In the matter of Nighthawks Aviation Operations Pty Ltd

Legislation Cited: Corporations Act 2001 (Cth)

Cases Cited: Commonwealth Bank of Australia v Begonia Pty Ltd (1993) 11 ACSR 609
Expile Pty Ltd v Jabb’s Excavations Pty Ltd (2003) 45 ACSR 711; [2003] NSWCA 163
Switz Pty Ltd v Glowbind Pty Ltd; Glowbind Pty Ltd v Switz Pty Ltd (2000) 48 NSWLR 661; [2000] NSWCA 37
Xu v Megaward Pty Ltd (2018) 130 ACSR 412; [2018] NSWCA 232

Texts Cited: N.A.

Category: Principal judgment

Parties: Jen Group Pty Ltd (plaintiff)
Nighthawks Aviation Operations Pty Ltd (defendant)

Representation: Counsel:
N Bailey (plaintiff)
M R Davis (defendant)
Solicitors:
Keypoint Law (plaintiff)
FSC Law (defendant)

File Number(s): 2025/308171

Publication restriction: N.A.

JUDGMENT

1. The plaintiff (Jen Group) seeks orders pursuant to sections 459A and 459P of the C**orporations A**ct 2001 (Cth) for the winding up in insolvency of the defendant (Operations).

2. Operations resists the application. It contends that it is solvent.

3. Jen Group served a creditor’s statutory demand dated 30 April 2025 on Operations. The demand concerned a debt for $34,626.65. It required payment of the debt within 21 days of the date of service. The date of service was 1 May 2025. The 21 days expired on 22 May 2025.

4. Operations did not apply to have the statutory demand set aside, or comply with it.

5. Jen Group commenced these proceedings on 12 August 2025.

6. Section 459R of the Corporations Act requires that an application for a company to be would up in insolvency must be determined within 6 months after it is made. On 20 October 2025, Black J extended that time until 27 March 2026.

7. For purposes of an application under section 459P of the C**orporations A**ct, a company is deemed to be insolvent if, relevantly, during the 3 months ending on the day when the application was made, the company failed to comply with the statutory demand: see section 459C(2)(a). It follows that Operations is deemed to be insolvent, given the application was made on 12 August 2025 and the failure occurred on 22 May 2025.

8. The presumption of insolvency operates except so far as the contrary is proved for the purposes of this application: see section 459C(3). This means that Operations had an onus to prove that it is able to pay all of its debts as and when they become due: see section 95A.

9. In seeking to prove that it is solvent, Operations relied on the evidence of Mr Bruce Kennedy, who is the sole director of Operations. It also relied on evidence from Ms Christine Gugiatti, who is Mr Kennedy’s de facto partner. Through a corporate vehicle, they own nearly 75% of the shares in Operations. She is also the sole director of a company called Nighthawks Aviation Pty Ltd (Aviation). Mr Kennedy and Ms Gugiatti also indirectly own a majority of the shares in Nighthawks Aviation Support Pty Ltd (Support). Mr Kennedy is the sole director of Support.

10. Operations also relied on expert evidence from Mr David Hurst, who is a chartered accountant and registered liquidator. He prepared an expert report in which he expressed the view that Operations is solvent. The report was admitted without objection.

11. Operations sought to lead evidence through Mr Kennedy which disputed the debt and explained why he considered the matter to have been resolved. Operations submitted that the evidence explained the context of the application and was relevant to the kind of material that would need to be adduced to prove solvency. Not having applied to set aside the statutory demand, Operations could not oppose the winding up application on the ground that the debt was disputed: see section 459S. I considered that the evidence challenging the debt involved, as a matter of substance, opposing the application on a ground that could have been relied on in making an application to set aside the statutory demand, but was not. I could only grant leave to Operations to raise this issue if I was satisfied it was material to proving the company was solvent: section 459S(2). I was not so satisfied. Operations did not submit that a debt of $34,626.65 meant the difference between solvency and insolvency. The circumstances surrounding the debt had no bearing on the question of whether Operations is solvent: see Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661; [2000] NSWCA 37 at [53]-[54] per Spigelman CJ. I rejected the evidence.

