Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Number of paragraphs: 158

Date of hearing: 15 July 2021

Counsel for the Plaintiffs: Mr J Garas SC with Ms RA Collins

Solicitor for the Plaintiffs: Gilbert + Tobin

Counsel for the Defendant: The Defendant did not appear

Counsel for the identified Interested Parties: Mr F Assaf SC with Ms PA Honey

Solicitor for the identified Interested Parties: Pragma Legal

ORDERS WAD 95 of 2021 IN THE MATTER OF ADAMAN RESOURCES PTY LTD (ADMINISTRATORS APPOINTED) (ACN 620 314 007) between: JEREMY NIPPS AND BARRY WIGHT IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF THE SECOND TO EIGHTH PLAINTIFFS First Plaintiffs

ADAMAN RESOURCES PTY LTD (ADMINISTRATORS APPOINTED) (ACN 620 314 007) Second Plaintiff

ADAMAN MINERALS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 628 877 609) (and others named in the Schedule) Third Plaintiff

and: REMAGEN LEND ADA PTY LTD (ACN 636 602 849) Defendant

order made by: BANKS-SMITH J DATE OF ORDER: 20 July 2021

1. Pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Corporations Act 2001 (Cth), the first plaintiffs (Administrators) are justified and are, or will be, acting reasonably and properly by entering into and giving effect to a deed of company arrangement in terms of a term sheet proposed by Rivet Finco Pty Ltd as annexed to these orders (DOCA Proposal), including the transactions contemplated under it.
2. Pursuant to s 447A of the Corporations Act, Part 5.3A of the Corporations Act is to operate in relation to the second plaintiff (Adaman Resources) and third plaintiff (Adaman Minerals): (a) as if s 437A(1) and s 442A(c) of the Corporations Act provided that the Administrators have the power to enter into the DOCA Proposal, and the transactions contemplated under it, on behalf of Adaman Resources and Adaman Minerals; (b) as if s 437D(2) of the Corporations Act provided that the Administrators' entry into the DOCA Proposal, and the transactions contemplated under it, will be on behalf of Adaman Resources and Adaman Minerals and therefore not void under s 437D(2) of the Corporations Act for lack of authority; (c) as if s 442C(2) of the Corporations Act does not prevent the Administrators from dealing with and disposing of any secured property (or property, other than PPSA retention of title property, of which the owner or lessor is a third party but which is used or occupied by, or is in the possession) of Adaman Resources or Adaman Minerals under the DOCA Proposal, and the transactions contemplated under it, subject to the required steps and limitations specified in s 442B, s 442C and s 442D of the Corporations Act; and (d) as if the provisions of Divisions 10, 11 and 11AA of Part 5.3A of the Corporations Act apply to the DOCA Proposal, and any deed executed to give effect to the DOCA Proposal, insofar as they relate to Adaman Resources and Adaman Minerals.
3. Within two business days of these orders being made, the Administrators are to take all reasonable steps to give notice of these orders to creditors of each of the Companies (including persons claiming to be creditors) and Rivet Finco Pty Ltd as proponent of the DOCA Proposal by means of a circular: (a) to be published on the website maintained by the Administrators in respect of the administration of the Companies; and (b) to be sent by email or by post to all known creditors and Rivet Finco Pty Ltd.
4. The plaintiffs' costs of and incidental to this application be costs in the administration of the Companies, jointly and severally. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BANKS-SMITH J: 1 This application was commenced on an urgent basis to seek directions regarding entry into a deed of company arrangement and underlying transactions in circumstances where the question of the validity of the appointment of administrators under Part 5.3A of the Corporations Act 2001 (Cth) remains in part deferred. 2 For the reasons that follow, I have decided that it is appropriate in the circumstances to make certain directions.

Timeline 3 The first plaintiffs, Jeremy Nipps and Barry Wight (Administrators), have brought this application. They are both partners of insolvency specialist firm Cor Cordis, and were appointed as joint and several administrators of the second plaintiff, Adaman Resources Pty Ltd, on 1 May 2021. On the same day the Administrators were appointed administrators of the third plaintiff, Adaman Minerals Pty Ltd. 4 The Administrators were also appointed that day as administrators of the fourth to eighth plaintiffs, being Adaman Gold Hold Co Pty Ltd, Adaman Gold Pty Ltd, Goldlake Holdings Pty Ltd, Hopstorm Pty Ltd and Kirkalocka Gold SPV Pty Ltd respectively. 5 The concurrent first meeting of creditors under s 436E of the Corporations Act was held on 12 May 2021. 6 The concurrent second meeting of creditors was held on 6 July 2021. 7 At the second creditors meeting, the creditors resolved that each of the seven entities that I have referred (together the Adaman Group) execute a deed of company arrangement in terms proposed by Rivet Finco Pty Ltd (Rivet Finco DOCA Proposal). 8 This application was filed on 12 July 2021. A case management hearing was conducted on 13 July 2021, and a hearing date of 15 July 2021 was set. Orders were made permitting any party or interested person to file affidavits or submissions. I am satisfied that the legal representatives of each of the Remagen Interests, the Mitchell Interests and the Director Interests (described below) were on notice of the application and hearing. I permitted Rivet Finco and SMS Innovative Mining Pty Ltd (SMS) to be heard as interested persons. Senior counsel appeared at the hearing of the interlocutory application on behalf of Rivet Finco and SMS, but did not seek to make any oral submissions. No other party or interested person sought to appear or make any submissions.

The concurrent proceedings 9 Relevantly there are two proceedings on foot relating to the Adaman Group. 10 In this proceeding (WAD 95 of 2021), which commenced on 4 May 2021, the Administrators initially applied for orders validating their appointment to all seven entities comprising the Adaman Group (Validation Application). A number of other applications have now been brought in the Validation Application, as referred to below. The defendant, Remagen Lend ADA Pty Ltd, was formally joined as a party as it opposed the validation orders insofar as they related to Adaman Resources and Adaman Minerals. As explained below, the application for validation with respect to the other Adaman Group entities has been determined, but the application remains deferred with respect to Adaman Resources and Adaman Minerals. 11 Remagen is a shareholder of Adaman Resources. Mr Simon Raftery is the sole director of Remagen and was formerly a director of Adaman Resources. I will refer to them together as the Remagen Interests. The Court initially proposed to deal with the allegations made by Remagen in WAD 95 of 2021 on an urgent and expedited basis so that the balance of the Validation Application could be resolved, allowing all parties to proceed one way or another with certainty. Expressed generally, Mr Raftery alleged by an affidavit filed in the Validation Application that the conduct of the directors of Adaman Resources and others, including the Administrators, has given rise to the following contested issues: (1) whether the removal of Mr Raftery as a director of Adaman Resources on 30 April 2021 and a dilution of his shareholding was invalid; (2) whether the incumbent directors of Adaman Resources were entitled to rely upon an emergency power in the constitution to resolve to appoint the Administrators; (3) whether the board of Adaman Resources was entitled to resolve to appoint administrators to Adaman Resources in the absence of a resolution of its shareholders, having regard to the terms of a shareholders' agreement dated 18 November 2019 between itself and its shareholders on incorporation; (4) whether the board of Adaman Resources acted bona fide in exercising their powers to pass the resolution in that they relied upon a demand made by a related company, SMS as the catalyst for the appointment in circumstances where (Remagen contends) the debt to SMS was not owed; (5) whether Adaman Resources and Adaman Minerals were insolvent; and (6) whether the independence of the Administrators was compromised in some manner. 12 On 11 May 2021 Mr Raftery and Remagen commenced separate proceedings against the plaintiffs in this matter and others (WAD 106 of 2021) (Separate Proceeding). In the Separate Proceeding (and having regard to the originating process filed in that matter), the Remagen Interests seek relief as to the matters generally alleged by Mr Raftery that I have summarised above. The relief sought includes leave to proceed against Adaman Resources and Adaman Minerals (the eleventh and twelfth defendants) but leave has not as yet been pursued, and a declaration that the appointment of each of the Administrators (the ninth and tenth defendants) as administrators of Adaman Resources and Adaman Minerals was invalid. 13 Strictly for convenience I will refer to the other parties in the Separate Proceeding as follows: (a) the second defendant (Mitchell Group Holdings Pty Ltd) as the Mitchell Interests; and (b) the first and third to eight defendants (Contento Investments Pty Ltd, Stefead Resources Pty Ltd, SMS, Mark Rowsthorn, Daniel Sweeney, Nicholas Anderson and John Fitzgerald) as the Director Interests. 14 The Separate Proceeding is being pursued by pleadings by the consent of the parties. A statement of claim has been filed. Whilst the Administrators and the Mitchell Interests have filed their defences, the Director Interests have yet to file a defence, it having been agreed (or not opposed) by the parties that the time for filing such defence be extended until after a strike out application brought by the Director Interests is determined. Furthermore, at the date of the hearing of this application the Separate Proceeding remained stayed as a result of non-compliance by Remagen with an order (made with Remagen's consent) that it pay security for costs. Under the terms of the orders for security the Separate Proceeding remains stayed, although I understand from Registry that payment of the security sum was tendered on the day following the hearing. 15 The Separate Proceeding is of some importance to this application because it has had the effect of postponing any meaningful determination of the balance of the Validation Application. The contentions made as to the validity of the Administrators' appointment are common to both proceedings. Any determination of the proceedings, including any complaints maintained against the Administrators, is likely to be some time off. There is an overlap between matters relevant to the balance of the Validation Application and the Separate Proceeding. Therefore, absent any separate resolution (and I have directed the parties to mediation, without deferring any step in the proceedings), the balance of the Validation Application will not be decided in the short term, and will most likely await determination of the Separate Proceeding or be dealt with at the same time. I further note that as the Director Interests have not filed a defence, the issues between the parties have not as yet been clearly defined.

