Liquidators' Funding Agreement Approved, Suppression Orders Made

Original Word Document (85.1 KB) Federal Court of Australia

White (Liquidator), in the matter of Profounder Turfmaster Pty Ltd (in liq) [2026] FCA 470

| File number(s): | WAD 100 of 2026 |

| Judgment of: | BANKS-SMITH J |

| Date of judgment: | 16 April 2026 |

| Date of publication of reasons: | 20 April 2026 |

| Catchwords: | C ORPORATIONS – application by liquidators under s 477(2B) of the Corporations Act 2001 (Cth) for retrospective approval of entry into a funding agreement and approval of entry into retainer agreement – whether a proper exercise of the liquidators' powers – suppression orders to protect confidentiality – application allowed |

| Legislation: | Corporations Act 2001 (Cth) s 477(2B)

Federal Court of Australia Act 1976 (Cth) ss 37AF, 37AG |

| Cases cited: | Bredenkamp (Liquidator), in the matter of Coolgardie Minerals Limited (in liq) [2025] FCA 404

Dudley, in the matter of Freshwater Bay Investments Pty Limited (in liquidation) [2021] FCA 608

FSM Development Pty Ltd, in the matter of FSM Development Pty Ltd (in liquidation) [2025] FCA 617

Greentree Resources Pty Ltd (in liq) v Greentree, in the matter of Greentree Resources Pty Ltd (in liq) [2025] FCA 256

Hayes, in the matter of Denham Constructions Pty Ltd (in liq) [2018] FCA 2053

Hundy (liquidator), in the matter of 3 Property Group 13 Pty Ltd (in liquidation) (No 2) [2023] FCA 173

Kitay v Frigger [No 2 ] [2024] WASC 113

Kogan, in the matter of Rogulj Enterprises Pty Ltd (in liq) [2021] FCA 856

McGrath re HIH Insurance Ltd [2005] NSWSC 731

Naidenov, in the matter of AJW Interiors and Constructions Pty Ltd (in liq) [2024] FCA 25

Nipps (Liquidator), in the matter of Dimension Agriculture Pty Ltd (in liq) [2024] FCA 1070

Nipps (liquidator), in the matter of I-Pros perity Pty Ltd (in liq) [2025] FCA 696

Re HIH Insurance Ltd [2004] NSWSC 5

Special Gold Pty Ltd (in liq) v Dyldam Developments Pty Ltd (subject to a Deed of Company Arrangement) [2025] FCA 226

Tonks (Liquidator), in the matter of Vaucluse 29 Pty Ltd (in liq) [2025] FCA 1306 |

| Division: | General Division |

| Registry: | Western Australia |

| National Practice Area: | Commercial and Corporations |

| Sub-area: | Corporations and Corporate Insolvency |

| Number of paragraphs: | 37 |

| Date of hearing: | 16 April 2026 |

| Counsel for the Plaintiffs: | Mr R M Johnson |

| Solicitor for the Plaintiffs: | Ashurst Australia |
ORDERS

| WAD 100 of 2026 |
| IN THE MATTER OF PROFOUNDER TURFMASTER PTY LTD (IN LIQUIDATION) (ACN 644 815 805) |
| | HAYDEN LEIGH WHITE AND DANIEL WOODHOUSE IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF PROFOUNDER TURFMASTER PTY LTD (IN LIQUIDATION) (ACN 644 815 805)

First Plaintiff

PROFOUNDER TURFMASTER PTY LTD (IN LIQUIDATION) (ACN 644 815 805)

Second Plaintiff | |

| order made by: | BANKS-SMITH J |
| DATE OF ORDER: | 16 april 2026 |
THE COURT ORDERS THAT:

1. Pursuant to s 477(2B) of the Corporations Act 2001 (Cth), the first plaintiffs, as joint and several liquidators of Profounder Turfmaster Pty Ltd (In Liquidation) ACN 644 815 805 (Company), have approval nunc pro tunc to enter into, and cause the Company to enter into, the agreement in the form appearing at confidential exhibit HLW-1 to the confidential affidavit of Hayden Leigh White affirmed 8 April 2026 (Confidential Affidavit).

2. To the extent that it is required, pursuant to s 477(2B) of the Corporations Act, the first plaintiffs have approval to enter into, nunc pro tunc, the letter of engagement with the firm Ashurst Australia located at confidential annexure HLW-2 to the Confidential Affidavit.