12. Jen Group relied on the proposition that in order to discharge the presumption of insolvency, a company will ordinarily need to present the “fullest and best” evidence of its financial position: see Commonwealth Bank of Australia v Begonia Pty Ltd (1993) 11 ACSR 609 at 617 per Hayne J. There is authority that where a company has the burden to prove solvency, unaudited accounts and unverified claims of ownership or valuation are not ordinarily probative of solvency, even if made by qualified accountants who have detailed knowledge of how those accounts were prepared: Expile Pty Ltd v Jabb’s Excavations Pty Ltd (2003) 45 ACSR 711; [2003] NSWCA 163 at [16].

13. The proper approach to evidence in an application such as this one is set out in the decision of the Court of Appeal in Xu v Megaward Pty Ltd (2018) 130 ACSR 412; [2018] NSWCA 232:

[30] First, Mr Xu complains that the accounts tendered by Megaward are not “the fullest and best evidence” of its financial position. This draws upon language used by Hayne J in Commonwealth Bank of Australia v Begonia Pty Ltd (rec and mgr apptd) (1993) 11 ACSR 609; 11 ACLC 1075 at 1081. However, he very properly acknowledged that there was not some inflexible rule that there was only one way of proving solvency, namely, by producing audited accounts. True it is that in some cases — especially if the company is in a weak financial position — a court may take the view that only such evidence would suffice to displace a presumption of insolvency. All this has been explained in a series of cases, including Deputy Commissioner of Taxation v De Simone Consulting Pty Ltd [2007] FCA 548 at [11]–[14] (Finkelstein J), Coates Hire Operations Pty Ltd v D-Link Homes Pty Ltd [2011] NSWSC 1279 at [60]–[61] (White J); and Deputy Commissioner of Taxation v Bayconnection Property Developments Pty Ltd (2012) 127 ALD 64; [2012] FCA 363 at [60]–[61] (Robertson J).

[31] Fundamentally, as was said in both of the last two decisions:

“Hayne J was describing the nature of the evidence one would expect a company to lead in opposition to the application that it be wound up in insolvency. His Honour did not say that only the fullest and best possible evidence of a company’s financial position would be sufficient to displace a presumption of insolvency.”

[32] That does not stand in the way of the fact that in many and probably most such applications, the company would be well advised to adduce the fullest and best possible evidence. That reflects the qualified force of the proposition that “the Court should ordinarily be presented with the ‘fullest and best’ evidence of the financial position of the respondent”, applied in this Court in Expile Pty Ltd v Jabb’s Excavations Pty Ltd (2003) 45 ACSR 711; [2003] NSWCA 163, which in turn reflects the qualified language used by Hayne J.

See also Mangano v Bullen [2025] FCAFC 42 at [163] per Shariff and Needham JJ.

14. Mr Hurst examined the financial record of Operations. He did not conduct an audit. He expressed the opinion that Operations was solvent as at 1 July 2025 and remained solvent to 5 January 2026 (noting his report is dated 16 January 2026).

15. Jen Group advanced 3 main reasons why I should not be satisfied that Operations has established that it is solvent. They were: (1) the Court cannot be satisfied that books and records of the company are accurate; (2) the circumstances surrounding the acquisition and sale of a helicopter; and (3) Operations is dependent on related-party finance.

16. There is some overlap between these reasons and I will deal with them together.

17. The financial health of Operations, as reflected in the company’s books and records, was significantly improved following a transaction in October 2025 involving the sale of a helicopter. On the adjusted balance sheet prepared by Mr Hurst, Operations’ current ratio was fluctuating around 1 in the months up to 30 September 2025 and then jumped to 3.46 in October 2025 and has remained above 2 since then.

18. The circumstances surrounding this transaction were not fully explained in the evidence. It appears that a helicopter owned by a company called BMG Management Consultants Pty Ltd (which is associated with Mr Brett McGrane) owned a helicopter that was being piloted by a pilot working, probably for Aviation, on a movie set. The helicopter was damaged and it was unable to fly again. It appears that BMG was involved in a legal dispute with its insurer concerning the damage to the helicopter. Meanwhile, on 7 March 2023, Aviation paid $95,000 to BMG which, apparently, was the amount of BMG’s insurance excess.

