First Applicant v Second Applicant

1 On 19 November 2019, this Court ordered that the AXF Group Pty Ltd (in liquidation) (receivers and managers appointed) ('Company'/'AXF Group') be wound up in insolvency, pursuant to s 459A of the Corporations Act 2001 (Cth) ('Act').

2 These reasons concern the application by the current liquidators, Philip Campbell-Wilson and Matthew Byrnes ('Liquidators'), for orders that the winding up be terminated and for associated orders ('application').

3 On 18 December 2024, the Liquidators applied under ss 482(1A)(a) and (c) of the Act and s 90-15 of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Act ('IPS') for the following substantive orders ('Termination Orders'):

1. Pursuant to s 482(1) of the Corporations Act, the winding up of the first plaintiff (the Company) be terminated with effect from the date of the order;

2. The following orders (the Freezing Orders) be vacated:

1. the freezing and ancillary orders of the Honourable Justice Almond made in this proceeding on 28 February 2020, as varied by his Honour's further orders made on 20 May 2020 and 11 February 2021; and

2. paragraph 7 of the orders of the Honourable Justice Riordan made in this proceeding on 11 May 2021.

3. Mr Philip Campbell-Wilson and Mr Matthew Byrnes be released and discharged as Receivers of the Company, and paragraphs 2 to 4 and 6 of the orders of the Honourable Justice Riordan made in this proceeding on 11 May 2021 (the Receivership Orders) be vacated.

4. The second plaintiffs' costs of the application be treated as costs in the liquidation, or otherwise in the deed administration, of the Company.

4 The application is made by the Liquidators both in their capacity as Liquidators of the Company under s 482(1A)(a) of the Act and as the administrators of the deed of company arrangement ('DOCA') dated 28 July 2024 pursuant to s 482(1A)(c) of the Act.

5 Clause 7.1 of the DOCA requires the Liquidators to seek the Termination Orders being the orders the subject of this application. The making of the Termination Orders is a 'Condition Precedent' to the 'Completion' of the DOCA.

6 Notice of the application was served on all creditors and contributories on 12 March 2025 by the provision of the summons and supporting affidavit of Mr Campbell-Wilson, and then on 13 March 2024 by the provision of the Order of this Court authenticated a day earlier.

7 The application is made with the consent of all parties to the proceeding. That consent is given, and this application is otherwise brought, in the context of the Company's creditors having approved entry into, and the plaintiff having executed, the DOCA effective from 28 July 2024.

8 As well as being supported by the respondents to the application, the application is supported by Mr Qi Laing Gu ('Mr Gu Snr'), the largest unsecured creditor and non-participating creditor.

10 The Liquidators rely on the following affidavits:

(a) affidavit of Philip Campbell-Wilson dated 29 April 2025;

(b) affidavit of Michelle Hallasso dated 25 February 2025;

(c) affidavit of Ying Deng dated 4 March 2025;

(d) affidavit of Michelle Hallasso dated 20 March 2025;

(e) affidavit of Jonathan Chee dated 20 March 2025;

(f) affidavit of Malcolm Kimbal Howell dated 26 February 2020;

(g) affidavit of Philip Campbell-Wilson dated 18 December 2024; and

(h) affidavit of Ying Deng dated 20 May 2025.

11 The Liquidators filed submissions that are both comprehensive and helpful.

12 On 19 November 2019 Malcolm Howell was appointed a liquidator of the company following the failure of the Company to comply with a statutory demand.

13 The Company was formerly the trustee of the Australian Ziang Fu International Trust ('Trust') pursuant to a trust deed dated 1 February 2006 ('Trust Deed'). The Trust is a discretionary trust. Pursuant to an 'ipso facto clause' in the Trust Deed, 'the Winding Up Order' had the effect of determining and vacating the office of the trustee of the Trust.

