Court rebukes liquidators for “eleventh hour” approval bid

The Federal Court of Australia has approved an application by liquidators Brad Tonks and Mark Roufeil of PKF for retrospective approval of two-long term agreements—a retainer with Piper Alderman and a litigation-funding agreement with Pretium Funding—but took the opportunity to criticise the liquidators for not seeking approval until the eleventh hour.

The application related to three interrelated property-development companies—Vaucluse 29 Pty Ltd, Bayview 66 Pty Ltd, and One Lake Macquarie Pty Ltd—all controlled by Mr Changjin Li and funded by his former wife Ms Changren Cheng through Athena Rose Capital Pty Ltd. The companies had engaged in high-value residential property transactions in New South Wales financed by Ms Cheng, who claimed repayment and security over several properties. After their collapse, the liquidators were appointed in June 2023 and commenced investigations into potential recovery actions against Ms Cheng and Athena Rose Capital.

Justice Owens accepted that such approval was required because the agreements operated for more than three months and were entered into on behalf of the companies. He was satisfied that both agreements were in the creditors’ interests—enabling the liquidators to prosecute or defend litigation, conduct public examinations, and provide security for costs—and that they were commercially reasonable and properly entered into. Although the liquidators had delayed seeking approval, their conduct was honest, and no prejudice arose; the Court therefore granted retrospective approval.

Justice Owens was sharply critical, however, of the liquidators’ delay, noting that they had known approval was needed yet waited until the “eleventh hour” to apply. He stressed that retrospective approvals should be exceptional and that liquidators must seek court or creditor consent before entering long-term agreements. The Court stated that “awaiting the eleventh hour to bring an application capable of being made much sooner is a practice to be deprecated for reasons that go well beyond a judicial preference for quietude”. Nonetheless, the Court accepted that the funding was vital: without it, required security for costs could not be posted, the companies’ public examinations (scheduled for November 2025) could not proceed, and potential recoveries for creditors would be foreclosed.

The Court also granted the liquidators a five-month extension under s 588FF(3)(b) to bring any voidable-transaction claims. The liquidators argued that they could not yet identify potential claims because they lacked complete records and had not conducted the examinations. Justice Owens agreed, finding their explanation for delay—particularly funding constraints—satisfactory and the extension fair and just. Notice had been given to Athena Rose Capital and Ms Cheng, who did not oppose the order, and no identifiable prejudice to others was shown.

Read the decision here.

Evan Walker of Ground Floor Wentworth Chambers and Andrew Fernon SC of University Chambers (instructed by Piper Alderman) represented the liquidators.