Background
Andrew Fielding and Helen Newman were liquidators of Coral Coast Mutual Pty Ltd (CCM Australia), a company within the ALAMMC group. CCM Australia wholly owned Coral Coast Pte Ltd (CCM Fiji), which held a leasehold interest in Fijian land intended for a resort development.
CCM Fiji had entered a loan arrangement with HFC Bank secured by a mortgage over the property. Although it did not draw down funds, it incurred fees that it failed to pay. When the bank threatened to enforce its mortgage, the liquidators caused CCM Australia to lend CCM Fiji money under an unwritten agreement to fund a negotiated settlement and associated expenses. The mortgage was discharged on 28 May 2026, but the property had not sold within the anticipated three months.
The Court’s Holding
Justice O’Sullivan retrospectively approved, from 14 May 2026, the liquidators’ entry into the loan agreement under s 477(2B) of the Corporations Act 2001 (Cth). The Court also directed under s 90-15 of the Insolvency Practice Schedule (Corporations) that the liquidators were justified in causing CCM Australia to enter into and perform the agreement.
The Court found that paying the settlement avoided a likely forced sale, which would probably produce less than an orderly sale. The loan was repayable from sale proceeds; after payment of CCM Fiji’s liabilities and repayment of CCM Australia, any surplus would remain within CCM Australia’s assets because it owned CCM Fiji outright. The arrangement therefore supported proper realisation of assets and the orderly winding up of CCM Australia.
Key Takeaways
- A court may grant retrospective approval for a liquidator’s agreement that may extend beyond three months.
- The Court will generally respect a liquidator’s commercial judgment absent bad faith, legal error, impropriety, or a substantial reason to doubt its reasonableness.
- Funding a subsidiary to avert a discounted forced sale can be consistent with an orderly and beneficial liquidation.
Why It Matters
The decision illustrates how s 477(2B) approval can protect a liquidation strategy undertaken urgently to preserve asset value. It also confirms that a s 90-15 direction may be appropriate where liquidators seek protection for a disclosed commercial decision that could later be challenged.