Federal Court of Australia

Knight (Deed Administrator), in the matter of Microbio Ltd (Subject to Deed of Company Arrangement) [2026] FCA 1540

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to section 444GA(1)(b) of the Corporations Act 2001 (Cth) (Act), the First Applicant has leave to transfer the shares as set out at paragraph 18 of the affidavit of Tracy Lee Knight affirmed on 21 September 2026 (Transferred Shares) in Microbio Ltd (ACN 620 469 696) (Subject to a Deed of Company Arrangement) (Company) from those Members of the Company to Microbio Toowoomba Pty Ltd ACN 675 616 369 as trustee for Microbio Toowoomba Unit Trust, CJT Capital Partners Pty Ltd ACN 660 039 038 as trustee for Microbio Unit Trust and Hay Investment Corporation Pty Ltd ACN 141 053 349 (Transferred Shares Recipients) in accordance with the terms of the deed of company arrangement (as amended) executed by (among others) the Company, the First Applicant and the Transferred Shares Recipients (Microbio DOCA).

2.    Pursuant to section 447A(1) of the Act, and section 90-15 of the Insolvency Practice Schedule (Corporations) 2016 in Schedule 2 to the Act (IPSC), the First Applicant may in her capacity as deed administrator of the Company:

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

(b)    enter or procure the entry of the name of the Transferred Shares Recipients into the share register of the Company in respect of all shares transferred to the Transferred Shares Recipients in accordance with order 1 above.

3.    Pursuant to section 447A(1) of the Act, and section 90-15 of the IPSC, the further meeting of eligible employee creditors of the Company as set out at paragraph 41(c) of the affidavit of Tracy Lee Knight affirmed on 31 August 2026 be taken to be convened under section 439A and pursuant to section 444DA(2)(a) of the Act.

4.    Pursuant to section 444DA(5) of the Act, the Court approves the non-inclusion in the Microbio DOCA of a provision in the terms otherwise required by s 444DA(1) of the Act.

5.    The Applicants’ costs of, and incidental to, the application be costs and expenses in the deed administration of the Company.

6.    Pursuant to rule 8.21(1)(g)(ii) of the Federal Court Rules 2011 (Cth), the Applicants have leave to file the Proposed Further Amended Originating Application as annexed at pages 16 to 19 of Annexure TLK- 5 to the affidavit of Tracy Lee Knight affirmed 2 October 2026.

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

REASONS FOR JUDGMENT

DOWNES J:

Introduction

1    This was an application by the administrator of a deed of company arrangement (Deed Administrator) of Microbio Ltd (subject to deed of company arrangement) (the Company) and the Company for leave to transfer shares in the Company pursuant to s 444GA(1)(b) of the Corporations Act 2001 (Cth) (the Act). Ancillary orders were also sought relating to resolutions varying the statutory priority otherwise available to employee creditors in an immediate liquidation under the Act.

2    On 14 October 2026, I allowed the application and granted the ancillary relief sought. These are my reasons for doing so.

Background

3    The Company is a molecular diagnostics business that develops rapid pathogen and antimicrobial resistance detection technology aimed at the early detection of sepsis, including the InfectID-BSI, InfectID-AMR, InfectID-Fungal and InfectID-SSBA programs.

4    The Company is an unlisted public company limited by shares subject to a deed of company arrangement initially executed on 26 June 2026 (DOCA). The parties to the DOCA included inter alia, the Deed Administrator, the Company, Hay Investment Corporation Pty Ltd ACN 141 053 349 (Hay Investment) and the proponents of the DOCA, being Microbio Toowoomba Pty Ltd ACN 675 616 369 as trustee for Microbio Toowoomba Unit Trust and CJT Capital Partners Pty Ltd ACN 660 039 038 as trustee for Microbio Unit Trust (CJT) (together, the Proponents).

5    The DOCA was subsequently amended on 4 September 2026 (Amended DOCA) after the third meeting of creditors on 3 September 2026. Under the Amended DOCA, certain parties under the DOCA ceased to be parties and Dr Flavia Huygens, the founder and chief scientific officer of the Company, and her related entity became parties. The Deed Administrator, the Company, the Proponents and Hay Investment continued to be parties under the Amended DOCA. Under the Amended DOCA, the Proponents would provide funding to the Company, and all preference and ordinary shares would be transferred to the Proponents and Hay Investment, except those held by the parties to the Amended DOCA which would be retained by their current holders. Obtaining the approval of the Court under s 444GA(1)(b) is one of the conditions precedent to completion of the Amended DOCA.

