Deputy Commissioner of Taxation v McCabe, in the matter of Adcon VIC Pty Ltd

IN THE MATTER OF ADCON VIC PTY LTD, ADCON ACT PTY LTD AND ADCON LOGISTICS PTY LTD

ANDREW MCCABE AND CHRISTOPHER JOHNSON AS DEED ADMINISTRATORS OF ADCON VIC PTY LTD (ACN 606 820 375), ADCON ACT PTY LTD (ACN 630 177 267) AND ADCON LOGISTICS PTY LTD (ACN 614 026 238)

ADCON ACT PTY LTD ACN 630 177 267 (and others named in the Schedule)

1. Pursuant to section 445D(1) of the Corporations Act 2001 (Cth) (Act), the Deed of Company Arrangement dated 6 September 2024 in respect of the second, third and fourth defendant be terminated.
2. Pursuant to sections 447A and 446AA of the Act, the second defendant, Adcon VIC Pty Ltd (ACN 606 820 375) (Adcon VIC), be wound up.
3. Pursuant to sections 447A and 446AA of the Act, the third defendant, Adcon ACT Pty Ltd (ACN 630 177 267) (Adcon ACT), be wound up.
4. Pursuant to sections 447A and 446AA of the Act, the fourth defendant, Adcon Logistics Pty Ltd (ACN 614 026 238) (Adcon Logistics), be wound up.
5. Andrew McCabe and Christopher Johnson be appointed joint and several liquidators of Adcon VIC, Adcon ACT, and Adcon Logistics.
6. Pursuant to section 556(1)(b) of the Act, the plaintiff's and the first defendants' costs of the proceedings be costs in the winding up of Adcon VIC, Adcon ACT and Adcon Logistics.

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

1. By originating process filed on 31 July 2025, the Deputy Commissioner of Taxation (the Commissioner) seeks to set aside a deed of company arrangement dated 6 September 2024 (the DOCA) to wind up Adcon VIC Pty Ltd (Adcon VIC), Adcon ACT Pty Ltd (Adcon ACT) and Adcon Logistics Pty Ltd (Adcon Logistics) (together, the Adcon Companies). In its place, the Commissioner seeks to have liquidators appointed to the Adcon Companies.
2. The Adcon Companies owned and operated medium to large commercial construction businesses. The sole director and secretary of each of the Adcon Companies is and was Mr Danny Isaac, who is the fifth defendant. The sole shareholder of each of the Adcon Companies is and was Colligere Pty Ltd, of which Mr Isaac is the sole director and the sole shareholder. The Adcon Companies were therefore under the control of Mr Isaac.
3. The Commissioner alleges that the Adcon Companies owe the Australian Taxation Office (ATO) debts exceeding $11 million and that the Adcon Companies form part of a wider group that owes the ATO $238 million.
4. The deed administrators of the Adcon Companies (Deed Administrators), who recommended against entry into the DOCA, now support the Commissioner's application, having previously taken a neutral position. They consent to being appointed as liquidators in the event that the DOCA is terminated.
5. Mr Isaac left Australia in 2023 and has not returned. His present whereabouts are unknown, although it is suspected that he is currently living in Dubai. Mr Isaac was previously legally represented but two weeks prior to the hearing, his solicitors filed a Notice of Ceasing to Act. He did not appear at the hearing on 26 March 2026, although he had the benefit of written submissions prepared by very competent senior and junior counsel which were filed while he was still legally represented.
6. Under the DOCA, Mr Isaac was required to make contributions to a fund held for certain creditors. He has failed to make certain contributions and is in breach of the DOCA. The Commissioner contends that, on that ground alone (and on other grounds), the DOCA should be terminated. The Deed Administrators now support the Commissioner's application because of this breach of the DOCA.
7. This matter was heard on 26 March 2026 and orders were made that day. These are the reasons for making those orders.

1. Adcon VIC, Adcon ACT and Adcon Logistics were incorporated on 1 July 2015, 22 November 2018 and 3 August 2016 respectively. The sole director and secretary of each of the Adcon Companies is the fifth defendant, Mr Isaac.
2. The Commissioner claims that Adcon Companies owe the ATO the following amounts:

(a) $1,052,590.38 owed by Adcon ACT, comprising income tax for the period ended 30 June 2023 and running balance account deficit debt in respect of business activity statement amounts as at 23 May 2024;

(b) $5,712,365.14 owed by Adcon Logistics, comprising goods and services tax for the period ended 31 March 2024 and running balance account deficit debt in respect of business activity amounts as at 23 May 2024; and

(c) $4,344,519.49 owed by Adcon VIC, comprising running balance account deficit debt in respect of business activity amounts as at 21 May 2024.

