Preston, in the matter of Grays.Com Pty Ltd (Administrators appointed) [2025] FCA 1269 (17 October 2025)

1. Pursuant to section 447A(1) of the Corporations Act 2001 (Cth) (Corporations Act), Part 5.3A of the Act is to operate in relation to the second to twenty-first plaintiffs as if section 443A(1) of the Corporations Act provides that:

(a) any liabilities of the first plaintiffs (in their capacity as administrators of the second to twenty-first plaintiffs) incurred with respect to any obligations arising out of, or in connection with, the funding agreement dated 3 October 2025 (Funding Agreement) entered into between the first plaintiffs in their capacity as joint and several administrators of the second to twenty-first plaintiffs, the second to twenty-first plaintiffs and Comserv 2291 Pty Ltd ACN 691 237 993 are in the nature of debts incurred by the first plaintiffs in the performance and exercise of their functions as joint and several administrators of the second to twenty-first plaintiffs; and

(b) notwithstanding that the liabilities referred to in paragraph 1(a) are debts incurred by the first plaintiffs in the performance and exercise of their functions as joint and several administrators of the second to twenty-first plaintiffs, the first plaintiffs will not be personally liable to repay such debts or satisfy such liabilities to the extent the property of the second to twenty-first plaintiffs is insufficient to satisfy the debts and liabilities incurred by the first plaintiffs arising out of, or in connection with, the Funding Agreement.

Notices of meetings to creditors electronically

1. Pursuant to section 447A(1) of the Corporations Act, Part 5.3A of the Corporations Act is to operate in relation to each of the second to twenty-first plaintiffs as if any notice (Notice) required to be given pursuant to section 75-225(1) and 75-15 of the Insolvency Practice Rules (Corporations) 2016 (Cth Insolvency Practice Rules (Corporations) 2016) (IPR) will be validly given to creditors of the second to twenty-first plaintiffs by reason of the following steps having been taken at least five business days prior to the date of the proposed meeting:

(a) where the first plaintiffs:

(i) have an email address for a creditor - by sending the Notice by email to each such creditor;

(ii) do not have an email address for a creditor - by sending the Notice by posting a copy of it to the postal address for each such creditor;

(b) by causing the Notice to be published on the Australian Securities and Investments Commission (ASIC) published notices website at https://insolvencynotices.asic.gov.au/; and

(c) by publishing the Notice on the website maintained by the first plaintiffs at https://www.mcgrathnicol.com/creditors/grays-group/.

1. Pursuant to section 447A(1) of the Corporations Act, if, pursuant to any provision in any of Part 5.3A of the Corporations Act, Part 5.3A of the Corporations Regulations 2001 (Cth), the IPSC, or the IPR, the first plaintiffs are required to provide any other notification to creditors during the administration of each of the second to twenty-first plaintiffs, the applicable notice requirements will be satisfied if the first plaintiffs give such notice by taking the following steps:

(a) where the first plaintiffs:

(i) have an email address for a creditor - by notifying each such creditor of the relevant matter via email; or

(ii) do not have an email address for a creditor (or have received notification of a non-delivery of a Notice sent by email in accordance with 3(a)(i) above) - by notifying each such creditor in writing of the relevant matter via post;

(b) by publishing notice of the relevant matter on the website maintained by the first plaintiffs at https://www.mcgrathnicol.com/creditors/grays-group/; and

(c) to the extent the matter relates to a meeting that is the subject of section 75-40(4) of the IPR, by causing a notice of the meeting to be published on the ASIC published notices website at https://insolvencynotices.asic.gov.au/.

1. The first plaintiffs must take all reasonable steps to cause notice of these orders to be given, within 2 business days of the making of these orders, to:

(a) the creditors (including persons or entities claiming to be creditors) of each of the second to twenty-first plaintiffs, in the following manner:

(i) where the first plaintiffs have an email address for the creditor - by notifying each such creditor, via email, of the making of the orders and providing a link to a website where the creditor may download the orders and the Originating Process;

(ii) where the first plaintiffs do not have an email address for a creditor but have a postal address for that creditor (or have received notification of non-delivery of a notice sent by email in accordance with (a)(i) above), by notifying each such creditor, via post, of the making of the orders and providing a link to a website where the creditor may download the orders and the Originating Process; and

(iii) placing sealed copies of the Originating Process and the orders on the website maintained by the first plaintiffs at https://www.mcgrathnicol.com/creditors/grays-group/; and

(b) ASIC.

