Federal Court of Australia

Australian Securities and Investments Commission v Falcon Capital Limited (in liquidation) (No 3) [2026] FCA 954

ORDERS

THE COURT NOTES THAT:

For the purpose of this order, “Joint and Several Liquidators” has the meaning given to it in the orders made on 9 April 2025.

THE COURT ORDERS THAT:

1.    Pursuant to s 477(2A) of the Corporations Act 2001 (Cth) (Corporations Act), approval is granted for the Joint and Several Liquidators, nunc pro tunc, to cause the First Defendant to enter into the settlement deed dated 12 June 2026 exhibited at exhibit PSH-3 to the affidavit of Paul Stuart Harlond made 30 June 2026 (Settlement Deed).

2.    Pursuant to s 477(2B) of the Corporations Act, approval is granted for the Joint and Several Liquidators, nunc pro tunc, to enter and cause the First Defendant to enter into:

(a)    the retainer with the firm Mallesons dated 16 April 2025 exhibited at confidential exhibit PSH-6 to the affidavit of Paul Stuart Harlond made 10 July 2026; and

(b)    the retainer with the firm Mills Oakley dated 27 November 2025 exhibited at confidential exhibit PSH-6 to the affidavit of Paul Stuart Harlond made 10 July 2026,

together, the “Retainers”.

3.    Pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) (being Sch 2 to the Corporations Act), the Joint and Several Liquidators were justified in causing Falcon to enter into, and are justified in giving effect to, the Settlement Deed.

4.    Pursuant to s 37AF(1) of the Federal Court of Australia Act 1976 (Cth), on the ground that it is necessary to prevent prejudice to the proper administration of justice, the following materials be kept confidential and may not be published or disclosed to any person and not be capable of inspection by any person, other than by duly authorised staff of the Court for the purpose of their work for the Court, until the liquidation of the First Defendant ends or further order of the Court:

(a)    the affidavit of Paul Stuart Harlond dated 30 June 2026 titled “Confidential Affidavit”, together with confidential exhibit PSH-4 to that affidavit; and

(b)    exhibit PSH-6 to the affidavit of Paul Stuart Harlond dated 10 July 2026.

5.    The Joint and Several Liquidators’ costs of and incidental to their application dated 30 June 2026 and filed 6 July 2026 are costs in the liquidation of the First Defendant.

THE COURT DECLARES THAT:

6.    Pursuant to s 1322(4)(a) of the Corporations Act, the Settlement Deed and the Retainers are not invalid by reason of them having been entered into without the Court’s prior approval.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    By interlocutory process dated 30 June 2026, Ross Blakeley and Paul Harlond (the Liquidators), who are the joint and several liquidators of Falcon Capital Limited (in liquidation) (Falcon), apply for an order granting approval, nunc pro tunc, for them to cause Falcon to enter into a settlement deed compromising a claim of Falcon against certain third parties. The Liquidators also seek a related declaration, related orders and ancillary orders.

2    The orders and declaration are sought under ss 477(2A), 477(2B) and 1322(4)(a) of the Corporations Act 2001 (Cth), s 90-15 of the Insolvency Practice Schedule (Corporations) (being Sch 2 to the Corporations Act) and s 37AF(1) of the Federal Court of Australia Act 1976 (Cth).

3    The application was not opposed by any person. In particular, the Australian Securities and Investments Commission (ASIC), which had notice of the application, indicated in correspondence to the Court that it had no matters that it wished to raise at the hearing of the application and did not propose to appear at the hearing (unless requested to do so).

4    At the conclusion of the hearing, I made orders and a declaration substantially in the terms sought by the Liquidators and said that I would publish my reasons later. The following are my reasons for making the orders and the declaration. I note that parts of the reasons that follow are based substantially on the Liquidators’ outline of submissions dated 14 July 2026.

Evidence relied upon

5    In support of the application, the Liquidators rely on the following affidavits:

(a)    an “open” (i.e. not confidential) affidavit of Mr Harlond dated 30 June 2026, which is his third affidavit in the proceeding (the Third Harlond Affidavit);

(b)    a confidential affidavit of Mr Harlond dated 30 June 2026 (the Fourth Harlond Affidavit); and

(c)    a supplementary affidavit of Mr Harlond dated 10 July 2026 (the Fifth Harlond Affidavit), which includes an open exhibit and a confidential exhibit.

