Federal Court refuses to end Mawson liquidation despite US bankruptcy order

The Federal Court has refused to terminate the Australian liquidation of Nasdaq-listed Mawson Infrastructure Group, ruling that a US bankruptcy order did not displace the liquidator’s statutory obligations under Australian law. Justice Downes directed liquidator Cameron Gray of HM Advisory to continue performing his functions in Australia despite an order of the US Bankruptcy Court for the District of Delaware stating that the Australian liquidation proceeding and any related custodianship should not be reinstated.

The Court found that the US proceeding had not been recognised in Australia under the Cross-Border Insolvency Act 2008 and that the US Bankruptcy Court had not issued a letter requesting assistance from the Federal Court. No automatic stay had therefore arisen in Australia under the UNCITRAL Model Law on Cross-Border Insolvency.

Mawson, which now trades as Big Digital Energy Inc, is a US-incorporated digital infrastructure business that previously operated data centres and a head office in Australia. It was wound up as a registered foreign company in February 2025 after failing to comply with a statutory demand and admitting that it had ceased carrying on business in Australia.

The liquidator has since received proofs of debt exceeding $29 million, which he presently considers genuine. Mawson asserted that it had completed a recapitalisation and supported an unconditional termination of the liquidation, but provided no evidence of its current financial position, assets or solvency.

Justice Downes said it would be contrary to public policy to return an apparently insolvent company to the control of directors who had failed to comply with their statutory obligations to provide information and deliver the company’s books and records. The Court also noted that the location and value of Mawson’s assets remain unknown. Mawson’s directors had not provided the liquidator with reports on the company’s activities and property, despite requests made shortly after his appointment and subsequent intervention by the Australian Securities and Investments Commission.

Justice Downes ordered the current and former directors, including Gregory Martin, Michael Hughes and Philip Stanley, to provide the prescribed reports within seven days. The Court warned that further non-compliance could result in additional orders and personal costs consequences.

The decision follows an unusual conflict between proceedings in Australia and the US. Creditors filed an involuntary Chapter 11 petition against Mawson in Delaware in December 2024, which triggered a worldwide automatic stay under US bankruptcy law.

The Australian winding-up application nevertheless proceeded, with Mawson submitting at the time that the US filing did not deprive the Federal Court of jurisdiction. Mawson did not appeal or seek to set aside the winding-up order.

The US petition was dismissed in November 2025 after the petitioning creditors declined to continue prosecuting it. The Delaware court ordered that the Australian liquidation proceeding and the custodianship should not be reinstated, while leaving open challenges to the validity or effectiveness of the liquidator’s appointment.

Justice Downes found that the Australian winding-up proceeding had already concluded when the liquidation order was made and therefore could not be “reinstated” in any event. The liquidator nevertheless remained an officer of the Federal Court with ongoing statutory duties to identify assets, adjudicate creditor claims and administer the company’s affairs.

The Court also authorised the liquidator to defend claims brought against him in the US and to recover his costs, remuneration and expenses from indemnity funds available for the liquidation and related proceedings.

Mawson has filed an adversary complaint in Delaware alleging that the involuntary bankruptcy petition was brought by a “cabal” of Australian parties in bad faith. It has also sought to hold the liquidator in contempt for continuing the Australian liquidation and refusing to consent immediately to proceedings seeking to set aside W Capital Advisors’ deed of company arrangement.

Justice Downes said it was difficult to understand how the contempt application could properly be maintained, given Mawson’s earlier submission that the US automatic stay did not affect the Federal Court’s jurisdiction to make the winding-up order.

The Court left open the possibility that the liquidation could be terminated later, once further information is available. For now, however, the absence of evidence of solvency, the scale of creditor claims, the uncertainty surrounding Mawson’s assets and the directors’ non-compliance weighed strongly against termination.

Read the decision here.

Professionals involved:

• Antonino Di Franceso and Hegarty Legal for the liquidator, Cameron Gray of HM Advisory

• Madeline Hall of Banco Chambers and HFW Australia for W Capital Advisors Pty Ltd

• John Anderson of Ninth Floor Selborne Chambers and Hall & Wilcox for Mr Manning

• Shelley Scott of University Chambers and Hamilton Locke for Mawson Infrastructure Group Inc (in liq)