Background
Mawson Infrastructure Group Inc (formerly Wize Pharma, Inc.) is a foreign entity registered in Australia that became a digital infrastructure provider after acquiring a Sydney-based company in 2021. The company operated data centers, providing services for AI, high-performance computing, and Bitcoin mining. By 2024, Mawson had ceased trading in Australia, though it remained registered here. W Capital Advisors obtained a default judgment against Mawson in the NSW Supreme Court on 31 May 2024 for approximately USD $166,000 on a Convertible Note and AUD $298,000 on a Loan Deed, plus interest and costs. When Mawson failed to satisfy this judgment, W Capital (together with Marshall Investments and Rayra Pty Ltd) filed an Involuntary Petition in the US Bankruptcy Court for Delaware in late 2024 seeking to place Mawson into Chapter 11 bankruptcy.
Following the US petition filing, the Federal Court of Australia received a winding up application from W Capital on 2 October 2024. Despite Mawson’s arguments that the US automatic stay under §362 of Title 11 of the US Code prevented Australian proceedings, the Judicial Registrar made a winding up order and appointed Cameron Hamish Gray as liquidator. The liquidator then received proofs of debt exceeding AUD $29 million. On 4 November 2025, US Bankruptcy Judge Mary F. Walrath dismissed the Involuntary Petition with prejudice and issued orders (the “US Orders”) stating that the Australian liquidation “shall not be reinstated.” The liquidator then brought the present application seeking directions to continue the Australian liquidation despite the US Orders.
The Court’s Holding
Justice Downes rejected the liquidator’s primary application to terminate the winding up but granted him broad authority to proceed with liquidation functions in Australia notwithstanding the US Orders. The court held that the filing of the Involuntary Petition did not affect the Federal Court’s jurisdiction to make the winding up order, nor did the subsequent US Orders preventing “reinstatement” of the Australian proceeding affect the liquidator’s statutory obligations under the Corporations Act 2001 (Cth). The court reasoned that the winding up proceedings themselves had concluded with the making of the original winding up orders, so the US Orders’ prohibition on reinstatement was inapplicable to the ongoing liquidation.
The court refused to terminate the liquidation, finding that Mawson appeared insolvent with significant admitted debts (exceeding AUD $29 million) and no credible evidence of solvency or recapitalization despite company assertions. Justice Downes emphasized that although Mawson’s directors publicly supported termination, their prior failures to comply with statutory obligations—including refusal to provide Reports on Company Activities and Property as required by §475 of the Corporations Act—constituted strong reasons against returning the company to their control. The court ordered the directors to provide these required reports within seven days and adjourned the application with liberty to apply, leaving open the possibility of a future termination application if circumstances changed.
Key Takeaways
- Cross-border automatic stays under US bankruptcy law do not automatically strip Australian courts of jurisdiction to wind up foreign companies registered in Australia under the Corporations Act.
- An Australian liquidator’s statutory obligations to identify and gather assets and adjudicate creditor claims continue even when conflicting orders are issued by foreign bankruptcy courts, absent formal recognition procedures under the Cross-Border Insolvency Act 2008 (Cth).
- Directors’ systematic failures to comply with statutory reporting obligations during liquidation constitute grounds for refusing termination of a winding up, even if the company claims to support termination.
- Assertions of company solvency or recapitalization made only in solicitor correspondence or from counsel’s bar table, without supporting documentary evidence, will not be accepted as a basis for terminating a liquidation.
Why It Matters
This judgment clarifies important principles governing cross-border insolvency disputes between Australia and the United States. It establishes that neither an automatic stay triggered by a US bankruptcy petition nor a subsequent US bankruptcy court order can unilaterally prevent an Australian court from exercising its statutory jurisdiction over foreign companies registered here. This protects the integrity of Australian liquidation proceedings and the interests of local creditors, even when parallel insolvency proceedings exist in other jurisdictions. The decision also reinforces that foreign company directors remain subject to Australian statutory obligations during liquidation and cannot simply avoid those obligations by claiming the company should be deregistered or liquidation terminated.
Practically, the judgment signals that foreign companies operating in Australia cannot escape creditor claims by moving proceedings to more favorable US bankruptcy forums. Liquidators pursuing Australian registered foreign entities retain significant authority to continue gathering assets within Australia and managing the liquidation process, independent of parallel US proceedings. However, the court’s willingness to potentially revisit termination if “further information” is obtained and if “facts are raised in the US Proceedings” suggests that cooperation and coordination between jurisdictions may ultimately influence outcomes.