Judge sees arguable basis for defendant's alleged wilful misinformation and misleading conduct
Australia’s Federal Court has ruled that a plaintiff might have enough interest in the matters for determination at a creditors’ meeting to deserve an order allowing it to vote as a creditor at any meeting during the defendant’s external administration.
In EVP Opportunities Master Pty Ltd as trustee for the EVP Opportunities Master Fund v Strong Room Technology Pty Ltd (Administrators Appointed), [2025] FCA 594, the plaintiff made an equity investment of around $10.4 million in the first defendant last February.
The first defendant later came under voluntary administration. As one of its creditors, the plaintiff filed an urgent ex-parte application seeking freezing orders to prevent the frustration of a prospective judgment.
Justice Derrington issued freezing orders against various parties as requested, upon seeing some arguable basis for the plaintiff’s allegations that:
On 3 June, the plaintiff urgently applied for relief through specific court orders. The plaintiff was concerned about whether the first defendant’s administrators would allow it to vote in its capacity as a creditor during the administration and would treat its claim as subordinate under s 563A of the Corporations Act 2001 (Cth).
The Federal Court of Australia issued a judgment permitting the plaintiff to:
Justice Moore, as a commercial and corporations duty judge, proposed to follow the course of action taken in the decisions of Re SurfStitch Group Limited (2018), 124 ACSR 234, [2018] NSWSC 164, and Ingram, in the matter of 5Star Sinai Limited (administrators appointed), [2018] FCA 734.
In the present case, Moore acknowledged that it was not fully clear whether the plaintiff had a subordinate claim, a proprietary claim, or a claim as an ordinary creditor.
However, Moore found a reasonable possibility that the plaintiff had a subordinate claim under s 563A because the plaintiff might be a shareholder, and the meaning of “otherwise dealing” in that provision could broadly include one applying for shares successfully or unsuccessfully.
Moore noted that the plaintiff could potentially avail of a surplus even if its claims were subordinate rather than proprietary, depending on the circumstances of the administration, as the administrators’ analysis demonstrated.
