Background
Agripower Australia Limited is an unlisted public company and the ultimate holding company of eighteen Australian and international subsidiaries whose primary business is mining diatomaceous earth at the Conjuboy mine in North Queensland and producing a silicon-based fertiliser called “Agrisilica.” The company has never reached significant commercial scale and has been heavily reliant on external capital raising. Between 2016 and 2017, Australian Agricultural Opportunities Limited (AAOL) — the vehicle through which Dubai-based Arqaam Capital invested in Agripower — subscribed for approximately USD $31.9 million in unsecured notes. By mid-2021 that sum had grown to over USD $41 million, with Agripower consistently failing to pay interest. Separately, Agripower issued USD $45 million in secured convertible notes to a third party (ADM) in 2017; by November 2022 the outstanding amount had ballooned to over USD $73 million. Director Peter Prentice repeatedly assured investors that large-scale refinancing was imminent, citing potential deals worth hundreds of millions of dollars, while the company remained unable to service its debts.
Administrators were appointed to Agripower on 15 September 2025. AAOL was admitted as the largest unsecured creditor for approximately AU $86.2 million. The administrators’ report to creditors, issued on 13 October 2025, contained no independent valuation of the company’s mining tenements — the most significant potential asset — and itself recommended that the second creditors’ meeting be adjourned so creditors could make a properly informed decision. Nonetheless, the meeting proceeded on 21 October 2025 and a majority of creditors (including secured creditor ADM by proxy) voted to execute a deed of company arrangement (DOCA). AAOL voted against. The DOCA, executed 29 October 2025, provided for a contribution of AU $460,000 from Agrisilicon Pty Ltd (a wholly-owned subsidiary with Prentice as sole director), converted the debts of unsecured noteholders including AAOL into equity at a less favourable rate than their note terms, and returned Agripower to its directors’ control.
Post-DOCA, Prentice caused Agripower to issue shares to Class B creditors on or about 22 December 2025 without administrator involvement, in direct breach of the DOCA. When cross-examined, Prentice conceded that a statement in his own affidavit — that he had acted in good faith and in accordance with the DOCA — was false at the time he swore it. The court found Prentice to be an unreliable witness, noting a pattern of misleading communications to investors and creditors over several years, including false representations about imminent capital raising and prospective debt restructuring that Arqaam’s director denied ever agreeing to.
The Court’s Holding
Downes J terminated the DOCA pursuant to s 445D of the Corporations Act 2001 (Cth) and appointed Queensland-based liquidators Mark Holland and Jason Preston in lieu of the deed administrators. The court was satisfied of two independent grounds. First, under s 445D(1)(c), there were material omissions in the report to creditors: the absence of any independent valuation of the mining tenements (acknowledged by the administrators themselves as preventing a meaningful comparison between the DOCA and liquidation), and the failure to disclose the extent of Prentice’s ongoing capital-raising discussions — he had emailed shareholders the very day the DOCA was executed claiming to be pursuing over USD $260 million in capital from Saudi Arabian investment funds, yet said nothing when creditors at the meeting specifically inquired about prospects for future funding. Both omissions, assessed objectively, could reasonably be expected to have been material to creditors’ voting decision.
Second, under s 445D(1)(g) — “some other reason” — the court held that continuation of the DOCA was contrary to public interest. The DOCA had the practical effect of shielding the directors from investigation into potential insolvent trading claims (estimated maximum ~AU $27.8 million), uncommercial director-related transactions, and breaches of directors’ duties under ss 180–183 of the Corporations Act. The administrators themselves had identified serious governance failures including undocumented intercompany loans, defaults on ATO payment plans, failure to hold AGMs, absence of board minutes and solvency assessments, and possibly misleading conduct toward investors. The contribution amount of AU $460,000 — entirely funded from within the Agripower Group rather than from any third-party injection — was characterised as de minimis against AU $321 million in creditor claims and in circumstances where Agrisilicon itself owed Agripower over AU $172 million on undocumented, unsecured, interest-free intercompany loans.
Exercising its discretion to terminate, the court also relied on Prentice’s actual breach of the DOCA through the unauthorised share issue and his admission of swearing a false affidavit, which the court found made it contrary to the interests of Agripower and its creditors — and contrary to the public interest — for Prentice to retain any control over the company. AU $166,200 in security-for-costs funds held by the court was ordered released to the liquidators specifically to fund investigations into claims arising from the company’s affairs. Costs were awarded against Agripower and Agrisilicon.
Key Takeaways
- A DOCA can be terminated under s 445D(1)(c) where the administrators’ own report concedes it lacks information critical to comparing DOCA and liquidation outcomes — the materiality test is objective and does not require proof that the omission actually changed the result.
- Failure to disclose ongoing capital-raising negotiations to creditors at a second meeting — particularly where the director present said nothing despite a direct question — constitutes a further material omission, especially where the entire premise of the DOCA rests on external funding.
- A DOCA that shields directors from investigation into serious misconduct while returning the company to those same directors’ control can be terminated on public-interest grounds under s 445D(1)(g), particularly where the deed fund is negligible relative to total creditor claims and is internally sourced.
- A director’s post-appointment breach of the DOCA (here, issuing shares without administrator involvement) and admission of swearing a false affidavit are powerful discretionary factors weighing in favour of termination.
- Courts will appoint liquidators with relevant sector experience — here, Queensland-based insolvency practitioners with mining industry expertise — where ongoing investigations into a specialist business are anticipated.
Why It Matters
This decision provides a clear illustration of the interplay between the two main statutory pathways to DOCA termination: informational deficiency under s 445D(1)(c) and the broad public-interest residual ground under s 445D(1)(g). The case confirms that where administrators themselves flag an inability to properly advise creditors — yet the meeting proceeds regardless and a DOCA is approved — a court can unwind that result. It also signals that the practical effect of a DOCA in foreclosing liquidator investigations is itself a legitimate reason for termination, not merely a collateral consequence to be weighed in the balance.
For insolvency practitioners and corporate lawyers, the decision reinforces that the adequacy of disclosure in the s 439A report is not a technical formality: omissions about asset valuations and material capital-raising activity can prove fatal to the DOCA. For creditors of distressed companies — particularly large unsecured note-holders like AAOL — the case demonstrates the availability of s 445D relief even where the DOCA has already been executed and partially performed, and illustrates how a court-ordered funding mechanism for liquidator investigations can be structured to overcome the usual constraint that investigation work goes unfunded in insolvent estates.