Court backs liquidators’ commercial judgment in quarry restructuring

The Federal Court has endorsed the reasonableness of liquidators’ decisions to release security interests and accept a reduced recovery as part of an interlocking deed of company arrangement (DOCA) involving an insolvent mining group.

Responsible Entity Services Limited (RES) previously managed several sub-funds under the RES Investment Fund, the largest being the Pleasure Point Mine Fund, which pooled investor money to provide loans to Pleasure Point Mine Pty Ltd (PPM) for developing a sandstone and silica quarry in Helidon, Queensland. RES collapsed into liquidation in late 2024 after PPM defaulted on loan repayments totalling about $30 million owed to investors in the RES Investment Fund. An attempted forbearance and recapitalisation deal with SASI LLC failed to win creditor support, leaving RES without recoveries or funding and prompting creditors to vote for its winding-up.

On 4 April 2025, liquidators Barry Wight and Rachel Burdett of Cor Cordis appointed Matthew Hutton and Mark Holland of McGrathNicol as receivers and managers and agents over the mine and associated land. A joint sale and recapitalisation process for the mine and its subsidiary (BRS Quarries Australia Pty Ltd) produced only one viable offer — a DOCA proposed by Swift Mining Resources, a shareholder in PPM.

Under the DOCA proposal, Swift offered to pay $5.975 million to effectively acquire full control of the mine and BRS Quarries. The liquidators assessed that Swift’s offer was the only genuine and executable proposal (a competing proposal by SASI had already collapsed), providing a better and faster return to RES (expected to receive roughly 19 cents in the dollar) and other creditors than liquidation or enforcement proceedings. The DOCA also resolved a caveat dispute lodged by SASI over the mining lease and avoided costly litigation to remove it.

The liquidators therefore viewed the Swift proposal as the best commercial outcome, ensuring some recovery for RES’s investors while preserving the option to pursue separate claims against former directors or third parties. The Court accepted this reasoning and authorised the compromise as commercially justified.

Justice Beach held that the liquidators acted reasonably and within their commercial discretion in agreeing to the settlement, finding it offered a superior return to RES creditors compared to any alternative enforcement or liquidation scenario. The Court also clarified that releasing security for value constitutes a “compromise of a debt” under s 477(2A), given the material impact on the debt’s recoverability.

Beach J emphasised that the Court’s role is not to second-guess liquidators’ commercial judgment but to ensure decisions fall within a reasonable range and are made in good faith. He approved the transactions and confirmed that the liquidators may proceed to release the mortgage and share security over PPM and BRS in exchange for payment under the DOCA, noting that this approach best served the interests of RES creditors and investors in a complex, inter-entity restructuring involving multiple secured and caveated interests.

Read the decision here.

Adam Segal (instructed by Gilbert + Tobin) represented the liquidators, while Gavin Rees (instructed by Vaikom Law) represented an interested party.