Signing allowed to proceed, but the deed's effect is paused pending trial
The Federal Court declined to grant a creditor's injunction against a rescue deed but stayed the deed's effect, allowing a challenge to proceed.
The dispute arose in Tacora Capital, LP v Mine & Rail Company Pty Ltd (Administrators Appointed), in the matter of Mine & Rail Company Pty Ltd [2026] FCA 903. The plaintiff sought to stop a competing creditor's rescue deed from being signed.
Mine & Rail Company Pty Ltd (the company) entered voluntary administration on March 5, 2026. Two creditors – the plaintiff and Valiant Resources Limited (Valiant) – each proposed a deed of company arrangement, an agreement that lets an insolvent company restructure rather than be wound up.
The plaintiff lodged a proof of debt for about $45.4 million. For voting at the creditors meeting on June 19, 2026, the administrators admitted part of it at $9,982,000 but valued another part, a convertible note claim, at a nominal $1. The administrators said they could not reliably estimate the value of that part of the claim.
Creditors then rejected the plaintiff's proposed deed and passed Valiant's, each by a majority in both the number of creditors and the value of their claims.
The plaintiff argued that the $1 figure changed the result. Had that claim been admitted at full value, it said, the plaintiff would have held a majority by value, requiring the meeting's chairperson to cast a deciding vote – one it contended would have favoured its own deed.
The court found that the plaintiff had a case worth arguing, though it described the prospects of success as "far from overwhelming." Valiant accepted that it was arguable the $1 admission was wrong, but disputed that the chairperson would have voted for the plaintiff's deed.
In an affidavit, the administrator who chaired the meeting said that he would not have supported the plaintiff's deed. He said that every unrelated unsecured creditor who stood to benefit had voted for Valiant's deed, and that the plaintiff was a related party that would receive no distribution under either proposal.
Weighing the practical consequences for each side, the court adopted the course proposed by Valiant and the administrators. It allowed the parties to sign Valiant's deed and to pay a $100,000 deposit and a $100,000 retention amount into the deed fund, but restrained the defendants from taking any further step to give the deed effect pending trial.
The court ordered the plaintiff to provide security in the amount of $350,000 by paying that sum into court by 5 p.m. on July 10, 2026, failing which the proceeding would be stayed. It dismissed the plaintiff's interlocutory application, reserved costs, and listed the substantive challenge for hearing after July 22, 2026.