1. Any person who can demonstrate a sufficient interest has liberty to apply to vary or discharge any orders made pursuant to orders 1 to 4 above, on 3 business days' written notice being given to the plaintiffs and to the Court.
2. The plaintiffs have liberty to apply on 3 business days' written notice to the Court in relation to any variation of these orders or any other matter generally arising out of the administrations of any or all of the second to twenty-first plaintiffs, jointly and severally.
3. Costs of the application are to be costs in the administration.
4. These orders be entered forthwith.

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

Delivered ex tempore, revised from transcript

1. By originating process dated 15 October 2025, the first plaintiffs, who are the voluntary administrators of twenty companies, being the second to twenty-first plaintiffs, to which I will refer collectively as the Grays Group, apply pursuant to s 447A(1) of the Corporations Act 2001 (Cth) for:

(a) an order relieving them from personal liability in respect of debts to be incurred under a funding agreement dated 3 October 2025 entered into between the administrators, the Grays Group, and a funder, Comserv 2291 Pty Ltd; and

(b) orders facilitating notices to be given to creditors of the Grays Group electronically where possible.

1. The administrators primarily relied on an affidavit of Mr Damien Mark Pasfield affirmed on 15 October 2025 and its accompanying Exhibit DMP-1. They also read an affidavit of Mr Pasfield affirmed on 17 October 2025 which provided further information about the notice provided to creditors of this application.
2. The administrators were represented by Ms Beechey, of counsel, who appeared with Mr Carey, of counsel, whose helpful written and oral submissions have enabled the delivery of these reasons ex tempore.

1. The Grays Group conducts an online auctions business, specialising in industrial, automotive and commercial products. It operates across all Australian States and Territories, except the ACT and Tasmania, and has approximately 300 full-time equivalent employees.
2. The second plaintiff, Grays.com Pty Ltd (administrators appointed), is the parent company of the Grays Group. Each of the remaining plaintiffs is, directly or indirectly, a 100% wholly owned subsidiary of Grays.com.
3. The sole shareholder, and secured creditor, of Grays.com is Comserv. I have already mentioned that Comersv is the funder under the funding agreement the subject of this application. Comserv is an associated entity of Slattery Auctions Australia Pty Ltd.
4. As at 31 August 2025, the Grays Group reported a net asset deficiency of approximately $35.3 million. For the 14 months ending 31 August 2025, the Grays Group reported an EBITDA loss of approximately $3.5 million.
5. Based on the information available to them at this early stage of the voluntary administration, the administrators have identified that the creditors of the Grays Group include Comserv as secured creditor, priority employee creditors, and unsecured creditors. The Australian Competition and Consumer Commission has also obtained a pecuniary penalty against one company ordered by this Court, although the status of that obligation in the liquidation need not be further addressed at this point (see s 553B of the Corporations Act). The bulk of the unsecured creditors (that is, representing approximately 50% of the total unsecured creditors) are supply creditors including Australia Post, Charter Hall and iCare, and various landlord creditors.

1. The administrators were appointed to each member of the Grays Group on 3 October 2025, and have taken control its business and operations. They are continuing to trade and have commenced a sale and/or recapitalisation process.
2. The first meeting of creditors was held on 15 October 2025.
3. The administrators consider that the Grays Group does not have sufficient funds of its own (either by way of available cash reserves or from monies generated from the operation of the business) to continue to operate beyond the week commencing 27 October 2025.
4. It was in those circumstances that, on the date of their appointment, the administrators entered into the funding agreement with Comserv.
5. The terms of the funding agreement provide that Comserv will provide funding, up to a limit of $4 million, to Grays.com (as borrower) to support the working capital needs and administration costs of the Grays Group. Each of the other plaintiff companies is a guarantor. The terms of the funding agreement provide that it is a limited recourse loan only. That is, it provides that the administrators are not liable to make any payment except to the extent of their right of indemnity out of the assets of the Grays Group. That limitation would not, however, be effective to protect the administrators in light of the terms of section 443A(2) of the Act.
6. The administrators have determined, therefore, that they will not draw down any amount under the funding agreement unless the orders they seek relieving them from personal liability in respect of the debts thus to be incurred are made. Fundamentally, that is because they are concerned that there may be insufficient recoveries from assets of the Grays Group to allow the administrators to repay Comserv the funding which is proposed to be made available.
7. The terms of the funding agreement require a drawdown notice to be issued five business days before amounts are to be provided. In circumstances where the administrators' cash flow forecasts show the business running out of funds in the week commencing 27 October 2025, the administrators will need to know whether they are in a position to issue a drawdown notice next week. If funding is not available, serious detrimental consequences will follow, including the termination of employment of employees, termination of customer and supplier contracts, and a likely reduction in the realisable value of the business and its assets, amongst other matters. It follows that this application is attended by some urgency.

