b)    Similarly, directors’ fees for the directors of RFL, in the amount of approximately $270,000 per annum, were paid by RFI and were not recognised through intercompany transactions.

(c)    Insurance premiums (for directors and indemnity insurance and cyber liability cover) were invoiced to RFL but paid by RFI without the recording of any corresponding intercompany dealing.

(d)    RFL contracted with an external IT service provider and those costs were paid by RFI without the recording of any intercompany indebtedness.

(e)    In a like manner, costs were incurred for the obtaining of legal advice for the Companies. Those costs were invoiced to RFL and paid by RFI, again without any intercompany indebtedness recorded.

(f)    The rental payable in relation to the Companies’ headquarters was met by RFI in the sum of approximately $181,000 per annum, though there was no apportionment between the Companies.

44    Sixth, the foregoing financial arrangements, which extended over a period of more than 16 years, support the liquidators’ opinion that the costs of reconstructing the accounts of the individual Companies would be about $1,130,000. In addition, the liquidators only have access to MYOB accounting data from 2015 onwards, such that, even if an attempt were made to reconstruct the accounts, there is a real risk that any such reconstruction would be inaccurate. Further, the reconstruction would necessarily involve making value judgments about the appropriateness of attributions as between the Companies in relation to common costs, which would need to be made from uncertain information. It would be difficult for the liquidators to correctly ascertain the appropriate apportionment of costs such as rent, insurance, legal expenses and the like.

45    In the context of those matters, which render the making of a pooling order just and equitable, it is appropriate to consider the counterfactual of what would occur if a pooling order were not made. In this case, were a pooling order not made, the liquidators would need to:

(a)    apportion amongst the Companies the administration and liquidation costs, such as legal fees and disbursements, sale costs and costs incurred in gathering the R&D Refund;

(b)    seek and obtain directions about the apportioning of the R&D Refunds and sale proceeds;

(c)    undertake multiple staged distributions between the Companies, which the liquidators estimate would require three rounds of dividends to be declared and paid. The first would be a dividend process for RFD, which would result in a distribution to RFI. The second would be a dividend process for RFI, which would result in a distribution to RFL, subject to the outcome of the reconstruction of the Companies’ accounts. Finally, there would need to be a dividend process for RFL or RFI once the “downstream” distributions were received; and

(d)    undertake an allocation of the liquidation costs as between the Companies.

46    The avoidance of these costs and the resultant delay in the payment of dividends supports the making of a pooling order, as it is in the general interests of unsecured creditors.

Question 5 – Is it just and equitable that the order sought be made?

47    The answer to question 5 necessarily follows from an assessment of the conclusions just made in relation to question 4. In this respect, the evaluative process of determining whether the making of an order is “just and equitable” was considered by Barrett J in Kirby Street at 100 [77] – [79]

[77]     Numerous cases have considered the significance of the phrase “just and equitable”. It is sufficient, I think, to refer to what was said by Sheller JA. In Stephenson v State Bank of New South Wales (1996) 39 NSWLR 101 at 113 when considering s 66M of the Conveyancing Act 1919 (NSW):

The determination of what is just and equitable in the circumstances is not a matter of unfettered individual opinion, nor does it involve a discretion of an arbitrary kind; see Cominos v Cominos (1972) 127 CLR 588 at 599; [1972–73] ALR 581 at 587–8. As Kitto J observed in R v Commonwealth Industrial Court; Ex parte the Amalgamated Engineering Union, Australian Section (1960) 103 CLR 368 at 383; [1961] ALR 104 at 112–13, the criteria are of a nature with which Courts are familiar. In Talga v MBC International Ltd (1976) 133 CLR 622 at 634; 9 ALR 359 at 366 Stephen, Mason and Jacobs JJ dealing with the issue raised for the Court by the Banking Act 1974 of whether it was just and equitable that a transaction should be treated as valid, said:

“ … The court will have before it an existing transaction replete with all its surrounding facts and circumstances and in their light will determine what is just and equitable. In doing so it will certainly be exercising a wide discretion that this is a commonplace of the curial process; the court will be bound to act judicially, exercising its discretion by reference only to such considerations affecting the transaction as, on an examination of the legislation, may be seen to be material to the decision which it is called on to make. Irrelevant matters, matters such as the plaintiffs instanced in the course of argument, which have no rational connection with the policy of the regulations but would be expressive only of the personal predilections of the Court cannot be allowed by it to play any part in its decision.”