Background facts

6    As set out in para 14 of the Third Harlond Affidavit:

(a)    Falcon was incorporated on 10 April 2006;

(b)    Falcon became a public company on 28 June 2010, but has never been listed;

(c)    on 23 August 2019, Falcon established the First Guardian Master Fund (the FGMF) and appointed First Guardian Capital Pty Ltd as its investment manager;

(d)    the FGMF:

(i)    is a registered managed investment scheme which takes the form of a unit trust;

(ii)    has Falcon as its responsible entity and trustee;

(iii)    has three wholly owned sub-trusts, being trusts in which Falcon in its capacity as trustee for the FGMF is the sole unitholder and of which Falcon is also trustee, namely the First Guardian Global Income Fund (the GIF), the First Guardian Australian Development Fund and the First Guardian Global Equity Fund (together, the Underlying Funds);

(e)    Falcon raised money by the sale of (various classes of) units in the FGMF to investors; and

(f)    the FGMF had various classes of units on issue from time to time, with each class having a different interest or combination of interests in the Underlying Funds.

7    On 9 April 2025, the Court made orders in this proceeding:

(a)    winding up Falcon pursuant to s 461(1)(k) of the Corporations Act;

(b)    appointing the Liquidators as joint and several liquidators of Falcon; and

(c)    directing the Liquidators to wind up the FGMF and five other funds of which Falcon is trustee, including the Underlying Funds.

8    Following their appointment, the Liquidators became aware that the accounts of Falcon in its capacity as trustee for the GIF recorded on the GIF balance sheet an asset described as the “Western Subdivisions Investment” with an ascribed book value of $40,359,500 as at 9 April 2025 (the Western Subdivisions Investment). The Liquidators located a loan agreement (the Loan Agreement) between Falcon and Western Subdivisions Pty Ltd (Western Subdivisions) in Falcon’s books and records.

9    As set out in paras 18 and 27-34 of the Third Harlond Affidavit, it appears that the funds advanced as a part of this investment were advanced not only to Western Subdivisions, but also to a number of different entities associated with Western Subdivisions’ sole director and shareholder, Abdullah Guerinat (also known as Abidal Guerinat) (Mr Guerinat).

10    As noted in para 20 of the Third Harlond Affidavit, the Liquidators’ investigations to date have included:

(a)    reviewing Falcon’s books and records;

(b)    conducting public examinations of various of Falcon’s directors;

(c)    conducting public examinations of Mr Guerinat on 8 December 2025 and 2 April 2026;

(d)    examining documents produced by Mr Guerinat pursuant to his examination summons or in the course of his examinations; and

(e)    reviewing underlying bank statements.

11    Reference is made in paras 22-25 of the Third Harlond Affidavit to various entities which are described as the “Rajomon Entities” and the “Archer Synergies Group”. Mr Harlond refers to the Rajomon Entities and the Archer Synergies Group collectively as the “Guerinat Entities”.

12    Relevant terms of the Loan Agreement are set out at para 62 of the Third Harlond Affidavit.

13    In para 69 of his third affidavit, Mr Harlond states that, according to the Liquidators’ calculations, the total debt owing by Western Subdivisions to Falcon under the Loan Agreement, as at 20 June 2026, was $36,977,885.10.

14    Mr Harlond states in para 75 of the Third Harlond Affidavit that, given Western Subdivisions’ financial position, and the fact that the loan advanced under the Loan Agreement was unsecured and not the subject of any personal guarantee(s), the Liquidators consider that there is no prospect that Western Subdivisions will be able to repay the amounts due from it under the Loan Agreement when due (or at all).

15    Mr Harlond discusses other assets against which Falcon may have claims at paras 77-87 of the Third Harlond Affidavit.

16    At paras 89-115 of the Third Harlond Affidavit, Mr Harlond addresses specifically the present application. He refers to without prejudice discussions that took place between the Liquidators and Mr Guerinat between December 2025 and June 2026 (at para 102).

17    On 12 June 2026, the Liquidators caused Falcon to enter into a settlement deed (the Settlement Deed) with Western Subdivisions, Mr Guerinat and various entities associated with Mr Guerinat (the Guerinat Entities). A copy of the Settlement Deed is at pp 1112-1138 of Exhibit “PSH-3”.

18    The operative terms of the Settlement Deed are subject to the Court:

(a)    approving the compromise of debt (to be) effected by the Settlement Deed under s 477(2A) of the Corporations Act; and

(b)    giving judicial directions under s 90-15 of the Insolvency Practice Schedule (Corporations) to the effect that the Liquidators have acted reasonably and are justified in causing Falcon to enter into and give effect to the deed.

