Re Kokoro Work Essence Pty Ltd (in liq) [2025] VSC 682 (31 October 2025)

(a) the liquidation be converted to a voluntary administration, and the liquidator be appointed as voluntary administrator of Kokoro (s 436B(2) of the Act);

(b) the administration be truncated, and the administrator be relieved of the requirements to receive a 'report on company activities and property' ('ROCAP'), and to convene a first meeting of creditors in the administration (s 447A(1) of the Act / s 90-15 of the IPS);

(c) the liquidator be permitted to hold the major meeting of creditors at any time during the administration convening period (s 447A(1) of the Act); and

(d) the winding up of Kokoro be stayed until the end of the voluntary administration period (s 482(1) of the Act).[2]

1. The liquidator relies on his affidavit in support of the application, sworn 3 September 2025, together with affidavits of service dated 13, 15 and 16 October 2025. The liquidator also relies on the written submissions prepared by the plaintiff's counsel dated 29 September 2025. I have drawn on those submissions extensively in preparing these reasons.
2. There is evidence before the Court that the originating process and the liquidator's affidavit have been served on Kokoro's directors Charles Tsung-Yeh Pai and Keiichi Watariguchi ('directors'). The material has also been served on Kokoro's creditors, Fivex Pty Ltd ('Fivex') and Daiwa Food Corporation Pty Ltd ('Daiwa'), and the Australian Securities and Investments Commission ('ASIC'). No creditor has appeared or sought to oppose the application. ASIC responded by email dated 10 September 2025 referring the liquidator's lawyers to a page on ASIC's website but did not otherwise engage in relation to the application.

1. Kokoro was incorporated on 8 November 2018, and operated a Japanese restaurant business trading as 'Z Curry' from leased premises at Shop 5, 276 Flinders Street, Melbourne.
2. Around July 2022, Kokoro ceased trading due to poor economic conditions brought on by the COVID-19 pandemic. On 18 July 2022, its landlord, Fivex, commenced an application to wind Kokoro up in insolvency, relying on an unsatisfied creditor's statutory demand for $267,755 in unpaid rent.
3. On 17 August 2022, Kokoro was wound up in insolvency by Woronczak JR of this Court and Renee Sarah Di Carlo was appointed liquidator.[3] On 13 September 2024, I made orders appointing the plaintiff as liquidator of Kokoro and other companies as a consequence of Ms Di Carlo's resignation.[4]
4. I observe that the plaintiff liquidator is a certified practicing accountant and has been a registered liquidator since 26 July 2021. He has in excess of 15 years' experience in personal and corporate insolvency.
5. From the liquidator's investigations (including those initially conducted by Ms Di Carlo), it has been ascertained that Kokoro's assets consist of:

(a) a modest amount in cash;

(b) plant and equipment, with an estimated realisable value of $100,000. This remained at the rented premises and may not ultimately be capable of being realised; and

(c) a small unfair preference claim against the Australian Taxation Office ('ATO') in the amount of $26,800; and

(d) an uncommercial transaction claim for the sum of $215,360.98 against Daiwa, in respect of which Mr Pai and Mr Watariguchi are also directors and shareholders.

1. The investigations also reveal that Kokoro's creditors comprise:

(a) a very small sum ($145) in priority creditor claims;

(b) Fivex as an unsecured creditor; and

(c) Daiwa as a purported unsecured creditor.

1. The investigations suggest Kokoro has a net deficiency of assets in the sum of approximately -$269,901.
2. The preference claim against the ATO has since settled. While Daiwa has indicated it will defend any voidable transaction claim brought against it, the liquidator is not in funds to pursue that claim and would require external funding to do so. If the Daiwa voidable transaction claim is not realised, the liquidator anticipates he will not be in a position to declare any dividend to unsecured creditors in the winding up.
3. On or around 11 June 2025, Daiwa propounded a preliminary proposal for a deed of company arrangement ('DOCA'), which would involve Daiwa contributing $120,000 to a DOCA fund, to be applied in the ordinary way with reference to ss 556, 560 and 561 of the Act ('DOCA proposal'). On 25 July 2025, Daiwa presented a signed DOCA proposal. Of the DOCA fund, $30,000 was provided to the liquidator on 28 July 2025, on a non-refundable basis. The balance is to be paid in 12 equal monthly instalments of $7,500.23. The liquidator estimates that there will be a dividend to participating unsecured creditors of 22 cents in the dollar if the DOCA proposal is enacted.
4. From the time the proposed DOCA is executed, the deed administrator (who is nominated to be the liquidator) will have no part in the ongoing management and trading operations of Kokoro and control over the company and the business operations will revert to Mr Pai or to Daiwa.
5. Under the DOCA proposal, the DOCA will terminate and the appointment of the deed administrator will come to an end on the happening of a number of events, including the successful completion of the terms of the DOCA.
6. Fivex has indicated it will vote in favour of the DOCA proposal, which is contingent on the Court granting this application. The liquidator has weighed the relative merits of the DOCA proposal and has resolved to recommend it to creditors. He has also determined to cap his professional fees in order to preserve an unsecured dividend pool of $60,000. The liquidator's recommendation is essentially premised on two things: first, the uncertainty of the value and prospects of recovery of the foreshadowed voidable transaction claim against Daiwa; and second, the meaningful dividend anticipated to be realised in a DOCA scenario.

