Federal Court of Australia

Stelamar LLC v Soar.Earth Limited (Subject to Deed of Company Arrangement) (No 2) [2026] FCA 1318

ORDERS

THE COURT ORDERS THAT:

1. Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), on the ground stated in s 37AG(1)(a), until further order the annexure to the affidavit of Cameron Hugh Shaw dated 5 August 2026 marked CHS–1 and the Plaintiffs’ Tender Bundle (Exhibit A) be suppressed and not published other than to the parties to these proceedings.

2. The originating process dated 11 June 2026 be dismissed.

3. The defendants file and serve any affidavits and written submissions on costs by 25 September 2026.

4. The plaintiffs file and serve any affidavits and written submissions on costs by 16 October 2026.

5. The defendants file and serve any affidavits and written submissions in reply on costs by 30 October 2026.

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

REASONS FOR JUDGMENT

JACKMAN J:

Introduction

1 This is an application by the plaintiffs, Stelamar LLC (Stelamar) and Issuer Solutions LLC (Issuer Solutions), for orders that the Deed of Company Arrangement executed by the first defendant, Soar.Earth Limited (Subject to Deed of Company Arrangement) on 10 June 2026 (DOCA) be set aside or terminated pursuant to s 445D(1) or s 447A of the Corporations Act 2001 (Cth) (Act), and that pursuant to ss 446AA and 447A of the Act, Soar.Earth be wound up in insolvency.

2 The plaintiffs are both companies incorporated in Wyoming in the United States of America. They both claim to be creditors of Soar.Earth, but Soar.Earth disputes their claims. Soar.Earth disputes the plaintiffs’ standing, but quite apart from whether they are to be treated as creditors of Soar.Earth, s 445D(2)(c) and s 447A(4)(f) confer standing to make an application under those provisions respectively on “any other interested person”, in addition to conferring standing on creditors of the company and specified others. The plaintiffs have standing to bring this application as interested persons.

3 The second defendants are the “Administrators” under the DOCA (the Administrators), having previously been appointed as voluntary administrators of Soar.Earth on 13 April 2026 pursuant to s 436A of the Act. They are Mr Cameron Shaw, Mr Aaron Dominish and Mr Richard Albarran of Hall Chadwick. The third defendant (Mr Guy Perkins), the fourth defendant (Mr Amir Farhand) and the fifth defendant (Mr Richard Revelins) are directors of Soar.Earth, and were the proponents of the DOCA. The sixth defendant, Soar (Australia) Pty Limited (Soar Australia), is a wholly owned subsidiary of Soar.Earth, and provided the funds used by way of cash contribution in the proposal for the DOCA. The first and third to sixth defendants have filed a submitting notice in these proceedings, submitting to any order the Court may make, except that they seek to be heard on the question of costs. Accordingly, the Administrators are the only active defendants.

Background

4 Soar.Earth is involved in developing and commercialising aerial imaging technology and content. It operates a website platform, Soaratlas.com. Soar.Earth seeks to create the world’s largest digital atlas, built on maps and imagery uploaded by individuals and organisations, making geospatial data accessible generally. The Administrators describe Soar.Earth as being in the pre-revenue lifecycle stage, with the website currently active and to which users can subscribe. Use of the platform is readily available to non-paying users, however a subscription is charged for premium users.

5 The plaintiffs (through their common director, Mr Mahaffie) and Soar.Earth had previous dealings which have led to an arbitration in the United States. Issuer Solutions acquired shares in Soar.Earth for USD500,002.75, pursuant to a Consulting and Capital Markets Advisory Agreement (CMA) in June 2023. Issuer Solutions claims the return of the amount of its investment together with interest, and alleges that it invested in Soar.Earth under false pretences and based on fraudulent misrepresentations. Stelamar disputes Soar.Earth’s rescission of the CMA and claims USD8,929,265.68 (AUD12,723.399.96) for breach of the CMA by reason of statements allegedly made by Soar.Earth, quantified as the value of the opportunity to which it was allegedly entitled under the arrangement. Soar.Earth also commenced arbitration proceedings against Mr Mahaffie, the plaintiffs and another entity associated with Mr Mahaffie in May 2025. Soar.Earth alleges that the Mahaffie parties made false representations so as to induce Soar.Earth to enter into the CMA in circumstances where the Mahaffie parties did not have the necessary experience or expertise. Soar.Earth rescinded the CMA by reason of the alleged conduct, and seeks compensation of USD3.145 million.

6 On 13 April 2026, the Administrators were appointed voluntary administrators of Soar.Earth. On 11 May 2026, the Administrators issued a report to creditors in advance of the meeting of creditors pursuant to s 439A of the Act (the Report to Creditors), in which they stated that the directors of Soar.Earth had advised that ongoing litigation against Soar.Earth and associated costs contributed to Soar.Earth’s financial difficulties, ultimately leading to their appointment (at [6.1]). The Report to Creditors referred to ongoing litigation with a former adviser since April 2024 which “has and will continue to utilise funds that could otherwise be used to fund the business” (at [6.2]).