PRINCIPLES GOVERNING RELIEF FROM PERSONAL LIABILITY

1. The default position is provided for in s 443A of the Act (which is found in Part 5.3A):

(1) The administrator of a company under administration is liable for debts he or she incurs, in the performance or exercise, or purported performance or exercise, of any of his or her functions and powers as administrator, for:

1. Section 447A of the Act, however, provides the Court with a broad power to make such orders as it thinks appropriate about how Part 5.3A of the Act is to operate in relation to a particular company. That power is to be exercised consistently with the purpose of Part 5.3A, namely to provide for the business, property and affairs of an insolvent company to be administered in a way that maximises the chances of the company, or as much as possible of its business, continuing in existence, or, if that is not possible, results in a better return for the company's creditors than would result from an immediate winding up of the company: Crosbie (administrator), in the matter of Godfreys Group Pty Ltd (administrators appointed) [2024] FCA 60 at [69] (Beach J).
2. It is well accepted that, by exercise of that power, the Court may make orders limiting the personal liability of an administrator. The number of examples of cases in which such orders have been made make it invidious to select some over others to name; it is enough to record the observation of Yates J in Freeman, in the matter of Regional Express Holdings Limited (administrators appointed) [2024] FCA 929 at [81] that such orders are "commonplace". Furthermore, the rationale of such orders has recently been succinctly explained by McEvoy J in Taplin, in the matter of Urban.io Pty Ltd (Administrators appointed) [2025] FCA 1254 at [15]:

Obviously enough, the rationale is that voluntary administrators should not be expected to expose themselves to substantial personal liability (see Preston, in the matter of Hughes Drilling Limited [2016] FCA 1175 at [18] (Yates J); Korda, in the matter of Ten Network Holdings Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2017] FCA 1144 at [43]- [44] (Markovic J), and that relief from personal liability can facilitate commercial decision-making by allowing administrators to focus on the best interests of the creditors uninfluenced by concerns of personal liability: [Secatore, in the matter of Fletcher Jones and Staff Pty Ltd (Administrators Appointed) [2011] FCA 1493] at [29].

1. The statement of principle to which reference is made more often than not is that of Gilmour J in Mentha, in the matter of Griffin Coal Mining Company Pty Ltd (administrators appointed) [2010] FCA 1469 at [30]:

The principles governing the granting of an application for orders under s 447A to vary the liability of administrators under s 443A can be summarised as follows:

(a) the proposed arrangements are in the interests of the company's creditors and consistent with the objectives of Pt 5.3A of the Corporations Act: Re Great Southern [[2009] WASC 161] at [13].

(b) typically the arrangements proposed are to enable the company's business to continue to trade for the benefit of the company's creditors: Re Malanos [[2007] NSWSC 865] at [9] and Re View [[2008] WASC 241] at [17].

(c) the creditors of the company are not prejudiced or disadvantaged by the types of orders sought and stand to benefit from the administrators entering into the arrangement: Re View at [18], and also Re Application of Fincorp Group Holdings Pty Ltd [2007] NSWSC 628 at [17].

(d) notice has been given to those who may be affected by the order: Re Great Southern at [12].

