Otway (liquidator), in the matter of AMD Freight Pty Ltd (in liq) (No 2) [2025] FCA 1169 (19 September 2025)

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

1. These reasons concern an interlocutory application for orders under s 482 of the Corporations Act 2001 (Cth). The plaintiffs as liquidators of AMD Freight Pty Ltd (ACN 632 274 947) (in liquidation) or the company request an order that the winding up of the company be terminated under s 482(1) of the Act. The plaintiffs as liquidators have standing to make that application under s 482(1A)(a) of the Act.

1. The liquidators read and rely on the affidavits of Thomas Stuart Otway sworn 11 July 2025, 7 Augst 2025, 3 September 2025 and 18 September 2025 and the affidavit of Jake Matthew Richter affirmed 11 September 2025.

1. On 1 April 2025 the Court made an order that the company be wound up in insolvency upon the application of the Deputy Commissioner of Taxation. The plaintiffs (Mr Otway and Alan Geoffrey Scott) were appointed joint and several liquidators of the company.
2. On 11 August 2025 the Court made orders appointing Mr Otway and Mr Scott as joint and several administrators of the company under s 436B of the Act on the application of Mr Otway and Mr Scott as liquidators of the company and the plaintiffs in this proceeding: Otway (liquidator), in the matter of AMD Freight Pty Ltd (in liq) [2025] FCA 1019.
3. As part of the orders made appointing the plaintiffs as administrators the requirement to convene the first meeting of creditors under s 436E of the Act was dispensed with.
4. On 12 Augst 2025 the plaintiffs (as administrators) circulated a report to creditors. Amongst other things, the circular informed creditors that the requirement to hold the first meeting of creditors had been dispensed with and the administrators intended to convene a second meeting of creditors on 1 September 2025 and attached a declaration of independence, relevant relationships and indemnities and an initial remuneration notice.
5. After the plaintiffs' appointment as administrators, they had a discussion with the director of the company (John Moulsdale) and Allan Thornley of Shaws Darwin Transport Pty Ltd that led to a proposal for the company to execute a deed of company arrangement.
6. On 22 August 2025 the plaintiffs (as administrators) circulated to the company's creditors a notice for the second meeting of creditors convened under s 439A of the Act on 1 September 2025 and what is referred to as the major report in accordance with s 75-225 of the Insolvency Practice Rules (Corporations) 2016 (Cth). The major report included:

(a) details of the company's financial position and dealings;

(b) details of the DOCA proposal;

(c) the plaintiffs' recommendation (as administrators) and opinion that it was in the creditors best interest that the company enter into the DOCA; and

(d) a copy of the draft deed of company arrangement.

1. The substantive aspects of the DOCA proposal were:

(a) U-Call Logistics Pty Ltd would contribute the sum of $100,000 as a loan to the company to enable payments to be made to financiers of the company in respect of asset finance instalments in arrears as at 1 April 2025;

(b) all debtors of the company (as at the date of the deed) would form part of the deed fund;

(c) the company would contribute $500,000 from its ongoing trading profits, by way of 20 monthly instalments of $25,000, to the deed fund; and

(d) all related party creditors would not participate in any distribution from the deed fund but would not compromise their claims against the company.