3. Pursuant to s 37AF and s 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the following documents be marked confidential on the Court file, not be published, disclosed or accessed except pursuant to an order of the Court and that their contents be suppressed until the conclusion of any litigation (including any appeal) arising out of the winding up and affairs of the second plaintiff:

(a) the plaintiffs' outline of submissions dated 8 April 2026;

(b) the Confidential Affidavit and all exhibits contained within; and

(c) the confidential affidavit of Emily Monei Thomason affirmed 15 April 2026 and all exhibits contained within.

1. The plaintiffs' costs of, and incidental to, this application be costs and expenses in the liquidation of the second plaintiff and be paid out of the assets of the second plaintiff.

2. Liberty to apply.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BANKS-SMITH J:

1 The liquidators of Profounder Turfmaster Pty Ltd (in liq) seek orders pursuant to s 477(2B) of the Corporations Act 2001 (Cth) for approval with retrospective effect to enter into both a litigation F unding A greement with a recognised litigation funder, and an E ngagement Agreement by way of letter with legal representatives, Ashurst Australia.

2 One of the liquidators, Mr Hayden White, provided two affidavits in support of the application, one of which contains confidential information.

3 Relevantly, a liquidator has the power to do all such things as are necessary for winding up the affairs of the company and distributing its property: s 477(2)(m) of the Corporations Act.

4 That power is qualified by s 477(2B), which requires approval from the Court, a committee of inspection or the creditors for a liquidator to enter into an agreement on the company's behalf, if the term of that agreement or obligations under it extend for more than three months.

5 The term of both the Funding Agreement and the Engagement Agreement will exceed three months.

Background

6 The following matters are based on information deposed to in the non-confidential affidavit.

7 The liquidators were appointed upon the making of a winding up order by the Court on 15 April 2025 on the application of the Commissioner of State Revenue.

8 Profounder was established for the purpose of acquiring the business and assets of Turf Master Pty Ltd, an established business that provided turf management and maintenance services to clients such as golf clubs and universities.

9 The acquisition settled in November 2020.

10 Despite requests, the liquidators have not received any books and records, including the requisite Report on Company Affairs and Property, in relation to Profounder. The information upon which the liquidators have been proceeding to date has been obtained from third parties and certain management accounts. However, based on such information, it is apparent that the amounts due to secured and unsecured creditors total an estimated $3,667,293. The liquidators have recovered approximately $85,437 from pre-appointment debtors. Otherwise, assets that they may be able to access include stock and equipment, but the current market value and location of stock and equipment is unknown.

11 According to Mr White, the preliminary investigations undertaken by the liquidators have identified a number of matters warranting further inquiry, including potential voidable transaction claims and insolvent trading claims.

12 In order to advance their investigations, the liquidators consider it necessary and appropriate to seek orders for public examinations of certain persons. It is anticipated that information obtained from such examinations will inform the next steps for the liquidators, including the merits, quantum and scope of potential recovery proceedings for the benefit of creditors.

13 According to Mr White, litigation funding for these purposes is necessary to progress the investigations in a manner consistent with their statutory duties and will assist in preserving and maximising potential recoveries for creditors.

14 Mr White deposed to steps taken to investigate the availability of external funding to support further investigations and the potential prosecution of claims. These inquiries included discussions with a litigation funder, and consideration of various funding structures.

15 Mr White is an experienced insolvency practitioner and I accept that he has an understanding of the prevailing market conditions for litigation funding of this kind. He considers that the key commercial terms of the Funding Agreement are broadly consistent with and no less favourable than those commonly offered in comparable insolvency litigation matters. In his view, the terms of the Funding Agreement are appropriate and reasonable.

16 Mr White considered that it was appropriate to engage specialist legal advisors with relevant experience in commercial litigation in insolvency matters to assist with the liquidation. Mr White states that in his opinion, the Engagement Agreement with Ashurst is fair, commercially reasonable and provides a practical means by which Profounder may obtain appropriate legal representation in potentially pursuing valuable claims for the benefit of creditors.

17 The Funding Agreement was executed on 17 December 2025 and before the liquidators brought this application for approval, but is expressed to be conditional upon that approval being granted. Entry into the Funding Agreement enabled Mr White to engage the assistance of Ashurst with comfort as to the ability to meet their legal costs in relation to this application. The Engagement Agreement was executed on 24 February 2026, with the intention that Ashurst would then be in a position to progress this application on behalf of the plaintiffs.

18 Mr White by his confidential affidavit disclosed to the Court important matters, including copies of the Funding Agreement and the Engagement Agreement, a summary of the key terms of the Funding Agreement, and a summary of certain steps undertaken in investigating potential claims to be pursued in the liquidation. Mr White discloses that the liquidators have obtained legal advice in relation to potential actions they might undertake, and in relation to the terms of the Funding Agreement. Such advice is self-evidently privileged and has not been disclosed.