19. By a letter dated 3 March 2025 that was addressed to Bruce Kennedy c/o Operations, which was handed to Mr Kennedy in about March 2025, Mr McGrane advised Mr Kennedy that the dispute with the insurer had resolved and that “I have taken possession of the wreck as part of the settlement & as discussed, I am happy for you to have it for the previously paid $95,000”.

20. There is evidence that Operations sold the helicopter to Flying Wombats Holdings Pty Ltd on about 11 October 2025 for $660,000. As part of the sale process, Mr McGrane apparently prepared a letter addressed “to whom it may concern”, confirming that Mr Kennedy of “Nighthawks Aviation” has full authority to sell the whole or parts of the helicopter. Mr Kennedy forwarded that letter to Flying Wombats as Chief Executive Officer of Aviation. Mr Kennedy gave evidence that there was considerable time and expense incurred in getting the helicopter ready for sale, including the preparation of reports. It is not clear how much was spent or whether the expenses were incurred by Operations, Aviation or Support.

21. The evidence indicates the $660,000 is being paid by Flying Wombats to Operations by way of part payments. There was a payment of $220,000 to Operations on 17 October 2025 from a company associated with Flying Wombats on account of the sale of the helicopter. There were payments of $140,000 on 31 October 2025 and $120,000 on 4 December 2025 from Flying Wombats. That is, the proceeds of the sale were paid to Operations and became a current asset of Operations, as cash. Without that cash, Operations would have had a negative cash position from October 2025. It appears that the $660,00 was booked as revenue for Operations’ profit and loss account in October 2025.

22. The evidence did not properly explain how Operations came to have the right to own and sell the helicopter when it was Aviation who had paid $95,000 to BMG. Mr Kennedy gave evidence that Aviation transferred the helicopter to Operations. There was no document to support that sale. The terms of the sale have not been explained. There was no evidence about when the sale occurred or of the purchase price. Mr Kennedy gave evidence that he expected the transaction to be reflected in the loan account between Operations and Aviation. It was not. It was not clear how the transaction worked, but it appears that what Mr Kennedy had in mind is that Operations is indebted to Aviation for the (unknown) purchase price. Mr Kennedy also gave evidence that he was unsure whether the sale was recorded in the books and records of Operations and that “we’ll figure it out” at the end of the financial year.

23. Operations submitted that I should infer the purchase price as between Aviation and Operations was $95,000. I am not prepared to draw that inference when the persons best placed to give evidence about the transaction (Mr Kennedy and Ms Gugiatti) were witnesses in the case and did not address the subject.

24. It is difficult to have confidence in the books and records of Operations in circumstances where it appears they record Operations as having received $580,000 in cash since October last year from the sale of the helicopter but have not brought to account the transaction by which Operations acquired the helicopter. It may be that everything could be figured out at the end of the financial year. That appears to reflect a casual approach to account-keeping. It does not help the Court when it is being asked to draw conclusions based on the financial records as they appear now.

25. Operations’ most significant liabilities, as recorded in its accounts, are in two categories. It has liabilities to related persons and entities. As at 5 January 2026, the accounts recorded debts of $1,106,491 to Mr Kennedy, $226,015 to Aviation and $30,039 to Support. It also owed about $565,000 in respect of two chattel mortgages associated with the purchase of two helicopters.

26. Ms Gugiatti gave evidence by an affidavit dated 1 October 2025 that Aviation has lent Operations money for the purpose of injecting operating capital and to assist with the purchase of the two helicopters. This indicates that the loan did not include any amount on account of the unusable helicopter that been acquired from BMG. At the time she made the affidavit, the loan balance was about $145,000. Her evidence was that she does not intend to cause Aviation to seek repayment of the loan. Ms Gugiatti does not deal with any loan or indebtedness on account of the helicopter acquired from Aviation by Operations. Her attitude to that loan is unknown, save it can be inferred that it is not in her or Aviation’s interests to take steps to imperil the viability of Operations.

