McCallum, in the Matter of Re Holdco Pty Ltd (Administrators Appointed)

In the matter of Holdco Pty Ltd, the plaintiffs, who were appointed as joint and several voluntary administrators of certain companies within the Sargon group, applied for leave under section 44C(2)(c) of the Corporations Act 2010 (Cth) to dispose of certain property of the companies under administration, which was subject to a security interest and property used or occupied by, or in the possession of, the companies under administration but owned by someone else. The urgency of the application stemmed from a condition precedent to the proposed sale, which required the disposal of the property. The legal issues before the court were whether the administrators had made arrangements that would adequately protect the interests of the secured parties and owners of the property being sold and whether ancillary relief should be granted under section 447A of the Act to ensure that intellectual property rights could be transferred unencumbered by security interests.

The court found that the arrangements made by the administrators were sufficient to protect the interests of the secured parties and owners of the property being sold. The court also found that ancillary relief under section 447A of the Act should be granted to ensure that intellectual property rights could be transferred unencumbered by security interests. The court concluded that an order in that form was within power and appropriate to make, as it facilitated the sale transaction for the benefit of all interested parties while protecting the interests of those holding security interests or ownership interests.

In conclusion, the court granted leave to the plaintiffs under section 442C(2)(c) of the Act and made orders under section 447A in the form of the orders made on 1 May 2020. The court also ordered that the plaintiffs' costs of the proceeding are costs properly incurred in the administration of the Sargon VA entities, and otherwise reserved costs. The Sargon group owns and operates businesses in the financial planning, corporate trustee, responsible entity, superannuation and related financial services sectors. The respective businesses and senior management hold responsible superannuation entity, Australian financial services licences and credit licences to enable the provision of such services. Generally, the Sargon businesses are conducted through the indirect subsidiaries of Sargon Capital, with the direct subsidiaries being holding companies. The Sargon VA entities generated very minimal income and incurred minimal expenses, with the majority of assets listed in their management accounts relating to capitalised goodwill on acquisition of subsidiaries, capitalised customer contracts, pre-acquisition retained earnings and intercompany loan receivables. The majority of liabilities listed in the Sargon VA entities' management accounts relate to intercompany loans payable (including to Sargon Capital), secured debts and, in the case of Sargon Services, employment and tax-related liabilities.