On 4 March 2025, the Victorian Supreme Court made orders that a special purpose liquidator be appointed to replace an incumbent liquidator to finalise a long-running liquidation.
The decision demonstrates the flexibility of the Court's powers under section 90-15(1) of the Insolvency Practice Schedule (Corporations) to replace liquidators if it is in the best interests of the creditors.
Background
Pluton Resources Limited (company), was an ASX-listed company specialising in the exploration, development and production of iron ore for the steel industry. The external administration of the Company has a long history being subject to various forms of external control since 2013. Relevantly, liquidators have been appointed to the company since about August 2016 (Incumbent Liquidator) and the company has been in liquidation since that time.
In 2018, Laurie Fitzgerald of William Buck was appointed by the Court as a Special Purpose Liquidator of the Company (SPL). The SPL was appointed for the purposes of investigating and prosecuting certain claims for the benefit of the Company. As a result of recovery actions undertaken by the SPL, including an insolvent trading claim that was pursued in the Federal Court, significant funds were recovered for the company's creditors.
Replacement application
A creditor of the company applied pursuant to section 90-15(1) of the Insolvency Practice Schedule (Corporations) (IPS) for the Court to remove the Incumbent Liquidator as liquidator of the company and in his place, appoint the SPL as the company's liquidator. The application was made with the consent of the Incumbent Liquidator.
The tasks to be undertaken to finalise the winding up of the company principally related to the distribution of the funds recovered by the SPL to creditors with admissible claims against the company.
In making the orders for the replacement of the Incumbent Liquidator, Judicial Registrar Caporale observed that it is clear that section 90-15(1) of the IPS is broad enough to make the orders sought by the applicant creditor: see, for example, section 90-15(3) and ASIC v Keystone Asset Management Ltd (receivers and managers appointed) (administrators appointed) (No 2) [2024] FCA 1040.
Past decisions have held that removal of a liquidator may be appropriate if it is for the benefit and better conduct of the liquidation and if it is in the creditors' interests. In the case of the company, the replacement application was advanced on the potential efficiencies which could be achieved for the benefit of creditors. The Court noted that the SPL had significant familiarity with the nature of the claims of the company's creditors and in that context, it was satisfied that it is for the benefit of the liquidation and in the interests of the company's creditors that the replacement application be granted.
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