Chala Metals - Case Update

The Federal Court of Australia has granted an order extending the convening period in the voluntary administration of mining company Chala Metals, while also taking the opportunity to comment on the concept of “avoidable urgency” in extension applications.

Chala Metals’ primary assets were shareholdings in two Peruvian companies holding mining concessions over a large land area in Peru. The administrators had undertaken a sale process, including marketing, establishing a data room, and negotiating with neighbouring landowners to package the concessions into a joint sale campaign, which they considered essential to maximising value. They sought more time to complete that campaign, arguing that liquidation risked triggering contractual and regulatory consequences in Peru that could destroy or impair the concessions’ value.

The Court emphasised that extensions are not automatic and that administrators must adduce clear, particularised evidence justifying why prolonging the administration (rather than proceeding to liquidation) is in creditors’ interests. Here, the evidence initially provided ”did not travel much beyond a formulaic recitation of phrases used in previous cases to explain why an extension had been granted”.

After an adjournment, further material clarified that liquidation could jeopardise the company’s only valuable assets. Creditors were few in number and, when eventually notified, either supported or did not oppose the extension. On that basis, the Court granted an extension to 21 November 2025, with a Daisytek order, noting the balance favoured allowing the orderly sale process to continue.

Of particular note were the Court’s comments on “avoidable urgency”. The Court stated that there will be situations where applications of this kind can only be made on short notice. However, this was not such a case. Instructions had been given to solicitors on 8 August—by which point it must have been clear for some time to the administrators that they would wish to seek an extension—yet no application or creditor notification occurred until 18 August—two days before expiry. The Court described this as “unsatisfactory,” observing that delays of this kind create “artificial urgency” that may strain the Court’s resources and deprive creditors of a fair opportunity to consider and respond. As a result, the Court stated that care should be taken to ensure this does not happen again.

Read the decision HERE.