7 The Report to Creditors (at [5.4]) set out Soar.Earth’s history of losses since FY2022, whereby in each of those financial years Soar.Earth earned income of between $106,546 and $231,520, and earned gross profit of between $83,909 and $230,923. Soar.Earth’s net loss in each of those years was between $872,996 and $1,334,855. In the period from 1 July 2025 to 13 April 2026, Soar.Earth earned income of $393,881, earned gross profit of $321,349, and suffered a net loss of $810,737. Soar.Earth’s externally prepared financial statements on a consolidated basis showed a surplus of assets over liabilities in each year since FY2022 of between $1,665,943 and $3,615,655 (at [5.4]).

8 The Report to Creditors provided the Administrators’ Estimated Realisable Value (ERV) of Soar.Earth’s assets and liabilities (at [5.5]), resulting in a deficiency of assets to liabilities (including contingent assets and liabilities) of between $15,614,576 and $2,534,329. The difference is largely due to the contingent nature of the outcome of the rival claims in the United States arbitration proceedings. The Administrators did not provide figures for the ERV of intellectual property, but simply inserted the letters “TBD”, meaning “to be determined”.

9 The Report to Creditors (at [5.5.7]) stated that the Administrators’ investigations revealed that intellectual property in the name of Soar.Earth consisted of the online platform and some registered trademarks. The Report to Creditors stated that an external valuer had been requested to attribute a value to the platform and trademarks but the completed valuation was yet to be received. The Report to Creditors stated that the Administrators had been advised that they should receive the valuation before the meeting of creditors to be held on 19 May 2026, and that they expected to be in a position to provide an update in regard to that matter (at [5.5.7]).

10 In relation to “Other Assets” of Soar.Earth, the Report to Creditors referred to the net assets of Soar Australia as at 31 March 2026 as being about $4.64 million (at [5.5.8]). Reference was made to Soar Australia holding Ethereum cryptocurrency with a value of $1.5 million, and a loan owing by Soar.Earth totalling $2.8 million. The report stated that if Soar.Earth was liquidated, the assets of Soar Australia (excluding the inter-company loan account) would be available to assist the company to fund litigation and, if a surplus remained, would be distributable to creditors.

11 The Report to Creditors also referred to the Administrators having identified potential expenses incurred for FY25 that may form part of a successful claim for a research and development (R&D) grant. The Administrators estimated that amount to be between $250,000 to $300,000 for the purposes of the ERV.

12 In relation to unsecured creditors, the Report to Creditors referred to $3,636,294.65 being owed to related entities (at [5.5.12.1]). Putting aside the claim by Soar Australia for about $2.8 million, that figure comprised unpaid director fees and a claim by Mr Farhand for non-priority employee entitlements.

13 The Report to Creditors also contained an analysis of the contingent assets and contingent liabilities associated with the arbitration proceedings in the United States (at [5.5.9] and [5.5.14]).

14 The Report to Creditors summarised the effect of the proposed DOCA (at [10]). That section of the report identified the cash contribution of $500,000 from the proponent being sourced from Soar Australia as forming part of the Fund under the DOCA. Another component of that Fund was described as follows:

Any tax receivables accruing from the administration of the DOCA and/or the Voluntary Administration period, excluding any current or future payments under the R&D Tax Incentive Scheme.

15 The distribution of the Fund was described as follows: first, payment of the Administrators’ remuneration and expenses; second, payment of priority employee entitlements (excluding Non-Participating Creditors); and third, payment to all creditors admitted to proof by the Administrators (excluding Non-Participating Creditors) in satisfaction of their admitted claims on a pari passu basis. It should be noted that there are no secured creditors of Soar.Earth. The Non-Participating Creditors were described as the directors of Soar.Earth and their associates, Soar Australia, Botanix Pharmaceuticals Limited (Botanix) (in relation to a $400,000 convertible note liability), and continuing employees of Soar.Earth in respect of their accrued but unpaid priority entitlements. The summary of the DOCA stated that on effectuation of the DOCA, all claims of creditors (other than Non-Participating Creditors) will be extinguished and released.

16 The Report to Creditors estimated that the return to unsecured creditors under the DOCA would be between 2.08 and 100 cents in the dollar. The return to unsecured creditors in a liquidation was said to be between nil and 100 cents in the dollar ([1.4] and [11.0]). In the table disclosing the items leading to those conclusions, the entries in the liquidation scenario for the realisation of intellectual property (comprising the website and trademarks) state “TBC”, meaning “to be confirmed”. The Administrators recommended that Soar.Earth execute the proposed DOCA ([13.0]). The detailed reasons for that recommendation included that the DOCA has more reliable recoveries than in the liquidation scenarios, the DOCA excludes the claims of Non-Participating Creditors, and the DOCA provides for continued trading and continued employment.

