Federal Court of Australia

Scott, in the matter of Axify Pty Ltd (Administrators Appointed) [2026] FCA 1005

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 444GA(1)(b) of the Corporations Act 2001 (Cth) (Act), the plaintiffs be granted leave to transfer to ImpactB Pty Ltd (ImpactB) or its nominees all of the issued ordinary shares held by each of the members in Axify Pty Ltd (subject to deed of company arrangement) (Axify) who are not ImpactB (Shares) in accordance with the deed of company arrangement dated 4 June 2026, entered into by the plaintiffs, Axify and ImpactB (Deed).

2.    Pursuant to s 447A of the Act and/or s 90-15 of the Insolvency Practice Schedule (Corporations) (being Sch 2 to the Act), the plaintiffs may, jointly and severally, in their capacity as Deed Administrators:

(a)    execute share transfer forms and any other documents ancillary or incidental to effecting the transfer of the Shares referred to in Order 1; and

(b)    enter or procure the entry of the name of ImpactB or its nominee(s) in the share register of Axify in respect of all Shares transferred to ImpactB or its nominee in accordance with Order 1.

3.    The plaintiffs’ costs of and incidental to this application be costs and expenses in the deed administration of Axify.

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

REASONS FOR JUDGMENT

JACKMAN J:

1    The plaintiffs (Deed Administrators) are the deed administrators of a deed of company arrangement approved by the creditors of Axify Pty Ltd (subject to deed of company arrangement) (Axify) on 15 May 2026 and entered into on 4 June 2026 (DOCA).

2    By Interlocutory Process, the Deed Administrators seek, in substance:

(a)    an order pursuant to s 444GA(1)(b) of the Corporations Act 2001 (Cth) (Act) granting leave to the Deed Administrators to transfer to ImpactB Pty Ltd (ImpactB) or its nominee all of the issued ordinary shares in Axify not presently held by ImpactB in accordance with the terms of the DOCA; and

(b)    ancillary relief pursuant to s 447A of the Act and/or s 90-15 of the Insolvency Practice Schedule (Corporations).

3    Axify operates a software development business and has developed a voice-based artificial intelligence platform for restaurants and hotels. Axify has seven employees.

4    The Deed Administrators were appointed as joint and several administrators of Axify on 9 April 2026. References below to the “Administrators” are to the Deed Administrators acting in that former capacity.

5    The Administrators’ preliminary analysis revealed that Axify had substantial negative equity. As at April 2026, the negative earning balance was $1,891,530.70. Axify’s records disclosed debts totalling almost $1.5 million, indebtedness having almost doubled since 30 June 2025. In order to preserve the trading of the business of Axify pending a sale or entry into a deed of company arrangement, the Administrators entered into a funding agreement with ImpactB (which was subject to orders made by Lee J in these proceedings on 14 April 2026). The Administrators thereafter traded the business of Axify as a going concern.

6    From 9 April 2026, the Deed Administrators commenced a campaign for the sale or recapitalisation of the business, including publication of an advertisement in The Australian Financial Review and preparation of an Information Memorandum, together with an associated data room. At the end of the sale process, the Administrators received one offer to purchase certain assets of the business (Sale Offer) and two proposed deeds of company arrangement. The Administrators considered the Sale Offer was not in the interests of creditors and did not accept it.

7    The first DOCA proposal was submitted by Mr Anandakumar (then a director and a substantial shareholder of Axify) and Dr Joe Walsh on 4 May 2026. That proposal never progressed to a final binding offer, and the Administrators were unable to discern the likely return to creditors from the proposal. For those reasons, the Administrators formed the view that the proposal was not in the best interests of creditors.

8    The second DOCA proposal was submitted by ImpactB (being the other substantial shareholder of Axify) on 6 May 2026. That proposal provided, inter alia:

(a)    a deed funding pool of approximately $583,000;

(b)    an additional $200,000 injection of working capital separate to the deed fund, which could be supplemented by a rebate from the Australian Tax Office;

(c)    the full repayment of critical trade creditors and advisers;

(d)    related-party service suppliers receiving nil return;

(e)    the retention of all employees and the adoption of all pre-appointment employee entitlements, including the employees’ outstanding superannuation entitlements; and

(f)    all shares of Axify being transferred to ImpactB.