Previous judgments 16 These proceedings have been the subject of six published judgments to date. 17 In Nipps (Administrators) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) [2021] FCA 520 (Adaman 1), I made orders under s 447A validating the appointment of the Administrators to each of the fourth to eighth plaintiffs. The application insofar as it concerned Adaman Resources and Adaman Minerals was adjourned, in effect due to the overlap with the matters the subject of the Separate Proceeding: Adaman 1 at [10]-[19]. 18 In Nipps (Administrators) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) (No 2) [2021] FCA 577 (Adaman 2), I made orders extending the convening period for the second meeting of creditors to 28 July 2021. 19 In Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) (No 3) [2021] FCA 628 (Adaman 3), I made orders as to legal professional privilege of certain documents, including that a number of documents should be inspected by the Court. 20 In Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) (No 4) [2021] FCA 644 (Adaman 4), I made orders modifying the operation of s 443A under s 447A of the Corporations Act and s 90-15 of the Insolvency Practice Schedule (Corporations) (IPS), being Schedule 2 to the Corporations Act, relating to a $20 million funding facility (Facility) provided under a funding agreement entered into by the Administrators with Rivet Finco as lender for the ongoing costs of the administration, including with respect to limiting the Administrators' personal liability (Funding Deed). 21 In Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) (No 5) [2021] FCA 645 (Adaman 5) I made orders under s 447A of the Corporations Act and s 90-15 of the IPS acknowledging the entitlement of the Administrators to remuneration and costs, regardless of the deferred question as to the validity of their appointment over Adaman Resources and Adaman Minerals. 22 In Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) (No 6) [2021] FCA 694 (Adaman 6), McKerracher J, having inspected the documents over which undetermined privilege claims remained, made orders reflecting that the privilege claims were substantiated.

This application 23 This application is brought in part under s 90-15 of the IPS. The Administrators seek a direction that the Administrators are justified and are, or will be, acting reasonably and properly by entering into and giving effect to a deed of company arrangement in terms of an identified term sheet proposed by Rivet Finco (which they propose be annexed to the orders), including the transactions contemplated under it. 24 The Administrators also seek orders under s 447A of the Corporations Act that Part 5.3A of the Corporations Act is to operate in relation to Adaman Resources and Adaman Minerals: (a) as if ss 437A(1) and 442A(c) of the Corporations Act provided that the Administrators have the power to enter into the Rivet Finco DOCA Proposal, and the transactions contemplated under it, on behalf of Adaman Resources and Adaman Minerals; (b) as if s 437D(2) of the Corporations Act provided that the Administrators' entry into the Rivet Finco DOCA Proposal, and the transactions contemplated under it, will be on behalf of Adaman Resources and Adaman Minerals and therefore not void under s 437D(2) of the Corporations Act (for lack of authority); (c) as if s 442C(2) of the Corporations Act does not prevent the Administrators from dealing with and disposing of any secured property (or property, other than PPSA retention of title property, of which the owner or lessor is a third party but which is used or occupied by, or is in the possession) of Adaman Resources or Adaman Minerals under the DOCA Proposal, and the transactions contemplated under it, subject to the required steps and limitations specified in ss 442B, 442C and 442D of the Corporations Act; and (e) as if the provisions of Divn 10, 11 and 11AA of Part 5.3A of the Corporations Act apply to the DOCA Proposal, and any deed executed to give effect to the DOCA Proposal, insofar as they relate to Adaman Resources and Adaman Minerals.

Evidence 25 Rivet Finco and SMS relied on a solicitor's affidavit that updated the Court as to the position relating to security for costs. 26 The Administrators provided detailed evidence in support of this application by way of affidavits of Mr Nipps. Mr Nipps has sworn nine affidavits in the Validation Application and all have some relevance. However, for the purpose of this application, the Administrators rely in particular on the seventh, eighth and ninth affidavits (sworn 12, 13 and 14 July 2021 respectively). 27 The evidence which I refer to in the following section of these reasons (Part B) summarises and relies on the unchallenged evidence given by way of those affidavits.

Convening of second creditors meeting 28 On 28 June 2021 the Administrators convened the concurrent second meeting of the creditors of the Adaman Group for 6 July 2021, sending a circular to creditors notifying them of the meeting and informing them that the Administrators' Report to Creditors, amongst other documents, would be available for download from the Cor Cordis website on 28 June 2021.

Events leading to the Rivet Finco DOCA Proposal being put to the creditors 29 I have addressed in Adaman 2 the expression of interest campaign undertaken by the Administrators and the length of that process: Adaman 2 at [25], [29]-[38]. Those matters remain relevant to these reasons. 30 That process occurred over the course of six weeks between 8 May 2021 and 16 June 2021. 31 There was an advertisement process undertaken in state and national newspapers and an industry newsletter, and an electronic data room was made available to interested parties. 32 The Administrators also engaged PCF Capital to assist shortlisted interested parties complete their due diligence requirements. 33 The Administrators received 95 enquiries, with 94 parties signing non-disclosure agreements and gaining entry to the data room. 34 The deadline for non-binding indicative offers was 31 May 2021. A total of 18 non-binding indicative offers were received. 35 The Administrators shortlisted five interested parties to progress to the due diligence phase of the sale process, and they then engaged with those parties for the purpose of site visits, question and answer opportunities, and management presentations. 36 The due date for receipt of binding offers was 16 June 2021. As at that date, the Administrators received seven offers from interested parties in relation to the assets of the Adaman Group. Of those offers two related only to individual projects of the Adaman Group. Two were for all projects and came from third parties unrelated to the Adaman Group. Rivet Finco put forward a proposed DOCA. Remagen put forward an offer to purchase all shares held by Adaman Resources in the other Adaman Group entities. Remagen also put forward in the alternative a DOCA proposal. 37 Between 17 June 2021 and 28 June 2021 the Administrators liaised with the various proponents. Mr Nipps said that they used that time to satisfy themselves that they had received the best offer that each of the proponents was prepared to make in relation to quantum, terms, and expected return, and that the terms of each proposal were fully understood and in a form capable of acceptance by creditors. They also considered each proponent's ability to finance and complete the proposed offers and transactions. 38 The Administrators then analysed the likely return to creditors and shareholders of each of the Adaman Group entities in relation to each of the offers and concluded that: (a) each of the project-specific offers should not be accepted, because the other offers made would likely lead to a superior or equal return to all classes of creditors of the Adaman Group than the best combination of project-specific offers; (b) the third party offers should not be accepted as they were lesser in value than the DOCA proposal put forward by Rivet Finco and, in the Administrators' view, there was less certainty as to whether the proponents could complete the transactions proposed; (c) the Remagen offer (as amended, as referred to below) was the highest offer for the assets of the Adaman Group entities; and (d) an offer put forward by Rivet Finco provided certainty as to finance and as to the prospect of the proposal being completed. 39 It is apparent from the evidence of Mr Nipps that, expressed simply, there was a contest as between Rivet Finco and Remagen as to the better proposal that might be put before creditors at the second meeting of creditors. Because of the nature of this application, it is necessary to address those competing proposals and the negotiations that led to the Administrators deciding to recommend to the creditors a DOCA proposal put forward by Rivet Finco.

