In the recent case of Richard Scott Tucker as Joint and Several Administrator of Allegiance Mining Pty Ltd (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement) (ACN 059 676 783) -V- Su1 the Supreme Court of Western Australia considered when a party will be an “interested person” with standing to oppose an application under section 444GA of the Corporations Act 2001 (Cth) (Act).
The deed administrators of Allegiance Mining Pty Ltd (Receives and Managers Appointed) (Subject to Deed of Company Arrangement) (Allegiance) applied for orders under section 444GA of the Act to transfer all of the shares in Allegiance to (or at the direction of) Mallee Resources Pty Limited (Mallee) (444GA Application). Mallee along with Hartree Metals LLC (Hartree) were the co-proponents of the Allegiance deed of company arrangement (DOCA).
Mr Junyu Su subsequently sought leave to oppose the 444GA Application. Mr Su was, and is, a shareholder in and related party creditor of the parent company of Allegiance, Dundas Pty Ltd (in liquidation) (Dundas). The Court was therefore required to consider whether Mr Su was an “interested person” within the meaning of section 444GA(2)(c) of the Act in deciding whether Mr Su had standing to oppose the 444GA Application.
Allegiance is the sole owner of the Avebury Nickel Mine which is located in Tasmania, and is a 100% owned subsidiary of Dundas. The Avebury Mine is the primary asset of the corporate group that includes Dundas, Allegiance and a number of other companies.
As noted above, Mr Su held 13% of the shares in Dundas and was also a related party creditor of Dundas.
Hartree was the main secured creditor of Dundas and Allegiance. On 26 November 2021, Hartree appointed receivers and managers to Dundas and Allegiance. The directors of Dundas and Allegiance subsequently placed both companies into voluntary administration.
Hartree and Mallee then put forward a proposal pursuant to which (amongst other things) Dundas would be placed into liquidation, Allegiance would enter into a deed of company arrangement (DOCA), and Allegiance’s deed administrators would then apply for orders under section 444GA of the Act to transfer 100% of the shares in Allegiance to Mallee (or its nominee).
The commercial terms of the proposal were such that all of Allegiance’s creditors would receive 100c/$, Allegiance would assume all of Dundas’ non-related party creditors who would also receive 100c/$, and Dundas would receive $3.4m in cash and a further $12.5m (in Mallee shares or in cash) for the transfer of its shares in Allegiance. This in turn would result in the related party creditors of Dundas receiving 32.8c/$.
The creditors of the companies accepted and voted in favour of the Hartree and Mallee proposal, and Allegiance executed the DOCA and Dundas was placed into liquidation.
After the Allegiance deed administrators commenced the 444GA Application required by the Allegiance DOCA, Mr Su applied for leave to be joined to or heard on the 444GA Application.
Section 444GA(1) provides that a deed administrator may transfer shares in the company with the written consent of the owner or with the leave of the Court.
Section 444GA(2) provides that:
(2) A person is not entitled to oppose an application for leave under subsection (1) unless the person is:
(a) a member of the company; or
(b) a creditor of the company; or
(c) any other interested person; or
As Mr Su was neither a member or creditor of Allegiance, he was required to establish that he was an interested person within the meaning of section 444GA(2)(c).
Mr Su claimed that he did quality as an interested person as:
While the Court was not entirely persuaded that the evidence established that Mr Su would be better off under either of these proposals, the Court was content to proceed on the basis that this was the case.
The Court noted that there is no direct authority on the meaning of “interested person” in the context of s 444GA(2)(c) of the Act.
However, Master Sanderson noted that the expression “interested person” is also used in section 445D(2)(c) of the Act (dealing with who can apply for orders to terminate a DOCA), and that the expression in this section was considered by Austin J in Allatech Pty Ltd2, with Austin J’s interpretation being cited with approval by the NSW Court of Appeal in the decision in BE Australia WD Pty Ltd3.
Austin J concluded in the Allatech case that an ‘interested person’ is someone whose material rights or economic interests are or may be substantially affected by the operation or effect of the DOCA which they seek to challenge. Master Sanderson agreed generally with this formulation, although the Master stated that he had some concern about the use of the word ‘substantially’ and said that the better view may be that there must be a material or significant direct impact on the relevant party’s rights or interests.
After dealing with the competing submissions from Mr Su on the one hand and Hartree and Malle on the other hand, Master Sanderson concluded that:
Mr Su’s application for leave to oppose the 444GA Application was therefore dismissed.
This is an important decision as it confirms when a party will qualify as an ‘interested person’ for the purposes of section 444GA(2)(c) of the Act in seeking leave to oppose an application under section 444GA(1).
As section 444GA applications are becoming a more common feature of restructuring proposals under DOCAs, it is likely that this test will be highly relevant in the years to come.
If you have any questions about making or opposing a section 444GA application, the experienced Lavan team is here to help.
 Richard Scott Tucker as Joint and Several Administrator of Allegiance Mining Pty Ltd (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement) (ACN 059 676 783) -v- Su  WASC 178.
 Allatech Pty Ltd v Construction Management Group Pty Ltd  NSWSC 293.
 BE Australia WD Pty Ltd v Sutton  NSWCA 414.