[78]     Section 579E(12) must therefore be seen as conferring a discretion that, while wide, can only be exercised judicially in the light of the whole of the circumstances surrounding the relevant subject matter.

[79]     The factors referred to in s 579E(12) are identified by the legislation as those central to the court’s determination of what is just and equitable. The conclusions I have expressed in relation to those, viewed in the light of the whole of the surrounding circumstances as deposed to by the liquidator, persuade me that efficiency and savings will be achieved if a pooling order is made and that the ultimate effectuation of the several windings up as if they together constituted a single winding up will be beneficial to the creditors of the several companies.

48    Here, the factors identified above strongly support the making of a pooling order. They demonstrate that the Companies operated the business collectively and made little or no distinction between themselves in their operational and financial management. They conducted the business and incurred liabilities without regard to their separate identities. In those circumstances, it would be unfair now to undertake an individualised assessment of each company for the purposes of considering the claims of creditors. Accordingly, subject to that which follows, a pooling order should be made.

Question 6 – Does s 579E(10) preclude the making of a pooling order?

49    The effect of s 579E(10) is that it precludes the making of a pooling order if doing so would “materially disadvantage” an eligible unsecured creditor who has not consented to it. The subsection provides:

(10)     The Court must not make a pooling order in relation to a group of 2 or more companies if:

(a)     both:

(i)     the Court is satisfied the order would materially disadvantage an eligible unsecured creditor of a company in the group; and

(ii)     the eligible unsecured creditor has not consented to the making of the order; or

(b)     all of the following conditions are satisfied:

(i)     a company in the group is being wound up under a members’ voluntary winding up;

(ii)     the Court is satisfied that the order would materially disadvantage a member of that company;

(iii)     the member is not a company in the group;

(iv)     the member has not consented to the making of the order.

50    The curious operation of this subsection has been explained in a number of authorities.

51    In Kirby Street, Barrett J stated at 101 [81] – [82]:

[81]     The legislation seems to contemplate, at least on its face, that the court might conclude that it is just and equitable that a pooling order be made yet be precluded by s 579E(10) from making the order because satisfied that it would produce “material disadvantage” as there mentioned.

[82]     My view is that, if such “material disadvantage” were found, the court could not come to a positive conclusion on the “just and equitable” question…

52    In Re Hutson at 287 [62], Markovic J sought to give the subsection slightly more work to do, observing:

[62]     The determination of whether an eligible unsecured creditor would be materially disadvantaged by the making of a pooling order is a question to be determined in all of the circumstances of the case: Re Walker at [42], [50]. Relevant matters to take into account in determining that issue include the dividend payable to creditors in a pooled scenario versus a non-pooled scenario and whether any creditor has appeared to object to the making of the proposed pooling order: Re Walker at [40]; Re Aboriginal Connections at [42].

53    A further explanation was given by M Osborne J in Re IMO at 545 [23] – [24], 546 [27] and [29]:

[23]        By s 579E(10)(a) the Court must not make a pooling order if:

(a)     the Court is satisfied that the order would materially disadvantage an eligible unsecured creditor of a company in the group; and

(b)     the eligible unsecured creditor has not consented to the making of the order.

[24]     The just and equitable factors to be considered by s 579E(12) includes a like matter, namely s 579E(12)(e). It has been held that if the Court is satisfied that a material disadvantage to unsecured creditors will result from the making of a pooling order, then the pooling order could not be made as a matter of discretion [citing Lofthouse v Environmental Consultants International Pty Ltd [2012] VSC 416 at [30], which cited Kirby Street at [82] as set out above].