Rivet Finco DOCA Proposal 40 The Administrators received a version of the Rivet Finco DOCA proposal on 16 June 2021. A finalised proposal was provided on 25 June 2021 (and this is the version referred to as the Rivet Finco DOCA Proposal). 41 As described in the terms sheet, the Rivet Finco DOCA Proposal has the effect of facilitating the sale of the shares held by Adaman Resources in Adaman Gold Hold and Adaman Minerals to Rivet Finco or its nominee, following which each of the entities in the Adaman Group, apart from Adaman Resources, would be controlled and owned by Rivet Finco or its nominee. 42 The proposed terms included Rivet Finco: (a) paying the remuneration and costs incurred in the administration of the Adaman Group, and under the DOCA itself, and establishing a creditors' trust for distribution to employees and unsecured creditors; (b) discharging $61 million owed to Rivet Finco with the balance to be repayable by the Adaman Group entities following the conclusion of the DOCA; (c) contributing up to $600,000 to return up to 5 cents in the dollar to the unsecured creditors of each of the entities in the Adaman Group, excluding Adaman Minerals and Adaman Resources; (d) contributing $5.35 million to Adaman Minerals, to be offset against a vendor's lien purportedly owed to Kirkalocka and Adaman Gold by Adaman Minerals; (e) contributing an amount sufficient to pay in full certain unsecured creditors of Adaman Resources (described as 'minor creditors') who are owed less than $150,000; and (f) contributing an amount of $200,000 to be distributed pari passu among the unsecured creditors of Adaman Resources who have a claim exceeding $150,000 (described as 'major creditors'). 43 Further, it was a term that Rivet Finco and its related entities will be excluded creditors in respect of any claims over the amount of $150,000 as against Adaman Resources for the purposes of the DOCA, and not entitled to claim any future contribution as against Adaman Resources in respect of these claims. 44 Mr Nipps also disclosed features of an alternative proposal put forward by Rivet Finco which provided for the option for an alternative proponent who had proposed an offer for the Adaman Group (and so potentially including Remagen) to acquire the relevant shares and assets, but no proponent sought to exercise that option prior to 7 July 2021 or at all. 45 Having examined the proposal, the Administrators considered that the Rivet Finco DOCA Proposal would deliver a superior return to the creditors of each of the Adaman Group entities than in a liquidation scenario and provided the following cents/dollar returns analysis: Category of Creditor Liquidation scenario Final proposal Kirkalocka Secured creditors Commercially sensitive 100.00 Priority employee creditors 100.00 100.00 Unsecured creditors Nil 1.07 Adaman Resources Secured creditors 50.02 to 100.00 100.00 Unsecured creditors $150,000 Nil to 1.01 1.09 to 1.61 Adaman Minerals Secured creditors Nil to 23.08 100.00 Each of Adaman Gold, Adaman Gold and Goldlake Secured creditors Nil 100.00 Unsecured creditors Nil 1.07 Hopstorm Secured creditors Commercially sensitive 100.00 Unsecured creditors Nil 1.07

46 Mr Nipps confirmed that (as at 12 July 2021) the Administrators were of the view that the above likely return to creditors remained accurate. He also noted that as the Rivet Finco DOCA Proposal provided for a separate contribution for the Administrators' (and Deed Administrators') remuneration, costs and expenses, such sums would not detract from the returns analysis. 47 Mr Nipps deposed to the fact that the Administrators were satisfied that the Rivet Finco DOCA Proposal has certainty with respect to funding, as the majority of the contribution is to be provided by way of the release of related party claims against Adaman Resources and Adaman Minerals; the release of Rivet Finco's secured claim against the relevant Adaman Group entities of about $61 million; and from the Facility.

First Remagen offer 48 The first Remagen offer (Remagen Offer) received on 16 June 2021 included the following terms: (a) Remagen proposed to establish a special purpose proprietary company as the DOCA proponent (Bidco); (b) Remagen, through Bidco, proposed to purchase the shares held by Adaman Resources in the Target Entities, as well as certain assets of Adaman Resources, for approximately $140.5 million (less assessed duty payable) (Contribution); (c) funding was to be provided by way of $105 million in debt funding to be provided by BlackRock Alternative Advisors Inc (BlackRock) and Archibald Capital Pty Limited (Archibald) and $40 million in equity funding to be paid by Remagen; (d) the exchange of executed transaction documents, including the debt funding documentation, and payment of the $132,826,567 deposit (Deposit) was expected to occur on 2 July 2021; (e) Remagen proposed authorising the Deposit to be applied to immediately repay the secured debt owed to Rivet Finco in full; to pay the full face value of claims of unsecured creditors of all Adaman Group entities (except Adaman Resources), excluding related-party claims and intercompany debts immediately on execution of a deed of assignment, assigning their claims to Bidco; and to pay the full face-value of related-party claims to the Administrators to be held on trust pending their formal adjudication by an independent insolvency practitioner; (f) upon completion, the balance of the funds were to be paid to the Administrators to pay any remaining unsecured creditors of the entities in the Adaman Group except Adaman Resources who have not assigned their claims to Bidco (excluding certain defined intercompany claims); pay any balance to Adaman Resources as additional consideration; and (g) appropriate exclusivity arrangements were to be entered into. 49 Mr Nipps noted that the Remagen Offer was silent on the payment of the Administrators' remuneration, costs and expenses, and that because the remuneration, costs and expenses were to be funded from the Contribution allocated to pay creditors, this would reduce the returns to creditors, given the Administrators' priority. 50 On 19 June 2021 Remagen, by its solicitors King & Wood Mallesons (KWM), provided an exclusivity and loan agreement to the Administrators' solicitors, Gilbert + Tobin (G+T).

Consideration and rejection of Remagen Offer 51 On 23 June 2021 Administrators informed Remagen (through their respective solicitors) that they were unable to accept the Remagen Offer. Remagen was informed of the reasons, which included: (a) no conclusive and binding evidence of funding was provided as part of the Remagen Offer; (b) no upfront consideration was provided; (c) there was no binding or conclusive representation as to the expected timing of the transaction provided as part of the offer; (d) accordingly, the Administrators held serious concerns regarding Remagen's capacity and means to complete the transaction contemplated in the Remagen Offer in a timely manner, having regard to the serious operational, trading and financial risks presented by the ongoing administration of the Adaman Group; (e) in circumstances where a condition of exclusivity was imposed, the Administrators were not able to explore or progress any contingencies should the Remagen Offer not proceed; (f) there were alternative DOCA proposals capable of acceptance (being the initial Rivet Finco DOCA Proposal and, as at that date, a Remagen DOCA proposal); and (g) having been presented with the two DOCA proposals, the Administrators considered they were duty bound to present the two DOCA proposals to creditors at the second creditors meeting.

First Remagen DOCA Proposal made and withdrawn 52 Remagen had also submitted a DOCA proposal. The Administrators referred to this as the First Remagen DOCA Proposal. It was subsequently withdrawn on 24 June 2021 after the Remagen Offer was rejected and because, according to Remagen, the rejected Remagen Offer was superior to the DOCA proposed by Remagen.

Revised Remagen Offer 53 On 24 June 2021, by a letter from KWM to G+T, Remagen provided a revised Remagen Offer, in effect identical to the prior version, save that Remagen waived the requirement for exclusivity and confidentiality; the revised Remagen Offer was now unconditional; the date for acceptance was extended to 28 July 2021; and proof of funding could be evidenced by the transfer of $40 million to be held on trust by KWM. KWM said in the letter that payment of the Deposit by 2 July 2021 was still achievable and that BlackRock had instructed Corrs Chambers Westgarth to prepare loan documentation to enable Remagen to draw on funds. In the context of requiring the Administrators to 'revisit their decision' as to the revised Remagen Offer, KWM said: As administrators, your clients are duty bound to consider all prospective means of achieving the objectives of Part 5.3A being a better return for the Target Entities' creditors and members and more broadly to act in the best interests of the companies and their creditors and members. Your clients have broad powers under s437A(1)(c) to dispose of all or part of the business before going to second creditors' meetings, as was clearly recognised in Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 8) [2020] FCA 1344 at [32]. … Your clients have one final opportunity to revisit their decision not to accept our client's Final Offer. Should your clients fail to do so, it is apparent that the creditors of the Target Entities and Adaman Resources will suffer loss and damage. Should your clients purport to convene the second creditors' meeting in respect of Adaman Resources, Adaman Minerals or indeed any of the Target Entities, please note that our client will consider taking urgent steps to re-list Federal Court proceedings numberedWAD95/2021 and WAD106/2021 and seek such remedies or relief as it deems necessary, including against your clients personally. 54 G+T informed KWM that the Administrators agreed to work towards implementing the revised Remagen Offer, relevantly on the basis that: (a) the Report to Creditors and notice of the second creditors meeting scheduled for 6 July 2021 would be issued; (b) KWM would provide evidence of receipt of the $40 million into its trust account as soon as possible; (c) executed facility documentation with BlackRock and Archibald Capital would be received; (d) if payment of the Deposit took place no later than 5 July 2021, the second creditors meeting would be adjourned to a date that was two weeks later to allow for completion of the transaction contemplated by the Second Remagen Offer; (e) it would be a condition precedent to the completion of the share sale that the Administrators' appointment over Adaman Resources and Adaman Minerals would be validated by consent; and (f) there would be a mechanism by which Remagen would increase the offer price to top-up any shortfall to ensure that even with payment of the Administrators' remuneration, costs and expenses, all admitted creditors would be paid in full.

Further revised Remagen Offer 55 On 27 June 2021 Remagen amended the revised Remagen Offer, principally by way of extending the contemplated timeline of the transaction. Relevantly: (a) facility documentation giving effect to the advance of debt funding by BlackRock would be executed by 5 July 2021, conditional on the acceptance of appropriate security documentation by BlackRock and Archibald Capital; (b) proof of a $40 million contribution of equity into the trust account of KWM would be provided by 5 July 2021; (c) actual payment of the Deposit and exchange of transaction documents would occur by 9 July 2021; and (d) final completion was estimated to occur by 23 July 2021.