6    On 7 May 2026, the Deed Administrator was appointed as the voluntary administrator of the Company pursuant to s 436A of the Act. As at the date of her appointment, the Company had cash at bank of approximately $2,100.

7    On 11 May 2026, the Deed Administrator (in her previous capacity) issued a circular to all members of the Company alerting members to, inter alia, the existence of a portal containing general information for creditors and providing details on the lodgement of a proof of debt (WCT Portal).

8    On 26 June 2026, the Deed Administrator was appointed the deed administrator of the DOCA and remains the Deed Administrator of the Amended DOCA. No application has been brought to set aside either the DOCA or the Amended DOCA.

9    On 11 September 2026, the Deed Administrator issued a circular to the Company’s members and creditors by email which advised that the executed Amended DOCA, the executed Amended Side Deed, and other relevant court documents filed in these proceedings were available to be downloaded on the WCT Portal and provided the details of the hearing of the amended originating process.

10    Because the Company is an unlisted company with more than 50 members, the prohibition on share acquisitions imposed by s 606 of the Act applies. However, the Australian Securities and Investment Commission (ASIC) may, pursuant to s 655A, exempt a person from the prohibition in s 606.

11    In seeking an exemption from ASIC under s 655A, the Deed Administrator engaged Mr Bradley Hellen of Pilot Advisory to prepare an Independent Expert Report (Pilot IER). In the Pilot IER, Mr Hellen opined that the residual equity value of all ordinary and preferences shares of the Company as at the date of the report would be $nil in a liquidation scenario. On 4 September 2026, the Deed Administrator applied to ASIC for relief under s 655A(1)(a) of the Act and provided the Pilot IER as part of that process.

12    On 18 September 2026, ASIC granted “in-principle” relief subject to this Court granting the Deed Administrator leave to transfer the shares.

13    On 28 September 2026, Lander & Rogers, acting on behalf of certain shareholders of the Company, sent correspondence to Wotton Kearney asserting that the latter acted for the insurer of the Directors and Officers insurance policy held by the Company (28 September Letter). The letter enclosed a lengthy draft statement of claim in the Supreme Court of Victoria articulating a representative proceeding claim by specified preference shareholders of the Company against current and former directors and officers of the Company (Individual Defendants) based upon misleading or deceptive conduct and unconscionable conduct (Draft Victorian SOC). The Company was also named as a defendant to the representative proceeding claim.

14    On 29 September 2026, the Deed Administrator first became aware of the existence of the claim alleged in the Draft Victorian SOC. The Draft Victorian SOC is premised on the transfer the subject of this application proceeding for nil consideration.

15    On 2 October 2026, Lander & Rogers wrote to Gadens (with ASIC copied by way of email) indicating that their clients opposed the application, made various criticisms of the evidence relied upon by the Deed Administrator in this application and indicated that their clients did not intend to participate in the hearing of the application (2 October Letter).

16    The Draft Victorian SOC, 28 September Letter and 2 October Letter were provided to Mr Hellen. Mr Hellen (and those speaking on his behalf) did not consider that the matters raised affected the assumptions adopted, scope of work undertaken, or the conclusions in the Pilot IER.

17    ASIC was also provided with those documents, including the result of Mr Hellen’s consideration of those documents, the applicants’ written submissions and further court documents filed in these proceedings. On 13 October 2026, ASIC sent a letter to Gadens indicating that it had considered the further material provided and maintained its decision to grant “in-principle” relief.

18    Prior to the hearing, the Deed Administrator provided all employees of the Company, known unsecured creditors and members of the Company with the further court documents filed in these proceedings, including the applicants’ written submissions and draft orders sought at the hearing. No alternative deeds of company arrangement were put forward. No creditors or members of the Company have deposed that they are otherwise willing to fund a liquidation. No individual appeared to oppose the application at the hearing.

Application for leave under s 444GA(1)(b)

19    The applicants submit, and I accept, that leave should be granted under s 444GA(1)(b) of the Act for the following reasons:

(1)    Mr Ben McNamara, a non-executive director and the interim Chair of the Company, has given evidence that absent approval of the share transfer, it is likely that the Company will not have sufficient funds to continue its operations beyond 22 October 2026, the Amended DOCA will likely terminate and the Company will be wound up.