14 On 19 December 2019 the first respondent, AXF Holdings Pty Ltd ('AXF Holdings') became the new trustee of the Trust pursuant to a deed of removal of trustee and appointment of new trustee. As a result of the appointment, the assets of the Trust vested in AXF Holdings. At about the same time the former director of the Company and one of two primary beneficiaries of the Trust, Mr Mingfeng 'Richard' Gu ('Mr Gu Jnr') caused the Company to transfer its shareholdings in a number of companies to the new trustee, AXF Holdings. Those shareholdings comprised:

(a) AXF Investments Pty Ltd (ACN 603 313 408) ('AXF Investments'): 95 ordinary shares held and transferred for $1 per share (100 total ordinary shares issued in the Company);

(b) AXF Resources (ACN 604 730 181) ('AXF Resources'): 1 ordinary share held and transferred for $1 (1 total ordinary share issued in the Company);

(c) Cape Grim Holdings Pty Ltd ('Cape Grim'): 85 ordinary shares held and transferred for $1 per share (100 total ordinary shares issued in the company). Cape Grim is a company which sells bottled water from Cape Grim; and

(d) AXF Properties (Eynesbury) Pty Ltd (ACN 168 062 486): 1,000 ordinary shares held and transferred for $1 per share (1,000 total ordinary shares issued in the Company).

15 On 27 February 2020 Mr Howell applied for freezing orders against the assets of the Company and the Trust, and to be appointed receiver and manager of the 'Trust Assets' (as defined in the Order). On 28 February 2020 Almond J made a freezing order against AXF Holdings, Mr Gu Snr, AXF Resources and AXF Properties (Eynesbury) Pty Ltd (ACN 168 062 486) ('Freezing Order').

16 On 30 May 2020 Riordan J made orders granting approval to Mr Howell in his capacity as liquidator to enter into a litigation funding agreement with Claims Funding Australia Pty Ltd ('CFA') for the purposes of applying for a freezing order and for the receivership application.

17 As noted earlier, in addition to seeking orders terminating the winding up, the application seeks an order that the freezing and ancillary orders made by Almond J on 28 February 2020 as varied by his Honour's further orders made on 20 May 2020 and 11 February 2021 be vacated.

18 The Freezing Order made on 28 February 2020 relevantly provided the respondents must not remove from Australia or in any way dispose of, deal with or diminish the value of any of the 'Trust Assets' or the 'AXF Holdings Assets' (as defined in the Order) which are in Australia up to the unencumbered value of $75,140,266.89. The Freezing Order listed the usual exceptions for living and legal expenses, dealing with the assets the subject of the freezing order in the course of business and discharging obligations bona fide and properly incurred under a contract previously entered into, with notice given. The Freezing Order provided that the parties could agree in writing to a variation to the exceptions and if so, they were to file and serve a minute of a proposed consent order recording the variation, and the Court may thereafter order that the exceptions are varied accordingly.

19 Specific trust assets to which the Freezing Order referred include:

(a) the vessel known as the 'Fat Fish' ('the Vessel');

(b) the Patek Phillippe 5740/1 G-001 'Nautilus' Calibre 240Q watch described in the Certificate of Origin dated 18 April 2019;

(c) 95 fully-paid ordinary shares in AXF Investments held non-beneficially by AXF Holdings;

(d) 1 fully-paid ordinary share in AXF Resources held non-beneficially by AXF Holdings;

(e) 1000 fully-paid ordinary shares in AXF Properties (Eynesbury) Pty Ltd (ACN 168 062 486) held non-beneficially by AXF Holdings; and

(f) 85 fully-paid ordinary shares in Cape Grim held non-beneficially by AXF Holdings.

20 The 20 May 2020 variation to the Freezing Order provided that the third respondent, AXF Resources Pty Ltd, was permitted to withdraw money from bank accounts it holds with National Australia Bank Limited ('NAB').

21 On 14 August 2020, a meeting of the creditors of the Company was held. At that meeting a motion was carried to remove Mr Howell as the liquidator and to appoint the Liquidators as joint and several liquidators of the company.