Consideration and rejection of further revised Remagen Offer 56 The evidence of Mr Nipps was to the effect that by this stage, the Administrators had serious concerns that Remagen did not have access to the required funds, given both the failure of Remagen to provide any evidence of funding available to pay the Deposit or complete the transaction and the new extension to the proposed timetable. 57 Mr Nipps said it was the Administrators' view that the further revised Remagen Offer should not be accepted in circumstances where: (a) the payment of the Deposit had been extended and there was no comfort for the purpose of the second creditors meeting scheduled for 6 July 2021 that a deposit must be paid by that time; (b) the estimated date of completion was extended to 23 July 2021, in circumstances where the Facility was estimated to be fully exhausted as early as approximately mid-July 2021, potentially leaving the Administrators exposed and unfunded; (c) as described further below, Rivet Finco had notified the Administrators that if they were to continue progressing the Remagen Offer and Remagen failed to make payment of the Deposit by 2 July 2021, Rivet Finco would review its rights under the Facility and security, which provided for termination and appointment of receivers; (d) the Rivet Finco DOCA Proposal provided a mechanism whereby Remagen could take up the alternative proposal option to complete the transaction (see [44] above); and (e) given that the second creditors meeting had already been convened, the Administrators were not in a position to indulge any further time extensions beyond 5 July 2021. 58 On 28 June 2021 G+T informed KWM that the Administrators rejected the further revised Remagen Offer, but that the Administrators were still prepared to work towards giving effect to the Remagen Offer as it stood prior to those further revisions. On the same date the Administrators issued circulars convening the second creditors meeting, as discussed below.

Second Remagen DOCA Proposal 59 On 1 July 2021 Remagen through it solicitors provided a further DOCA proposal (Second Remagen DOCA Proposal). 60 Under the Second Remagen DOCA Proposal: (a) the proponent was identified as Habrok (Alto) Pty Limited or its nominee; (b) the proposed consideration was $125 million, of which $20 million would be by way of equity contribution funded by Remagen and $105 million would be by way of a debt facility provided by BlackRock; (c) the indicative date of completion was 26 July 2021; and (d) proof of funding was to be evidenced by $20 million to be paid into the trust account of KWM by 5 July 2021 with a support letter from BlackRock in relation to the $105 million debt contribution by 2 July 2021. 61 The Second Remagen DOCA Proposal also provided that Remagen and Mr Raftery would enter into consent orders in respect of these proceedings and in the Separate Proceeding. Relevantly, they would consent to orders validating the Administrators' appointment to Adaman Resources and Adaman Minerals and supporting that relief being made prior to and separately from the Separate Proceeding. They would also consent to orders in the Separate Proceeding regarding the validity of the Administrators' appointment to Adaman Resources and Adaman Minerals and that the administrations of Adaman Resources and Adaman Minerals should end. 62 The Administrators considered the terms of this proposal were less certain and less favourable than those of the First Remagen DOCA Proposal, which in turn had been less favourable than the original Remagen Offer. Mr Nipps noted: (a) the equity contribution in the Second Remagen DOCA Proposal was $20 million, a sum which was $15 million less than the equity contribution proposed in the First Remagen DOCA Proposal; and (b) whereas the First Remagen DOCA Proposal contemplated the execution and exchange of facility documentation for debt funding by 2 July 2021, the Second Remagen DOCA Proposal only contemplated the provision of a support letter from BlackRock. 63 KWM requested that the Administrators present and recommend the Second Remagen DOCA Proposal to creditors at the second creditors meeting, and that they put forward a resolution for the Second Remagen DOCA Proposal for voting by creditors. 64 Mr Nipps said that on 2 July 2021, given the serious concerns the Administrators held in relation to Remagen's ability to obtain funding and, on the basis that Mr Raftery had previously given his permission, he spoke to identified representatives from BlackRock who told him that, amongst other matters, there would be no binding loan documentation entered into by Blackrock prior to the scheduled second creditors meeting.

Administrators' concerns regarding Second Remagen DOCA Proposal 65 On 2 July 2021 G+T wrote to KWM setting out the following: (a) the Administrators had serious concerns that Remagen did not have access to the required funds to complete the Second Remagen DOCA Proposal; (b) the equity contribution under the Remagen Offer (including in its revised forms) was expressed to be $40 million which had, without explanation, halved to $20 million under the Second Remagen DOCA Proposal; (c) despite numerous expressions of concern, Remagen had yet to provide the Administrators with binding or conclusive proof of funds, which was especially concerning given that the first and second revisions of the Remagen Offer had contemplated payment of the Deposit by 2 July 2021; (d) the indicative date of completion under the Second Remagen DOCA Proposal of 26 July 2021 was not satisfactory in circumstances where there was an anticipated shortfall in funding requirements, with the Facility under the Funding Deed estimated at that time to be exhausted by the Administrators by approximately mid-July 2021; (e) if the Second Remagen DOCA Proposal did not reach completion, the Administrators would be faced with very significant risk, assuming that the Facility with Rivet Finco would be terminated and the Administrators would therefore be unfunded and exposed to potential personal liability from ongoing trading activities; (f) the contribution under the Second Remagen DOCA Proposal was not adequately particularised and it was unclear what the precise quantum of the contribution would be; and (g) if the Second Remagen DOCA as proposed did not complete, there would be no guarantee that the Rivet Finco DOCA Proposal would still be available on the same terms, or at all. Further, there was a risk that Rivet Finco would appoint receivers and managers over certain of the assets (including the Kirkalocka mine asset) pursuant to its securities. This risk was also present if the Second Remagen DOCA Proposal was adopted. The Administrators would be bound to raise this risk with creditors. 66 The G+T letter of 2 July 2021 also listed representations that the Administrators asserted Remagen had made in the course of proffering its proposals. Those representations were compiled in a table in the letter, and included: (a) at a meeting between Remagen and the Administrators on 11 June 2021, Remagen confirmed payment of 10% of equity as a deposit by 16 June 2021, with the balance to be held on trust with KWM; (b) in its first offer, Remagen made statements to the effect that it 'intends' to provide equity funding in the order of $35 million; that it 'intends' to provide equity funding in the order of $40 million, the bulk of which would be included in a $132 million deposit to be paid on 2 July 2021; that payment of the $132,826,576 deposit was 'estimated' to occur on 2 July 2021; that BlackRock and Archibald have provided a 'letter of support indicating their investment committee approved to provide A$105 million debt funding', subject to execution of facility documents, by no later than 2 July 2021; and (c) in a letter to the Administrators of 24 June 2021, Remagen made statements to the effect that BlackRock had instructed lawyers to prepare loan agreements to enable drawing of funds and that a first set was expected the following day; and that if Remagen required evidence of $40 million funding it was prepared to transfer the funds to KWM's trust account and provide a copy of that trust statement. 67 According to the Administrators, as relayed in the G+T letter, those representations were subsequently not complied with, or were contradicted or abandoned without satisfactory explanation. 68 The Administrators informed Remagen that they were not able to take any further action in respect of the Second Remagen DOCA Proposal until satisfied by evidence as to Remagen's access to adequate funds.

Remagen's criticism of convening of second creditors meeting 69 As recorded in the extract at [53] of these reasons, KWM's letter of 24 June 2021 to G+T stated that if the Administrators purported to convene the second creditors meeting, Remagen would consider taking urgent steps to re-list these proceedings and the Separate Proceeding and seek remedies or relief as it considered necessary, including against the Administrators personally. 70 No request was made by Remagen (or any other party) to relist the matters and no application was brought to injunct the convening of the second creditors meeting or seek other urgent relief.

Remagen's comments on Report to Creditors prior to meeting 71 On 2 July 2021 KWM wrote to G+T noting, amongst other matters, that Remagen had withdrawn the Remagen Offer. KWM also referred to the Report to Creditors stating: Your clients' report also fails to adequately address the risks to creditors with the Rivet DOCA Proposal in circumstances where your clients' appointment in respect of Adaman Resources and Adaman Minerals has not been validated and remains in issue in extant legal proceedings. By contrast, the Remagen DOCA proposal provides your clients and the creditors with certainty in this regard, insofar as it involves our client consenting to orders validating your clients' appointment in respect of Adaman Resources and Adaman Minerals.

Administrators decline to defer second creditors meeting 72 Mr Nipps gave evidence as to why the Administrators considered it was necessary to convene the second creditors meeting for 6 July 2021, rather than defer the date for further negotiations with proponents. He explained that: (a) it was estimated at that time that the Facility provided under the Funding Deed (see Adaman 4) would be exhausted as early as mid-July 2021; (b) there was a risk that SMS and Rivet Finco may further increase the rates under, or terminate, the existing mining services agreement; (c) the ongoing occupational health and safety and environmental obligations in appointments that involve mining assets, and potential risks, could potentially have led to costs exceeding the facility limit under the Funding Deed; and (d) the value of the mining operations continued to deteriorate during the ongoing administration, with 21 employee resignations, no investment in non-urgent capital expenditure and the need to prioritise short term cash flow. 73 Further, on 24 June 2021 (four days before the notice to creditors convening the meeting was circulated) Rivet Finco informed the Administrators by letter that it would review its rights under the Funding Deed and security (including termination and appointment of receivers) if the Administrators were to continue progressing the Remagen Offer without payment of the Deposit. The letter caused the Administrators concern that there was a real risk that value for all creditors could be destroyed if the Remagen Offer failed to complete and Rivet Finco withdrew its proposed offer. 74 Remagen did not pay the Deposit on or before 5 July 2021.