…

[27]    This requirement was considered at some length in Re Watch Works Australia Pty Ltd (in liq); Ex Parte Francis. From that case the following principles are apparent:

(a)     non-material disadvantages do not require the consent of the affected creditors;

(b)     the focus of the court is on advantages and detriment to an eligible unsecured creditor of a company, rather than the overall benefit of pooling to all creditors taken as a whole; and

(c)     a small reduction of a possible dividend to a particular group is not likely to be considered a material disadvantage, for example, a loss of a dividend to one company of 1.47c in the dollar was not considered material.

…

[29]     In Lofthouse, the absence of objection by any unsecured creditor was also considered in a finding of a lack of detriment that was material.

54    Here, there has been no objection to the making of a pooling order. The liquidators have taken extensive steps to notify all of the Companies’ creditors and shareholders of the application, and no person has entered an appearance or objected to the orders sought. This is important in two respects. Firstly, the extent of the notice and explanation given by the liquidators in respect of this application provides confidence that it is likely to be known and understood by those who may be affected by it. In such circumstances, it is likely that no reasonable argument could be advanced in opposition to the making of the orders; otherwise, it would have been raised by an affected person. Second, the absence of any objection by an unsecured creditor materially supports the conclusion that no detriment will be suffered by them by reason of a pooling order: Lofthouse v Environmental Consultants International Pty Ltd [2012] VSC 416 [31] – [32] (Lofthouse).

55    In this matter, as is likely to be the case in most applications of this kind, it is not possible to identify with precision the dividend outcomes as between separate individual liquidations on the one hand and, on the other, a liquidation following the making of a pooling order. The primary reason for that is the impossibility of knowing in advance the likely outcome of any reconstruction of the Companies’ accounts. There are too many variables which might arise in the analysis of 16 years of intercompany dealings.

56    A similar difficulty, arising from a lack of historical accounting records, was considered in Lofthouse. There, Ferguson J observed:

[32]    In light of the matters that I have canvassed in the preceding section of these reasons, the court cannot be satisfied that any unsecured creditor would be materially disadvantaged by the making of a pooling order. Whilst without further examination it might seem that the creditors of ECI NSW may be disadvantaged, the Liquidator would not be able to make a distribution to those creditors without further investigation as to the true position in relation to the assets and liabilities of that Company. As noted above, the cost of that work would likely erode the cash sum presently held by ECI NSW.

57    Necessarily, the range of potential outcomes arising from any reconstruction of the Companies’ accounts will also depend upon identifying which company within the group incurred expenditure or became entitled to receive payment in respect of particular transactions. Making determinations in relation to these issues may prove problematic in circumstances where accurate information is sparse and, indeed, some creditors were unaware of the identity of the entity with which they had contracted. Relevantly, similar circumstances confronted Sifris J in Algeri v Koko Black Group Pty Ltd [2016] VSC 190. There, his Honour noted that the liquidators were of the view that the only disadvantage of making pooling orders was that certain creditors may receive a reduced dividend. That was insufficient to prevent such orders from being made and it was observed (at [32]) that it was “difficult for creditors to articulate which company they had contracted with” making the postulated disadvantage only a “possibility”. These circumstances are reflected in the present case.

58    In the application of s 579E(10), it is apt to bear in mind that the subsection is concerned only with “material” disadvantage. In Re Watch Works Australia Pty Ltd (in liq); ex parte Francis [2020] WASC 6 at [81], Vaughan J considered that requirement and observed:

[81]    Disadvantage is material where it is considerable or significant; it must have real importance or consequences. Disadvantage will not be material where it is unimportant, insignificant or inconsequential. Necessarily the enquiry is evaluative and involves a question of degree.

