Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed)

The Federal Court was asked to determine the validity of the appointment of administrators to two companies within a group of companies, where the appointments to five other subsidiary companies were not in question. The applicants, Nipps and Wight, were seeking relief under section 447A of the Corporations Act 2001 (Cth) in relation to their appointment to the subsidiaries. The core issue before the court was whether the resolution to appoint the administrators to the two companies was valid and, if so, whether the court should exercise its discretion to allow the administration of the subsidiaries to proceed as if the appointments were valid.

The court examined the circumstances surrounding the resolution to appoint the administrators, considering the statutory requirements and the context in which the resolution was passed. It found that the resolution was not passed in accordance with the necessary procedures as outlined in the Corporations Act, and thus was invalid. However, the court also considered the broader context, including the insolvency of the companies and the potential benefits of the administrators' continued involvement. The court concluded that despite the procedural flaws in the resolution, it was in the best interests of the creditors and the companies for the administrators to continue their role. Consequently, the court exercised its discretion under section 447A to deem the appointments valid as if they had been properly made.

In light of the above, the court made several orders. It validated the appointments of Nipps and Wight as joint and several administrators of the relevant companies, deeming their appointments as effective from 1 May 2021. The court also ordered that the costs associated with the application in relation to these companies were to be treated as costs in the administration of those companies. The hearing of the application was adjourned with liberty to apply, and the orders were to be entered forthwith. This decision ensured continuity in the administration of the insolvent companies, providing stability and a pathway for resolution.