Background
Sava Engineering Pty Limited, itself in liquidation, applied under ss 459A and 447A of the Corporations Act 2001 (Cth) to wind up WMG Holdings Co Pty Ltd, terminate WMG’s voluntary administration, and appoint Glenn Spooner of SSB Advisory as liquidator. Sava had commenced the winding-up proceeding on 27 May 2026 after WMG failed to comply with a statutory demand. WMG subsequently entered voluntary administration on 6 August 2026.
The administrator recommended that WMG be wound up and scheduled the second creditors’ meeting for 3 September 2026, one day before the winding-up application was due to return to court. At the urgent hearing on 2 September, all parties and supporting creditors agreed that WMG was insolvent. Sava and the administrator also agreed that WMG should be wound up, leaving the identity of the liquidator as the central dispute: Sava proposed Spooner, while the administrator sought appointment to that role.
Sava challenged the administrator’s suitability by pointing to inaccuracies and omissions in his report and affidavit, including an incorrect relation-back period, a mistaken filing date for the winding-up application, and the report’s failure to alert creditors to a possible $53 million claim for unpaid share capital. The administrator argued that retaining him would avoid duplicating investigative work already performed.
The Court’s Holding
Justice Wheatley ordered WMG to be wound up under s 459A, appointed Spooner as liquidator, and terminated the voluntary administration. The Court applied the usual practice that, where competing nominees are otherwise equal, the plaintiff’s nominee is appointed. The administrator therefore bore the burden of establishing a reason to depart from that course.
The administrator did not discharge that burden. The incorrect relation-back analysis was significant because it concerned the period for investigating potentially voidable transactions and could have affected the administrator’s opinions and recommendations. The administrator’s affidavit repeated incorrect dates and misstated the effect of the competing routes into liquidation. The omission of the potential unpaid-share-capital claim from the creditors’ report also caused concern.
The Court treated comparative cost as neutral: Spooner’s firm charged lower hourly rates in several senior categories, but appointing a new liquidator could duplicate some work. The unexplained decision to schedule the second creditors’ meeting immediately before the court hearing also formed part of the overall assessment, although the Court made no finding about why that date was chosen. Justice Wheatley concluded that no ground justified departing from the usual practice and that, if anything, the circumstances supplied some reason not to appoint the administrator.
Key Takeaways
- In a contest between proposed liquidators, the Federal Court will ordinarily appoint the winding-up plaintiff’s nominee unless the opposing party establishes a sufficient reason to depart from that practice.
- Errors in an administrator’s relation-back analysis and omissions from a report to creditors may weigh against appointing that administrator as liquidator, particularly when they bear on potential recoveries and the basis of recommendations to creditors.
- Prior work by an administrator and the risk of duplicated costs are relevant but not necessarily decisive; here, those considerations did not overcome concerns about the administrator’s reporting and evidence.
Why It Matters
The decision illustrates that an administrator does not obtain a preference for appointment as liquidator merely by having already investigated the company or recommended liquidation. When a winding-up plaintiff proposes a qualified nominee, the party seeking a different appointment must identify a persuasive reason to displace the usual course.
It also underscores the importance of accuracy and completeness in reports to creditors. Mistakes affecting the relation-back period or failure to disclose a potentially substantial recovery can influence the Court’s assessment of who should control the liquidation, even where insolvency itself is uncontested.