17 Following receipt of the Report to Creditors, the plaintiffs’ solicitors wrote to the Administrators’ solicitors raising a number of concerns, including that the valuation of Soar.Earth’s intellectual property should be disclosed before the second meeting, and that the proposed DOCA excluded any current or future payments in respect of the R&D tax incentive payment which was estimated to be between $250,000 and $300,000.

18 The second meeting of creditors proceeded on 19 May 2026, despite the plaintiffs proposing an adjournment in correspondence before the meeting. None of the proofs of debt submitted by creditors were admitted other than for voting purposes. Issuer Solutions’ proof of debt was admitted for voting purposes for AUD712,458.92 plus AUD1 and Stelamar’s proof of debt was admitted for voting purposes for AUD1 (rather than the claimed AUD12,723,399.96), on the basis that the amount could not be readily quantified and the supporting materials did not verify the claimed quantification (affidavit of Mr Dominish at [35]–[37]). The plaintiffs raised an issue in relation to the absence in the Report to Creditors of a scenario where a liquidator was appointed but decided not to continue with the US arbitration proceeding. During the meeting, Mr Shaw (one of the Administrators) read out a letter from the plaintiffs’ solicitors dated 14 May 2025 detailing their complaints (CB1/321–8).

19 The plaintiffs proposed a motion for the meeting to be adjourned for up to 45 business days pending the provision of the valuation of Soar.Earth’s intellectual property, but it was not passed. The plaintiffs’ votes in favour of an adjournment were counted for $712,460 in value, and were contending with those voting against an adjournment comprising 7 related-party creditors (which accounted for $3,021,549 in value), and 12 unrelated minor creditors (which accounted for $218,196.69 in value). One of the 12 unrelated minor creditors was later found to have only a post-administration claim, thus reducing the votes against the adjournment resolution by one vote valued at $8,100.02 (CB1/357). The resolution to execute the DOCA was passed in a vote which mirrored the voting in respect of the adjournment resolution; that is, the plaintiffs voted against the DOCA resolution, and all other creditors who voted were in favour of the DOCA.

20 The DOCA was executed on 10 June 2026, and the plaintiffs commenced this proceeding the following day. The Administrators are awaiting the outcome of this proceeding before taking any steps to effectuate the DOCA.

21 Following the commencement of the proceedings, the Administrators provided to the plaintiffs a valuation report from Proval Partners dated 26 May 2026 (which they had received on 4 June 2026) concerning the value of Soar.Earth’s intellectual property and the total equity value of Soar.Earth (Proval Valuation Report). The Proval Valuation Report is confidential, and is the subject of a suppression order pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth). Proval Partners were engaged to provide that report on 5 May 2026. The Administrators had sought unsuccessfully to engage five other valuers between 16 April 2026 and 4 May 2026.

Legislative Provisions

22 Section 445D(1) of the Act provides as follows:

The Court may make an order terminating a deed of company arrangement if satisfied that:

(a)    information about the company’s business, property, affairs or financial circumstances that:

(i)    was false or misleading; and

(ii)    can reasonably be expected to have been material to creditors of the company in deciding whether to vote in favour of the resolution that the company execute the deed;

was given to the administrator of the company or to such creditors; or

(b)    such information was contained in a document that accompanied a notice of the meeting at which the resolution was passed; or

(c)    there was an omission from such a document and the omission can reasonably be expected to have been material to such creditors in so deciding; or

(d)    there has been a material contravention of the deed by a person bound by the deed; or

(e)    effect cannot be given to the deed without injustice or undue delay; or

(f)    the deed or a provision of it is, an act or omission done or made under the deed was, or an act or omission proposed to be so done or made would be:

(i)    oppressive or unfairly prejudicial to, or unfairly discriminatory against, one or more such creditors; or

(ii)    contrary to the interests of the creditors of the company as a whole; or

(g)    the deed should be terminated for some other reason.

23 Section 447A provides relevantly as follows:

(1) The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company.

(2) For example, if the Court is satisfied that the administration of a company should end:

(a)    because the company is solvent; or

(b)    because provisions of this Part are being abused; or

(c)    for some other reason;

the Court may order under subsection (1) that the administration is to end.

24 The object of Pt 5.3A is set out in s 435A as follows:

The object of this Part, and Schedule 2 to the extent that it relates to this Part, is to provide for the business, property and affairs of an insolvent company to be administered in a way that:

(a)    maximises the chances of the company, or as much as possible of its business, continuing in existence; or

(b)    if it is not possible for the company or its business to continue in existence – results in a better return for the company’s creditors and members than would result from an immediate winding up of the company.

Is the DOCA contrary to the objects or public policy of Pt 5.3A?

25 The plaintiffs submit that the DOCA is being deployed for the dominant purpose of seeking to expunge the claims faced by Soar.Earth in the US arbitration proceedings, and that that course is foreign to the objects of Pt 5.3A, such that the DOCA ought to be terminated under s 445D(1)(f) and/or (g), or pursuant to s 447A(2)(b).