59    On the material presented by the liquidators, who were astute to be as fulsome as possible, it is not possible for the Court to be satisfied that any unsecured creditor would suffer a material disadvantage by the making of a pooling order. That arises predominantly by reason of the state of the Companies’ accounts. Whilst it is possible that some, albeit presently unidentifiable, creditors might be worse off if a pooling order were made, that is far from certain given the high costs associated with reconstructing the relevant accounts. It follows that no assessment may be made of the extent or severity of any potential disadvantage which the creditors may suffer. Notwithstanding, were it necessary to decide, the probable conclusion is that there will be no material disadvantage to any relevant unsecured creditor. Rather, it is more likely that they will be better off as a result of the pooling orders being made.

60    To aid in the determination of this issue, the liquidators have prepared an “estimated statement of position” (the “Liquidators’ Estimates”) which provides some prognostication of the potential outcomes of various scenarios. However, it is recognised that their opinions are founded upon several key assumptions relating to the Companies’ available cash, the amount of estimated R&D Refunds, as well as post-appointment payments and expenses.

61    The Liquidators’ Estimates predict that:

(a)    if a pooling order is made, unsecured creditors will receive between 14.7c and 55.6c in the dollar, and no amounts would be paid to shareholders of RFL; and

(b)    if a pooling order is not made (and excluding any apportionment of R&D Refunds and reallocation of intercompany transactions):

(i)    unsecured creditors of RFL will receive 100c in the dollar and there will be a surplus of $1.2 million to $1.8 million to RFL’s shareholders;

(ii)    unsecured creditors of RFI will receive between 0c and 19.3c in the dollar; and

(iii)    unsecured creditors of RFD will receive between 1.3c and 28.1c in the dollar.

62    As has been mentioned, there are presently no known unsecured creditors of Zcell.

63    An important caveat on the Liquidators’ Estimates is that they are not likely to occur, particularly because they do not take into account the reconstruction of the intercompany transactions (and the estimated $1.1 million in costs of doing so), nor the proposed distribution of the R&D Refunds and sales proceeds. This merely emphasises the difficulty faced by the liquidators in hypothesising on potential outcomes in the face of insufficient information.

64    The conclusions appearing in the Liquidators’ Estimates are also sensitive to the adjustment of the several assumptions on which they are based. In this respect, the liquidators have undertaken some sensitivity analysis, to give an indication of the likely consequences of adjustments to the quantum of liabilities as between the Companies. For example, if the intercompany liability of RFL to RFI were to increase to $3 million, the estimated return to unsecured creditors of RFI increases from (an upper range of) 19.3c in the dollar to 34.4c in the dollar. Further, if no pooling order is made, but the Court nevertheless orders the apportionment of the R&D Refund, the Liquidators’ Estimates are that:

(a)    unsecured creditors of RFL will receive between 0c and 51.3c in the dollar;

(b)    unsecured creditors of RFI will receive between 9.5c and 43.4c in the dollar; and

(c)    unsecured creditors of RFD will receive between 3.9c and 30.9c in the dollar.

65    These figures indicate that a pooling order would yield better returns for unsecured creditors. For example, unsecured creditors of RFL are estimated to receive between 14.7c and 55.6c in the dollar if a pooling order were made, compared to between 0c and 51.3c in the dollar in the context of an apportionment of the R&D Refund. In this regard, it must be borne in mind the liquidators consider there to be no equitable basis for RFL to retain the R&D Refunds, since it did not contribute to the costs of the activities which resulted in them being received. Indeed, on the available evidence, it would be an inappropriate outcome for RFL creditors to receive a return of 100c in the dollar, and for RFL shareholders to enjoy a surplus, by reason only of the historical practice of RFL receiving and retaining the R&D Refunds in its bank account. That outcome is merely a function of RFL’s position as the head company of the tax consolidated group, as well as the group’s failure to appropriately allocate and record intercompany transactions. As the liquidators rightly submit, such a scenario is not in any way reflective of the true creditor position.

