Australian Pacific Coal administrators flag insolvent trading, director duty claims

Administrators of Australian Pacific Coal Limited (AQC) and six related companies have identified potential insolvent trading and director duty claims after concluding the companies were insolvent from at least November 2025, around nine months before administrators were appointed. Shaun Fraser and Jonathan Henry of McGrathNicol said their preliminary investigations indicate AQC’s directors may have limited prospects of defending an insolvent trading claim and may also be unable to rely on safe harbour protections. The findings remain preliminary and would require further investigation if the companies enter liquidation.

AQC, the ASX-listed parent of the group, was focused on redeveloping the Dartbrook underground coal mine near Muswellbrook, New South Wales. The project restarted coal production in 2024 but encountered operational and financial difficulties, and Vitol appointed Ben Campbell and David McGrath of FTI Consulting as receivers over the Dartbrook assets and certain AQC group assets in July 2025. The loss of control of Dartbrook effectively stripped the companies of their principal asset, operating income and funding support. AQC’s shares were subsequently suspended from trading in October 2025.

The immediate trigger for the August 2026 administrations was a $1.1 million statutory demand issued by M Resources. The Queensland Supreme Court initially set aside the demand in October 2025, but the Queensland Court of Appeal reversed that decision on 18 August 2026. Unable to negotiate a deferral or other commercial resolution, the directors appointed the voluntary administrators on 24 August.

The administrators, however, said AQC’s financial distress pre-dated the Court of Appeal ruling. Their cash flow analysis found the companies were insolvent from at least November 2025, when AQC first began deferring employee wages, and potentially from July 2025 when the Dartbrook receivership cut off access to the group’s principal asset and funding. Employee wages were deferred from November 2025 to January 2026 and again from June 2026 until the administrators’ appointment. The report also identified overdue taxes and superannuation, creditor demands and special payment arrangements as indicators of insolvency.

That timing could become important if the companies are liquidated. The administrators said the directors may not have reasonable prospects of relying on the statutory defences to insolvent trading, pointing to the loss of Vitol funding following the Dartbrook receivership, AQC’s inability to raise equity after its shares were suspended and the repeated deferral of employee wages. They also said safe harbour may be unavailable because no safe harbour adviser was engaged and employee entitlements remained outstanding when administrators were appointed. Separately, the administrators’ preliminary view is that the directors likely breached duties under sections 180 to 182 of the Corporations Act by continuing operations while deferring accrued employee wages.

There may be little value available from the companies themselves. The administrators estimate consolidated liabilities of about $356.3 million, including a $283.4 million contingent claim by Vitol under AQC’s parent guarantee, $29.9 million of unsecured creditor claims and $42.6 million of intercompany claims. They estimate realisable assets at just $79,000, although potential value could still emerge from AQC’s interest in the Matuan Downs Bentonite Project and other investigations. The administrators said they have not identified meaningful assets likely to produce a return to unsecured creditors.

Creditors will not yet be asked to choose between a DOCA and liquidation. The directors submitted a draft DOCA proposal on 16 September, but the administrators said it is not presently capable of being put to creditors. They intend to open the second meetings on 28 September and adjourn them for up to 45 business days while the proposal is developed and assessed. Unless a viable DOCA emerges, the administrators said winding up is currently the only available outcome. A supplementary report and recommendation will be issued before the reconvened meetings, which are to occur no later than 30 November.

Read the administrators’ report here.