26 The plaintiffs rely on Blacktown City Council v Macarthur Telecommunications Pty Ltd [2003] NSWSC 883; (2003) 47 ACSR 391 at [21] and [25], in which Barrett J held that where a company was placed into administration in a clear and deliberate attempt to stave off the hearing of proceedings by bringing the statutory stay under s 440D into play, and to forestall an inevitable insolvent winding up with consequential insolvent trading claims, there was an abuse of the provisions of Pt 5.3A. That case was referred to with approval in Canstruct Pty Ltd v Project Sea Dragon Pty Ltd (Subject to Deed of Company Arrangement) (No 4) [2024] FCA 112; (2024) 172 ACSR 73 at [97] (Derrington J), in which it was held that utilising the voluntary administration and DOCA process for the predominant purpose of expunging a particular trade creditor’s debt may suffice to enliven the power under s 447A and s 445D(1)(g): at [105]. That decision was upheld on appeal in Project Sea Dragon Pty Ltd (Subject to Deed of Company Arrangement) v Canstruct Pty Ltd [2024] FCAFC 141; (2024) 305 FCR 465 (Canstruct Full Court) at [135]–[137] (Jackman J, with whom O’Callaghan and McElwaine JJ agreed). The Full Court also approved the decision in Re Academy Construction and Development Pty Ltd [2024] NSWSC 808 at [80]–[87], in which Black J held that a DOCA should be terminated as an abuse of Pt 5.3A in circumstances where a party which was seeking to claim damages for defective building work against the deed company was singled out in the DOCA as having its claim subject to a cap in an arbitrary amount whereas other (smaller) claims were paid in full under the DOCA. The Full Court (at [136]) upheld the primary judge’s reasoning that a purpose of expunging a particular creditor’s debt which was unwanted, while paying all other arm’s-length creditors in full before restarting operations in an almost identical position to the pre-DOCA state (save for the existence of the particular unwanted debt) was alien to the objects of Pt 5.3A.

27 The plaintiffs submit that the effect of the DOCA following its effectuation will be that any debt by Soar.Earth to the plaintiffs arising from the plaintiffs’ claims in the arbitration proceedings will be discharged (under cl 23), and the plaintiffs’ claims will be released in full and extinguished (under cl 24). By contrast, the plaintiffs submit that Soar.Earth itself will be at liberty to prosecute the arbitration proceeding unencumbered by the plaintiffs’ claims and certain other minor debts, and will resume its normal business operations with the claims of related parties against Soar.Earth uncompromised. The plaintiffs submit that the operation and effect of the DOCA is telling of its main purpose.

28 I accept that in some circumstances one can infer a party’s purpose in a transaction from the objective effect of that transaction. However, in the present case, there is abundant express evidence of the directors’ and the Administrators’ purpose in relation to the DOCA, which is entirely consistent with the objects of Pt 5.3A, as follows.

29 Mr Revelins, a director and the chairman of Soar.Earth, gives evidence as follows at [60] and [64] of his affidavit, which I accept:

(a) after Soar.Earth engaged in without prejudice discussions with Issuer Solutions and Stelamar concerning the US litigation, which did not lead to any resolution, Soar.Earth’s directors decided to place Soar.Earth into voluntary administration, as they were of the view that Soar.Earth would become insolvent before the completion of the arbitration;

(b) the factors that led to that decision included Soar.Earth’s ongoing legal costs due to be incurred in connection with the arbitration, obligations to pay employees’ entitlements, Soar.Earth’s liabilities and negative cashflow, the effect of the ongoing unresolved dispute in deterring potential investors, and the view that the costs of continuing with the arbitration and funding Soar.Earth’s other activities would shortly render Soar.Earth insolvent; and

(c) in formulating the proposal for the DOCA, Soar.Earth’s directors calculated Soar.Earth’s outstanding amounts due to creditors and estimated costs of the voluntary administration, and concluded that an amount of AUD500,000 would be a sufficient sum to provide for creditors (other than creditors related to the directors) and allow employees to preserve their entitlements through the DOCA.

30 Mr Shaw gives evidence, which I accept, that when he and Mr Dominish reviewed the DOCA proposal on or about 11 May 2026, he had regard to the objects set out in s 435A of the Act, and noted that the DOCA proposal allowed for Soar.Earth to continue, being a matter which he considered he ought to have regard to in accordance with Pt 5.3A of the Act, and also considered that the continuation of Soar.Earth’s business operations would see the continued employment of priority creditors and ongoing trading relationships with a number of unsecured creditors, and formed the view that a liquidation of Soar.Earth was inconsistent with the objectives of Pt 5.3A of the Act: affidavit of 11.8.26 at [60].

