Background
Bill Karageozis and Nick Keramos, the joint and several administrators and later liquidators of Evolve Group Pty Ltd, applied under s 90-15 of the Insolvency Practice Schedule (Corporations) for advice that they were justified in paying Polymer Direct Pty Ltd $329,415.17. Polymer Direct had supplied raw resin and polymer used by Evolve Group to manufacture plastic products. It claimed $897,120.87 under 35 unpaid invoices issued between 17 December 2025 and 10 April 2026, and asserted registered purchase money security interests over supplied materials and related proceeds.
Each shipment was accompanied by an invoice attaching Polymer Direct’s Terms and Conditions of Sale, including retention-of-title and PPSA provisions. Polymer Direct registered a financing statement on 24 November 2025 describing “[a]ll goods, now and in the future” supplied to Evolve Group. However, no extant overarching security agreement was produced. Polymer Direct’s solicitors said the credit application could not be located, while a customer statement identified a $1.3 million credit limit. Derrington J held that the evidence established only that an agreement could not be found, not that none existed; the liquidators’ written contention that “[t]here is no overarching credit agreement” was therefore unsupported.
Administrators were appointed on 10 April 2026, and creditors resolved to liquidate Evolve Group on 16 July 2026. The proposed payment comprised $80,764.79 for unused resin and polymer held at administration and $248,650.38, calculated as 40% of $621,625.95 received from pre-administration sales of finished goods. Other claims included CBA’s approximately $8 million AllPAP-secured debt, further secured debts, employee and superannuation priorities, and unsecured trade claims exceeding $1.5 million. All creditors, including CBA, received notice; none opposed the relief.
The Court’s Holding
Derrington J advised that, upon the facts stated in the affidavits, the liquidators were justified in paying $329,415.17 in discharge of Polymer Direct’s security interests. He treated creditor status as an appropriate legal question for judicial advice, but criticised the application’s abstraction and inadequate factual analysis. He said s 90-15 should not become a taxpayer-subsidised advice service: ordinarily, controllers should obtain competent independent advice, present relevant material and authorities orderly, and identify doubts and competing arguments. The Court could refuse directions where those steps were not taken or no genuine legal issue remained. Here, the absence of opposition weighed heavily in favour of relief, while PPSA uncertainty supplied an issue warranting consideration.
The Court did not definitively decide that advance registration always covers later-created interests. If an earlier credit agreement existed and registration was late, s 588FL could cause its interests to vest in Evolve Group. Proceeding instead on the assumption that no overarching agreement existed, his Honour examined Gelpack and Carrafa. They suggested prior registration could cover subsequently created interests, but the relevant Gelpack remark was obiter, and neither case really considered that mechanism. Sections 151(1) and 161 PPSA provided contextual support. Despite no affidavit evidence of Polymer Direct’s belief when registering, the Court assumed it believed it would become secured and, absent submissions that the PPSA operated otherwise, assumed the invoice-created interests did not vest at administration.
Polymer Direct’s PMSIs attracted super-priority under s 62(3)(b), ahead of CBA’s AllPAP interest. Its interests could continue in processed or commingled products, limited by the statutory value rule, and in sale proceeds. Although the 40% tracing exercise was general and delivery dates for the consumed resin were unknown, the Court accepted it in the uncontested circumstances, assisted by a broad “first in first out” assumption. The unused-materials component presented no real difficulty. Both parties received costs from Evolve Group’s assets before distribution, but on the standard rather than requested indemnity basis because the application could have been conducted more precisely and coherently.
Key Takeaways
- The operative advice authorised the specified $329,415.17 payment on the affidavit facts; it was not an unqualified determination of every underlying PPSA question.
- The non-vesting conclusion on the no-overarching-agreement scenario expressly rested on assumptions, limited submissions and supporting authority that did not fully analyse advance registration.
- Liquidators should obtain competent advice and present a focused, factually developed application rather than asking the Court to construct the answer from raw material.
- The Court accepted the proposed payment and awarded both parties standard-basis costs from the liquidation assets before distribution.
Why It Matters
The decision protects a practical, unopposed liquidation distribution while exposing the evidential limits behind it. It does not establish a universal rule that registration before any security agreement necessarily perfects every later-created interest. Practitioners should distinguish the Court’s assumptions and qualified advice from a definitive construction of s 588FL.
It also signals closer scrutiny of judicial-advice applications. Even where creditors do not object, controllers must investigate the facts, obtain appropriate advice and explain the legal uncertainty; non-opposition may support relief, but it does not replace proper preparation.