1. Comserv, who is the funder and the secured creditor, supports the orders sought. That fact has been described as "determinative" in other cases, and will usually argue powerfully in support of the making of the order: Park, in the matter of IG Power (Callide) Pty Ltd (Administrators Appointed) (No 5) [2025] FCA 135 at [19] (Derrington J); Mentha, in the matter of Spyglass Management Group Pty Ltd (Administrators Appointed) [2004] FCA 1469 at [6] (Finkelstein J). Whether or not it rises quite that high, it is plainly an important consideration.
2. The evidence of Mr Pasfield is that the funding to be provided under the funding agreement will enable the administrators to continue to operate the business while conducting the sale and/or recapitalisation process, which they would not otherwise be able to do. In the administrators' opinion, it is in the interests of the Grays Group and their creditors to preserve the assets of the Grays Group as a whole, and to continue to employ the employees across the Grays Group while the process for any sale or recapitalisation of the Grays Group is completed. In the administrators' opinion, such a process will maximise:

(a) the sale price that can be obtained from any sale of the business;

(b) in turn, the greatest return available to the Grays Group creditors; and

(c) the likelihood of the business being restructured or recapitalised in such a way that as many of the employees as possible will continue to be employed.

1. In Mr Pasfield's opinion, the funding agreement is in the best interests of the Grays Group companies' creditors because:

(a) without it, there are insufficient funds to continue to conduct the business;

(b) it allows the administrators to carry out the administration which will maximise the sale price that can be obtained from any sale of the business and/or assets and, in turn, maximise the return available to the creditors of the Grays Group; and

(c) the funding made available under the funding agreement enables the employees of the Grays Group to be paid for the services which they perform while the administrators pursue the sale and/or recapitalisation of the business.

1. I accept that evidence, and thus find that the orders sought relieving the administrators of personal liability are in the interests of the companies' creditors and consistent with the objectives of Pt 5.3A of the Corporations Act.
2. As to whether the proposed orders would cause any disadvantage or prejudice to creditors, Mr Pasfield gave evidence of the administrators' belief, based on the book value of assets reported in the Grays Group consolidated management accounts as at 31 August 2025, on discussions with potential purchasers, and on the offers so far received, that the claims of the secured creditors and priority creditors will not be paid in full, and so unsecured creditors are unlikely to receive any return from the sale proceeds or asset realisations in any event. In those circumstances, no prejudice would be caused to unsecured creditors by the funding arrangements or by limiting the administrators' personal liability under those arrangements. It would seem that the Grays Group will obtain at least the value of the funds and associated obligations that are advanced by reason of the preservation, or maximisation, of the value of the opportunity to sell the business. I have already mentioned that the secured creditor supports the making of the orders.
3. As for employees, the funding will enable employees to retain their employment and to be paid for the services that they perform while the administrators continue to trade the business. The administrators have also confirmed that it is their view that the likely extent of the payment of the employees' priority entitlements will not be any greater, or at least substantively so, than if the operations of the Grays Group were wound down.
4. Insofar as notice to those who may be affected is concerned, the administrators notified creditors who attended the first meeting of creditors held on 15 October 2025 of their intention to bring this application and of the relief they intended to seek. Following that meeting, the solicitors for Comserv and Slattery Auctions contacted the administrators, seeking details of the listing of the application, which were promptly provided. The administrators have also uploaded a copy of the sealed originating process on the creditors' portal of the Grays Group administration section on the McGrathNicol website.
5. The administrators have not yet otherwise taken steps to notify all creditors, or to notify ASIC. But in circumstances where the matter has been raised at the first meeting of creditors, where there is some urgency in obtaining the relief sought so as to enable the uninterrupted trading of the business, and in light of the further steps proposed to be taken (which I will described in a moment), I am satisfied that the fact that not all creditors or ASIC are yet aware of the application is not a reason to refuse to make the orders sought.
6. As McEvoy J observed in Re Urban.io at [31]:

The authorities recognise that circumstances of urgency will in some cases justify either a short period of notice (see In the matter of Nexus Energy Ltd [2014] NSWSC 1041 at [14] (Black J), or no notice at all (see [Preston, in the matter of Hughes Drilling Limited [2016] FCA 1175 at [19]]; Crawford, in the matter of Unlockd Ltd (Administrators Appointed) & Ors [2018] VSC 345 at [71] (Sloss J)), so long as the proposed orders are drafted to "ameliorate any disadvantage": Re Unlockd Ltd at [71]. The usual approach is to make orders which both require the administrators to take reasonable steps to notify affected persons of the outcome, and reserve the liberty of such persons to apply: see, for example, Re Nexus Energy at [14]; Re Hughes Drilling Limited at [19].