PART C - THE REPORT TO CREDITORS AND THE SECOND CREDITORS MEETING

Recommendations to Creditors in Report to Creditors 75 Pulling those strings together, as at 28 June 2021 when the Report to Creditors was issued, the Rivet Finco DOCA Proposal was in a form capable of being voted upon by creditors. The First Remagen DOCA Proposal had been withdrawn but the Administrators were continuing to negotiate with Remagen in relation to the conditions precedent for completion under the Remagen Offer as revised, and in particular in relation to proof of funding and payment of the Deposit in advance of the second creditors meeting. The revised Remagen Offer had not been withdrawn and the Second Remagen DOCA Proposal had not yet been proposed. 76 The Report to Creditors was in evidence and was organised by the following topics: (1) Key messages and recommendation. (2) Purpose and background. (3) Company history and background. (4) Status of the administration. (5) Financial position. (6) Employee disclosures. (7) Administrators' investigations. (8) Proposal for a deed of company arrangement. (9) Estimated return to creditors. (10) Administrators' statement and opinion. (11) Other matters. 77 Four matters are of particular significance for the purpose of this application. 78 First, the Administrators recommended to the creditors that they considered it would be in the creditors' interests for each of the Adaman Group entities to execute a DOCA in terms of the Rivet Finco DOCA Proposal. 79 Second, the Administrators disclosed the subject matter of the Separate Proceeding including the relief sought against the Administrators with respect to their appointment to Adaman Resources and Adaman Minerals. 80 Third, the Rivet Finco DOCA Proposal term sheet was included in the Report to Creditors and its key features were discussed. A comparison of the estimated return to creditors under that proposal as against in a liquidation was provided. 81 Fourth, the revised Remagen Offer was disclosed to the creditors and discussed. The Administrators commenced by pointing out its attraction: On Friday, 25 June 2021, the Administrators agreed to work towards implementing terms proposed by Remagen Capital for the acquisition of the Kirkalocka Gold Project, Snake Well Project and the Corinthia Project, by way of acquiring the shares held by [Adaman Resources] as the ultimate holding company of the Companies (Remagen Offer). As the Remagen Offer was not proposed by way of Deed of Company Arrangement, creditor approval is not required. The consideration proposed under the Remagen Offer is the highest offer for the assets of the Companies that the Administrators have received and is expressed to be circa $140.5m (less assessed duty payable). Remagen Capital has advised that this purchase price will be funded by a combination of debt and equity. 82 The Administrators then set out a summary of expected returns to creditors under that offer, and the various conditions precedent that were still the subject of negotiation, including the requirement for proof of equity funds, the exchange of transaction documents and the payment of the Deposit by 5 July 2021. 83 The Administrators explained that notwithstanding their willingness to work toward giving effect to the Remagen Offer, they considered it necessary to convene the meeting for 6 July 2021, noting that the time between the Report and the meeting would give sufficient time to enter into the Remagen Offer based on its own timelines but allow the creditors to vote on the companies' futures if the Deposit was not paid by 5 July 2021. The Administrators also referred to the likelihood that the Facility would be fully exhausted by mid-July, and the information from Rivet Finco to the effect that it would review its right under the Funding Deed if Remagen did not pay the Deposit. 84 However, if the Deposit under the revised Remagen Offer was paid by 5 July 2021, the Administrators intended to adjourn the second creditors meeting for a period of up to 15 business days to allow the revised Remagen Offer to complete. The Administrators informed the creditors that they could vote to pass a resolution that the meeting be adjourned for up to 45 business days, but that in the Administrators' view, it was not in their interest to do so unless the Deposit was paid prior to the second creditors meeting. 85 The Administrators concluded this part of the Report to Creditors by stating: Having regard to the above, the Administrators have sought to balance the benefit of allowing the Remagen Offer to progress and the need for certainty as to the Companies' futures within a short time frame. If the Deposit is paid by 5 July 2021, the Administrators intend to adjourn the second creditors meeting for a period of up to 15 business days to allow for completion of the Remagen Offer in accordance with section 75-140 of the IPR. However, should Remagen fail to meet an agreed milestone and, therefore, the Remagen Offer not proceed, the Administrators will convene the adjourned second creditors' meeting earlier. 86 Fifth, the Administrators informed the creditors about their investigation into the affairs of the companies, and, relevantly, the potential for a claim for insolvent trading to be brought against the directors of Adaman Resources and Kirkalocka should those companies proceed into liquidation. The estimated date of insolvency for Kirkalocka was 30 October 2020, whereas it was otherwise estimated to be variously 31 March 2021 (Adaman Resources), 1 May 2021 (Adaman Minerals) or 30 April 2021 (other entities). 87 The provisional quantum of a potential claim against the directors of Kirkalocka was said to be around $31 million, less adjustments for various necessary payments made by the Administrators during the relation back period. The potential claim in Adaman Resources was significantly smaller (around $50,000). 88 The Report to Creditors addressed contingencies to recovery of any such claims, such as the need to prove the date of insolvency; that there are a number of statutory defences available to such claims; that funding would be required to pursue litigation; that the capacity of any directors to pay was unknown, although it was acknowledged that there was a 'financial instrument' that might provide an indemnity for insolvent trading; and that inquiries in this regard were of a preliminary nature only and that the directors had not answered requests for information as to their assets. 89 Mr Nipps deposed in his affidavit to the effect that having regard to the uncertainty at that time as to substantiating, pursuing and funding such insolvent trading claims, together with the fact that any shortfall in funding would need to be met from any funds generated, the Administrators were of the view that the existence of the potential claims was insufficient to make a liquidation scenario preferable. Accordingly, the Administrators in the Report to Creditors recommended that it was in the interests of creditors to adopt the Rivet Finco DOCA Proposal and it was preferable to a liquidation scenario, a view that Mr Nipps said is maintained by the Administrators.

Employee creditors meeting 90 On 6 July 2021and immediately prior to the second creditors meeting the Administrators held a meeting of eligible employee creditors in order to consider the priority of their employee entitlements under the Rivet Finco DOCA Proposal. There were priority employee claims in the administrations of both Adaman Resources and Kirkalocka. 91 Mr Nipps said that each eligible employee creditor of Adaman Resources and Kirkalocka Gold who attended the meeting by person or by proxy voted in favour of resolutions that a provision in accordance with s 444DA(1) of the Corporations Act be excluded from a proposed deed of company arrangement and that eligible employee creditors otherwise be entitled to a priority for their entitlements in accordance with the Rivet Finco DOCA Proposal.

Second creditors meeting 92 The second creditors meeting proceeded on 6 July 2021. 93 Although Mr Nipps understood from one of his employees (Ben Weaver) that Mr Nagle of KWM had been informed the meeting was proceeding, no representative of either Remagen or KWM attended the second creditors meeting (although if they had attended and voted on the resolutions, the outcome of the voting of each resolution would not have been affected). 94 The minutes of the meeting were in evidence. Mr Nipps described in his seventh affidavit, consistent with the minutes, the significant matters addressed at the meeting. 95 Mr Nipps chaired the meeting. He tabled an updated DIRRI which, relevantly, included reference to the Funding Deed (see definition and discussion of the DIRRI in Adaman 1 at [24]; and Adaman 3 at [47]-[48]). 96 The Administrators did not admit certain proofs of debt lodged by SMS and Rivet Finco in relation to amounts purportedly owing by Adaman Resources in the amount of $10,345,885 and $957,386.05, respectively. 97 Mr Nipps provided a detailed update to the Report to Creditors in relation to the status of the Remagen Offer and also addressed the (subsequently received) Remagen DOCA Proposal. 98 As to the Second Remagen DOCA Proposal, Mr Nipps said that he provided the creditors with details, including as to the estimated return to creditors. He told them that the estimated return to creditors was higher than that expected under the Rivet Finco DOCA Proposal or in a liquidation scenario. However, he expressed the concerns of the Administrators about Remagen's ability to complete the transactions contemplated by the Second Remagen DOCA Proposal, in light of the lack of evidence of funding. He informed the meeting that Remagen had not provided a letter of support from BlackRock (due 2 July 2021), or evidence that $20 million was held in the KWM trust account (due 5 July 2021). Mr Nipps told the meeting that having regard to those concerns, the Administrators did not consider the Second Remagen DOCA was sufficiently clear to be capable of acceptance, and that the Administrators remained of the view that it was in the interests of creditors for the Rivet Finco DOCA Proposal to be accepted. 99 Mr Nipps said he advised the creditors that a creditor is able to propose a resolution to adjourn the second creditors meeting if they wished to further consider the Second Remagen DOCA Proposal, and asked creditors for the preference of the duration of an adjournment. Resolutions were proposed by two creditors in relation to Kirkalocka and Adaman Resources respectively for a 45 day adjournment, but the resolutions did not pass. No resolutions to adjourn the second creditors meeting were proposed by any person for the other companies. 100 Mr Nipps said that Joseph Scarcella of Johnson Winter & Slattery, representing the Mitchell Interests, informed those present that his clients had instructed him to convey his clients' contentions that: (a) SMS is not a creditor of Adaman Resources; (b) Adaman Resources is not insolvent; (c) the Administrators' appointment in relation to Adaman Resources is invalid; and (d) accordingly, he had been instructed to abstain from all further voting on behalf of his clients. 101 Resolutions relating to the Administrators' remuneration in relation to each of the Adaman Group entities were passed with 100% of voting creditors in number and value voting in favour of the resolutions. 102 As to the resolution to enter into the Rivet Finco DOCA Proposal, for each of the Adaman Group entities apart from Kirkalocka, 100% of voting creditors in number and value voted in favour of the resolution. 103 For Kirkalocka, the resolution was passed with 95.45% of voting creditors (in number) and 99.94% in value voting in favour of the resolution. 104 Mr Nipps said that he abstained from voting with the general proxies held in his name and advised the creditors to that effect. He also informed the creditors that no nominations were received to appoint alternative insolvency practitioners as deed administrators.