31 Mr Shaw gives evidence, which I accept, that he discussed with Mr Dominish the estimated outcomes and timing of return to creditors from the DOCA, and various liquidation scenarios, to priority, unsecured and contingent creditors, and in particular they noted that (affidavit of 11.8.26 at [61]):

(a) a return to priority creditors was likely to be expedited in the DOCA scenario proposed by Soar.Earth’s directors, and would be 100 cents in the dollar;

(b) in various liquidation scenarios, a range of returns to priority creditors was nil to 100 cents in the dollar, and was subject to the outcome of asset realisations and the solvent liquidation of Soar Australia;

(c) while they were not in receipt of a valuation, what was of greater importance was that they had not had any response from the sale advertisements they had placed for the sale of Soar.Earth’s business;

(d) the value of Soar Australia’s cryptocurrency was deteriorating, and Soar.Earth was running at a significant loss;

(e) the strong likelihood that Soar.Earth’s employees may have resigned if Soar.Earth was wound up, and this would have had a detrimental effect on the saleability of Soar.Earth;

(f) the return to unsecured creditors was higher in the DOCA proposal;

(g) there was a greater degree of certainty under the DOCA proposal, given that the cash contribution under the DOCA was required prior to its execution, whereas in the liquidation scenarios there was uncertainty as to the timing, costs and realisation prices of Soar.Earth’s assets, and they also considered the impact on the sale of Soar.Earth’s assets in a forced liquidation scenario;

(h) the possible impact of realising Soar.Earth’s intellectual property in a winding up scenario, in the context where Soar.Earth had not generated commercial revenue and had previously raised approximately $6.3 million in equity capital, meant that there was risk attaching to achieving fair market value for Soar.Earth’s intellectual property in a winding up scenario;

(i) they had not received any response to the advertisements for the sale of Soar.Earth’s business, let alone genuine offers to purchase the business;

(j) achieving the high outcome of the liquidation would require a successful outcome in the arbitration in the US which was uncertain, likely to incur further costs and could require considerable time to resolve; they also considered a liquidation scenario in which the arbitration was discontinued, and the estimated return to creditors under that scenario was between the liquidation low and high ranges estimated in the Report to Creditors, but they did not consider that discontinuing the arbitration would be in the best interests of Soar.Earth and it could result in additional claims being made against Soar.Earth of approximately AUD14.8 million, which would prejudice the interests of the other creditors;

(k) the claims of each of Stelamar and Issuer Solutions were contingent upon the outcome of the arbitration; and

(l) the cash contribution for the DOCA comprised a subset of assets (including cryptocurrency) that would be available in a liquidation.

32 Mr Shaw gives evidence, which I accept, that, after considering the above factors, he and Mr Dominish were satisfied that (affidavit of 11.8.26 at [62]):

(a) the DOCA proposal achieved the objectives set out in Pt 5.3A of the Act more adequately than the winding up of Soar.Earth;

(b) the estimated outcomes in various DOCA scenarios appeared to be higher than liquidation scenarios;

(c) there was greater certainty to the DOCA as the cash contribution was required in advance of the execution of the DOCA;

(d) there was a risk to the estimated outcomes in the liquidation scenarios due to amounts realised from assets, the associated costs, and the ongoing arbitration; and

(e) the estimated timing of a return to creditors was likely shorter in the DOCA scenario, as the DOCA scenario did not necessitate the sale of Soar.Earth or completion of the arbitration.

33 Mr Dominish gives evidence to similar effect in his affidavit at [27]–[29], which I accept.

34 There was no effective challenge to the evidence of Mr Revelins, Mr Shaw and Mr Dominish in cross-examination. Each of those witnesses gave credible and reliable testimony and I accept their evidence without reservation.

35 Accordingly, I reject the plaintiffs’ contention that the purpose of the DOCA is contrary to the objects or public policy of Pt 5.3A.

Was the information provided to creditors inadequate?

36 The relevant legal principles concerning s 445D(1)(a)–(c) may be summarised as follows:

(a) the question whether information is false or misleading looks to the objective quality of the information, not whether anyone was actually misled: Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd [2005] NSWSC 1235; (2005) 226 ALR 510 (Bidald) at [147] (Campbell J); Sino Group International Ltd v Toddler Kindy Gymbaroo Pty Ltd (subject to a deed of company arrangement) [2023] FCAFC 110; (2023) 168 ACSR 311 (Sino Group) at [62] (Farrell, Cheeseman and Feutrill JJ);

(b) the question is not whether anyone intended that, or did not care whether or not, the information was false or misleading: Bidald at [147];

(c) the question is to be assessed at the time of the hearing, not on the basis of information available at the time of giving the information: Bidald at [147]; Sino Group at [62];

(d) the same objective approach is taken to material omissions as for false or misleading information: Deputy Commissioner of Taxation v TMPL Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [2011] FCA 1403; (2011) 289 ALR 69 at [62] (Perram J); Sino Group at [62];

(e) the omission need not be of material which is required by statute: Canstruct Full Court at [169];

(f) the term “material” means something that was relevant and either did affect or might have affected the decision to vote in favour of the DOCA: Canstruct Full Court at [162]; Bidald at [165]; Sino Group at [62]; and

(g) in deciding whether the materiality test has been passed, all the information about the company’s business, property affairs or financial circumstances that has been found to be false or misleading should be considered collectively: Bidald at [169]; Sino Group at [62].

