Federal Court removes Hellyer Metals liquidator over concerns about independence and failure to investigate asset transfers

The Federal Court of Australia has removed the liquidator of Hellyer Metals Pty Ltd, finding that his failure to promptly investigate potentially voidable transactions, his relationships with individuals involved in those transactions and an opaque litigation funding arrangement gave rise to a reasonable apprehension of bias. In a decision delivered on 10 November 2026, Justice McElwaine held that the liquidator had failed to adequately investigate the transfer of the company's principal assets to related entities for apparently no valuable consideration, despite repeated requests and offers of funding from creditors. The Court appointed a replacement liquidator, emphasising that the independence and impartiality of insolvency practitioners must not only exist in substance but be demonstrably maintained throughout an administration.

The dispute arose from the liquidation of Hellyer Metals, part of a group of six companies associated with the Hellyer Gold Mine in northwest Tasmania. In October 2023, Goshawk Mining Pty Ltd agreed to sell the assets of an alluvial tin mine to Hellyer Metals for $25 million, comprising $15 million in cash and shares valued at $10 million. The transaction failed to complete, prompting Goshawk to commence proceedings seeking $36.4 million in damages. Saxby Capital Investments Pty Ltd, which had separately agreed to provide corporate advisory services in connection with a proposed fundraising, commenced proceedings claiming approximately $159,000.

In November 2025, while the litigation remained unresolved, Hellyer Metals transferred its interests in operating subsidiaries Hellyer Gold Mines Pty Ltd and Hellyer Metals Underground Pty Ltd to Celestial Pacific Group Pty Ltd, an entity associated with individuals who controlled the Hellyer group. The transaction contemplated consideration of approximately $51.5 million through the assumption and discharge of liabilities, but the Court noted that it appeared no such consideration had been provided. Goshawk subsequently obtained freezing orders over assets associated with the transaction, and Hellyer Metals entered creditors' voluntary liquidation on 22 January 2026.

Goshawk and Saxby repeatedly urged the liquidator to investigate whether the transfers constituted uncommercial transactions or creditor-defeating dispositions under the Corporations Act 2001, offering to discuss funding public examinations and potential recovery proceedings. The liquidator maintained that further investigations depended on funding and questioned whether the transferred shares had any value. He also suggested that recovering the assets could jeopardise the ongoing operations of the mining business. Justice McElwaine rejected that approach, observing that the liquidator’s obligation was to investigate questionable transactions and pursue recoveries where appropriate for the benefit of creditors, rather than preserve assets in the hands of Celestial Group.

The Court identified several matters undermining confidence in the liquidator’s independence. He had been appointed following an approach by individuals involved in the disputed asset transfers and subsequently retained the same solicitor who had introduced those individuals to him. He also provided a draft of his statutory report to former directors and the company's former general counsel, despite their potential exposure to claims arising from the transactions. Justice McElwaine described that decision as a serious error of judgment.

The Court was particularly critical of the liquidator’s limited investigative activity. Records disclosed only 30.35 hours of investigative work between 23 January and 4 May 2026, including just 12 minutes recorded against a discussion concerning litigation funding. The liquidator had also failed to exercise statutory powers to obtain company records despite acknowledging that the directors had not provided access. His more substantial investigative steps, including applications for public examinations, were undertaken only after the creditors commenced proceedings seeking his removal in June 2026.

Further concerns arose from a $130,000 litigation funding agreement entered into with Gibraltar Capital Pty Ltd in August 2026. The arrangement originated from discussions involving solicitors for two bankrupt former directors of Hellyer Metals who were seeking assistance in resolving their personal bankruptcy proceedings. Although the funding was ostensibly intended to support investigations and public examinations, Justice McElwaine found that the circumstances were opaque and created an obvious conflict between the interests of Hellyer Metals' creditors and those of the former directors. The absence of any commercial return for the funder also remained unexplained.

The liquidator’s evidence concerning the existing freezing orders raised additional concerns. When questioned about his reluctance to oppose an application to discharge the orders, he maintained that he was not required to expose himself to personal costs risks without adequate funding or protection. While acknowledging the statutory protections available to unfunded liquidators, Justice McElwaine found that the liquidator had failed to meaningfully engage with creditors willing to fund investigations and had not adequately considered the protections already available. The Court noted that Goshawk and Saxby had subsequently deposited $200,000 into their solicitors' trust account to fund the proposed replacement liquidator.

The liquidator also challenged the applicants' standing, arguing that their disputed and unliquidated damages claims did not qualify them as creditors entitled to seek his removal. Justice McElwaine rejected that submission, distinguishing the standing required to initiate winding-up proceedings from the broader entitlement to participate in an existing liquidation. The Court held that contingent creditors with claims sounding only in damages have a financial interest in an external administration and may seek orders under sections 90-15 and 90-20 of the Insolvency Practice Schedule (Corporations), notwithstanding that their claims remain disputed.

Justice McElwaine did not determine whether the liquidator was actually biased, finding that the cumulative circumstances established a reasonable apprehension that he might not bring an impartial mind to the administration. The Court stressed that removal of a liquidator is not undertaken lightly, but concluded that replacement was necessary to restore confidence in the integrity and independence of the liquidation and ensure that the disputed transactions were investigated promptly.

The Court appointed Adam Johnston of Apex Advisory as replacement liquidator, emphasising that the independence and impartiality of insolvency practitioners must not only exist in substance but be demonstrably maintained throughout an administration.

Read the decision here.

Michael Galvin KC and David Palmer (instructed by Groom Kennedy) acted for the Plaintiffs, Goshawk Mining Pty Ltd and Saxby Capital Investments Pty Ltd.

Ralphed Notley (instructed by Rostron Carlyle) acted for the liquidator.