22 On 11 February 2021 the Freezing Order was further varied by Almond J. Amongst other things the variation allowed the Vessel called the 'Fat Fish' to be sold with the net proceeds of sale after the payment of NAB as secured creditor and certain other specified expenses and payments to be paid into Court.

23 In around February 2021, following the sale of the Vessel and the discharge of the security interest held by NAB and the payment of expenses and amounts otherwise provided for, the surplus proceeds of $2,611,980 was paid into Court pending a determination of various claims on those proceeds.

24 In addition to the recovery of the net proceeds of sale of the Vessel, the Fat Fish, as a result of the actions taken by them, the Liquidators were successful in recovering funds from other sources.

25 The Liquidators realised $100,000 following the negotiated settlement of a claim by the company against Mr Gu Jnr in relation to motor vehicles, and a further $138,998 following the entry into a settlement deed between certain parties, including two related entities of the Company, and the Company and its Liquidators.

26 The total funds realised from the sale of the Vessel and the other two recoveries amounted to $2,751,078 ('the recovered funds'), over which various persons including Jhato Pty Ltd ('Jhato'), a secured creditor of the company, the previous liquidator, Mr Howell and the litigation funder, CFA, asserted an entitlement.

27 On 11 May 2021, Riordan J ordered that the Liquidators be appointed as joint and several receivers and managers of all the assets of the Trust ('Receivership Order'). As part of the relief sought, in this application the Liquidators who are the Court-appointed receivers, seek orders vacating the receivership and certain other orders made by Riordan J on 11 May 2021.

28 The appointment of the Liquidators as receivers and managers was complicated by the fact that one day earlier, on 10 May 2021, Jhato appointed Michael Billingsley and Jason Bing-Fai Tang as joint and several receivers over the same assets ('Jhato Receivers'). Mr Billingsley has since retired as receiver and manager, and Mr Tang continues as the sole receiver and manager pursuant to the appointment.

29 RZ Consulting Pty Ltd ('RZ Consulting') was a secured creditor of the Company alleging a secured claim of no less than $4,329,932 under a loan facility provided to the Company. Pursuant to cl 6.1 of the DOCA, RZ Consulting has since removed its PPSR registration over the Company. Various other PPSR registrations against the Company are referred to in the affidavit of Mr Campbell-Wilson.

30 The appointment by Jhato of receivers on 10 May 2021 led on 21 May 2021 to the termination of the litigation funding agreement by CFA. Since that time the liquidation has been unfunded. While that is the case, CFA asserted an entitlement to costs and a break-fee giving rise to a combined claim by CFA to be paid $3,788,887.96.

31 Jhato asserts that it has a priority claim over the Company's assets as a secured creditor as at 30 May 2021 in the amount of $32,622,602.74. As at 19 June 2024, following some payments made to Jhato from recoveries, Mr Tang estimated the value of the Jhato debt to be $29,263,565.85, without taking into account default interest at the rate of 35% accruing on the debt to Jhato from 30 May 2021.

32 In around December 2022, the Liquidators negotiated a settlement of the various claims to the recovered funds. On 18 January 2023 the Liquidators made a successful application pursuant to s 477(2B) of the Act for approval of that settlement. The settlement saw releases of claims in the amount of $2,846,329 which included a large portion of CFA's claim. The Order relating to the sale of the Vessel was varied by consent on 14 February 2023 to allow the distribution of the proceeds of sale. The consent order did not otherwise alter the terms of the Freezing Order.

33 I accept the submission on behalf of the Liquidators that the winding up has been complex, difficult and protracted. The Liquidators have been unable to pursue the realisation of the trust assets over which they were appointed receivers because the Jhato Receivers have consistently asserted control and priority over those assets, and because it is unlikely that those assets, or any of them, will leave anything to the Company after Jhato is paid out.