19    By the Settlement Deed (with capitalised terms in the following summary defined in the Settlement Deed or the Third Harlond Affidavit):

(a)    Western Subdivisions agrees to pay Falcon $2.9 million, comprising:

(i)    $1 million payable within two days of execution of the Deed (which sum has been paid into its solicitors’ trust account in accordance with the Deed, pending its subsequent release to Falcon if an Approval Order is made) (clauses 2.1(a) and 3.2) (Provisional Settlement Sum);

(ii)    $50,000 payable within two days of execution of the Deed (on account of the legal costs associated with this application, and which sum has already been paid to Falcon) (clause 3.3) (Legal Costs Amount); and

(iii)    $1.85 million payable within two days of an Approval Order being made, or on 2 July 2026, whichever is the later (clauses 2.1(b)(i) and (iii))

(together, the Settlement Amount);

(b)    upon receipt of the Settlement Amount, and thus conditional upon the granting of the present application:

(i)    Falcon covenants not to sue the Guerinat Parties, including their officers, employees and agents, in respect of any claims:

(A)    relating to the Loan Agreement, the Fyansford Property, the Tarneit Property and/or the Archer Properties (being the properties identified in Sch 2 to the Deed of Settlement) (clauses 4.1(a) and 4.3); and

(B)    arising directly or indirectly out of or in connection with any investigation conducted by the Liquidators “in relation to the business and operations of Falcon” (excluding any claims that involve fraud or gross misrepresentation on the part of a Guerinat Party or claims for moneys had and received of which the Liquidators were unaware upon entry into the Deed) (clauses 4.1(b) and 4.3);

(ii)    Falcon covenants not to conduct any further public examinations of Mr Guerinat (clause 4.2);

(iii)    Falcon agrees to withdraw its caveat over the Fyansford Property (clause 5.1(a)); and

(iv)    the parties agree that the Caveat Proceeding will be discontinued with no order as to costs (clause 5.1(b));

(c)    upon receipt of the Settlement Amount, and thus conditional upon the granting of the Application, the Guerinat Parties “and all of their related entities” covenant not to sue Falcon or the Liquidators in respect of any Claims at large (including in respect of claims which may be available to Western Subdivisions against Falcon arising out of Falcon’s failure to advance funds to Western Subdivisions in the amounts and at the times required by Sch 3 to the Loan Agreement, which failure Western Subdivisions has alleged caused it loss, including in the form of increased financing costs) (clause 4.5); and

(d)    Blackrock has executed a (second-ranking) mortgage over the Fyansford Property, which is being held in escrow by the Liquidators’ solicitors, Mallesons, as security for the performance of the Guerinat Parties’ obligations under the Settlement Deed (clause 6).

20    In summary, as set out in para 13 of the Liquidators’ submissions, by the Settlement Deed, Falcon agrees to compromise a debt of approximately $37 million (due to Falcon in its capacity as trustee of the GIF from Western Subdivisions under the Loan Agreement), as well as possible related claims against Mr Guerinat and certain of the Guerinat Entities, and all claims of those parties against Falcon, in exchange for the near immediate payment to Falcon of $2.9 million (funded from outside of the Guerinat Group).

21    In para 109 of his third affidavit, Mr Harlond states that in his opinion (and in the opinion of Mr Blakeley), a settlement on the terms of the Settlement Deed is in the best interests of Falcon and its creditors and unitholders, including because:

(a)    it represents a better outcome for Falcon than it could otherwise achieve;

(b)    it provides a quick and certain outcome; and

(c)    it may allow for Falcon’s liquidation to be finalised sooner than would otherwise be possible.

22    Mr Harlond states in paras 110-111 of that affidavit that he and Mr Blakeley are conscious that, if approved, the amount of the Western Subdivisions Investment to be returned under the Settlement Deed is much less than unitholders in the FGMF would have expected based on disclosures made by Falcon and the valuation of that investment at the time of the Liquidators’ appointment. However, they believe (based on the matters set out in the Third and Fourth Harlond Affidavits), that the Settlement Sum exceeds the current recoverable commercial value of the Western Subdivisions Investment.

23    In the Fifth Harlond Affidavit (at paras 11-22), Mr Harlond provides background to the aspect of the present application by which the Liquidators seek approval to enter into legal services agreements with Mallesons and Mills Oakley (the Retainers).

24    In the Fifth Harlond Affidavit (at paras 23-31), Mr Harlond deals with communications regarding the settlement approval application. This included notification of ASIC, creditors of Falcon and unitholders of the FGMF.