Conclusion as to the making of the pooling order

66    As the foregoing discussion demonstrates, in the circumstances of this case it is just and equitable that a pooling order be made. Further, the relevant circumstances do not engage any of the prohibitions in s 579E(10). Although the unsecured creditors who might be affected by such an order have not consented to its making, it is not possible to be satisfied that any eligible unsecured creditor would be materially disadvantaged. It follows that the pooling orders sought by the liquidators should be made, including orders pursuant to the Insolvency Practice Schedule (Corporations) (being Schedule 2 to the Act), which will facilitate the management of the liquidations as a pooled group.

Ancillary issues

67    The liquidators’ application seeks additional orders relating to particular matters that have arisen during the liquidations. The first concerns the validity of a creditors’ meeting and the second concerns nunc pro tunc approval with respect to entry into certain agreements.

Validation of resolutions of creditors at 23 June 2025 meetings

68    On 23 June 2025, coordinated meetings of creditors of the Companies were convened and held for the purposes of approving the liquidators’ entry into the Agreement with Strike Energy Inc (and related documents) and approving the liquidators’ remuneration.

69    Notice of those meetings was given to all known creditors by use of the liquidators’ “Halo” platform, as well as by the giving of a notice to the ASX.

70    Subsequent to those meetings, it came to the liquidators’ attention that, due to an oversight, notice of the meeting had not been uploaded to ASIC’s Published Notices Website, as required by r 75-40 of the Insolvency Practice Rules (Corporations) 2016 (Cth) and r 5.6.75(4) of the Corporations Regulations 2001 (Cth).

71    On the available material, no creditor was disadvantaged by this omission. All known creditors were notified of the meeting by email through the Halo platform. Further, no person has subsequently been identified as a creditor who could have, but did not, attend the meeting. Of the two creditors who lodged proofs of debt following notification via the Halo platform on 9 June 2025, one attended the meeting as an observer, and both have advanced claims as shareholders of RFL.

72    It is also relevant that no person has subsequently raised any objection with the liquidators as to the conduct of the meetings. Further, despite the wide notification of these proceedings, no person sought to be heard in opposition of the orders sought.

73    It is beyond doubt that the failure to lodge the requisite notice is properly characterised as a “procedural irregularity” for the purposes of s 1322(2) of the Act, and one which has not caused substantial injustice (or, indeed, any injustice) to any person. It is also an “accidental omission” for the purposes of s 1322(3).

74    In these circumstances, it should be declared that the resolutions of creditors purportedly passed at those meetings were validly passed: s 1322(4)(a). Each of the validated resolutions are identified in the orders which are set out at the commencement of these reasons.

Leave pursuant to s 477(2B) of the Act

75    At those same creditors’ meetings, the liquidators sought approval of the sale of certain IP assets of the Companies to Strike Energy Inc. Whilst that approval was given, the creditors did not, in terms, approve the liquidators’ entry into the Agreement or the related Intellectual Property Mortgage and Licence Deed.

76    An important aspect of the Agreement was that the purchase price was to be paid over 12 months and this involved the granting of a mortgage by Strike Energy to secure payment of the balance of the purchase price. Relatedly, a licence was also granted to Strike Energy to permit it to use the relevant IP assets pending finalisation of the Agreement.

77    The receipt of the balance of the purchase price has been delayed following Strike Energy’s default. Notwithstanding that default, the liquidators wish to complete the Agreement, although it appears that the technical deficiency in the approval given at the meeting may hinder that objective.

78    As part of the present proceedings, the liquidators seek the Court’s approval, pursuant to s 477(2B) of the Act, of their entry into those transactions. That approval is required because the Agreement is of a duration exceeding the three-month period referred to in s 477(2B).