37 The plaintiffs submit that there are three kinds of information that were omitted from the Report to Creditors or that were otherwise disclosed in a misleading way, within the meaning of s 445D(1)(a)–(c). The plaintiffs submit that the first two matters warranted an adjournment of the second creditors’ meeting held on 19 May 2026.

38 First, the plaintiffs rely on the lack of information concerning the value of Soar.Earth’s intellectual property. The plaintiffs submit that Soar.Earth derived its business from the operation of its website, such that the material value in the business lies in its intellectual property, including that related to its website. The plaintiffs point out that it was Soar.Earth’s website platform (which was said to include its “mapping technology, digital infrastructure and intellectual property”) that was advertised for sale in the two advertisements published on 5 and 6 May 2026 (CB2/523–5).

39 The plaintiffs submit that the Administrators intended the intellectual property valuation to be completed before the second creditors’ meeting, as stated in the Report to Creditors (at [5.5.7]). In fact, the Proval Valuation Report was not received by the Administrators until 4 June 2026, and the Administrators had decided by 15 May 2026 that they would not provide the Proval Valuation Report to any party (CB1/332).

40 The plaintiffs submit that the information as to the ERV figures in the Report to Creditors (at [5.5]) was misleading or contained material omissions because the intellectual property was Soar.Earth’s most significant asset, and the liquidation scenarios disclosed values which assumed no value in relation to the intellectual property despite it likely having a significant value. The plaintiffs submit that the inclusion of a value to be ascribed to intellectual property was something that could reasonably be expected to have been material to creditors in deciding whether to vote in favour of executing a DOCA, being relevant to the comparison of the expected outcomes for creditors under the proposed DOCA and in a liquidation scenario.

41 The fundamental flaw in the plaintiffs’ contention is that the Administrators did not have a valuation of Soar.Earth’s intellectual property either at the time of issuing the Report to Creditors or at the second creditors’ meeting, despite having acted reasonably in making requests and inquiries for that information. As indicated above, they did not have the Proval Valuation Report until 4 June 2026. This is not a case where a failure to make reasonable inquiries resulted in a material omission: see Bovis Lend Lease Pty Ltd v Wily [2003] NSWSC 467; (2003) 45 ACSR 612 at [325] (Austin J). Nor, contrary to the plaintiffs’ submissions, is it a case where there was a failure to make reasonable efforts to market and sell the relevant assets.

42 As the solicitors for the Administrators pointed out in their correspondence on 15 May 2026, there are limitations in the information that can be provided for the second creditors’ meeting. The voluntary administration process imposes very significant constraints in view of the emphasis in Pt 5.3A of the Act on the need for prompt action and prompt decisions, and the expectation that voluntary administrators will act with speed: Lehman Brothers Holdings Inc v City of Swan [2010] HCA 11; (2010) 240 CLR 509 at [21] and [27] (French CJ, Gummow, Hayne and Kiefel JJ). It is well-recognised that a voluntary administrator’s investigation of a company’s affairs has to be conducted in a short timeframe, and with limited resources and limited powers of compulsion: Re Recycling Holdings Pty Ltd [2015] NSWSC 1016; (2015) 107 ACSR 406 at [33] (Brereton J). As Brereton J noted in that case, the requirement that the report to creditors include “such other information known to the administrator as will enable the creditors to make an informed decision” (now found in s 75-225(3)(b)(v) of the Insolvency Practice Rules (Corporations) 2016 (Cth)) indicates that, generally speaking, there will not be an omission if the information in question is not known, or reasonably capable of being ascertained, by the administrator. In my view, that general position applies in the present case, and there was no misleading information and no material omission by reason of the absence of an ERV for Soar.Earth’s intellectual property.

43 Further, it was not misleading to provide total figures for estimated realisations in the estimated returns from a DOCA and a winding up (Report to Creditors at [11.0]) in circumstances where the relevant table expressly stated that the value of the intellectual property was to be confirmed. It was obvious to any reasonable reader of the table that the figures for estimated total realisations did not include the value (if any) of the intellectual property.

44 As to the Administrators’ decision not to adjourn the second meeting of creditors prior to it being held so as to allow further time to obtain a valuation of Soar.Earth’s intellectual property, Mr Shaw says that he and Mr Dominish took that decision for the following reasons (affidavit of Mr Shaw of 11.8.26 at [67]), which I accept as providing ample justification for their decision:

(a) Pt 5.3A of the Act prescribes a short period of time for voluntary administration.

(b) Soar.Earth’s business had been marketed for sale for nearly a fortnight, and Hall Chadwick had not received any response.

(c) The costs to run Soar.Earth’s business were approximately $95,000 per month and such a loss would be detrimental to Soar.Earth’s ability to operate. In addition, the Administrators would have had to give 5 business days’ notice, prepare a supplementary report and take the minutes of a second meeting, all of which would have occasioned costs. The cost to adjourn the second meeting of creditors, including the cost to operate Soar.Earth while it was in administration, together with Hall Chadwick’s costs (excluding legal fees) incurred would have been in the amount of:

(i) $121,993 if the meeting was adjourned for two weeks; and

(ii) $182,989 if the meeting was adjourned for three weeks.

