Otway, liquidator AMD Freight Pty Ltd (in liq)

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FEDERAL COURT OF AUSTRALIA

Otway (liquidator), in the matter of AMD Freight Pty Ltd (in liq) [2025] FCA 1019

File number: SAD 147 of 2025
Judgment of: CHARLESWORTH J
Date of judgment: 11 August 2025
Date of publication of reasons: 26 August 2025
Legislation:

Corporations Act 2001 (Cth) ss 435A, 436B, 436E, 439A, 447A

Insolvency Practice Rules (Corporations) 2016 (Cth) r 75-225   
Cases cited:

Brooks, in the matter of 351 Property Management & Maintenance Pty Ltd (in liq) [2023] FCA 1426

Hughes, in the matter of Vah Newco No. 2 Pty Ltd (in liq) [2020] FCA 1121

Lucas, as liquidator of Blackwater Mine Workers’ Club Limited (in liq) v Blackwater Mine Workers’ Club Limited (in liq) [2023] FCA 1636

Mansfield (liquidator), in the matter of NR Complex Pty Ltd (in liquidation) (receivers and managers appointed) [2023] FCA 614

Re Keldane Pty Ltd (in liq) [2011] VSC 385

Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717

Division: General Division
Registry: South Australia
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 25
Date of hearing: 11 August 2025
Counsel for the Plaintiff: Mr Lorbeer
Solicitor for the Plaintiff: PGC Legal

ORDERS

SAD 147 of 2025

IN THE MATTER OF AMD FREIGHT PTY LTD (ACN 632 274 947) (IN LIQUIDATION)

THOMAS STUART OTWAY AND ALAN SCOTT AS JOINT AND SEVERAL LIQUIDATORS OF AMD FREIGHT PTY LTD (ACN 632 274 947) (IN LIQUIDATION)

Plaintiff

ORDER MADE BY:

CHARLESWORTH J

DATE OF ORDER:

11 AUGUST 2025

THE COURT ORDERS THAT:

1.Pursuant to s 436B(2)(g) of the Corporations Act 2001 (Cth) (Act) the plaintiffs have leave to appoint themselves as joint and several administrators of AMD Freight Pty Ltd ACN (632 274 947) (Company).

2.The requirement for the plaintiffs to comply with s 436E of the Act is dispensed with.

3.The plaintiffs’ costs of, and incidental to this application be costs in the liquidation of the Company and are to be paid out of the Company’s assets.

4.The following persons have liberty to apply to vary or revoke the above orders:

(a)the plaintiffs; and

(b)any creditor of the Company (including any employee of the Company),

such liberty may be exercised initially by means of email to the Chambers of the presiding judge directed to associate.charlesworthj@fedcourt.gov.au.

5.In the event that the liberty in paragraph 4 is not exercised within 90 days of these orders then, by this order, the originating application is finalised.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

CHARLESWORTH J

  1. On 11 August 2025 I made orders relating to the affairs of AMD Freight Pty Ltd (ACN 632 274 947) (in liquidation) (Company).  Oral reasons were given on that day.

  2. These written reasons are revised from the transcript.  As foreshadowed at the hearing, the written reasons include additional references to factual background, legal principle and some elaboration not inconsistent with the ex tempore reasons.

    Reasons revised from the…

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Details
Case
[2025] FCA 1019
Decision Date

CaseChat Overview and Summary

The case before the court involves the application by the plaintiffs to be appointed as administrators for AMD Freight Pty Ltd, a company in liquidation. The plaintiffs, who are seeking to be appointed as joint and several administrators, argue that placing the company into voluntary administration is in the best interests of the creditors, given the company's potential profitability and the employment of six staff and two contractors. The plaintiffs have also proposed that the company should continue to trade to preserve its value and avoid the crystallisation of employee entitlements and a potential discount sale of assets. The court was tasked with deciding whether the plaintiffs should be appointed as administrators and if the requirement for the first creditors’ meeting should be dispensed with.

The court considered the plaintiffs' submissions and the evidence provided, noting that no financiers or unsecured creditors had opposed the relief sought. The court was satisfied that the avoidance of the costs of the first meeting of creditors was of benefit to the creditors of the company as a whole. The court also acknowledged that any creditor who considered that dispensing with the first meeting of creditors had an opportunity to voice any opposition to the proposed course. Given the absence of any such opposition, the court considered it appropriate to dispense with the requirement to hold the meeting, but granted liberty to apply to any affected person to vary that order.

The court granted the relief sought on the originating application, with the proviso that there would be liberty to apply to interested non-parties to vary or revoke the orders within a specified time. The court also ordered that the plaintiffs be appointed as joint and several administrators of the company, dispensed with the requirement for the plaintiffs to comply with s 436E of the Act, and ordered that the plaintiffs' costs of, and incidental to this application be costs in the liquidation of the company and are to be paid out of the company's assets. Any creditor of the company, including any employee of the company, has liberty to apply to vary or revoke the above orders, initially by means of email to the Chambers of the presiding judge.