9    The Administrators’ assessment of the ImpactB proposal was that it would achieve a blended return of 33 cents in the dollar for the creditors of Axify, with ordinary unsecured creditors and employees receiving 100 cents in the dollar. The Administrators recommended to the creditors of Axify that the Company execute the DOCA proposed by ImpactB. At the second meeting of creditors held on 15 May 2026, the creditors of Axify voted to enter into a DOCA on the terms proposed by ImpactB. The DOCA was executed by the Administrators, Axify and ImpactB on 4 June 2026.

10    Prior to entry into the DOCA, Axify had issued 1,005,471 fully paid ordinary shares to 20 shareholders.

11    All but four of the shareholders provided consents to the transfer of their shares pursuant to the terms of the DOCA and s 444GA of the Act. On 16 June 2026, the Deed Administrators transferred those shares to ImpactB pursuant to s 444GA(1)(a) of the Act. As a consequence, the present application for leave relates only to the four remaining shareholders (other than ImpactB), being Mr Anandakumar, Krishna & Vishnu Pty Ltd, PK Melrose Pty Ltd and Curtain Raiser Pty Ltd (together, Remaining Shareholders).

12    Section 444GA of the Act provides, relevantly, that:

(1)    The administrator of a deed of company arrangement may transfer shares in the company if the administrator has obtained:

(a) the written consent of the owner of the shares; or

(b) the leave of the Court.

…

(3)    The Court may only give leave under subsection (1) if it is satisfied that the transfer would not unfairly prejudice the interests of members of the company.

13    The critical issue on an application such as the present is whether or not the share transfer will bring about any “unfair prejudice” to the members of the company, which turns substantially on the question whether their shares have any residual value: see Freeman, in the matter of Regional Express Holdings Ltd (subject to deed of company arrangement) (No 7) [2025] FCA 1598 at [48]–[54] (Stewart J).

14    The Deed Administrators have given notice of the proceedings, and provided access to the Interlocutory Process and the evidence upon which the Deed Administrators rely, to the Remaining Shareholders and the Australian Securities and Investments Commission (ASIC).

15    There was no appearance for any of the Remaining Shareholders at the case management hearing on 9 July 2026, or at today’s hearing of the application. The Deed Administrators have provided a further affidavit evidencing notification of the orders made on 9 July 2026 to the Remaining Shareholders and ASIC.

16    The evidence demonstrates that Axify has very limited tangible asset value available to meet the claims of creditors, consisting of cash, receivables and an R&D rebate. There is a significant deficiency in the net asset position. Mr Scott is of the opinion, based on the Deed Administrators’ investigations, that Axify was insolvent from around March 2026.

17    The expert report of Mr Clifford provides an independent analysis of the valuation of the residual equity in Axify from a qualified accountant and business valuer. Mr Clifford adopts the capitalisation of future maintainable revenue as his valuation methodology. Adopting that methodology (and cross-checking the revenue multiple by reference to comparable transactions), Mr Clifford assesses the enterprise value of Axify as between $704,000 and $960,000 (depending on the revenue multiple adopted), with Mr Clifford adopting a preferred enterprise value at the midpoint of $832,000. Mr Clifford then assesses the equity value of Axify’s ordinary shares by reference to that enterprise value and the other assets of Axify, together with the claims required to be met out of the total assets. Whatever enterprise value is adopted in the range identified by Mr Clifford, the shortfall of assets available to meet claims is substantial, in each case more than $1 million. In those circumstances, Mr Clifford assesses the equity value of the shares in Axify as nil.

18    It is plain on the evidence that:

(a)    liquidation is the only realistic alternative to the DOCA and the proposed transfer of the shares; and

(b)    the shares would have no value in a liquidation.

It follows that there is no unfair prejudice to the Remaining Shareholders if those shares are transferred.

19    There is nothing in the Administrators’ report of 7 May 2026 which suggests that there would be any benefit to be derived from further investigations that would be carried out in a liquidation of Axify. There is no suggestion of existing shareholders providing means by which shares in Axify may obtain some value, and no prospect of the shares obtaining some value within a reasonable time. The Remaining Shareholders have been given an opportunity to be heard on the present application, and no shareholder has sought to be so heard.

20    Accordingly, I am satisfied that the Remaining Shareholders of Axify would not be unfairly prejudiced by the proposed transfer.

Associate:

Dated:    28 July 2026