1. In May 2024, each of the Adcon Companies was placed into administration. David Stimpson and Michael Carrafa (SV Administrators) were appointed administrators of each of the Adcon Companies. Subsequently, at the end of May 2024, following a resolution passed by creditors, the SV Administrators were replaced as administrators of Adcon VIC by Andrew McCabe and Christopher Johnson of Wexted Advisors (WXA Administrators). The SV Administrators remain the administrators of Adcon ACT and Adcon Logistics.
2. On 8 August 2024, Mr Isaac proposed that the Adcon Companies enter into the DOCA. The proposed DOCA was a pooled deed of company arrangement whereby the creditors of the Adcon Companies would be pooled and treated as creditors of one entity and the deed fund would be distributed amongst them.
3. At a reconvened second meeting of the creditors of Adcon VIC held on 16 August 2024, the creditors voted to execute the deed of company arrangement received on 8 August 2024, which was subsequently duly executed on 6 September 2024. The vote carried by a majority in number (19 in favour and 8 against) and a majority in value ($50 million in favour and $45 million against). Of the total value, 46.25% represented the claims of Busifund Pty Ltd (Busifund) who voted in favour of executing the DOCA.
4. Similarly, at a reconvened second meeting of the creditors of Adcon ACT and Adcon Logistics held on 29 August 2024, the creditors of both companies voted in favour of entering into the DOCA. With respect to Adcon ACT, the vote carried by both a majority in number (3 in favour and 2 against) and a majority in value ($13.5 million in favour and $1 million against). Of the total value, the claims of Busifund, who voted in favour of executing the DOCA, represented 85.79%. With respect to Adcon Logistics, the vote also carried by a majority in number (6 in favour and 2 against) and a majority in value ($14.7 million in favour and $635,000 against). Busifund, who voted in favour of executing the DOCA, represented 81.34% of the total value of claims.
5. I observed that if there had instead been a mixed result on the voting (i.e. a different result by number from the result by value), it is very unlikely that the Chairperson of the meeting (being, in each case, one of the administrators) would have exercised his casting vote, or exercised it in favour of the DOCA, given that in respect of each entity the relevant administrators recommended that the relevant entity be wound up.
6. A curious feature of the vote in favour of the DOCA is that the support of Busifund, who does not appear to gain anything from the DOCA, was critical. If Busifund had voted against the DOCA, it would not have passed for any of the entities (in light of the position on the casting vote set out above).
7. Similarly, if Busifund's vote had not been counted, the resolution to execute the DOCA would not have passed in respect of Adcon VIC and Adcon ACT.
8. In relation to Adcon Logistics, had Busifund's vote not been counted, the vote would still have carried by number (5 in favour and 2 against) and by value ($2.2 million in favour and $635,000 against). However, it appears that of the six creditors who voted in favour of entering into the DOCA, three creditors were companies of which Mr Isaac was the sole director (and therefore "Excluded Creditors" under the DOCA) and Mr Isaac himself.
9. It is somewhat odd that the fate of the DOCA was determined by persons and entities who do not appear to obtain any benefit from it. This provides at least some support for the Commissioner's contention that a purpose of the DOCA was to prevent investigations. It also tends to undermine Mr Isaac's submission that the appropriate course is for the creditors to be provided with an opportunity to vote on whether the DOCA should be terminated, as the creditors are best placed to determine what is in their interests. It is not apparent that the creditors are acting on the basis of what will provide the best return.
10. The DOCA was executed by each of the Adcon Companies, Mr Isaac, the WXA Administrators and the SV Administrators on 6 September 2024. There was a procedural irregularity whereby there was no separate signature block for the Deed Administrators, Mr McCabe and Mr Johnson, although they signed the DOCA because they signed in their capacity as WXA Administrators. That is, they signed in their capacity as WXA Administrators but not in their capacity as Deed Administrators. On 2 October 2025, the Court heard an interlocutory process filed on 12 September 2025 which sought to cure this irregularity, and subsequently made orders on that day which declared that the DOCA had been duly executed on 6 September 2024.
11. Pursuant to the DOCA:

(a) Mr Isaac is referred to as the "Deed Proponent" and Busifund is referred to as the "Financier".

(b) The claims of creditors are to be pooled and the Adcon Companies treated as one entity.