79    There can be no doubt that the Agreement is beneficial to the Companies and represents a sale of their assets for the best price reasonably obtainable and the creditors are desirous of the Liquidators taking steps to sell the assets to Strike Energy Inc. Further, and importantly, the Agreement (and related documents) concern the proper realisation of the Companies’ assets. Their performance advances the winding up of the Companies and that provides a sound basis for making the orders sought. There is also no opposition to this course.

80    The principles relevant to granting approvals of this nature were outlined by Gordon J in Stewart, Re Newtronics Pty Ltd [2007] FCA 1375 at [26] as follows:

[26]    There are a number of principles relevant to the exercise of the Court’s power under s 477(2B) which are worth restating:

(1)     the court does not simply “rubber stamp” whatever is put forward by a liquidator. As Giles J said in Re Spedley Securities Ltd (In liq) (1992) 10 ACLC 1,742 at 1,745 in relation to the powers of a liquidator to compromise claims:

[T]he Court is necessarily confined in attempting to second guess the liquidator in the exercise of his powers, and generally will not interfere unless there can be seen to be some lack of good faith, some error in law or principle, or real and substantial grounds for doubting the prudence of the liquidator's conduct. The same restraint must apply when the question is whether the liquidator should be authorised to enter into a particular transaction the benefits and burdens of which require assessment on a commercial basis. Of course, the compromise of claims will involve assessment on a legal basis, and a liquidator will be expected (as was made plain in Re Chase Corporation (Australia) Equities Ltd) to obtain advice and, as a prudent person would in the conduct of his own affairs, advice from practitioners appropriate to the nature and value of the claims. But in all but the simplest case, and demonstrably in the present case, commercial considerations play a significant part in whether a compromise will be for the benefit of creditors.

(2)    a court will not approve an agreement if its terms are unclear: Re United Medical Protection (No 4) (2002) 20 ACLC 1,647;

(3)    the role of the Court is to grant or deny approval to the liquidator’s proposal. Its role is not to develop some alternative proposal which might seem preferable: Corporate Affairs Commission v ASC Timber Pty Ltd (1998) 16 ACLC 1,642;

(4)     in reviewing the liquidator’s proposal, the task of the Court is:

[not] to reconsider all of the issues which have been weighed up by the liquidator in developing the proposal, and to substitute its determination for his in … a hearing de novo [but] … simply to review the liquidator’s proposal, paying due regard to his or her commercial judgment and knowledge of all of the circumstances of the liquidation, satisfying itself there is no error of law or ground for suspecting bad faith or impropriety, and weighing up whether there is any good reason to intervene in terms of the “expeditious and beneficial administration” of the winding up.

See ASC Timber at 1,650; see also Re Gate Gourmet Australia Pty Ltd (in liq) (2005) 23 ACLC 834 at [10] and Warne v GDK Financial Solutions; Peridon Village Nominees (2006) 24 ACLC 1,019 at [60]. The Court’s approval is not an endorsement of the proposed agreement but is merely a permission for the liquidator to exercise his or her own commercial judgment in the matter;

(5)    further, in judging whether or not a liquidator should be given permission to enter into a funding agreement (whether retrospective or not), it is important to ensure, inter alia, that the entity or person providing the funding is not given a benefit disproportionate to the risk undertaken in light of the funding that is promised or a “grossly excessive profit”: Anstella Nominees Pty Ltd v St George Motor Finance Ltd (2003) 21 ACLC 1,347 at [11] and Re ACN 076 673 875 Ltd (2002) 20 ACLC 1,551 at [28];

(6)     generally, the Court grants approval under s 477(2B) of the Act only where the transaction is the proper realisation of the assets of the company or otherwise assists in the winding up of the company: GDK Financial Solutions at [58] and the cases cited therein.

81    In the circumstances of the present case, including the fact that creditors have expressed their general consent to the sale and do not oppose this application, it is appropriate to grant the relief sought.

82    Approval should be given to the liquidators to enter into the Agreement, Intellectual Property Mortgage and Licence Deed.

Associate:    

Dated:    25 June 2026

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