34 I also accept that there is no realistic prospect of the Liquidators securing funding for further recoveries. Whatever Trust Assets remain require material costs and risk for the Liquidators to realise, and in any case are first subject to the Jhato receivership. Leaving to one side the 'Kwong claim' and the 'Ashbury Litigation Asset' to which I will shortly refer, the affidavit of Mr Campbell-Wilson refers to other Trust Assets comprising shares in various related entities, including mining ventures in the Solomon Islands which I accept will be difficult and speculative assets to recover, and for which little or no material value might in any case be realised.

35 On 4 June 2024, AXF Group's creditors resolved to approve the appointment of the Liquidators as joint and several voluntary administrators of the company pursuant to s 436B of the Act.

36 Over the course of almost five years and twenty-five iterations the Liquidators conducted negotiations that have culminated in the execution and part performance of the DOCA.

37 On around 26 July 2024, AXF Holdings (as the deed proponent), AXF Group and the Liquidators (in their capacity as joint and several administrators of the company and also in their capacity as the deed administrators) entered into the DOCA.

38 The submissions in support of the application describe the essential effects of the DOCA in the following terms:

(a) receive from AXF Holdings a contribution of $1.6 million;

(b) release Jhato's claim, by having Jhato retire the Jhato receivers, novate its debt to AXF Holdings and withdraw its security interest;

(c) have RZ Consulting withdraw or confirm discharge of its alleged security interests (which Mr Gu Jnr disputes), with the intent that its claims will form part of the unsecured creditor claims over the Company;

(d) extinguish a further $104,000,000 (or 51%) of the unsecured claims over the Company, by having certain unsecured creditors who are also related creditors (described in the DOCA as 'the Non-Participating Creditors') agree not to participate in any dividend distribution under the DOCA;

(e) with one voluntary exception, pay out priority creditors in full;

(f) see a small dividend paid to remaining unsecured creditors;

(g) otherwise fully discharge and release all claims against the Company; and

(h) keep the Company alive under the management of a new director, for the sole purpose of pursuing Trust Assets constituted by the Kwong Claim chose in action, to which I will shortly refer, but subject to an undertaking that the Company will not trade, and that any limited costs it incurs will be subject to an indemnity from AXF Holdings.

39 Subject to the DOCA the creditor claims over the company total between about $225,862,231 and $236,862,231.

40 As noted above, with one exception all priority creditors of the company will be paid in full under the DOCA. The affidavit of Mr Campbell-Wilson provides the following details of those priority creditors:

(a) PWC's petitioning creditor costs in the amount of c$150,000;

(b) My costs as liquidator (c$357,231) and as administrator (c$55,000) and disbursements in the form of legal fees to Assured Legal Solutions and Lander and Rogers;

(c) the wages, superannuation, retrenchment and leave accrued by Eligible Employee Creditors' under the Act in the amount of about $1,300,000.

1. Since my appointment, the Fair Entitlements Guarantee (FEG) have adjudicated the received claims and distributed $178,600.61 to priority creditors.
2. Based on the records and proofs of debt received to date, the priority claim owing to the employees of the Company is estimated to be $1,268,019.38, which includes an ATO superannuation guarantee charge liability, FEG's claim, and estimated outstanding employee entitlements.

41 The unsecured creditors of the company total approximately $202 million, of which $104 million comprises claims by related parties who are the Non-Participating Creditors under the DOCA. The affidavit of Mr Campbell-Wilson identifies the creditors with the highest number in value. It is unnecessary to identify those creditors in these reasons.

42 As noted above, pursuant to the DOCA, AXF Holdings must pay $1.6 million in three instalments to the deed administrators' trust account. Those payments have already been made.

43 Upon completion of the DOCA, the claims of all creditors, including all employee claims, will be fully released and discharged.

44 The effect of the orders sought in the application as a condition precedent to the completion of the DOCA is to terminate the winding up, to vacate orders incidental to the winding up, including the Receivership Order and the Freezing Order; and to otherwise, leave the Trust, Trust Assets and the company in the control of a new director, Ying 'Cindy' Deng.