(c) A Deed Fund is created, which comprises $5 million to be paid by Mr Isaac from Busifund's contribution, together with any cash of the Adcon Companies and any funds recovered (e.g. from debtors, from sale of assets, or otherwise).

(d) Mr Isaac was required to make eight quarterly instalments of $625,000 commencing in September 2024. Clause 8 of the DOCA provides as follows:

This Deed is conditional on, and subject to, the Deed Proponent [i.e. Mr Isaac] of the Adcon Companies paying the Contribution Sum to the Administrators' Trust Account, including the first instalment of $625,000 (being $5,000,000 divided by eight equal quarterly instalments) within seven (7) days of the Commencement Date, (being 6 September 2024), into the Nominated Account.

The dates for the subsequent quarterly contributions (of $625,000 each) are set out below:

[The instalment dates are then set out]

(e) The Deed Fund was to be distributed in accordance with the priority set out in the DOCA. "Excluded Creditors", which included Mr Isaac, Busifund and any related entity of the Adcon Companies, were excluded from distribution.

(f) Pursuant to clause 7.3, Mr Isaac was required to provide the Deed Administrators such assistance as the Deed Administrators reasonably required with respect to the affairs of the Adcon Companies and requests for information concerning the debtors.

1. As revealed in the evidence, the $5 million payable by Mr Isaac was to be provided by Busifund. The reason that Busifund would provide this money to Mr Isaac, and the relationship between Busifund and Mr Isaac, is not known to the Commissioner and is obscure. As the Commissioner pointed out, Mr Isaac could have explained these matters, but Mr Isaac has not cooperated in providing any information to the Deed Administrators and did not attend the hearing. On the basis of the percentages set out above, the support of Busifund was somewhat material to the outcome of the votes that were held. However, Busifund does not appear to obtain any benefit from the DOCA. Its support therefore should be treated with some caution. There is no apparent negative effect on Busifund if the DOCA is set aside, and thus the fact that it voted to support the DOCA might not be given much weight.
2. Mr Isaac has defaulted in his obligations under the DOCA. The quarterly instalment payable in September 2025 was late, and the quarterly instalments due in December 2025 and March 2026 have not been paid. Mr Isaac is therefore in breach of the DOCA.
3. The Commissioner submits that this alone is a sufficient basis for an order setting aside the DOCA. The breach of the DOCA has also caused the Deed Administrators to alter their position on the Commissioner's application from a neutral stance to their current stance of actively supporting the application.
4. In addition, the evidence reveals, and I find, that Mr Isaac has not provided the assistance he was required to provide to the Deed Administrators under the DOCA, or indeed any meaningful assistance.
5. The Commissioner also submits that the Court should infer that the DOCA is being used as a vehicle to keep investigations and recovery action at bay, and that it is contrary to public policy to permit the DOCA to remain on foot. The Commissioner points to the fact that approximately $108 million in property, plant and equipment (PPE) previously showing on the accounts of Adcon VIC has disappeared without any adequate explanation, and submits that it is appropriate that a liquidator investigate those matters and whether there may be a claim in relation to the missing assets.
6. In his written submissions, Mr Isaac submits that it is unlikely that Adcon VIC ever had PPE of $108 million, given that there is no revenue that could support such an acquisition, and no matching liabilities that could otherwise explain the acquisition of so great an amount of PPE. As the Commissioner points out, Mr Isaac could have shed some light on those matters, but he is not assisting the Deed Administrators and did not attend the hearing. When the Deed Administrators asked the accountants of Adcon VIC for the books and records of the company, they were informed that all of the company's records had been destroyed in the Brisbane floods in 2022.
7. Mr Isaac made a number of other points in his written submissions. To a considerable extent, those submissions have been superseded by the breach by Mr Isaac of the payment obligations. Mr Isaac submits that:

(a) Assuming that the only breach was Mr Isaac's lack of assistance, the Deed Administrators have the ability to convene a meeting of creditors and put that lack of assistance to the creditors to see if they vote in favour of terminating the DOCA. More generally, the correct approach is for the creditors to determine whether the DOCA should continue and that matter should not be taken out of the hands of the creditors.

(b) The missing assets were identified to the creditors prior to the vote in favour of the DOCA, such that the creditors must be taken to have considered that information and formed the view that nevertheless the DOCA was in their commercial interests.

(c) The Deed Administrators have examination powers, and have powers under the DOCA to get in amounts that can reasonably be collected to form part of the Deed Fund.

(d) It is unlikely that Adcon VIC ever had PPE of $108 million.

(e) Creditors are better off under the DOCA because Busifund will not be able to participate in the distribution and claim part of the Deed Fund, whereas it would be able to claim funds in a liquidation scenario.