1. Due to the terms of the proposed DOCA, it was also necessary for the plaintiffs (as administrators) to convene a meeting of eligible employee creditors under s 444DA of the Act. That meeting was also convened for 1 September 2025 to be held before the second meeting of creditors.
2. Each of the second meeting of creditors and meeting of the eligible employee creditors was held on 1 September 2025.
3. At the meeting of eligible employee creditors all creditors present voted in favour of a resolution, in effect, that employee entitlements would not be paid through the DOCA but through the ordinary course of the business of the company.
4. At the second meeting of creditors the creditors resolved to accept the DOCA proposal and that the company execute the deed of company arrangement. The creditors also resolved that the plaintiffs' remuneration during the liquidation period and the administration period of the company be fixed. All creditors that attended the second meeting of creditors voted in favour of the resolution that the company execute the DOCA.
5. The major report indicates that the plaintiffs (as administrators) estimated the return to creditors under the deed to be 100 cents in the dollar to priority creditors (being unpaid wages and superannuation) and between five and 10 cents in the dollar to the non-priority creditors (being all other unsecured creditors of the company). By contrast, the estimated return to all unsecured creditors of the company if it were wound up is nil.
6. On 1 September 2025, after the second meeting of creditors, the company's director and U-Call Logistics executed the deed of company arrangement.
7. Clause 3 provides that the deed will come into operation on the date the deed is fully executed.
8. Clause 7.1.1 provides that upon execution the administrators will make an application to the Court seeking an order terminating the liquidation of the company pursuant to s 482 of the Act. The proposed DOCA was made available to all creditors and other stakeholders of the company immediately prior to and during the second meeting of creditors. They were also provided with notice of the requirement in the deed to seek the liquidation of the company to be terminated and of the plaintiffs' intention to file this application in the Court.
9. Clause 7.1 also provides that upon execution the company will appoint Thornley as a director and transfer half, alternatively all, shares in the company held by the estate of the late Lynda Elaine Potter to U-Call Logistics and control of the company and its business will return to the directors of the company. Clause 7.9 provides for U-Call Logistics to advance $99,026.28 to the company for the purpose of paying asset finance arrears of certain secured creditors as at 1 April 2025.
10. Clause 7.2 provides that the company must make 20 monthly payments of $25,000. Clause 6.3 provides that the 'Deed Contributions' must be paid into the deed fund as well as all the company's cash at bank and receipts from accounts receivable generated before 1 September 2025.
11. Clause 12.2 provides that upon due performance and completion of the deed all claims of creditors, other than the claims of Mr Moulsdale or any related entity of Mr Moulsdale will be extinguished. Clause 9 provides that Mr Moulsdale will defer his claims while the deed remains in operation. Mr Moulsdale has submitted a proof of debt for $148,000 in respect of his claims.
12. It follows that, subject to any repayment during the operation of the DOCA, the DOCA contemplates that the company will be indebted to parties related to the deed proponents in the sum of approximately $250,000.
13. None of the company's creditors have indicated any concern with the proposed order that the liquidation end.
14. The liquidators have made the application and support it both in their capacity as liquidators and as deed administrators.
15. Mr Otway indicates that if the DOCA is terminated the plaintiffs (as liquidators) will be obliged to investigate and consider taking recovery action as well as report to creditors of the company with no obvious source of payment. Details of potential investigations are explained in the major report. The major report indicates that the former director (Ms Potter) and the current director (Mr Moulsdale) were involved in potential contraventions of the Act through insolvent trading. However, the plaintiffs (as administrators) have expressed the opinion that there is little prospect of making any recovery or any significant recovery in any actions taken against the estate of Ms Potter or Mr Moulsdale. Further, pursuant to cl 7.8.1 of the DOCA, if the deed is terminated for a default event, for example because the company fails to make deed contributions, the company can be wound up under s 446AA of the Act. Mr Otway opines that, in these circumstances, there is no discernible utility in the liquidation of the company continuing to coexist with the DOCA or that, upon effectuation of the DOCA, the company remain in liquidation. He opines that the return to liquidation presents difficulties for the company in its ongoing trading operations and it would be in the best interests of the company for the liquidation to be terminated.
16. As matters stand, Mr Moulsdale, as the director of the company and the relevant remaining shareholder of the company, supports the application to terminate the winding up. The DOCA contemplates that the shares held by the estate of the late Ms Potter will be transferred to U-Call Logistics. Therefore, I infer that the DOCA, including the term for termination of the winding up, is also supported by Ms Potter's estate. U-Call Logistics is a party to the DOCA and, again, I infer it also supports termination of the winding up.

Section 482 of the Corporations Act

1. Section 482(1) of the Act confers power on the Court to make an order staying or terminating the winding up. Section 482(1A) provides that, amongst others, the liquidator may make an application under s 482(1).
2. Section 482(2A) provides:

...

(2A) If such an application is made in relation to a company subject to a deed of company arrangement, then, in determining the application, the Court must have regard to all of the following matters:

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

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

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

(iii) ASIC;

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

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

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

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

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

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

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

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

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

(f) any other relevant matters.

1. Section 482(2) provides that the Court may, before making an order, direct the liquidator to give a report with respect to a fact or matter.
2. The principles applicable to the exercise of the power conferred under s 482 are well established and may be summarised as follows.

(1) The granting of an order is a discretionary matter.

(2) There must be notice of the application given to the creditors and the contributories and the Australian Securities and Investments Commission.

(3) The attitude and interests of the creditors, contributories and the liquidator are relevant, as is the attitude of the ASIC.

(4) The interests of creditors, including future creditors, should be taken into account. Here, the extent to which pre-deed debts will remain post-deed debts is a relevant consideration because it may affect the future solvency of the company.