45 Ms Deng is also the sole director and secretary of AXF Holdings, the trustee of the Trust and the proponent of the Deed.

46 Ms Deng has provided an undertaking to the Court in her capacity as director of AXF Group and of AXF Holdings as trustee for the Australia Xiang Fu International Trust that she:

(a) will not cause or permit AXF Group to enter into any trading or business activity other than to support or participate in the proposed legal proceedings described as the 'Kwong Claim'; and

(b) will cause AXF Holdings to indemnify AXF Group in respect of any costs, disbursements, debts or liabilities incurred by AXF Group in the course of, or connected with the activity described in the preceding paragraph.

47 The Company was previously involved in property development in Box Hill in which its business partner was Mr Francis Kwong. Arising out of that project on 28 September 2018 Mr Kwong signed a deed of acknowledgement of debt and release which obliged him to pay $9,895,872 to the Company. AXF Holdings alleges that Mr Kwong has breached the terms of the deed of acknowledgement and release, and also of a related deed described in the evidence as the Eynesbury Deed ('Kwong Claim').

48 The Liquidators submit it is prudent and appropriate to keep the Company alive for the purpose of pursuing the Kwong Claim. That is because notwithstanding the apparent transfer of Trust Assets to AXF Holdings in 2019 and upon the completion of the DOCA itself, Mr Kwong foreshadowed his defence is based on the proposition that the necessary consents to assignment of the chose in action against him were not obtained.

49 Ms Deng has exhibited a deed poll to her 20 May 2025 affidavit ('deed poll') which evidences that financial support for AXF Holdings has been obtained from Golden Crane Holdings Limited ('Golden Crane Holdings'), a company incorporated in the Virgin Islands, but based in Hong Kong, to enable the pursuant of the Kwong Claim. The evidence of Ms Deng discloses that a company related to Golden Crane Holdings, Golden Crane Investments Limited ('Golden Crane Investments'), has previously funded a 2023 class action in the Federal Court of Australia against the Western Australian government.

50 The deed poll records an obligation on the part of Golden Crane Holdings to provide funding of up to $3 million for the pursuit of the Kwong Claim, including expressly to cover any obligation AXF Holdings has to indemnity AXF Group in relation to the Kwong Claim, including pursuant to the undertaking given by Ms Deng to this Court.

51 Section 482(2A) of the Act describes the matters to which the Court must have regard in determining whether to terminate a winding up subject to a DOCA:

(a) any report that has been given to the Court by:

(i) the administrator, or a former administrator, of the company; or

(ii) the liquidator, or a former liquidator, of the company; or

(iii) ASIC;

and that contains an allegation that an officer of the company has engaged in misconduct;

(b) any report that has been lodged with ASIC by:

(i) the administrator, or a former administrator, of the company; or

(ii) the liquidator, or a former liquidator, of the company;

and that contains an allegation that an officer of the company has engaged in misconduct;

(c) the decision of the company's creditors to resolve that the company execute a deed of company arrangement;

(d) any document that accompanied a notice of the meeting under section 439A when the company was under administration;

(da) any notice that has been given to the administrator of the deed of company arrangement or the company's creditors under section 445HA (notification of contravention of deed of company arrangement);

(e) whether the deed of company arrangement is likely to result in the company becoming or remaining insolvent;

52 Counsel for the Liquidators submits that for the purposes of s 482(2A) of the Act the relevant factors in this case are:

(a) any report given to the Court by certain persons including, relevantly, the Liquidators (as contained in Mr Campbell-Wilson's supporting affidavit);

(b) the decision of the Company's creditors to resolve that the DOCA Proposal be approved (and thus, that the DOCA be executed);

(c) any document that accompanied the notice of the meeting convened under s 439A, at which that decision was made. The relevant document is the applicants' 'June 2024 Report' to creditors;

(d) whether the DOCA is likely to result in the Company becoming or remaining insolvent; and

53 In this application, counsel summarised 'other relevant matters' as comprising:

(a) the nature of the business carried on by the Company (and in particular, whether there was any apparently 'ugly side to the picture');

(b) the general background and circumstances which led to the winding up;

(c) the demonstrated current trading position and general solvency of the company;

(d) the nature and extent of the creditors, and the status of all debts;

(e) the attitudes and interests of creditors, contributories and liquidator(s);

(f) the public interest and 'commercial morality'; particularly (although not only) with respect to the conduct of the company's affairs. These concepts overlap and are designed to give expression to the very broad discretion conferred upon the Court in applications of this sort.

