Bio Refining Industries Inc Corporation v Australian Securities and Investments Commission, in the matter of Eguana Holdings Pty Ltd

CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd & Ors [2006] NSWSC 690; (2006) 201 FLR 296

In the matter of ERB International Pty Limited (deregistered) [2014] NSWSC 200; (2014) 98 ACSR 124

In the matter of Lysaght Civil Products Pty Ltd [2021] NSWSC 1459

Melluish v Underwood Development Pty Ltd [2004] NSWSC 429

Owners of Strata Plan No 91349 v Australian Securities and Investments Commission [2020] NSWSC 685; (2020) 147 ACSR 456 at [61]- [62] (Bell P)

Wyse & Young International Pty Ltd t/as Wyse & Young Accounting & Ors v Corrado [2015] NSWSC 1863

IN THE MATTER OF EGUANA HOLDINGS PTY LTD (DEREGISTERED) ACN 095 215 759

BIO REFINING INDUSTRIES INC CORPORATION NO. E0523642008-0

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

1. Pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) (Act), the defendant reinstate the registration of Eguana Holdings Pty Ltd (Deregistered) (Company).
2. Pursuant to s 601AH(3)(b) and (d) of the Act, upon reinstatement of the Company, Adam Shepard be appointed as liquidator of the Company.
3. The costs of this application be costs in the liquidation of the Company.

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

1. By an originating process filed 3 October 2024, the plaintiff, Bio Refining Industries Inc Corporation (Bio Refining) seeks an order that the defendant, the Australian Securities and Investments Commission (ASIC) reinstate the registration of Eguana Holdings Pty Ltd (Deregistered) (Eguana or Company), as the company is now known, pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) (Act).
2. The plaintiff also seeks that Adam Shepard be appointed as liquidator of the Company pursuant to s 601AH(3)(b) and (d) of the Act or s 90-15 of Schedule 2 to the Act.
3. In written submissions filed on 4 April 2025, the plaintiff seeks a further order that the Company be wound up pursuant to s 461(1)(k) of the Act. That order is not sought in the originating process. In any event, in circumstances where a company in liquidation at the time of its deregistration, remains in liquidation after its reinstatement (Australian Competition & Consumer Commission v Australian Securities and Investments Commission (ASIC) [2000] NSWSC 316; (2000) 174 ALR 688; 34 ACSR 232 at [49]), the plaintiff has not demonstrated the utility of a 'further and consequential' order that the Company be wound up (In the matter of Lysaght Civil Products Pty Ltd [2021] NSWSC 1459 at [25]).
4. A costs order is not sought against ASIC. The plaintiff asks that its costs be costs in the liquidation.
5. During case management of this proceeding, the defendant informed Chambers that it did not wish to be heard on the matter as communicated to the plaintiff in a letter dated 7 November 2024. At the plaintiff's request, and given the absence of any opposition to the application, on 22 April 2025, I ordered that the matter be determined on the papers.
6. The plaintiff relies on the following documents in support of its application:

(a) the affidavit of its director, Mr William Van Vliet, affirmed on 12 September 2024, with Annexures "WV1-55";

(b) the affidavit of its solicitor, Ms Elisa Molen-Grigull, affirmed on 24 March 2025, with Annexures "EMG3-28";

(c) written submissions filed on 4 April 2025; and

(d) Consent of liquidator filed 19 May 2025.

1. I am satisfied for the reasons outlined below that it is appropriate to make the orders sought, granting the application requiring ASIC to reinstate the Company's registration, and the appointment of Adam Shepard as liquidator of the Company.