The reasons for seeking relief 105 As is apparent from the above review of the negotiations, the Report to Creditors and the second meeting of creditors, Remagen had the opportunity to engage with the Administrators in putting forward a proposal relating to the Adaman Group, whether by way of share acquisition, DOCA or otherwise. It was on notice of the terms of the Rivet Finco DOCA Proposal. It was on notice of all court applications, including the application to extend the time for the convening of the second creditors meeting. The Administrators disclosed the terms of both the revised Remagen Offer and the Second Remagen DOCA Proposal to the creditors prior to resolutions being put to the creditors, and provided an opportunity for an adjournment. 106 Similarly, the Mitchell Interests were on notice of the court applications. 107 The Administrators, having considered the options, variables, conditions and risks associated with the various proposals and the capacity to continue operating, made a commercial decision (including for the purpose of providing their opinion under r 75-225(3) of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR) as to the best option for creditors) that it would be in the creditors' interests for the companies to execute a combined deed of company arrangement to give effect to the Rivet Finco DOCA Proposal. 108 That provision of the IPR obliges administrators to provide a statement setting out their opinion as to whether a company should enter into a deed of company arrangement, whether the administration should end, or whether the company should be wound up. As Mr Nipps attested, he remained of the view after the Report to Creditors was issued and at the time of the second creditors meeting that the best option was to give effect to the Rivet Finco DOCA Proposal. 109 The Administrators do not come to Court seeking validation or confirmation of the correctness of their commercial decision to recommend the Rivet Finco DOCA Proposal. If the application were of that nature, it would not be the appropriate subject of directions. Rather, there are two factors that have resulted in this application being brought. The first is the unresolved contention as to the validity of their appointments as Administrators over (only) Adaman Resources and Adaman Minerals. The second (and related) is that the Remagen Interests in particular have been highly critical of the propriety or reasonableness of the decision made by the Administrators. 110 So much is apparent from a letter sent by KWM to G+T on 6 July 2021 after the meeting was held, contending that the Administrators did not have the power to convene the meeting and that any resolutions passed were invalid. 111 The letter included the following paragraphs: … your clients have now taken the highly unusual approach of effectively either abandoning their [Validation Application] without further notice to the Court and the other parties to that proceeding, or taking steps which make such application otiose, thus seeking to abrogate the Court's jurisdiction; … with reference to our correspondence dated 2 July 2021, your clients then issued a misleading and deceptive report to creditors, including by advising creditors that they could expect a nil outcome in liquidation and that the paltry 1c/$ returns offered under the Rivet Finco DOCA Proposal were superior, notwithstanding … our client's binding DOCA proposal submitted on 1 July 2021 which offered far superior returns to creditors of the Adaman Group companies, a failure to disclose which we consider to have been in breach of your clients' obligations of disclosure [to] creditors. In the interim, we are instructed to seek your urgent confirmation that, pending resolution of Federal Court proceedings numbered WAD95/2021 and WAD106/2021 your clients will not sign the purported Rivet DOCAs or seek to effectuate the DOCAs. Please also note that given the nature of your clients' conduct, including what our client sees as flagrant breaches of their duties and responsibilities as administrators, we are instructed that our client is considering raising your client's conduct with relevant professional bodies and in the ongoing Federal Court proceedings. 112 The Administrators rely in particular on the third extracted paragraph as indicating criticism of a nature that justifies its application for directions in all of the circumstances. Remagen has not been heard with respect to the content of the letter, a consequence of it electing not to participate in the hearing of this application. However, I consider it appropriate to comment on a number of matters. 113 As to the first paragraph, I note that from the Court's perspective, the position has been clear since a case management hearing on 10 May 2021 and from the commencement of the Separate Proceeding that Remagen anticipated that the remaining allegations the subject of the Validation Application would not be determined in isolation from the Separate Proceeding. For example, counsel for Remagen at that case management hearing indicated that the respective allegations were 'wrapped up' and were 'a different side to the same coin'. Counsel submitted that there was a risk of multiplicity and inconsistent findings if the Validation Application were progressed, and noted that it would be necessary for the Court to make findings based on all the facts and circumstances. Counsel submitted that (at least at that time) there was no opposition to the Administrators continuing in their roles in the meantime. I note also the passages in Adaman 1 at [15], [46]; Adaman 2 at [13]-[14]; and Adaman 5 at [6]. 114 In short, the matters upon which the Remagen Interests rely in asserting in the KWM letter that the Administrators have abandoned the Validation Application, in circumstances where the same complaints found the claim for relief in the Separate Proceeding, is not clear. That overlap in the matters and potential delay in resolving the Validation Application appeared to be the reason the validation orders made in Adaman 1, which were not opposed with respect to the other companies in the group, were limited to those companies. That overlap also appears to have been the reason the parties seemed to abandon the prospect of an expedited trial in either the Validation Application or what became the Separate Proceeding, despite that prospect being raised by the Court and there being discussions as to available dates. The Administrators have raised the unresolved question as to the validity of their appointment to Adaman Resources and Adaman Minerals in each subsequent application to the Court. It is not as if that matter has been overlooked. 115 As to the second paragraph extracted from the letter, I have referred above (see [97]-[98]) to the disclosure by the Administrators of the Second Remagen DOCA Proposal and its discussion at the second creditors meeting. It is not necessary to determine at this point any factual contest about the nature of such disclosure. But it is apparent that there was disclosure to the creditors. 116 As to the third paragraph, I note that despite orders being made providing the Remagen Interests with the opportunity to be heard, and despite their knowledge of the application and hearing date, the Remagen Interests elected not to put on evidence or make submissions in this application. It is therefore difficult for the Court to give any particular weight to the substance of the allegations made by way of the letter, although I have not ignored them. The Administrators have made appropriate disclosure of Remagen's assertions. It is the Administrators who brought the KWM letter to the attention of the Court. 117 The allegations made by Remagen in the KWM letter may well be aired in future court proceedings and be the subject of pleadings, evidence and cross-examination. I make no finding about them. However, this application falls to be determined on the basis of the evidence now before the Court, and having regard to the submissions made by senior counsel for the Administrators. 118 I accept, however, that the content and tone of the KWM letter are relevant to the Administrators' decision to seek directions.