Appointment of liquidator as voluntary administrator

1. Section 436B of the Act relevantly provides that:

(1) A liquidator or provisional liquidator of a company may by writing appoint an administrator of the company if he or she thinks that the company is insolvent, or is likely to become insolvent at some future time.

(2) A liquidator or provisional liquidator of a company must not appoint any of the following persons under subsection (1):

(a) himself or herself;

...

unless:

(f) at a meeting of the company's creditors, the company's creditors pass a resolution approving the appointment; or

(g) the appointment is made with the leave of the Court.

1. In NR Complex Pty Ltd (in liq)[5], Halley J provided the following comprehensive summary of the relevant principles applicable to the exercise of the Court's discretion under s 436B(2):[6]
   1. The test for leave is not an onerous one: Re Cobar Mines Pty Ltd (In Liq) (1998) 30 ACSR 125 at 126 (Bryson J); see also In the matter of Equiticorp Australia Ltd (in liq) and Ors [2020] NSWSC 143 at [21] (Gleeson J). Nevertheless, the grant of leave should not be treated as a "mere formality, or mere procedural obstacle": Re Keldane Pty Ltd (in liq) [2011] VSC 385 at [13] (Pagone J); see also Australian Securities and Investments Commission v Diploma Group Limited (No 5) [2017] FCA 1147 at [40] (McKerracher J); Deputy Commissioner of Taxation (Cth) v Foodcorp Pty Ltd (1994) 13 ACSR 796 at 799 (Hodgson J).
   2. A liquidator will generally be granted leave to appoint themselves as the administrator, unless there are distinct reasons why they are not a suitable person. This reflects the "desirability of continuity" of persons in charge of the management of the company: Parkes Leagues Club Co-op Limited (In Liq) [2004] NSWSC 16 at [5] (Hamilton J) citing Re Cobar at 126 (Bryson J).
   3. The primary question on an application for leave for self-appointment as a voluntary administrator is whether the liquidator is "an appropriate person to be an administrator": Foodcorp at 799. A Court should generally grant leave if the person is an official liquidator with no prior association with the company and its officers and there is no distinct reason why their appointment would be inappropriate: Foodcorp at 799.
   4. The appropriateness of an appointment requires consideration of whether there are any matters such as a "conflict of interest, threat to independence or anything else offensive to commercial morality": Diploma Group at [40].
   5. Relevant considerations on an application of this kind include the proposed appointee's familiarity with the business and affairs of the subject company, the likely reduction in duplication and associated costs where a liquidator is appointed as administrator including where considerable work has already been undertaken and where continuity of appointees is desirable having regard to ongoing negotiations and/or complex arrangements see Equiticorp at [23] (Gleeson J).
2. I note that his Honour's helpful summary has since been cited with approval on numerous occasions[7] and I respectfully adopt it.
3. Authority also suggests that in exercising its discretion under s 436B(2) of the Act, the Court is interested in a general sense to see that there is some point in the transition from winding up to voluntary administration.[8]
4. In my view, the relevant factors weigh in favour of the granting of leave to the liquidator to be appointed as administrator.
5. From the investigations conducted to date, the liquidator has developed a sound familiarity with the affairs of Kokoro, which will likely reduce the prospect of duplication and associated costs having regard to the work already undertaken by the liquidator.[9] He is also appropriately qualified to act as voluntary administrator and potential deed administrator in the likely event the proposed DOCA is executed. Importantly, the evidence suggests the liquidator has been responsible for negotiating and facilitating the DOCA proposal and will be involved in carrying it out if approved. The sum of $30,000 has already been provided to the liquidator on a non-refundable basis as part payment of the DOCA fund.
6. The utilisation of the administration process in Pt 5.3A of the Act is also appropriate having regard to the financial position of the company. Because of its non-compliance with Fivex's statutory demand, Kokoro was, pursuant to s 459C(2)(a) of the Act, presumed to be insolvent at the time it was placed into liquidation by the Court. The available evidence suggests that it remains insolvent having regard to its deficiency of assets and the extent of creditor claims. The position is distinguishable from that in Porter v Chief Commissioner of State Revenue[10] where significant asset sales in the liquidation gave rise to some uncertainty about the company's insolvency at the time of the application under s 438B(2) of the Act and the liquidator had not expressed an opinion about the company's insolvency. In this case, I am satisfied that the liquidator's opinion on the insolvency of the company can be readily inferred from the available affidavit material and the earlier reports to creditors. I am also satisfied that the company would not transition into voluntary administration as a solvent company.
7. Importantly, there is no opposition to the proposed appointment. One of the purported creditors is also the proponent of the DOCA proposal. Further, given the potential benefits of the DOCA proposal, including a likely better return to creditors than under liquidation, there is clearly some purpose served in moving the company from liquidation to voluntary administration. Lastly, the evidence relied upon by the liquidator discloses no real or potential conflict of duty or interest, and no other matter which might otherwise be considered offensive to commercial morality, if he is appointed as a voluntary administrator of Kokoro.