1. Mr Van Vliet is the president and director of Bio Refining, and was, from 12 October 2015 until its deregistration on 12 May 2021, a director of Eguana.
2. The plaintiff became a creditor of Eguana because various debts owed by Eguana to various entities were assigned to the plaintiff on 7 November 2019. The debts totalled $6,607,387.29.
3. On or around 27 January 2017, the sole member of Eguana, being Feld Capital Limited (Feld), resolved to voluntarily wind up the Company and appoint Daniel Jean Civil as liquidator.
4. On 23 January 2020, at a creditors' meeting, it was resolved that the liquidator would be authorised, pursuant to s 477(2B) of the Act, to enter into a Deed of Assignment and Indemnity as detailed in the report to creditors dated 9 January 2020.
5. That report included the director's proposal that: (a) pursuant to legal advice received, the Company commence proceedings against KNM Process System Sdn Bhd (KNMPS), formerly the sole shareholder of Eguana, to recover debts owed by the Company to its creditors, which ought to have been paid by KNMPS under a letter dated 9 April 2014 (Letter of Financial Support); and (b) Bio Refining indemnify the Company and/or the liquidator in respect of any costs that may be incurred in respect of the claim (Assignment Proposal).
6. The Letter of Financial Support provided that KNMPS and its controlled entities will support companies including KNM Pty Ltd (as Eguana then was) in meeting their financial obligations, as and when they fall due for a period of 24 months from the date of signing the letter and in accordance with a resolution of the directors.
7. On 12 May 2021, Eguana was deregistered by ASIC pursuant to s 509 of the Act, after the lodgement of an End of Administration Return by Mr Civil on 12 February 2021.
8. On 19 May 2025, for the purposes of this proceeding, Mr Adam Shepard, a registered liquidator, gave his consent to be appointed by the Court to act as the liquidator of Eguana. (An earlier, undated, consent was provided on 8 October 2024, on which Mr Van Vliet relied in his affidavit). He replaced Mr Civil, who is no longer a registered liquidator. Mr Civil confirmed on 28 November 2024 that he had no objection to the reinstatement of the company or the appointment of a new liquidator.
9. The plaintiff seeks an order that the Court reinstate the registration of Eguana, to enable Eguana to pursue the prospective claim against KNMPS, or for the assignment of the claim. The evidence is that, while the creditors of Eguana approved the Assignment Proposal on 23 January 2020, Mr Civil and Mr Van Vliet were not able to reach agreement on the form of the proposal, including the amount of the indemnity, prior to deregistration. The plaintiff foreshadows that, if the orders sought are made, the terms of the assignment will require the approval of Eguana's creditors or the Court.

1. Section 601AH(2) and (3) of the Act relevantly provides:

601AH Reinstatement

Reinstatement by Court

(2) The Court may make an order that ASIC reinstate the registration of a company if:

(a) an application for reinstatement is made to the Court by:

(i) a person aggrieved by the deregistration; or

(ii) a former liquidator of the company; and

(b) the Court is satisfied that it is just that the company's registration be reinstated.

(b) the Court makes an order under subsection (2);

the Court may:

...

(d) make any other order it considers appropriate.

1. On the present application, there are three main issues: (i) whether the plaintiff is a 'person aggrieved' by the deregistration; (ii) whether the Court is satisfied that it is just that the company's registration be reinstated; and (iii) whether it is appropriate that Adam Shepard be appointed as liquidator of the Company.

1. The expression 'person aggrieved' in s 601AH(2)(a)(i) of the Act is not defined in the Act. It has been held to be an expression of wide import, which should be construed liberally. It includes a person who has been deprived of something, or injured or damaged in a legal sense: Owners of Strata Plan No 91349 v Australian Securities and Investments Commission [2020] NSWSC 685; (2020) 147 ACSR 456 at [61]- [62] (Bell P), citing Bell Group Limited (ACN 008 666 993) (in liq) v Australian Securities and Investments Commission [2018] FCA 884 (2018); 358 ALR 624 at [47] (McKerracher J).
2. The plaintiff claims that: (a) it is a creditor of Eguana by virtue of the assignment of unsecured debts totalling $6,607,387.29; and (b) a prospective claim against a third party in respect of the Company's debts was not pursued, despite creditors approving the plaintiff's proposal for assignment of the claim, prior to deregistration of the Company.
3. It is not necessary to embark on a detailed and exhaustive analysis of the facts and law underpinning the plaintiff's claim: Owners of Strata Plan No 91349 at [65]-[67]. On the basis of the evidence before me, I am satisfied that the plaintiff has a genuine grievance that the deregistration of the Company has affected his interests insofar as a right of some value, or potential value, has been extinguished or negated.
4. I accept that the plaintiff has a valuable right in the potential to have the Company's claim against KNMPS assigned to it. In that regard, the plaintiff has a real economic interest in the reinstatement of the Company (Wyse & Young International Pty Ltd t/as Wyse & Young Accounting & Ors v Corrado [2015] NSWSC 1863 at [43] (White J); cf. Melluish v Underwood Development Pty Ltd [2004] NSWSC 429 at [6] (Barrett J); CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd & Ors [2006] NSWSC 690; (2006) 201 FLR 296 at [7]), which will allow the plaintiff to pursue the Assignment Proposal with a view to a prospective claim against KNMPS to recover debts owed by the Company to its creditors, which includes the plaintiff.