In summary, the court has granted the plaintiffs' application to be appointed as administrators for AMD Freight Pty Ltd, dispensed with the requirement for the first creditors’ meeting, and ordered that the plaintiffs' costs be paid out of the company's assets. The court has also granted liberty to apply to vary or revoke the orders within a specified time.

Orders

Orders of the court

1. Pursuant to s 436B(2)(g) of the Corporations Act 2001 (Cth) (Act) the plaintiffs have leave to appoint themselves as joint and several administrators of AMD Freight Pty Ltd ACN (632 274 947) (Company).

2. The requirement for the plaintiffs to comply with s 436E of the Act is dispensed with.

3. The plaintiffs’ costs of, and incidental to this application be costs in the liquidation of the Company and are to be paid out of the Company’s assets.

4. The following persons have liberty to apply to vary or revoke the above orders:

(a) the plaintiffs; and

(b) any creditor of the Company (including any employee of the Company),

such liberty may be exercised initially by means of email to the Chambers of the presiding judge directed to associate.charlesworthj@fedcourt.gov.au.

5. In the event that the liberty in paragraph 4 is not exercised within 90 days of these orders then, by this order, the originating application is finalised.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The plaintiffs have notified the Company’s financiers and unsecured creditors of the filing of this application. No financier or unsecured creditor has indicated opposition to the relief sought nor have they sought to be heard.Facts and Liquidator’s Opinions Mr John Moulsdale is the current director of the Company (Director). He was appointed in January 2025 following the passing of the former director, Ms Lynda Potter (Former Director). The Former Director was the sole shareholder of the Company. She died earlier this year. On or around the Appointment Date, the Director informed Mr Otway that he was in the final stages of negotiating a sale of the Company when the winding up order was made. The plaintiffs were informed that the cause of insolvency was the Former Director’s extended period of illness, spanning more than four years. During the illness, an employee was left to operate the Company, eventually leading to its inability to make payment of “significant debts”. The plaintiffs have formed the view that the Company has been insolvent from 30 April 2022 and remains so. The plaintiffs have caused the Company to continue to trade in order to preserve the value of its business. Their opinion is that placing the Company into voluntary administration is in the best interests of the creditors, on the basis that:(1)its business appears to be profitable;(2)it employs six staff and two contractors;(3)the Director has advised Mr Otway that he (jointly with another person) intends to present Deed of Company Arrangement (DoCA) to creditors;(4)if it is not placed into voluntary administration, the plaintiffs will take steps to sell the business, resulting in:(a)the crystallisation of employee entitlements resulting from termination, becoming a debt owed by the Company;(b)the Company’s assets being sold at a discount to market value at auction, likely increasing the losses of unsecured creditors;(5)if placed into voluntary administration and the DoCA is rejected, the administrators can continue trading operations, preserving the value of the Company’s assets and operations for a “going concern” sale; and(6)that would avoid the resulting loss likely to be incurred by ceasing operations upon an external sale in a liquidation, and the associated fees and delays in preparing for such sale. The plaintiffs propose that during administration the Company’s creditors will have an opportunity to review the proposed DoCA in conjunction with an independent administrator’s report, pursuant to r 75-225(3) of the Insolvency Practice Rules (Corporations) 2016 (Cth). The plaintiffs are presently of the view that entry into voluntary administration is the “only way” the Company can continue to “trade long term”.Appointment of plaintiffs as administrators Section s 436B of the Act is contained in Pt 5.3A. The object of that Part (as expressed in s 435A) is to provide for the business, property and affairs of an insolvent company to be administered in a way that:(a)maximises the chances of the company, or as much as possible of its business, continuing in existence; or(b)if it is not possible for the company or its business to continue in existence—results in a better return for the company’s creditors and members than would result from an immediate winding up of the company.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The plaintiffs otherwise submit that the primary purpose of the first meeting of creditors within an administration is the appointment of a “committee of inspection”. The plaintiffs’ opinion is that the appointment of a committee of inspection is not necessary in this matter given its size and complexity. I do not consider the evidence to be sufficient to form a concluded view on that topic. However, I proceed on the basis that any creditor who considered that dispensing with the first meeting of creditors (and hence the opportunity to appoint the committee of inspection) has had an opportunity to consider the relief sought in this action and to voice any opposition to the proposed course. In the absence of any such opposition I consider it appropriate to dispense with the requirement to hold the meeting, but to grant liberty to apply to any affected person to vary that order. Dispensing with the requirement to conduct the first creditors’ meeting within the administration does not carry with it any express or implied approval of the DoCA that is presently being prepared. Rather, the dispensation will permit the plaintiffs, as administrators, to focus their resources on the preparation of an independent report to facilitate the creditors’ consideration of any DoCA in due course: Act, s 439A; Rules, r 75-225. Overall, I am satisfied that the avoidance of the costs of the first meeting of creditors is of benefit to the creditors of the Company as a whole.Conclusion I otherwise accept the plaintiffs’ oral and written submissions in support of the originating application. Orders will be entered in substantially the terms sought. It is appropriate to grant the relief sought on the originating application, with the proviso that there will be liberty to apply to interested non-parties to vary or revoke the orders within a specified time.

Ratio Decidendi

Legal Principle Established

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