1. Section 447A(1) of the Act provides the Court with a broad power to make orders as to how Pt 5.3A of the Act is to operate in relation to a particular company. The Court's main concern in considering and making orders is the best interests of the relevant company's creditors as a whole.[11] Although the power under s 447A(1) is not unfettered, it extends to the making of the orders sought by the liquidator in this application, being orders: dispensing with the requirement to convene a first creditors meeting;[12] dispensing with the requirement to receive a ROCAP;[13] and permitting the administrator to convene the major meeting of creditors at any time during the convening period on appropriate notice.[14]
2. The envisaged administration is relatively straightforward. As already noted, there are two unsecured creditors, one of which has proposed a DOCA, the other of which intends to vote in favour of it. The liquidator has already investigated Kokoro. I accept there is no need for a ROCAP. I also accept there is no need for a committee of inspection or any utility in convening a first meeting of creditors. Given the known creditors and their intentions in relation to the proposed DOCA, there is no indication that any creditor would seek to remove the administrator at the first meeting. The dispensation orders sought are appropriate in those circumstances. Further, the orders sought would seem to facilitate the object of Pt 5.3A because the business, property and affairs of the company will be administered in a way that may well result in a better return for its creditors than would result from the winding up.

1. Pursuant to s 90-15(1) of the IPS, 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'. The Court's power to give a direction is broad and is intended to facilitate the performance of a liquidator's functions.[15] However, the Court will not give a direction that relates to the making or implementation of a business or commercial decision, where no particular legal issue is raised, and there is no attack on the propriety or reasonableness of the decision.[16]
2. A direction that a self-appointed administrator is justified and acting reasonably in not requiring a ROCAP is an order that can appropriately be made under s 90-15(1).[17] I will give such a direction.

1. Section 482(1) of the Act empowers the Court to stay a winding up either indefinitely or for a limited time, or to terminate a winding up. A stay of a winding up in the context of a proposed administration 'may be appropriate where it is designed to facilitate the proposed restructuring transactions and finalise the external administration (rather than to restore the company to ordinary trading operations).'[18] Relief under s 482(1) may be appropriate where, as is the case here, an administration conducted in parallel with a liquidation would be 'duplicative and wasteful.'[19]
2. It is appropriate that there be a stay of the liquidation from the time of the appointment of the liquidator as administrator, until the conclusion of the administration. As already indicated, there is support from the creditors of the company and the liquidator himself has sought the stay.[20] The stay of the liquidation is necessary to enable the DOCA proposal to be considered.[21] The liquidation will not be prematurely terminated, and the Court will retain its discretion to lift the stay if, for any reason, that is appropriate. On the available evidence, there are no issues of commercial morality that militate against the granting of a stay.[22]

1. I will grant the relief sought by the liquidator and make the orders in the Annexure to these reasons.

1. Pursuant to s 436B(2) of the Corporations Act 2001 (Cth) ('Act'), the plaintiff ('liquidator') is granted leave to be appointed as voluntary administrator of Kokoro Work Essence Pty Ltd (In Liquidation) (ACN 629 899 985) ('company').
2. Pursuant to s 482(1) of the Act, with effect from the appointment of the liquidator as voluntary administrator of the company, the winding up of the company is stayed until the end of the voluntary administration period of the company pursuant to s 435C of the Act.
3. Pursuant to s 447A(1) of the Act, Pt 5.3A of the Act is to operate in relation to the voluntary administration of the company on the following terms (with these orders to prevail to the extent of any inconsistency with the provisions of Pt 5.3A of the Act):

(a) there is to be no requirement that a first meeting of creditors in the administration of the company be convened or held;

(b) s 438B(2) of the Act does not apply to the administration of the company; and

(c) the liquidator (as administrator of the company) may convene and hold the meeting(s) required under s 439A of the Act at any time during the convening period (as defined in the Act), provided that notice of such meetings is provided in accordance with s 75-225 of the Insolvency Practice Rules (Corporations) 2016 (Cth).

1. Pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), being Sch 2 to the Act, the liquidator (as administrator of the company) is justified and acting reasonably in not requiring or receiving a 'Report on Company Activities and Property' from any director of the company.
2. The liquidator's remuneration, costs and expenses of this application are costs in the liquidation of the company and are to be paid out of the assets of the company.
3. Liberty to apply on three days' notice.

[2] On 30 September 2025, Connock J ordered that the originating process be referred to an Associate Judge for hearing and determination pursuant to Rule 77.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) and, if required, also pursuant to Rule 16.1(3) of the Supreme Court (Corporations) Rules 2023 (Vic).

[3] Supreme Court of Victoria proceeding S ECI 2022 02705.

[4] Supreme Court of Victoria proceeding S ECI 2024 04568.

[5] [2023] FCA 614.

[7] Brooks, in the matter of 351 Property Management & Maintenance Pty Ltd (in liq) [2023] FCA 1426 [18] (O'Bryan J) ('Brooks'); Lucas, as liquidator of Blackwater Mine Workers' Club Limited (in liq) v Blackwater Mine Workers' Club Limited (in liq) [2023] FCA 1636 [24] (Derrington J); Re Dundas Mining Pty Ltd (in liq) [2025] WASC 157 [22] (Hill J); In the matter of Ally Fashion Pty Ltd (in liquidation) [2025] NSWSC 479 [24] (Nixon J); Blundell, in the matter of Reacon Australia Pty Ltd (in liquidation) v Ctrl Print Pty Limited as trustee for Ctrl Print Management Unit Trust [2025] FCA 578 [12] (Derrington J); Emerald No 2 (SA) Pty Ltd v Matthews, in the matter of Sapphire (SA) Pty Ltd [2025] FCA 695 [30] (Neskovcin J); Otway (liquidator), in the matter of AMD Freight Pty Ltd (in liq) [2025] FCA 1019 [14] (Charlesworth J).

[8] Brooks [19] and the cases cited there.

[9] See In the matter of Merchant Overseas Logistics Pty Ltd [2022] VSC 154 [30]-[32] (M Osborne J) ('Merchant Overseas Logistics').

[10] [2003] NSWSC 243; (2003) 44 ACSR 725.

[11] NR Complex [29], citing Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717 [104] (Middleton J).

[12] NR Complex [32], citing Australian Securities and Investments Commission v Diploma Group Limited (No 5) [2017] FCA 1147 [65] (McKerracher J), and other cases.

[13] NR Complex [33], citing Peter Ngan re JKB Constructions Pty Ltd [2006] NSWSC 1040 [7] (Barrett J).

[14] NR Complex [34], citing Sims, in the matter of Destra Corporation Limited [2009] FCA 1199 [25] (Lindgren J).

[15] El-Saafin -v- Franek (No 2) [2018] VSC 683 [110]-[111] (Lyons J); NR Complex [43].

[16] Re Ansett Australia Pty Ltd (No 3) [2002] FCA 90; (2002) 115 FCR 409, 428 (Goldberg J); In the matter of Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556 [7] (Black J); NR Complex [45].

[18] NR Complex 50], citing In the matter of Vah Newco No. 2 Pty Ltd (in liq) [2020] FCA 1121 [32] (Middleton J) and In the matter of Equiticorp Australia Ltd (in liq) and Ors [2020] NSWSC 143 [53] (Gleeson J).

[20] Section 482(1A)(a) of the Act relevantly provides that an application for a stay or termination of a winding up can be made by the liquidator, or a creditor or contributory, of the company.

[21] See also Merchant Overseas Logistics, where M Osborne J observed at [57] that where relief under s 482 of the Act is sought as part of a suite of orders to facilitate consideration by creditors of a proposed deed of company arrangement, the policy objectives underlying pt 5.3A of the Act are relevant public interest factors weighing in favour of the Court exercising its discretion to grant such relief.

[22] See Re Warbler Pty Ltd (1982) 6 ACLR 526, 533.