27. Operations’ loan account records show that loans from Mr Kennedy to the company have generally been growing over time from nil in March 2024 to over $1m. The balance of the loan from Aviation has fluctuated but has generally grown over the same period. There is no entry of $95,000 or other amount attributed to the loan relating to the BMG helicopter. These loans are carried as non-current loans. Mr Hurst treated them for the purposes of his analysis as non-current liabilities, based on the evidence of Mr Kennedy and Ms Gugiatti that they did not intend to require repayment. There is no evidence of any legal impediment that would prevent either Mr Kennedy or Aviation from demanding immediate payment, or payment on short notice.

28. I am satisfied that Operations’ ability to pay its debts as and when they fall due depends on the willingness of Mr Kennedy, Aviation and, to a lesser extent, Support to refrain from making demands for repayment of their loans and being willing to advance funds to enable Operations to meet its obligations. While I can infer that neither Mr Kennedy nor Ms Gugiatti have any incentive to imperil Operations, I have no evidence about their ability to continue to provide financial support to Operations. For instance, if Aviation has outstanding creditors, Ms Gugiatti may have no choice, if acting in accordance with her duties to Aviation, to call on its loan to Operations.

29. The financial affairs of Mr Kennedy and Aviation have become so intertwined with those of Operations that it is not possible to come to a conclusion that Operations is solvent without properly understanding the financial position of Mr Kennedy and Aviation. The solvency of Operations depends on both the goodwill and the financial wherewithal of Mr Kennedy, Aviation and Support. There is no evidence about that financial wherewithal.

30. I am conscious that Mr Hurst has expressed the opinion that Operations is solvent. That opinion was based on the following “key matters”:

31. Operations generated an accumulated profit of $667,164 for the period 1 July 2025 to 5 January 2026;

32. cash at bank increased by $114,450 from 1 July 2025 to 31 December 2025;

33. Operations maintained a net surplus of liquid assets over unsecured current liabilities throughout the period under review;

34. ATO lodgements and payments were regular;

35. related party support was available; and

36. only one trade creditor was identified as being outside trading terms and an offset arrangement was in place.

37. Notwithstanding these views, I am not satisfied that Operations has proved that it is solvent in circumstances where:

38. the financial records of Operations do not properly or fully account for a transaction (being the acquisition and sale of the BMG helicopter), which was critical to Operations’ reported accumulated profits, its cash position and its surplus of liquid assets over unsecured current liabilities; and

39. Operations’ ability to pay its debts is heavily dependent on ongoing related party support and it is not possible to assess the availability of that support without some substantiation of the ability of the related parties to continue to provide that support.

These circumstances mean that I cannot be confident that I am able to identify the debts of Operations or the terms of the relevant arrangements and cannot be satisfied that Operations has the ability to pay those debts as and when they fall due.

32. If Jen Group had an onus to prove that Operations is insolvent, it would have failed. The evidence does not establish that Operations is insolvent and Mr Hurst’s report points to matters that speak against insolvency. But on this application, Operations is presumed to be insolvent. It was for Operations to prove it is solvent. In the circumstances of this case, that required Operations to explain the full financial circumstances and implications of the acquisition and on-sale of the helicopter to Flying Wombats and to provide evidence about the continuing willingness and ability of Mr Kennedy, Aviation and Support to provide financial support to Operations. These matters were not addressed in the evidence and were not taken into account by Mr Hurst.

33. It follows that Jen Group is entitled to the orders that it seeks.

34. Mr Scott Darren Pascoe and Mr Glenn Ian Livingstone of WLP Restructuring Pty Ltd have given their consent to being appointed as joint and several liquidators of Operations. It was not suggested that they were inappropriate persons to be appointed.

35. I make the following orders:

36. Nighthawks Aviation Operations Pty Ltd ACN 168 769 926 be wound up.

37. Scott Darren Pascoe and Glenn Ian Livingstone of WLP Restructuring Pty Ltd be appointed as joint and several liquidators of Nighthawks Aviation Operations Pty Ltd ACN 168 769 926.

38. The costs of the plaintiff be paid out of the assets of the defendant.

**********