1. The power of the Court under s 601AH(2)(b) of the Act to order reinstatement if satisfied it is just to do so, confers a broad discretion to the Court: In the matter of ERB International Pty Limited (deregistered) [2014] NSWSC 200; (2014) 98 ACSR 124 at [5] (Brereton J). While not limiting the power, it may be relevant to consider the circumstances in which the company was deregistered; the purpose in seeking reinstatement; whether any person is likely to be prejudiced by reinstatement; and the public interest: Australian Competition & Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316; (2000) 174 ALR 688; 34 ACSR 232 at [27]- [28] (Austin J).
2. I am satisfied that it is just to order reinstatement of the Company's registration for the following reasons.
3. First, the plaintiff has taken steps to investigate a potential claim against KNMPS to recover debts owed by the Company to its creditors. At the plaintiff's instigation, the Company's creditors authorised the liquidator to enter into a Deed of Assignment and Indemnity in respect of that claim. For want of agreement between the plaintiff and the liquidator, that did not occur prior to the Company's deregistration. As the plaintiff submits, reinstatement of the Company would allow its liquidator (and the plaintiff) to take steps to cause that assignment to occur.
4. Second, there is no evidence that any person is likely to be prejudiced by reinstatement. Specifically, the former liquidator, Mr Civil, was provided with notice of the application, and has confirmed that he has no objections to the reinstatement of the Company or the appointment of a liquidator. Furthermore, the circumstances of his replacement (which is sought, as detailed below) does not give me any cause for concern.
5. The plaintiff submits that, if the claim does not succeed, and there is no further return to the Company's creditors, the creditors will be in no different position than where they are now. That does not account for the costs of the liquidator, and in pursuing the claim. However, it is not necessary, nor desirable, to assess the prospects of the claim; only its potentiality in terms of determining whether it is just that the Company be reinstated in order to allow the plaintiff to pursue a claim. That being said, the Department of Employment and Workplace Relations, a priority creditor, has confirmed that it has no objection to the reinstatement of the Company, although the views of other priority creditors are unknown.
6. The plaintiff claims that, despite being approached, the Australian Taxation Office has not indicated any objection to the reinstatement of the Company or the appointment of a new liquidator.
7. Third, ASIC has indicated that it has no objection to the application, and no costs order is sought against ASIC.
8. There appears to be a delay of several years (since deregistration) in the plaintiff seeking the Company's reinstatement. That delay is not explained. Mr Vliet accounts for various announcements of the holding company, KNM Group, and KNMPS, to the Bursa Malaysia from late 2021 to 2024, and an application to the High Court of Kuala Lumpur for a proposed scheme of arrangement and restraining order. However, it is not evident what impact those events had, if any, on the pursuit of this application. Even so, the factor of delay alone is not such as to negate the other considerations that favour reinstatement.

3.3 Is it appropriate to appoint a new liquidator?

1. The plaintiff seeks an order that Mr Adam Shepard be appointed as liquidator of the Company.
2. The plaintiff claims that: (a) Mr Civil is no longer a registered liquidator, and, as mentioned above, he has no objection to the appointment of a new liquidator; and (b) Mr Shepard, a registered liquidator, has consented to the appointment.
3. Furthermore, the plaintiff claims that, as Mr Van Vliet resides in Malaysia, he is ineligible to be a director of the Company given the requirement in s 201A(1) of the Act that a company have at least one director that ordinarily resides in Australia. To the extent that any non-compliance with s 201A(1) of the Act (which is not cured by the Court or otherwise addressed) gives rise to a concern that "[i]t would not be "just" to resurrect a company which would then be devoid of proper governance" (CGU Workers Compensation at [9] (Barrett J)), I agree with the plaintiff's submission that this concern is met by the appointment of a liquidator who would assume control of the Company.
4. In these circumstances, I consider it appropriate to order that Mr Shepard be appointed as liquidator of the Company upon its reinstatement.

1. I am satisfied that it is just that the Company's registration be reinstated, and that it is appropriate that Mr Shepard be appointed as liquidator of the Company.
2. The costs of the plaintiff's application will be costs in the liquidation of the Company.

I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Younan.