1. That is the approach that the administrators have taken in this case; that is, the proposed orders provide for notice to be given to creditors and to ASIC of any orders made and grant liberty to any person with a sufficient interest to apply to discharge or vary the orders.
2. Overall, therefore, I am satisfied that making orders relieving the administrators from personal liability will appropriately facilitate their making commercial decisions in the best interests of the Grays Group companies and creditors uninfluenced by concerns of personal liability, and is consistent with the objectives of Part 5.3A to preserve the assets of the Grays Group and maximise the potential return to creditors.

1. The Administrators also seek orders to facilitate the issuing of notices to creditors electronically where the administrators have an email address for the creditor.
2. Such orders are now commonplace: Strawbridge, in the matter of Virgin Australia Holdings Ltd (Administrators Appointed) [2020] FCA 571 at [27] (Middleton J). As I observed in Livingsone, in the matter of Vertical 4 Pty Ltd (Administrators Appointed) [2025] FCA 382 at [64], such orders benefit creditors both by facilitating timely and effective communication, and by doing so in a cost-effective manner (thus conserving the limited assets of the company). Additional reasons supporting the making of an order of this kind in the present circumstances were explained by Yates J in Freeman at [35].

1. For the above reasons, I am satisfied that orders should be made in accordance with the short minutes of order provided to me.
2. Because the application was made for the benefit of the administration, I consider that it is appropriate to order that the plaintiffs' costs of and incidental to the application be costs in the administration of the Grays Group.

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

GRAYS CO 3 PTY LTD (ACN 634 636 421) (ADMINISTRATORS APPOINTED)

GRAYS CO 4 PTY LTD (ACN 634 640 225) (ADMINISTRATORS APPOINTED)

CAR BUYERS AUSTRALIA PTY LTD (ACN 159 545 758) (ADMINISTRATORS APPOINTED)

GRAYS ECOMMERCE GROUP LTD (ACN 125 736 914) (ADMINISTRATORS APPOINTED)

GEG NO 1 PTY LTD (ACN 113 930 608) (ADMINISTRATORS APPOINTED)

GEG CAPITAL PTY LIMITED (ACN 169 008 191) (ADMINISTRATORS APPOINTED)

GEG INTERNATIONAL PTY LTD (ACN 096 509 134) (ADMINISTRATORS APPOINTED)

GRAYS AUCTIONEERS PTY LTD (ACN 154 639 871) (ADMINISTRATORS APPOINTED)

GRAYS REAL ESTATE AUSTRALIA PTY LTD (ACN 643 206 268) (ADMINISTRATORS APPOINTED)

GRAYS (AUST) HOLDINGS PTY LIMITED (ACN 114 615 780) (ADMINISTRATORS APPOINTED)

GRAYSONLINE S.A. PTY LIMITED (ACN 119 696 070) (ADMINISTRATORS APPOINTED)

GRAYS (NSW) PTY LIMITED (ACN 003 688 284) (ADMINISTRATORS APPOINTED)

GRAYSFINANCE PTY LTD (ACN 622 573 737) (ADMINISTRATORS APPOINTED)

GLC FINE WINES & LIQUOR PTY LTD (ACN 082 470 782) (ADMINISTRATORS APPOINTED)

GRAYS (VIC) PTY LTD (ACN 085 287 289) (ADMINISTRATORS APPOINTED)

GRAY EISDELL TIMMS (WA) PTY LTD (ACN 056 957 852) (ADMINISTRATORS APPOINTED)

GRAY EISDELL TIMMS (QLD) PTY LTD (ACN 060 942 323) (ADMINISTRATORS APPOINTED)

C M PTY LTD (ACN 060 526 516) (ADMINISTRATORS APPOINTED) IN ITS PERSONAL CAPACITY AND AS TRUSTEE FOR THE GEM TRUST (ABN 67 201 946 415)