(d) Mr Farhand told Mr Shaw that Soar.Earth had approximately eight skilled employees who were nervous about the administration. Mr Shaw formed the view that there was a real risk that Soar.Earth would lose its employees the longer the administration process continued.

(e) The delay may have led to further costs being incurred in relation to the arbitration.

(f) Stelamar and/or Issuer Solutions did not submit an alternative DOCA proposal and did not agree to cover the costs associated with adjourning the second creditors’ meeting.

45 Second, the plaintiffs submit that the disclosure to creditors before the second creditors’ meeting failed to refer to a liquidator (if one were appointed to Soar.Earth) having the discretion not to continue with the US arbitration, and the estimated return in a liquidation scenario assumed that the arbitration would continue. The plaintiffs submit that there was no scenario disclosed where the appointed liquidator chose not to continue with the arbitration, thereby saving substantial costs. The table in the Report to Creditors comparing the estimated return from a DOCA with the return from a winding up discloses legal costs and disbursements in a liquidation as being between about $1.44 million and $2.92 million, which Note 12 states represents legal costs to pursue the claims against Mr Mahaffie in Australia and in the United States. The plaintiffs refer to the general principle that a liquidator seeking to discharge his or her duty to collect the assets of the company by recovery proceedings should do so with costs and benefits clearly in view: Hall v Poolman [2009] NSWCA 64; (2009) 75 NSWLR 99 at [149] (Spigelman CJ, Hodgson JA and Austin J).

46 Mr Shaw gives evidence, which I accept, that at the second creditors’ meeting on 19 May 2026 he was asked by the plaintiffs’ solicitor why the Report to Creditors did not provide a scenario where a liquidator discontinued the arbitration, and answered that there were a number of permutations that could occur and a liquidator could take the matter forward if there was a solid case and there was a commercial benefit (affidavit of 11.8.26 at [66(b)]). I have referred above to Mr Shaw’s evidence (affidavit at [61(j)]) to the effect that he and Mr Dominish considered a liquidation scenario in which the arbitration was discontinued, and considered that the estimated return to creditors under that scenario was between the liquidation low and high ranges estimated in the Report to Creditors, although they did not consider that discontinuing the arbitration would be in the best interests of Soar.Earth. I also accept Mr Shaw’s evidence that he said at the second creditors’ meeting that Soar.Earth considered that it had a strong claim against each of Stelamar and Issuer Solutions, and if Soar.Earth was successful in the arbitration each creditor would be paid 100 cents in the dollar, and there would be remaining available assets and cash at bank for Soar.Earth to continue its business (affidavit at [66(c)]).

47 I do not regard this second matter as giving rise to any misleading information or material omission. There was nothing to indicate to the Administrators that the scenario of a liquidator deciding not to continue with the US arbitration was a probable or even likely course of action, as distinct from a theoretical possibility. I do not regard that scenario as a matter to be inferred from the fact that one of the main causes of Soar.Earth’s financial difficulties was the cost of conducting the arbitration, as a liquidator may well decide to continue funding the litigation from the assets available to Soar.Earth (ie those which it owns itself and those owned by Soar Australia), or seek external sources of funding to do so, or both. For their own part, the Administrators did not regard a decision to discontinue the arbitration as being in the best interests of Soar.Earth or its creditors. In any event, the financial consequences of that scenario would fall within the disclosed range of estimates of the outcome of a winding up provided in the Report to Creditors, and there was clear disclosure of the component of the future costs of the arbitration in making those estimates.

48 Third, the plaintiffs submit that the Report to Creditors was misleading in stating (at [11.2]) that if Soar.Earth is wound up the estimated dividend to be paid to ordinary unsecured creditors would potentially take longer than 12 months due to litigation, whereas if Soar.Earth executes the DOCA the proposed dividend is estimated to be paid to creditors in approximately 2–3 months from execution of the DOCA, subject to the resolution of the US arbitration. The plaintiffs rely in part on the Administrators’ omission of a liquidation scenario in which the US arbitration proceedings were discontinued, which I have already discussed.

49 In addition, the plaintiffs submit that the Administrators did not address the likely delays that would be encountered in a DOCA scenario if the Administrators refused Stelamar’s or Issuer Solutions’ proof of debt for dividend purposes, and either or both of those parties commenced proceedings challenging the determination of the proof of debt. However, I can assure the parties that if that matter is to be heard and determined by me, then I am confident that it will be decided within a month of proceedings being commenced, and my experience of the Companies List in the Supreme Court of New South Wales is that a similar timeframe would be likely in that forum.

50 Accordingly, whether considered individually or collectively, in my view there is no merit in these grounds of challenge to the DOCA.