(5) The interests of the liquidator include whether the liquidator supports the deed and if adequate provision is made for the liquidator's remuneration and expenses.

(6) In considering the position of the contributories, the Court will usually want to know if each member consents to the termination or is bound not to object or whether his, her or its rights are properly secured.

(7) Potential contraventions of the Act are also relevant. These relate to:

(a) returning control of the company to delinquent directors;

(b) pursuing recovery actions for the benefit of creditors; and

(c) investigation of offences and (or) contraventions of the Act by the liquidators in the interests of creditors and the public.

(8) The solvency of the company and its general trading position should be demonstrated.

(9) General matters of public interest and commercial morality are relevant considerations.

(10) The factors to which reference has been made are not non-exhaustive.

These principles may be drawn from the following authorities: Smith; in the matter of Matrix Metals Limited (in liquidation) [2011] FCA 1399 at [30]- [42] (McKerracher J) and the authorities there cited; In the matter of Glass Recycling Pty Ltd (in liq) [2014] NSWSC 439 at [15]- [23] (Brereton J); Mercy & Sons Pty Ltd v Wanari Pty Ltd [2000] NSWSC 756; 157 FLR 107 at [49]- [51] (Austin J); Rupert Company Ltd v Chameleon Mining NL (in liq) [2006] NSWSC 415; 24 ACLC 635 at [15]- [18] (Austin J); Vero Workers Compensation (NSW) Ltd v Ferretti Pty Ltd (in liq) [2006] NSWSC 292; 57 ACSR 103 at [15]- [19] (Austin J).

1. In Glass Recycling Brereton J said:
   1. Essentially, on such an application, the Court must be satisfied, first, that the state of affairs that required that the company be wound up no longer exists. Where the winding up was on grounds of insolvency, it will be necessary for the applicant to demonstrate that the company is not, or is no longer, insolvent. This is usually the most significant consideration [Re SNL Group Pty Ltd (in liq) [2010] NSWSC 797, [24]]. Thus it has been said that an order terminating the winding up would usually be made if all the creditors are paid out, the liquidators' costs and expenses are covered, and the members agree [Apostolou v VA Corporation of Australia Pty Ltd [2010] FCA 64; (2010) 77 ACSR 84, [58]; Re Kitchen Dimensions Pty Ltd (in liq) [2012] VSC 280].
   2. However, the factors to which the cases refer demonstrate that more is necessary than merely establishing that the state of affairs that required the company to be wound up no longer exists. This appears from, inter alia, the references to "commercial morality" as a relevant consideration, and also from references to the interests of future as well as extant creditors. These factors illustrate that the second broad consideration that informs the exercise of the Court's discretion - once satisfied that the state of affairs that originally required winding up no longer exists - is that it would be reasonable to entrust the affairs of the company, once again, to the directors, under whose management it previously failed.

1. On the affidavit evidence filed in support of the application I am satisfied that the present creditors of the company are in favour of and will be in a better position than if the company were wound up. Their interests appear to be in favour of terminating the liquidation.
2. As to future creditors, as has already been mentioned, the company will be indebted for approximately $250,000 to present creditors whose claims will not be compromised by the terms of the DOCA.
3. When the matter first came before me for hearing on 12 September 2025, I was not satisfied on the state of the evidence that the company would be in a position to trade profitably after effectuation of the DOCA. Amongst other considerations is the extent to which pre-DOCA creditors may affect the solvency of the company in a post-DOCA environment. That is, the ability of future creditors to recover their debts may be affected by pre-DOCA debts. Here, the fund available for payment of future creditors' debts will be diminished by pre-DOCA debts. Accordingly, I directed under s 482(2) of the Act that the liquidators report on matters pertaining to the present and future solvency of the company. The liquidators have now reported on these matters.
4. The liquidators' report indicates that after execution of the DOCA the company's liabilities will continue to exceed its assets by a substantial amount. However, the liquidators are confident that with the support of Mr Moulsdale and Mr Thornley the company will trade profitably in the future and will be able to pay its debts as and when they fall due. Although Mr Moulsdale submitted a proof of debt for $148,000, the amount in which the company is indebted to him will be subject to reconciliation. The debt due to Mr Moulsdale will be repayable on demand (at call). A debt is not presently due to U-Call Logistics, but it is anticipated that it will become due and payable (at call) in the future. The liquidators are of the view that Mr Moulsdale, Mr Thornley and U-Call Logistics will support the company in the future and, therefore, will continue to defer repayment of the debts due to them so as to ensure the profitable trading of the company.
5. The major report also indicated that the company traded at a loss of approximately $100,000 in the period after the liquidators were appointed. That loss is explained by certain extra-ordinary items. These items are not expected to affect the future profitability of the company.