Judicial directions - authorities 119 It is to be recalled that as to five of the seven companies in the Adaman Group (all but Adaman Resources and Adaman Minerals), the Court has already ordered that pursuant to s 447A of the Corporations Act, Part 5.3A is to operate in relation to them as if the Administrators were validly appointed as joint and several administrators on 1 May 2021. 120 This application is brought under s 90-15 of the IPS and s 447A of the Corporations Act. In Adaman 4 I summarised the statutory context: [21] Section 447A of the Corporations Act provides that the court may make such orders as it thinks appropriate about how Part 5.3A is to operate in relation to a particular company. [22] Section 90-15 of the IPS relevantly provides that the court may make such orders as it thinks fit in relation to the external administration of a company, including an order determining any question arising in the external administration of the company. [23] While it is now settled that the court has wide powers under s 447A of the Corporations Act and s 90-15 of the IPS, such orders must be made in pursuit of the objects of Part 5.3A as set out in s 435A as follows: 435A Object of Part The object of this Part, and Schedule 2 to the extent that it relates to this Part, 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. Note: Schedule 2 contains additional rules about companies under external administration. [24] Where there is recourse to the IPS, regard should also be had to its objects set out in s 1 1 of the IPS which relevantly provide as follows: 1-1 Object of this Schedule … (2) The object of this Schedule is also: (a) to regulate the external administration of companies consistently, unless there is a clear reason to treat a matter that arises in relation to a particular kind of external administration differently; and (b) to regulate the external administration of companies to give greater control to creditors. 121 The authorities acknowledge that directions may be given to treat an invalid appointment of an administrator as valid. In this case the question of the validity of the appointment of the Administrators to Adaman Resources and Adaman Minerals has not been resolved. Ultimately it may be determined that the appointments were valid; or it might be determined that they were not, whether for reasons that implicate the Administrators or otherwise. 122 In the meantime, the Administrators seek to exercise powers and seek to do so regardless of the deferred issue as to validation of their appointment. They seek directions in that regard. The Administrators in this application seek to fill any gap as to authority so that the Rivet Finco DOCA Proposal can be implemented in accordance with the resolution of creditors at the concurrent second creditors meeting. 123 In Adaman 1 (at [29]) I referred to Hayes v Doran (No 2) [2012] WASC 486, in particular at [406] of those reasons, where Kenneth Martin J adopted submissions that were agreed by the parties in that case, including a collection of the authorities that address the power of the court to make orders as if the Administrators had been validly appointed: see paras 268-279 of the extract at [406]. The discretion to make such orders is to be exercised having regard to all the circumstances of the case including whether substantial injustice would be caused by effectively validating an otherwise invalid appointment. 124 It is also important to have regard to the authorities as to the constraints on the exercise of the power to give judicial directions. 125 It is well established that generally there must be something more than the making of a business or commercial decision before a court will give directions in relation to an administrator's proposed course of conduct. It may be a legal issue of substance or procedure or it may be an issue of power, propriety or reasonableness - but some issue of this nature is required to be raised: In the matter of Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556 (Black J) at [9]. The protection afforded by such an order must be predicated on the external administrator having made full and fair disclosure of all relevant facts and circumstances to the court: In the matter of Ansett Australia Ltd and Korda (No 3) [2002] FCA 90; (2002) 115 FCR 409 at [44] (Goldberg J). See also Adaman 4 at [37]. 126 In Mighty River International v Hughes and Bredenkamp as Deed Administrators of Mesa Minerals Ltd (subject to DOCA) [No 2] [2018] WASC 368, Le Miere J considered the question of reasonableness and said: [49] … In considering the question of reasonableness, the court does not second guess the business judgment of the Administrators or the creditors who approved entry into the transaction. The court is concerned whether the Administrators' negotiation of and entry into the transaction is made in good faith and for a proper purpose, with no material personal interest in the transaction, after they had informed themselves about the proposed transaction to the extent they reasonably believed to be appropriate and with a rational belief that the decision is in the best interest of the creditors and the company. Further, the court will consider whether the transaction is objectively reasonable in the sense that it is supported by reason and within the limits of what is rational or sensible to expect in all the circumstances. 127 Finally as to principles, I note that senior counsel for the Administrators properly disavowed any attempt by this application to obtain binding declarations of rights or the court's validation of the underlying commercial transactions reflected in the Rivet Finco DOCA Proposal. Rather, as explained in their submissions, the Administrators seek a direction pursuant to s 90-15 of the IPS that they are justified, and are, or will be, acting reasonably and properly in entering into and giving effect to the Rivet Finco DOCA Proposal in accordance with the resolutions of creditors at the second creditors meeting. They seek protection from any potential claims that they have acted unreasonably or inappropriately in doing so. Implicitly, that direction is sought in circumstances where the validity of their appointment with respect to two of the seven relevant companies remains the subject of challenge. As in all such cases, the nature and extent of the protection obtained, if relied upon in the future, may depend upon factors such as any changes in circumstances or any findings as to non-disclosure. 128 Further, as set out at [24] above, the Administrators seek particular directions relating to Adaman Resources and Adaman Minerals that, as explained during the hearing, are designed to address any apparent gap in the authority of the Administrators in giving effect to the Rivet Finco DOCA Proposal and the transactions contemplated by it, having regard to the validation issue. 129 The subject matter of the directions all fall within Part 5.3A and are amenable to the type of relief sought. The material provisions and divisions of Part 5.3A in that regard are as follows: (a) s 437A(1) - the administrator of a company under administration may dispose of any of its property and exercise any power that the company or any officers could exercise if the company were not under administration; (b) s 442A(c) - the administrator of a company under administration has power to execute a document in the company's name and on its behalf; (c) s 437D(2) - a transaction or dealing affecting property of a company under administration is void unless, relevantly, the administrator entered into it on the company's behalf or it was entered into under an order of the Court; (d) s 442C(2) - the administrator of a company under administration or deed of company arrangement is not prevented from disposing of property of the company that is subject to a security interest (other than PPSA retention of title property) that is used or occupied by, or is in the possession of the company, but of which someone else is the owner or lessor provided, relevantly, the written consent of the secured party, owner or lessor has been given or with leave of the Court; (e) Division 10 - the execution and effect of a deed of company arrangement; (f) Division 11- the variation, termination and avoidance of a deed of company arrangement; and (g) Division 11AA - notification of contravention of a deed of company arrangement. 130 It is important to note that in addition to facilitating the execution of documents in the names of Adaman Resources and Adaman Minerals and the completion of the practical steps necessary for completion of the underlying transactions anticipated by the Rivet Finco DOCA Proposal, the orders sought also preserve the usual powers contained in s 445D for the court to terminate a deed of company arrangement on application to the court.

Relevant matters 131 There are a number of matters in this case of particular relevance to the exercise of the discretion under s 90-15 of the IPS and s 447A of the Corporations Act.

Parties in conflict 132 There is no doubt that the question of the reasonableness of the Administrators' actions in recommending the Rivet Finco DOCA Proposal at the second creditors meeting, rather than Remagen's offers, is raised by Remagen. The KWM letter of 6 July 2021 is forthright in that regard. The Administrators are faced with a scenario where parties related to the proponents of the respective proposals are in dispute, and Remagen is a dissatisfied bidder. Further, in the lead up to the second creditors meeting, Rivet Finco, as secured creditor, reserved its right to enforce the Funding Deed and security in the event that the Administrators continued to negotiate with Remagen and Remagen failed to make payment of the Deposit. I accept that it was appropriate for the Administrators to seek directions in those circumstances.

Remagen's position as to validity 133 At times in its negotiations with the Administrators, Remagen maintained its contention that the Administrators had no power to proceed with respect to any proposal, but then appeared to assert that it was unreasonable for the Administrators to fail to exercise their powers to accept its offer (see [53] above). Further, Remagen was willing to facilitate consent orders from the Court as to the validity of the remaining appointments if (but only if) its offers were preferred and put to creditors (see [61] and [70] above). Remagen's alternating approaches to validity of the Administrators' appointment might be viewed as a compromise offered by Remagen as part of its proposals, rather than any concession as to its subsisting contentions about the validity of the appointments. However, it is important to note that the Administrators were dealing with Remagen in circumstances where its position as to validity appeared to shift, and its criticism of the Administrators similarly shifted, depending on the circumstances. This inconsistency is another reason that justifies, in my view, the Administrators seeking these directions.

Position of the Mitchell Interests 134 I have had regard to the matters raised by the Mitchell Interests that are included in the minutes of the second meeting of creditors. I acknowledge that the Mitchell Interests also maintain that the Administrators were not validly appointed to Adaman Resources or Adaman Minerals. They did not seek to be heard on this application.

Interests of creditors and formation of opinion 135 The evidence of the Administrators is that it is in the interests of the creditors to accept the Rivet Finco DOCA Proposal. Whilst it is not for the Court to validate that commercial decision, it is relevant to the exercise of the Court's discretion to have regard to the processes undertaken by the Administrators and their reasons for forming the opinion relayed to the creditors in the Report to Creditors and ascertain whether there is conduct that might weigh against or otherwise inform the exercise of the Court's discretion. In particular, I note the following: (a) having regard to the number of inquiries and offers received, there was apparent interest in the market for the relevant assets and business; (b) the Administrators facilitated due diligence and engaged with the short-listed interested parties; (c) the Administrators communicated with Remagen extensively via their solicitors and gave it the opportunity to revise its proposals and put forward a number of proposals; (d) they were concerned to obtain comfort that Remagen was in a position to fund its proposals, but received conflicting, changing and at times indefinite information in that regard (including on contacting BlackRock), and did not receive what they considered to be sufficient comfort by way of the payment of a deposit, proof of funding or executed funding term sheet; (e) the Administrators continued to communicate with Remagen about its proposals after the Report to Creditors was issued and until the time of the second creditors meeting; (f) the Administrators were operating under time constraints having regard to the cost of operations and capped funding; (g) the Administrators disclosed the challenge that has been made to the validity of their appointment to Adaman Resources and Adaman Minerals and disclosed the nature of the Separate Proceeding; (h) the Administrators set out the details of the Remagen Offer in the Report to Creditors and informed the creditors at the second creditors meeting about the Second Remagen DOCA Proposal; (i) the Administrators offered the creditors the opportunity of an adjournment if they wished to consider further the Second Remagen DOCA Proposal; (j) the Administrators disclosed concerns about the prospects of completion of the Remagen proposals; (k) the Administrators analysed a comparison of the return to creditors under the Rivet Finco DOCA Proposal and in a liquidation scenario; (l) the Administrators disclosed the potential for an insolvent trading claim and qualifications in that regard; (m) the Administrators formed the opinion for the reasons set out in the Report to Creditors that it was in the creditors' interests for each of the companies to execute the Rivet Finco DOCA as proposed; (n) resolutions were put to the vote to that effect for each company and passed in overwhelming numbers; (o) no resolution for an adjournment was passed; (p) no person proposed the replacement of the Administrators at the meeting; and (q) the Report to Creditors and the minutes of the second creditors meeting are consistent with the affidavit evidence of Mr Nipps.