19 There is no committee of creditors to approve entry into the agreements, and the liquidators did not consider it appropriate to seek creditor approval, having regard to the delay and costs involved in convening a meeting for that purpose; uncertainty in the circumstances as to whether a quorum might be obtained; and the tension between disclosing confidential information that might prejudice future proceedings and the liquidators' obligation to inform creditors of matters relevant to any proposed resolution.

Principles

20 The purpose of s 477(2B) is 'to ensure that the court exercises some oversight of the liquidator's actions and, in effect, confers or completes the necessary power only where it sees that a case for exercise of the power in the particular circumstances has been sufficiently shown': Re HIH Insurance Ltd [2004] NSWSC 5 at 15.

21 The application of the principles in the context of a litigation funding agreement are well known and referred to in many authorities, including at appellate level. It is sufficient for present purposes to respectfully adopt Wigney J's summary in Hundy (liquidator), in the matter of 3 Property Group 13 Pty Ltd (in liquidation) (No 2) [2023] FCA 173:

[18]    The reason that approval is required in respect of agreements which may operate or involve obligations that extend beyond three months is that such agreements tend to cut across the general expectation that the winding up of a company will proceed expeditiously: Re HIH Insurance Ltd [2004] NSWSC 5 at [15]; Re Golden Sands Hospitality Pty Ltd (in liq) (No 2) [2017] NSWSC 450 at [15], [17].

[19]    The requirement to obtain approval of such agreements affords some protection against ill-advised or improper actions on the part of the liquidator: Empire (Aust) Nominees Pty Ltd v Vince (2000) 35 ACSR 167; [2000] VSC 324 at [12]. The Court's task is not to second guess the liquidator's commercial judgment, but rather to determine whether there are grounds for suspecting a lack of good faith, some error of law or principle, or some other good reasons to intervene: Re Spedley Securities Ltd (in liq) (1992) 9 ACSR 83 at 85-86; Leigh, re AP and PJ King Pty Ltd (in liq) [2006] NSWSC 315 at [23]; Stewart, re Newtronics Pty Ltd [2007] FCA 1375 at [26]; Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher & Barnet (2015) 89 NSWLR 110; [2015] NSWCA 85 at 125.

[20]    In respect of funding agreements that require approval pursuant to s 477(2B) of the Corporations Act, the factors that may be relevant to assessing whether approval should be granted include: the manner in which the funding or indemnity will be provided under the agreement; the prospects of success of the proposed litigation; the risks involved in the claim; the interests of creditors other than the proposed defendant or respondent; possible oppression; the nature and complexity of the cause of action; the extent to which the liquidator has canvassed other funding options; the level of the funder's premium, if any; and the extent to which the liquidator has consulted with creditors: Leigh at [25]; Re ACN 076 673 875 Ltd (rec and mgr apptd) (in liq) (2002) 42 ACSR 296; [2002] NSWSC 578 at [16]-[34]; Hughes, in the matter of Sales Express Pty Ltd (in Liq) [2016] FCA 423 at [20].

22 Whether approval is required in relation to entry into retainer and costs agreements between solicitors and liquidators has also been the subject of considerable attention, the potential point of distinction being the fact that such agreements are often entered into personally by liquidators, rather than as agent for the company. In Kitay v Frigger [No 2] [2024] WASC 113 at [79]-[91], Hill J analysed the position and concluded (at [91]):

…I consider that approval under s 477(2B) of the Act is required for agreements entered into by the liquidator as agent for or representative of the company, as well as agreements in the name of the company. However, approval is not required for entry into agreements by the liquidator in their own name. In determining whether the agreement has been entered into by the liquidator as agent for or representative of the company or in their own name, it is necessary to consider the substance of the agreement, whether the company is a party to the agreement or appears to have the status of a party under the agreement, and who receives the benefit of the services provided under the agreement.

23 See also Nipps (Liquidator), in the matter of Dimension Agriculture Pty Ltd (in liq) [2024] FCA 1070 at [26]; Tonks (Liquidator), in the matter of Vaucluse 29 Pty Ltd (in liq) [2025] FCA 1306 at 19.

24 There is also a body of authority addressing the question of the grant of approval effective retrospectively. There is no doubt that in appropriate circumstances a nunc pro tunc order may be made: Hayes, in the matter of Denham Constructions Pty Ltd (in liq) [2018] FCA 2053 at 31; Dudley, in the matter of Freshwater Bay Investments Pty Limited (in liquidation) [2021] FCA 608 at 8; Tonks at [21]-[27].