(2)    Consistent with Mr McNamara’s evidence, the Deed Administrator is of the opinion that if the effectuation of the Amended DOCA is not achieved, the Company will, almost invariably, enter into liquidation.

(3)    The Pilot IER concludes that the residual equity value of all ordinary and preference shares in the Company as at the date of the report is $nil in a liquidation scenario. Mr Hellen’s opinion has not been changed by the Draft Victorian SOC.

(4)    The Deed Administrator is also of the opinion that in a liquidation, the ordinary and preference shares in the Company will have no value. It is also the Deed Administrator’s view that unsecured creditors are not expected to receive any return in a liquidation.

(5)    The Deed Administrator is of the view that the share transfer will not cause unfair prejudice to those affected. This view has not been changed by the Draft Victorian SOC, the 28 September Letter or the 2 October Letter.

(6)    If the Amended DOCA is implemented:

(a)    the return to creditors would be materially higher than in a liquidation, as all employee and admitted unsecured creditor claims will be paid in full (noting however, that this would not include any claim stemming from the draft Victorian SOC);

(b)    the secured debt owed to CJT and Hay Investment converts to equity; and

(c)    the Company will continue to seek to commercialise its technology.

(7)    The Amended DOCA advances the objects of Pt 5.3A of the Act (as embodied in s 435A), insofar as it provides for a continuation of the business of the Company.

(8)    No group member has appeared to oppose the application at the hearing.

(9)    ASIC has granted in-principle relief and been given an opportunity to raise any objections following receipt of the applicants’ further court documents filed in these proceedings. It has not done so.

(10)    Despite the various criticisms made by Landers & Rogers in its 28 September Letter, their clients have not shown that there is a realistic alternative to the liquidation of the Company. Despite that letter raising the possibility that their clients could fund the Company in a liquidation scenario, no member of the Company has put on an affidavit deposing to being ready, willing and able to do so.

20    I also do not consider that the existence of the Draft Victorian SOC renders the transfer of shares unfairly prejudicial. The establishment of group members’ loss under the Draft Victorian SOC is premised on the Court granting leave to transfer the shares for nil consideration. Additionally, the Amended DOCA does not release any claims which the group members might have against the Individual Defendants under any insurance policy. “Claim” is defined under the Amended DOCA to mean all claims against the Company only. The definition of “Claim” is imported into the release clause contained in the Amended DOCA. Any assertion that a release of the Company would prejudice group members’ rights against the Individual Defendants in relation to insurance is therefore speculative.

21    For these reasons, I granted leave under s 444GA to allow the Deed Administrator to transfer shares in the Company in accordance with the Amended DOCA because I was satisfied that the transfer will not unfairly prejudice the interests of members of the Company. I also granted leave for the applicants to further amend their amended originating process to reflect the proposed transfer of shares under the Amended DOCA.

Ancillary Relief

22    The applicants also sought ancillary relief relating to resolutions varying the statutory priority to which employee creditors would otherwise have been entitled in an immediate liquidation in accordance with the Amended DOCA.

23    The Deed Administrator sent two notices dated 1 June 2026 and 19 August 2026 to the eligible employee creditors explaining why she thought altering the statutory priority would result in a better outcome than an immediate winding up of the Company.

24    On 9 June 2026, the eligible employee creditors attended a virtual meeting and unanimously passed a resolution under s 444DA(2) to vary the standard priority that employee creditors would otherwise be entitled to in an immediate liquidation pursuant to ss 556, 560 and 561 of the Act.

25    On 3 September 2026, at the second meeting, the eligible employee creditors again unanimously passed, on the voices, a resolution to vary the standard priority under s 444DA(2)(a), but in the context of the of the proposed Amended DOCA. However, this meeting was not convened under s 439A.

26    To guard against any risk that the second meeting of eligible employee creditors on 3 September 2026 might be ineffective, I considered it appropriate to make an order pursuant to s 447A(1) of the Act, and s 90-15 of the Insolvency Practice Schedule (Corporations) (being Sch 2 to the Act), that the further meeting is taken to be convened under s 439A and pursuant to s 444DA(2)(a) of the Act.

27    The applicants also sought the Court’s approval of the non-inclusion in the Amended DOCA of a provision in the terms otherwise required by s 444DA(1) of the Act. I made that order because I was satisfied that the variation of the statutory priority would likely result in the same or a better outcome for eligible employee creditors as a whole than would result from an immediate winding up of the Company.

Associate:

Dated:    16 October 2026