Is the DOCA unjust or oppressive, unfairly prejudicial to or unfairly discriminatory against one or more creditors?

51 The plaintiffs rely on a number of matters in support of their challenge to the DOCA under s 445D(1)(e), (f) and (g). First, the plaintiffs submit that the cash contribution for the DOCA of $500,000 is sourced from Soar Australia, being a wholly owned subsidiary of Soar.Earth. Accordingly, the plaintiffs submit that the amount is not external capital, but is an amount that would in any event be available for distribution to creditors if Soar.Earth were wound up. Second, the plaintiffs refer to the exclusion from the Fund under the DOCA of the expected R&D tax incentive payment of $250,000–$300,000, which they say has not been explained.  Third, the plaintiffs submit that the resolution to adopt the DOCA was passed in reliance on the votes of related parties, each of which is a Non-Participating Creditor under the DOCA. Accordingly, while the related entities will not participate in the DOCA Fund, their claims are not released by the DOCA and will continue to be owed by Soar.Earth in full after the termination of the DOCA. As a result, the plaintiffs submit that the related parties exercised their voting power in the DOCA resolution to compromise Stelamar’s and Issuer Solutions’ debts while preserving their own debts against Soar.Earth in full. Although Botanix is not listed as a related entity, its proof of debt for its unsecured loan of $400,000 is the largest unsecured claim apart from the plaintiffs’ claims, and will survive the DOCA uncompromised if the DOCA is effectuated.

52 The plaintiffs submit that for those reasons the DOCA has an unjust and discriminatory operation in respect of Stelamar and Issuer Solutions as unsecured creditors, and as members of a class of creditors (namely, creditors which are not related to Soar.Earth). The plaintiffs submit there are no reasonable grounds for the differential treatment, and therefore the DOCA operates contrary to s 445D(1)(e), (f) and (g).

53 As was confirmed by Canstruct Full Court at [153]–[156], the mere fact that a creditor is prejudiced by the operation of a DOCA is not a sufficient reason to terminate the DOCA, as the existence of the DOCA procedure usually means that some creditors will gain something and some creditors will lose something out of the arrangement. The test under s 445D(1)(f)(i) is not merely discrimination or prejudice, but unfair discrimination or unfair prejudice, and some degree of discrimination is not necessarily unfair. In general, it is relevant to compare what the allegedly prejudiced creditors would receive (or be likely to receive) on a winding up, although the matter must be assessed in light of the particular circumstances. Further, Pt 5.3A of the Act assumes that the creditors are best placed to judge their interests, so a setting aside on this ground will not be ordered lightly.

54 In my view, the plaintiffs have not established any of these grounds of challenge. As to the cash contribution of $500,000, while it is true that this was sourced from Soar.Earth’s subsidiary rather than from an external party, there is a significant benefit to Soar.Earth’s creditors in that money being immediately available under the DOCA, rather than the creditors being beholden to Soar Australia’s discretion as to whether and when to sell its cryptocurrency, being an asset which has a substantial inherent price volatility. As to the R&D tax incentive, the exclusion of that matter from the DOCA Fund should be viewed as an aspect of the give-and-take involved in striking a commercial balance between the interests of participating and non-participating creditors, in the context where that money has still not been received. The participating creditors under the DOCA have the benefit of their claims not being diluted by the claims of the Non-Participating Creditors, but have the potential disadvantage of not having recourse to the anticipated payment of $250,000–$300,000 (if and when it may be received). That is in the nature of the kind of commercial compromise envisaged by Pt 5.3A. Similar reasoning applies to the treatment of the claim by Botanix, which lent $400,000 to Soar.Earth repayable either by shares or cash at Soar.Earth’s election, and which is a Non-Participating Creditor under the DOCA. The claim by Botanix thus does not dilute the claims on the DOCA Fund, and there is no certainty or probability that Botanix will be better off by not participating in the DOCA. As to the existence of a voting bloc comprising related-party creditors at the second creditors’ meeting, it must also be borne in mind that there were 11 unrelated creditors which validly voted in favour of the DOCA, five of which were not priority creditors. There is no reason to think that they did not cast their votes upon a bona fide consideration of the matter, and in particular upon a genuine consideration of the relative merits of the DOCA compared to a winding up.

Conclusion

55 The plaintiffs have failed to establish their grounds for challenging the DOCA. The discretionary decision as to whether to terminate the DOCA on any of those grounds therefore does not arise.

56 The plaintiffs’ originating process should be dismissed. My preliminary view is that the Administrators are entitled to an order for costs against the plaintiffs. However, I have not heard the parties on costs and it may be that the Administrators will seek a special order as to costs, such as a lump sum order. It may also be the case that the other defendants will wish to make submissions on costs. Accordingly, I have set a timetable for the filing and service of affidavits and written submissions on the question of costs, which I anticipate deciding on the papers. If a lump sum order is sought, the evidence should deal with the amount claimed so as to avoid the need to refer the matter to a Registrar for the determination of the quantum.

Associate:

Dated:    4 September 2026

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