25 Relevant factors include the explanation for the delay; the presence or absence of prejudice to the company or it creditors; the length of the delay; and whether the liquidator has acted honestly: Tonks at [22]-[23]. It has also been accepted that for a document requiring s 477(2B) approval, a term requiring s 477(2B) approval as a condition to the document's operation is a matter that favours the grant of nunc pro tunc relief: Naidenov, in the matter of AJW Interiors and Constructions Pty Ltd (in liq) [2024] FCA 25 at 123; Bredenkamp (Liquidator), in the matter of Coolgardie Minerals Limited (in liq) [2025] FCA 404 at 15.

26 I have applied these principles in considering the orders sought by this application.

Why approval appropriate

27 Having regard to the scope of the liquidation, it is unsurprising that the term of the Funding Agreement is expected to exceed three months. I am satisfied that its key terms are clear, that the liquidators are responsible for the day-to-day conduct of any proceedings (subject to certain reporting and other requirements involving the funder), and that the Funding Agreement covers the essential matters that one would expect to find in such an agreement. Its terms appear fair and reasonable in the circumstances.

28 I take into account that the liquidators have considered and obtained legal advice about the terms of the Funding Agreement and the matters it is intended to cover. I accept that there is an appropriate explanation for not consulting with creditors about the Funding Agreement. There is nothing in the evidence that reveals any conduct on the part of the liquidators which suggests the Court should not grant approval.

29 I am therefore satisfied that the approval requested to enter into the Funding Agreement should be granted.

30 As to the Engagement Agreement, in contrast to the facts of Kitay v Frigger [No 2 ], the Engagement Agreement is entered into by the liquidators as agents for or representatives of Profounder and in the name of Profounder. In those circumstances, I consider that leave is required, and I am similarly satisfied that approval to enter into the Engagement Agreement should be granted. The Engagement Agreement is likely to be operative for more than three months. The terms of the Engagement Agreement are clear on its face, and its purpose is to assist the liquidators to take steps for the benefit of creditors in the liquidation.

31 I am also satisfied that the approval should operate nunc pro tunc. There is nothing in the conduct of the liquidators which weighs against such an order; the application has been made promptly in the circumstances; it includes detailed evidence by way of disclosure to the Court; and the need for approval was recognised as a condition of the Funding Agreement.

Suppression

32 Finally, it is necessary to consider the grant of a suppression order to preserve the confidentiality of the confidential affidavit of Mr White and the written submissions.

33 Having read those documents, I accept that it is appropriate to make a suppression order under s 37AF and s 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth). Such orders are not uncommon in circumstances where disclosure of information by liquidators about matters such as the strategy or nature of proposed litigation may have a prejudicial effect on proceedings and so on the interests of creditors. Disclosure might accord prospective defendants an unfair advantage in responding to a claim if they know the terms of any funding, being information not ordinarily available to opposing parties in litigation.

34 In McGrath re HIH Insurance Ltd [2005] NSWSC 731, Barrett J observed (at [10]-[13]) that because a liquidator, unlike an ordinary litigant, was required to seek approval under s 477(2B) and, in the process, disclose 'information that, in the ordinary course, a plaintiff is entitled to keep confidential in the plaintiff’s own interests', the public interest in the administration of justice through the pursuit of litigation, which was being brought for the benefit of creditors, was 'very likely to be prejudiced' if that information were available to a potential defendant.

35 There are many examples where this Court has made suppression orders relating to funding agreements between liquidators and funders: Kogan, in the matter of Rogulj Enterprises Pty Ltd (in liq) [2021] FCA 856 at 31; Special Gold Pty Ltd (in liq) v Dyldam Developments Pty Ltd (subject to a Deed of Company Arrangement) [2025] FCA 226 at 12; FSM Development Pty Ltd, in the matter of FSM Development Pty Ltd (in liquidation) [2025] FCA 617 at 13.

36 Such orders have also extended to engagement letters between liquidators and legal representatives: Dimension Agriculture at [42]; Nipps (liquidator), in the matter of I-Pros perity Pty Ltd (in liq) [2025] FCA 696 at [21], [24]-25; Greentree Resources Pty Ltd (in liq) v Greentree, in the matter of Greentree Resources Pty Ltd (in liq) [2025] FCA 256 at [12], 14.

Orders

37 Orders were made on 16 April 2026 that reflect these reasons.

| I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Banks-Smith. |
Associate:

Dated: 20 April 2026