54 Counsel submits the Courts have warned against a too rigid application of the factors prescribed by the Act and the factors in Re Warbler Pty Ltd[1] referred to below_._

55 In Re Warbler, Master Lee QC acknowledged that those factors were not intended to be exhaustive.[2] The weight to be attributed to the factors listed will depend on the facts of each case.

56 The Liquidators submitted there is a positive case warranting the making of the orders sought in the summons. That is because the orders sought, if made:

(a) resolve the untenable situation created by the competing receiverships;

(b) facilitate a pragmatic solution which best serves the interests and wishes of the Company's creditors (particularly its priority and unrelated unsecured creditors);

(c) facilitate the novation of the Trust's largest secured debt to the new trustee - where it should rightly be;

(d) leave the new trustee to bear the cost and risk of pursuing the realisation of the remaining Trust Asset in the form of the Kwong Claim, which the applicants cannot themselves pursue; and

(e) otherwise, do not offend commercial morality or the public interest, having regard to the objects of Part 5.3A of the Act.

57 Counsel submitted that there is an acknowledged difference between cases where the termination of a winding up is sought in circumstances where a DOCA has been entered, and one without a DOCA. Where a DOCA is entered into, considerations of solvency, public interest and commercial morality must be considered in the context of the objects of Part 5.3A of the Act. I accept that is the case.

58 The principles to be applied on an application to terminate a winding up were stated by the Court of Appeal in Von Risefer v Mainfreight International Pty Ltd:[3]

A long line of authorities establishes the framework within which an application to terminate or stay a winding-up will be considered. In Re Warbler Pty Ltd [(1982) 6 ACLR 526, 533], Master Lee QC of the Queensland Supreme Court said this:

1. The granting of a stay is a discretionary matter, and there is a clear onus on the applicant to make out a positive case for a stay.

2. There must be service of notice of the application for a stay on all creditors and contributories, and proof of this.

3. The nature and extent of the creditors must be shown, and whether or not all debts have been [or will be] discharged.

4. The attitude of creditors, contributories and the liquidator is a relevant consideration.

5. The current trading position and general solvency of the company should be demonstrated. Solvency is of significance when a stay of proceedings in the winding up is sought.

6. If there has been non-compliance by directors with their statutory duties as to the giving of information or furnishing a statement of affairs, a full explanation of the reasons and circumstances should be given.

7. The general background and circumstances which led to the winding up order should be explained.

8. The nature of the business carried on by the company should be demonstrated, and whether or not the conduct of the company was in any way contrary to 'commercial morality' or the 'public interest'.

This list has been often cited. But, as Master Lee himself stated, it was not intended to be exhaustive, and should not be regarded as a series of rigid principles. Nor does it follow that all items on the list carry equal weight. Solvency or otherwise of the company will loom large where the company was wound up because of inability to pay its debts as they fell due.

59 In Re Glass Recycling Pty Ltd Brereton J observed:[4]

Essentially, on such an application, the court must be satisfied, first, that the state of affairs that required that the company be wound up no longer exists. Where the winding up was on grounds of insolvency, it will be necessary for the applicant to demonstrate that the company is not, or is no longer, insolvent. This is usually the most significant consideration. Thus it has been said that an order terminating the winding up would usually be made if all the creditors are paid out, the liquidators' costs and expenses are covered, and the members agree.

