Thinking outside the square – Court approves post appointment remuneration for administrators

In the case of Trpcevski (Administrator), in the matter of Trisquare Pty Ltd (in liq) [2025] FCA 1511, the Federal Court considered the question of whether former administrators are able to claim remuneration for work done after they ceased to be administrators.

In this case, the former administrators had been appointed by the directors of Trisquare Pty Ltd but were replaced as voluntary administrators by the creditors of the company at the first creditors’ meeting.  The former administrators subsequently applied to the Court for approval of their remuneration for both the work done during their appointment and also for work carried out in relation to the handover of the administration of the company after their appointment had ended.

The Court carefully considered the relevant authorities and extracted the key principles to be applied when assessing whether to approve post appointment remuneration.

Background

The former administrators were appointed as joint and several voluntary administrators of Trisquare Pty Ltd (In Liquidation) (Trisquare) by the directors of the company on 7 February 2025.

However, at the first creditors’ meeting held on 19 February 2025, the creditors voted to appoint different administrators.

After the appointment of the new administrators, the following events took place in February and March 2025:

• the new administrators wrote to the former administrators requesting Trisquare’s books and records, as well as the former administrators’ work product in relation to things like lists of employees and creditors, and cashflow and payments information.  The former administrators duly provided these materials to the new administrators along with an update as to the status of the administration;
• the former administrators exchanged correspondence with the solicitors for the new administrators in relation to the transfer of funds to the new administrators and the payment of the administration liabilities of the former administrators;
• the former administrators exchanged correspondence and also met with the new administrators to discuss matters in relation to suppliers and contractors of Trisquare and the contact between the former administrators and Trisquare staff; and
• following these engagements, the new administrators approved payments to the relevant suppliers and contractors and to employees for wages, and the former administrators released the surplus funds in their control to the new administrators.

The former administrators also corresponded with the new administrators about seeking creditor approval for their remuneration, and in April 2025 proposals were put to the creditors of Trisquare to approve the former administrators’ remuneration (for the work done both before and after the former administrators were replaced) without convening a meeting of creditors pursuant to s 75-40(1) of the Insolvency Practice Schedule forming Schedule 2 to the Corporations Act 2001 (Cth) (the Act) (IPS).  The creditors did not approve the former administrators’ remuneration.

Trisquare was eventually placed into liquidation on 1 August 2025, and the new administrators were appointed as liquidators of Trisquare.

Subsequently, in October 2025, the former administrators applied to the Court for orders to determine and approve their remuneration.   The liquidators provided correspondence regarding certain concerns about the remuneration application (which was put before the Court), but the liquidators ultimately confirmed that they did not wish to appear or be heard on the application.  No creditor sought leave to be heard on the application.

There was no question as to the entitlement of the former administrators to apply to the Court in respect of their remuneration incurred between 7 and 19 February 2025, and the remainder of this paper focusses on the application in respect of the post-appointment period.

The law

Justice Jackson noted the following matters in relation to the applicable law regarding approval of post appointment remuneration.

Prior to 2016, the relevant provision dealing with administrator remuneration was s 449E of the Act.  Section 449E only provided for an entitlement for “the administrator of a company under administration” to seek approval of their remuneration.  As a result, there was no statutory ability to seek approval for pre or post appointment remuneration.

The cases from this period showed that in order for the Court to approve pre or post appointment remuneration, the administrator had to either (a) prove that there was an express or implied contract between the administrator and the company for the work to be carried out and giving the administrator a contractual right to charge for their remuneration, or (b) seek to recover their remuneration on a quantum meruit basis.

However, following the Insolvency Law Reform Act 2016 (Cth), s 449E was repealed and replaced by the relevant provisions in the IPS.

Section 60-10 of the IPS is the direct successor to s 449E and appears to give rise to a similar statutory entitlement to remuneration that is limited to work carried out in the course of an appointment.

However, s 90-15 of the IPS confers a broad power on the Court to make such orders as it thinks fit in relation to the external administration of a company.  Further and importantly, s 90-15(3)(f) expressly provides that an order under s 90-15(1) can include an order in relation to remuneration, and there are now at least three cases where s 90-15 has been used to approve post appointment remuneration claimed by the previous administrators or liquidators of a company, namely Albarran, in the matter of Tauro Capital Pty Ltd (in liq) [2024] VSC 69, Warwick, in the matter of WITS Holdings Pty Ltd (in liquidation) [2021] VSC 179, and Burdett, in the matter of  Michael Sklovsky Pty Ltd (subject to a deed of company arrangement) [2021] VSC 421.

Having regard to both the s 449E cases and the more recent s 90-15 cases, Justice Jackson then went on to make the following findings:

• the Court has the power under s 90-15 to approve post-appointment remuneration if the work has been done at the request of and with the assent of the current liquidators or administrators;
• a former administrator is a person with a “financial interest” in the external administration of the company and therefore has standing to apply under s 90-15;
• s 90-15 gives the Court broad powers, and s 90-15(3) expressly contemplates that an order can be made in relation to remuneration, and neither ss 60-11 and 60-12 or the provisions of the IPS read as a whole reveal any intention that s 60-11 should ‘cover the field’ in relation to administrator remuneration;
• an order approving pre or post appointment remuneration is squarely within the scope of the power under s 90-15 and such an order may find substantial justification in the cost savings that will flow from former administrators not having to prove the existence of a legally binding contract for the carrying out of the work (as was the case under the previous s 449E regime);
• however, whilst a former administrator does not have to prove that there was a legally binding contract for the work in question, they will still have to establish “at least an objectively manifested mutual understanding with duly authorised officers of the company that the former administrators are undertaking the work at the express or implied request of those officers, or otherwise with their assent”;
• it will be a question of fact on the evidence in each case as to whether the necessary objectively manifested assent is present;
• the Court retains a discretion to withhold approval if appropriate; and
• former administrators will also still have to establish that the work and costs claimed were done and incurred reasonably and properly for the benefit of the administration or winding up.

The decision

The Court was satisfied that the former administrators in this case had carried out work at the express and implied request of the new administrators, and that the work in question was more conveniently done by the former administrators because of their knowledge of and familiarity with the affairs of the company gained during the period of their appointment.  The Court also noted that the application was not opposed.

In the circumstances, the Court therefore confirmed that the former administrators were entitled to be remunerated for this post appointment work, but referred the matter to a Registrar for assessment of the reasonableness of the amounts claimed.

The Court also noted that while the creditors had rejected the claim by the former administrators for creditor approval of their post appointment remuneration, this was not relevant to the Court’s decision as to whether the work performed was reasonable (in line with the consistent approach taken with respect to ordinary claims for Court approval of administrators’ remuneration).

Lavan comments

This is a very useful decision which clarifies the approach that will be taken (at least in the Federal Court) in relation to claims for approval of post appointment remuneration.

It confirms the availability of s 90-15, the removal of the need for a former administrator to prove the existence of a legally binding contract for the work, but also the need for the former administrator to prove that the work done was at the request of and with the agreement of a duly authorised officer of the company.

If you have any questions about this case or about administrator claims for approval of remuneration, the experienced Lavan team is here to help.

Many thanks to Lavan associate Mitchell Davis for his assistance in the preparation of this publication.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.