No injunctive relief sought 136 Whilst no party was obliged to bring any application for injunctive relief if it had concerns about the sale process implemented by the Administrators, Remagen had indicated it might take such a course but did not do so. It engaged in the expression of interest process, although on its terms.

Support of employees 137 As noted above, all employees voting at the employee creditors meeting voted in favour of the Rivet Finco DOCA Proposal. The support for that proposal was also made apparent in a letter sent by the general manager of Adaman Resources to Mr Nipps on 7 July 2021, in which the author expressed the 'relief' of the employees that the creditors resolved to accept the Rivet Finco DOCA Proposal at the second creditors meeting.

Companies remain insolvent 138 Mr Nipps' evidence was that he (and Mr Wight) remain of the view that Adaman Resources and Adaman Minerals were insolvent as at 1 May 2021 and continue to be insolvent.

Uncertainty as to timing of determination of validity 139 I have addressed the difficulty faced by the Administrators in assessing when the deferred Validation Application and Separate Proceeding might be heard and determined. I accept that, having regard to the nature of the business operated by the Adaman Group and the funding involved in maintaining its operations, it was not feasible for the Administrators to defer any sale process or recommendation to the creditors until those matters were resolved. The intervention of pleadings disputes and the non-compliance with the security for costs order are indicative of the sort of matters that might arise in litigation of the nature now underway between the respective interests in this matter.

Determination 140 This is a difficult case. There are competing and conflicting interests, aggrieved shareholders and directors, a secured creditor in a position to apply considerable commercial pressure and unresolved allegations as to the authority of the Administrators to act as administrators, and where those allegations are relevant to only two of the seven companies the subject of the combined Rivet Finco DOCA Proposal. All of these matters have played out against a backdrop of an operating gold mine, being an asset that by its nature consumes significant day-to-day operating expenses and also employs many people. 141 It is also a case where serious allegations have been made by various parties in correspondence (properly placed before the Court by the Administrators), but where the aggrieved parties (including a defendant in the action) have elected not to seek any injunctive relief, have not sought to expedite the Separate Proceeding and have elected not to appear before the Court to make any submissions or agitate their claims. 142 It is also a case where the existence of the Separate Proceeding has made resolution of the Validation Application impossible in any abridged time frame, and so for practical purposes those proceedings have left the Administrators with no realistic option but to either do what they could in terms of the objects of Part 5.3A of the Corporations Act, or to concede that the group should proceed to liquidation. 143 There is no question that the return to some categories of the unsecured creditors is expected to be small under the Rivet Finco DOCA Proposal, but at the same time it provides for payment to employees and permits a substantial business to continue to operate, and the creditors have voted in favour of the proposal. 144 There is also no question that Rivet Finco has achieved a position where it has considerable leverage in terms of promoting the Rivet Finco DOCA Proposal: it has, however, potentially much at stake as a secured creditor, and has also been in a position to provide funding on terms acceptable to the Administrators, permitting the business to carry on whilst the expression of interest campaign was undertaken. 145 The Administrators' view is that it is in the interests of creditors to accept the Rivet Finco DOCA Proposal, and that it is superior to a liquidation scenario. Accordingly, entry into the Rivet Finco DOCA Proposal on its face will further the objectives of s 435A by maximising the chances that the business of the Adaman Group (or parts of it) continue in existence while also resulting in a better return for creditors than would result from an immediate winding up of the company. It maximises the prospect that employees will continue to have employment. The creditors voted in favour of this course. 146 Further, the making of the orders is consistent with the objectives of the IPS. It is consistent with the object of giving greater control to creditors that the Court make directions to give effect to the clearly expressed preference of the creditors and employees. 147 Whilst I acknowledge the allegations that have been made against the Administrators by, in particular, Remagen, I must determine this application on the evidence before me and having regard to the objects of Part 5.3A of the Corporations Act. 148 I have acknowledged elsewhere that Remagen may have legitimate contentions about the steps which led to the appointment of the Administrators, contentions that may need to be determined in due course (see Adaman 1 at [46]). In making the directions in this matter, the Court is not pre-determining or making any assumptions as to the merits of the Separate Proceeding or the relief sought. No such determination can properly be made until, assuming the action is pursued, the issues are fully pleaded, evidence is presented and witnesses are cross-examined. I cannot at this point resolve the questions that underlie the challenge to the validity of the Administrators' appointment to Adaman Resources and Adaman Minerals. 149 However, having carefully considered the evidence before me, I have found no basis to conclude that the Part 5.3A regime is being used in manner that comprises an abuse of process. No person sought to make a submission before me that I should draw such a conclusion. 150 Nor is there a basis upon which I might properly find that the Administrators' opinion as provided to the creditors was formed other than after proper consideration of the competing proposals and the risks associated with their completion. Having regard to Mr Nipps' evidence, the Administrators' opinion was carefully reasoned and opportunities were fairly provided to other proponents to put forward proposals as they considered appropriate, whilst having regard to the need for decisions to be made quickly in order to preserve the operating business of the Adaman Group. 151 Ultimately the creditors resolved to implement the Rivet Finco DOCA Proposal. That is their prerogative under the Part 5.3A regime, subject to (relevantly) the operation of Division 11. 152 I am not satisfied that any substantial injustice would follow from the grant of relief. The parties with an interest in the application were all on notice. The ability for creditors to rely on Division 11 of Part 5.3A is preserved. The Remagen Interests remain able to pursue claims against the Administrators in the Separate Proceeding, albeit that there may be modifications to the relief they now seek. 153 Having regard to the matters raised by the Administrators as to the challenge to their appointment and the disclosure of the criticism of their actions, I accept the Administrators' submissions that the circumstances and proposed relief fall within the ambit of that which may be granted under the wide ambit of s 90-15 of the IPS. 154 For the same reasons, I also consider it is appropriate to make the directions under s 447A as to the manner in which Part 5.3A is to operate, having regard to the present challenge to the validity of the appointment of the Administrators to Adaman Resources and Adaman Minerals. The directions relate to steps that fall squarely within Part 5.3A and relate to the exercise of powers by the Administrators for the purpose of the administrations and proposed deed. 155 Having regard to all of the above matters, I have determined that it is appropriate and reasonable in the circumstances to grant the relief sought.

Urgency in bringing and determining application 156 Finally, I return to the circumstances of this application. Mr Nipps said that the Administrators were concerned that any significant delay in giving effect to the terms of the Rivet Finco DOCA Proposal would potentially be fatal to effecting a sale on a going concern basis in circumstances where the Facility under the Funding Deed was estimated to be exhausted by approximately mid-July 2021. That date was later revised (in Mr Nipps' eighth affidavit) and it was anticipated that the funding would be exhausted by 22 July 2021. Mr Nipps said that the effect of funds being exhausted, and where there was no guarantee that further funding would be forthcoming, was that it would be necessary to cease trading and demobilise operations. Any further funding, if received, would also have the potential to affect the return to creditors. 157 It was against that backdrop that the hearing proceeded on an expedited basis and it has been necessary to consider the issues raised and determine the application as a matter of urgency. Having said that, I repeat that I am satisfied that all interested parties were on notice of the hearing.

Orders 158 There will be orders accordingly. I certify that the preceding one hundred and fifty-eight (158) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Banks-Smith.

Associate: Dated: 20 July 2021 SCHEDULE OF PARTIES WAD 95 of 2021 Plaintiffs Fourth Plaintiff: ADAMAN GOLD HOLD CO PTY LTD (ADMINISTRATORS APPOINTED) (ACN 628 443 470) Fifth Plaintiff: ADAMAN GOLD PTY LTD (ADMINISTRATORS APPOINTED) (ACN 626 160 316) Sixth Plaintiff: GOLDLAKE HOLDINGS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 620 531 133) Seventh Plaintiff: HOPSTORM PTY LTD (ADMINISTRATORS APPOINTED) (ACN 620 534 957) Eighth Plaintiff: KIRKALOCKA GOLD SPV PTY LTD (ADMINISTRATORS APPOINTED) (ACN 626 160 816)