Applicable principles

25    Section 477(1) of the Corporations Act specifies the powers and responsibilities of liquidators generally. Relevantly and subject to the balance of that section, those powers include the power under s 477(1)(d) to:

compromise any … debts, liabilities capable of resulting in debts and any claims (present or future, certain or contingent, ascertained or sounding only in damages) subsisting or supposed to subsist between the company and a … debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the property or the winding up of the company, on such terms as are agreed …

26    The powers in s 477(1) are subject to ss 477(2A) and 477(2B).

27    Section 477(2A), when read together with reg 5.4.02 of the Corporations Regulations 2001 (Cth), provides that a liquidator of a company must not, except with the approval of the Court, of the committee of inspection or of a resolution of the creditors, compromise a debt owed to the company if the amount claimed by the company is greater than $100,000.

28    Section 477(2B) provides that, except with the same approval, a liquidator must not enter into an agreement on the company’s behalf if the term of the agreement may end, or the obligations of a party to the agreement may be discharged by performance, more than three months after the agreement was entered into (even if the term may end, or the obligations may be discharged, within those three months).

29    The principles regarding applications under ss 477(2A) and 477(2B) of the Corporations Act are well established. They were summarised by Wheatley J in Blakeley (Liquidator), in the matter of Global Capital Property Fund Ltd [2025] FCA 484 at [29]-[30].

30    The relevant principles concerning applications for directions under s 90-15 of the Insolvency Practice Schedule (Corporations) are also well established: see In the matter of Courtenay House Capital Trading Group Pty Ltd (in liq) [2020] NSWSC 780; 147 ACSR 1 at [6] per Rees J.

Consideration

31    By the Settlement Deed, the Liquidators are causing Falcon to accept a very significant discount on debt due to Falcon from Western Subdivisions, and to compromise other claims which may be open to Falcon against related entities, in respect of approximately $38 million worth of advances made by Falcon, including advances made under the Loan Agreement with Western Subdivisions and excluding interest.

32    The settlement has a “substantial element of compromise about it” and is appropriately the subject of s 90-15 directions. As set out in the Third and Fourth Harlond Affidavits, the compromise is the product of significant consideration and negotiation between the relevant parties over a lengthy period, entered into with the benefit of legal advice, after having conducted public examinations of Mr Guerinat and key directors of Falcon, and after having made due enquiries as to the ability of potential judgment debtors to satisfy any judgments which might be obtained against them.

33    The Settlement Deed was entered into in circumstances where:

(a)    the Loan Agreement is unsecured, and relies entirely on the creditworthiness of Western Subdivisions for the repayment of the loan in accordance with its terms;

(b)    Western Subdivisions has no meaningful assets and cannot repay the loan;

(c)    the loan, although capable of being accelerated and terminated, has not been accelerated and terminated and does not presently fall due for repayment until 22 May 2030 at the earliest;

(d)    Falcon defaulted under the terms of the Loan Agreement in that it failed to provide Western Subdivisions with the advances required at the times required, as a result of which Western Subdivisions is said to have sustained significant loss and damage;

(e)    Falcon has no contractual rights of recovery against any other Guerinat Entity;

(f)    the Liquidators have taken legal advice about the prospects of other claims which may be available to Falcon against certain Guerinat Entities;

(g)    the Liquidators’ investigations, which have included conducting two public examinations of Mr Guerinat and obtaining various documents pursuant to his examination summons and other orders, suggest that those Guerinat Entities have no or no meaningful capacity to meet any judgment against them; and

(h)    the compromise embodied in the Settlement Deed is the product of robust and prolonged negotiations between the parties spanning several months, which the Liquidators consider represents the best available outcome for Falcon in the circumstances.

34    Having regard to the matters set out in the preceding paragraph and in the (confidential) Fourth Harlond Affidavit, I am satisfied that the Settlement Deed is in the best interests of creditors and unitholders. I therefore consider it appropriate to make an order pursuant to s 477(2A) of the Corporations Act granting approval, nunc pro tunc, to the Liquidators to cause Falcon to enter into the Settlement Deed.

35    For the same reasons, I consider it appropriate to make an order pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) that the Liquidators were justified in causing Falcon to enter into, and are justified in giving effect to, the Settlement Deed.

36    Insofar as the Liquidators seek an order in relation to the Retainers, I am also satisfied that it is in the best interests of creditors and unitholders to make that order. I therefore consider it appropriate to make an order pursuant to s 477(2B) of the Corporations Act granting approval, nunc pro tunc, to the Liquidators to enter and cause Falcon to enter into the Retainers.

37    The Liquidators also seek (out of an abundance of caution) a declaration pursuant to s 1322(4)(a) of the Corporations Act that the Settlement Deed and the Retainers are not invalid by reason of them having been entered into without the Court’s prior approval. I consider it appropriate to make that declaration.

Conclusion

38    For the reasons set out above, on 14 July 2026 I made orders and a declaration substantially in the terms sought by the Liquidators.

Associate:

Dated:    20 July 2026