1. Section 445D of the Corporations Act 2001 (Cth) (the Act) provides as follows:

(1) The Court may make an order terminating a deed of company arrangement if satisfied that:

(a) information about the company's business, property, affairs or financial circumstances that:

(i) was false or misleading; and

(ii) can reasonably be expected to have been material to creditors of the company in deciding whether to vote in favour of the resolution that the company execute the deed;

was given to the administrator of the company or to such creditors; or

(b) such information was contained in a document that accompanied a notice of the meeting at which the resolution was passed; or

(c) there was an omission from such a document and the omission can reasonably be expected to have been material to such creditors in so deciding; or

(d) there has been a material contravention of the deed by a person bound by the deed; or

(e) effect cannot be given to the deed without injustice or undue delay; or

(f) the deed or a provision of it is, an act or omission done or made under the deed was, or an act or omission proposed to be so done or made would be:

(i) oppressive or unfairly prejudicial to, or unfairly discriminatory against, one or more such creditors; or

(ii) contrary to the interests of the creditors of the company as a whole; or

(g) the deed should be terminated for some other reason.

(2) An order may be made on the application of:

(a) a creditor of the company; or

(b) the company; or

(ba) ASIC; or

(c) any other interested person.

1. As submitted by the Commissioner, the substantial breach by Mr Isaac of his obligations under the DOCA is a sufficient basis to terminate it. A key aspect of the DOCA was to constitute a fund which included, as a core contribution, $5 million from Mr Isaac, and make that fund available to creditors of the three Adcon Companies. A failure to make the payments substantially undermines the point of the DOCA and the basis on which it was approved. The DOCA should be terminated pursuant to s 445D(1)(d) of the Act.
2. There is no consideration in the present case that would weigh against such a conclusion. The Adcon Companies are not solvent and the DOCA is not a means of returning them to financial health. Under the terms of the DOCA (clause 10.2), the funds that have already been paid by Mr Isaac are not repayable upon termination of the DOCA and remain available to creditors. It is not likely that by terminating the DOCA the creditors are being deprived of further payments, given that Mr Isaac has ceased to perform his obligations. If the availability of $5 million was the matter that persuaded creditors to vote in favour of the resolution to approve the DOCA, that is no longer an operative reason. In any event, that would not be a reason for Busifund to vote in favour of the DOCA (given that it was providing the $5 million to Mr Isaac), and Busifund's reason for voting in favour of the DOCA is unknown. To continue the DOCA after the breach would serve no apparent purpose protective of creditors but would thwart the potential for investigations and recovery actions by liquidators.
3. The matters raised by Mr Isaac in his written submissions have been superseded by the breach of the DOCA. In any event, whilst I have insufficient evidence to make any finding that Adcon VIC had $108 million in PPE that has disappeared, the dramatic changes in assets recorded on the accounts of Adcon VIC from year to year and the otherwise unsatisfactory nature of those accounts means that there appear to be matters justifying investigation to see if there are any available claims. Contrary to the position adopted in the submissions of Mr Isaac, that is not something that can appropriately occur without terminating the DOCA because the Deed Administrators lack the full range of investigative and enforcement powers, including against third parties, that liquidators will have under the Act. In that regard, I note that Mr Isaac has not provided the Deed Administrators with the assistance required to be provided under clause 7.3 of the DOCA, which the Commissioner relies upon as an additional breach of the DOCA.
4. In relation to the submission of Mr Isaac that creditors are better off under the DOCA because it prevents Busifund from participating in the Deed Fund, that submission does not appear to grapple with the fact that Busifund is a secured creditor. Clause 5.2 of the DOCA provides that the Deed does not affect the rights of any secured creditor to realise or otherwise deal with its security interest "except so far as this Deed so provides in relation to a Secured Creditor who votes in favour of the Deed". There appears to be no such exception or provision in the DOCA. Mr Isaac did not appear at the hearing to further engage with this submission, and I reject it.
5. In relation to the submission of Mr Isaac that any breach should be put to the creditors to decide by calling a further meeting, the present application has been on foot for months. Creditors (including Busifund) have been provided with notice of the application. No creditors have come forward opposing the application, notwithstanding ample opportunity to do so. Given that the apparent purpose of the DOCA has been undermined by Mr Isaac's breaches, in the circumstances I would not dismiss the application on that basis.
6. For these reasons, the DOCA should be terminated and orders should be made for the winding up of each of the Adcon Companies.

I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Moore.