1. The liquidators both in their capacity as liquidators and as deed administrators are in favour of the termination of the liquidation. I take that into account and consider it to have significant weight in the exercise of the Court's discretion. I am also satisfied that the liquidators and administrators' remuneration and expenses are adequately taken into account by the terms of the DOCA and, therefore, is not an impediment to the termination of the liquidation.

1. As already mentioned, the contributories present and future appear to be in favour of termination of the liquidation.

1. The major report in cl 10.1 identifies that the administrators are required to make a report to ASIC under s 438D of the Act. When the matter was first heard, the report made to ASIC was not available to the Court. That has now been provided. There is limited information in the report to ASIC and it does not add to the information contained in the major report.
2. The company has been insolvent since approximately 30 April 2022. In the major report the plaintiffs (as administrators) express the view that the former director may have contravened the insolvent trading and directors' duties provisions of the Act. However, they were also of the view that the former director may have had defences to any claims for contravention based on her illness. The plaintiffs also expressed the view that Mr Moulsdale was likely to have contravened the Act and he was unlikely to have defences. However, the period during which he was a director was short and the losses incurred in that period were relatively small. Nonetheless, in my view, returning the company to the control of a director that may have been involved in contraventions of the Act is a matter that undermines confidence in the future management of the company.

1. The liquidators' report to the Court of 18 September 2025 suggests that the present and future solvency of the company is founded in large measure on the continuing financial support of Mr Moulsdale and Mr Thornley and their related parties.

1. Although the plaintiffs have confidence in the continuing support of Mr Moulsdale and Mr Thornley and the future trading performance of the company, the DOCA will be administered for a period of 20 months or close to two years during which the company is to make the Deed Contributions. The company will be returned, in part, to the management of a director the plaintiffs consider contravened the Act in a manner that caused the company loss. Notwithstanding that the alleged contraventions were for a short period and without significant loss, the plaintiffs are of the opinion that the director would not have a defence to a claim for those contraventions. These are factors that cause reluctance to order the termination of the winding up at this time.
2. Further, cl 7.8.1 of the DOCA provides that on the happening of an event of default (as described in the deed, the plaintiffs may, in their absolute discretion, terminate the DOCA and wind up the company by notice in writing to the director and the company. Therefore, the DOCA contemplates a circumstance in which the company will be returned to liquidation before effectuation of the deed.
3. If the DOCA were terminated under cl 7.8.1 the company would return to liquidation and be wound up in accordance with s 446AA(1)(b) of the Act. If s 446AA(1)(b) is engaged then, pursuant to s 446AA(2), the company is taken to have passed, at the time of termination of the DOCA, a special resolution under s 491 that the company be wound up voluntarily and to have done so without a declaration having been made under s 494. Section 497 is taken to have been complied with in relation to the winding up. Terminating a Court ordered winding up in circumstances in which the company may be later placed into a voluntary winding up is an unnecessary complication. The same outcome may be achieved, in substance, by staying the liquidation during operation of the DOCA and deferring termination of the Court ordered winding up until after effectuation has been achieved.
4. As a consequence of lingering uncertainty regarding the future profitability and management of the company, that the deed fund will be partly derived from the ongoing business of the company and the duration of operation of the deed, I am not satisfied that the winding up of the company should be terminated upon execution of the DOCA. By the same token, on the assumption that the DOCA is completed as contemplated, then there would be no reason for the company to remain in liquidation at that point in time. It is also not necessary that the company be under the control of the liquidators and its directors during administration of the DOCA.
5. For the foregoing reasons, it is preferable that the winding up of the company be stayed until termination of the DOCA. If the deed is terminated for any of the reasons given in cl 17.1.1, cl 17.1.2 or cl 7.8.1 then the company should automatically return to liquidation. In the case of termination of the DOCA contemplated in cl 17.1.3 (upon effectuation of the deed), then it would be appropriate that the liquidation terminate. Accordingly, while I am not satisfied that the liquidation should be terminated at the date of execution of the DOCA, I am satisfied that it should be stayed pending effectuation of the deed and, if the deed of company arrangement is effectuated in accordance with the terms, then the liquidation should terminate.

I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Feutrill.