Background
RNOK Pty Ltd entered voluntary liquidation on 17 September 2025. It held a one-third participating interest in a Brisbane property-development joint venture with Five Star Projects Pty Ltd and Kosrodos Pty Ltd. Under the project deed, RNOK’s insolvency required it to transfer that interest for 70% of market value, with disputes over value to be resolved by an independent expert.
After RNOK rejected an offer of $178,658, the expert assessed its interest at $573,227. Five Star and Kosrodos threatened proceedings to set aside that assessment. The parties instead executed a settlement deed under which they would pay RNOK $450,000, subject to court approval. The liquidator also sought approval of $92,187.70 for work already done and $22,000 for work needed to complete the liquidation.
The Court’s Holding
Justice Longbottom granted retrospective approval under s 477(2A) of the Corporations Act 2001 for the liquidator to enter the $450,000 settlement. The amount payable for RNOK’s joint-venture interest was a “debt” to the company because the project deed required payment of the expert-determined price. The Court accepted that the compromise was a prudent exercise of the liquidator’s commercial judgment.
The settlement would return about 78% of the expert valuation while avoiding anticipated litigation costs of about $100,000; even success in defending the proposed challenge would produce only a modest additional net recovery. Westpac, one of RNOK’s two creditors, did not oppose the settlement. The Court also fixed the liquidator’s remuneration at $114,187.70 inclusive of GST, finding the past and projected work fair and reasonable.
Key Takeaways
- A binding expert valuation under a joint-venture agreement can create a “debt” for s 477(2A) purposes.
- The Court will generally respect a liquidator’s commercial judgment where the compromise is supported by evidence and no substantial concern arises about its reasonableness or good faith.
- Liquidator remuneration may include a reasonable amount for future work needed to conclude the liquidation.
Why It Matters
The decision illustrates the Federal Court’s practical approach to insolvency settlements: approval is available where a liquidator reasonably trades a disputed higher recovery for a prompt, materially valuable payment and avoidance of disproportionate litigation costs. It also confirms that seeking a single remuneration determination for completed and remaining work can avoid unnecessary further costs to creditors.