Federal Court freezes Mine & Rail DOCA pending voting valuation challenge

The Federal Court has restrained the implementation of a deed of company arrangement for Mine & Rail Company Pty Ltd while Tacora Capital LP challenges the administrators’ decision to admit part of its $45.4 million proof of debt for only $1 for voting purposes.

Justice Goodman permitted the company, its administrators and Valiant Resources Ltd to execute the Valiant-sponsored DOCA, which faced a statutory signing deadline on 10 July, but ordered that no further steps be taken to implement it pending the final determination of Tacora’s proceeding. Valiant may still pay a $100,000 deposit and a $100,000 retention amount into the deed fund.

Barry Wight and Thomas Birch of Cor Cordis were appointed voluntary administrators of Mine & Rail on 5 March 2026. Tacora later lodged a proof of debt for approximately $45.43 million, comprising a claim arising from a US$7 million advance under a term sheet and a further US$23 million advanced under a convertible note deed.

The administrators admitted the term sheet claim for approximately $9.98 million for voting purposes. They admitted the convertible note claim for a nominal $1, saying they were unable to form a just estimate of its value because of the limited-recourse nature of the instrument and the absence of a valuation of the underlying shares.

Tacora and Valiant each proposed competing DOCAs. Although the administrators ultimately recommended Tacora’s revised proposal on the basis that it would produce a better return for unrelated unsecured creditors, creditors voted against it by 12 to one in number and approximately $11.82 million to $9.98 million in value.

The voting pattern was reversed for Valiant’s proposal, which was approved by the same majorities. The administrators recorded that the outcome would have been split between number and value had Tacora’s claim been admitted at approximately $45 million, requiring the meeting chair to consider a casting vote.

Tacora commenced proceedings seeking orders that its proof be admitted at its full value, that the resolution approving the Valiant DOCA be set aside and that the company enter the Tacora DOCA. It alternatively seeks a fresh creditors’ meeting, the winding up of Mine & Rail or termination of the Valiant deed if it has already been executed.

Tacora argued that, had its convertible note claim been admitted at full value, it would have held the majority in value and Mr Birch would have exercised a casting vote in favour of the Tacora proposal, consistently with the administrators’ recommendation.

Mr Birch said in affidavit evidence that he would instead have supported the Valiant DOCA. He said every unrelated unsecured creditor attending the meeting who stood to receive a distribution had voted for Valiant’s proposal, while Tacora was a related-party creditor, the proponent of the competing deed and would not receive a distribution under either proposal.

Justice Goodman found that Tacora had established a sufficiently arguable case, although its prospects were “far from overwhelming”. Whether Mr Birch would have cast his vote for Tacora’s proposal would need to be determined after a full examination of the evidence, including any cross-examination.

On the balance of convenience, Justice Goodman accepted the course proposed by Valiant and the administrators. Allowing the Valiant deed to be signed preserved its validity before the statutory deadline, while preventing its implementation protected Tacora’s position if the challenge ultimately succeeds.

Tacora was ordered to provide $350,000 security for its undertaking as to damages. The defendants were directed to file evidence by 15 July, with written submissions to follow ahead of a final hearing to be fixed after 22 July.

Read the decision here.

Tacora was represented by Henry William Lawyers, Jonathan Burnett of Eleven Wentworth and Haiqiu Zhu of Sixth Floor Selborne Wentworth.

Corrs Chambers Westgarth and John Anderson of 9 Selborne Chambers acted for Mine & Rail and the administrators.

Jones Day and Michael Rose of 9 Wentworth acted for Valiant.