However, the factors to which the cases refer demonstrate that more is necessary than merely establishing that the state of affairs that required the company to be wound up no longer exists. This appears from, inter alia, the references to 'commercial morality' as a relevant consideration, and also from references to the interests of future as well as extant creditors. These factors illustrate that the second broad consideration that informs the exercise of the court's discretion - once satisfied that the state of affairs that originally required winding up no longer exists - is that it would be reasonable to entrust the affairs of the company, once again, to the directors under whose management it previously failed...

60 In English, Scottish & Australian Chartered Bank Lindley LJ stated:[5]

if the creditors are acting on sufficient information and with time to consider what they are about and are acting honestly, they are, I apprehend, much better judges of what is to their commercial advantage than the court can be.

61 The statement by Lindley LJ in English, Scottish & Australian Chartered Bank was applied by Justice Giles in Re Spedley Securities Ltd (in liq)[6] in the context of the attitude of creditors to an application by a liquidator.

62 In addition to applying these general principles, because the company is subject to a DOCA, I am required to have regard to the matters specified in s 482(2A) of the Act, the terms of which are set out above.

63 Before turning to those matters it is convenient to deal with the matters enumerated by Master Lee in Re Warbler, so far as those factors are relevant to the disposition of this application. Item 2 of the matters listed is satisfied. The Liquidators have assumed the onus discussed in item 1 in Re Warbler in their evidence, and have discharged that onus concerning items 3, 5, 6, 7 and 8. Item 4, which is a significant consideration in this case, is clear. The creditors, and the Liquidators, who are the moving party in this application pursuant to the DOCA, support the termination of the winding up and the ancillary orders that are sought.

64 To make the orders sought by the Liquidators, which are supported by the creditors, whose support is reflected in the DOCA and its terms, is to act in a manner consistent with the views expressed by Lindley LJ.

65 This was a winding up in insolvency. Noting the observations by Brereton J in Re Glass Recycling Pty Ltd,[7] the evidence, including the undertaking given by Cindy Deng establishes that the Company will not enter into any trading or business activity.

66 The proposed orders will allow the DOCA to proceed to completion at which time, with the exception of the Kwong Claim, the Company will revert to a neutral position with no assets and no liabilities. As is the evidence of Mr Campbell-Wilson, the company will at that time be left solvent in the sense that it will have neither assets nor liabilities and nor will it be subject to any form of external administration.

67 Although the Company will revert to what is described as a 'neutral position', the exception concerns the participation as required by the Company in the proposed legal proceedings, variously described in the evidence and in the Golden Crane Holdings deed poll as the 'Kwong claim' or the 'Kwong proceeding'.

68 The undertaking by Ms Deng that she will cause AXF Holdings to indemnity AXF Group in respect of any costs, disbursements, debts or liabilities incurred by AXF Group in the course of, or connected with the proposed legal proceedings described as the Kwong Claim is backed by the funding from Golden Crane Holdings, the subject of the deed poll.

69 In those circumstances I am satisfied that although upon termination of the winding up, the Company may be involved as a party to the proposed Kwong Claim, that it is not at risk of a return to insolvency by reason of that involvement.

70 I now turn to consider the mandatory factors listed in s 482(2A) of the Act.

71 Concerning sub-section (a) I must have regard to any report given to the Court in this case by the Liquidators. I treat the primary affidavit of Mr Campbell-Wilson relied on in support of this application as such a report. The affidavit provides a thorough and detailed account of the administration of the Company in insolvency. It provides cogent evidence in support of the termination of the winding up, and for the making of the other orders that are sought.

72 Sub-section (b) requires that I must consider any report that has been lodged with ASIC. The Liquidators lodged a s 533 report with ASIC, noting possible misconduct by Mr Gu Jnr as a former director of the Company concerning possible breaches of director's duties, obligations to keep financial records, and insolvent trading. ASIC notified the Liquidators on 16 August 2021 that it did not intend to investigate the matters in that report. I accept the submission by counsel that if there were concerns sufficient to warrant the refusal of this application, then it could have been expected that ASIC or the Australian Tax Office would have intervened when provided with the opportunity to do so. That has not occurred.

73 I also accept counsel's submission that if there were concerns about any alleged phoenixing activity, then the orders sought by the Liquidators in this application would likely thwart rather than facilitate any such activity.

74 Sub-section (c) requires that I consider the decision of the Company's creditors to resolve the Company execute a DOCA. The creditors' decision to have the company execute the DOCA has been described in the cases as of 'paramount importance'.[8] In this case, the creditors voted in favour of the DOCA and by virtue of that vote have voted in favour of the orders sought in the application.

75 I have already referred to the key features of the DOCA as summarised in counsel's submissions. The evidence shows that the position for the creditors under the DOCA is certainly no worse, and I think better than what Mr Howell considered likely to be the position when the winding up commenced in his report to creditors dated 4 May 2020. I consider that the creditors acted prudently and were fully and appropriately informed when they resolved to execute the DOCA, and it is important to place significant weight on their wishes when determining this application.

76 Sub-section (d) requires that I consider any document that accompanied the notice of the meeting under s 439A when the Company was under administration. In this case, that is the June 2024 report. That report prepared by the Liquidators details the two potential choses in action available, being the Ashbury Litigation Asset and the Kwong Claim, and includes views expressed by the Liquidators on the prospects of recovery concerning those claims. There is nothing in the report which acts as a counter to the proposition that it is appropriate to make the orders sought in the summons.

77 Sub-section(da) requires that I must consider whether there has been any contravention of the DOCA. That subsection is not relevant in this case. There has been no contravention.

78 Sub-section (e) requires that I must consider whether the DOCA is likely to result in the company becoming or remaining insolvent. For the reasons I have previously discussed, that is not a material or relevant consideration in this case.

79 Sub-section (f) requires that I consider any other relevant matters. In this case, another relevant matter is that the termination of the winding up and the completion of the DOCA, the terms of which include the payment of $1.6 million that has been attended to provides an outcome for the creditors which is more certain and more favourable than would be the case from the continuation of an unfunded liquidation.

80 For those reasons, I will make orders substantially in accordance with the relief sought in the summons. Those orders include the order sought concerning the costs of the application. The orders that I will make will include a reference in other matters to the undertaking given to the Court by Ms Deng.

AXF GROUP PTY LTD (ACN 116 258 130) (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)

PHILIP CAMPBELL-WILSON AND MATTHEW BYRNES AS JOINT AND SEVERAL LIQUIDATORS OF AXF GROUP PTY LTD (ACN 116 258 130) (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)

AXF PROPERTIES (EYNESBURY) PTY LTD (ACN 168 062 486)

CLAIMS FUNDING AUSTRALIA PTY LTD ATF THE CLAIMS FUNDING AUSTRALIA DISCRETIONARY TRUST

JASON BING-FAI TANG AND MICHAEL BILLINGSLEY AS JOINT AND SEVERAL RECEIVERS AND MANAGERS OF AXF GROUP PTY LTD (ACN 116 258 130) (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED)

DANNY TONY VRKIC IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF MINGFENG GU

[1] (1982) 6 ACLR 526.

[2] Re Warbler Pty Ltd (1982) 6 ACLR 526, 534 ('Re Warbler').

[3] [2009] VSCA 179; 25 VR 366; 73 ACSR 427, 367-8 (Ashley JA with whom Beach AJA agreed) (citations omitted).

[4] [2014] NSWSC 439 [18], [19] (citations omitted).

[5] [1893] UKLawRpCh 112; [1893] 3 Ch 385, 409 ('English, Scottish & Australian Chartered Bank').

[6] (1992) 9 ACSR 83 [86].

[7] [2014] NSWSC 439 [18]-[19] (citations omitted).

[8] Re Nukleen Int Pty Ltd (In Liquidation) (Subject To A Deed Of Company Arrangement) ACN 158 147 767 [2014] SASC 30 [18] (Dart J).