IE CA 3 Holdings and IE CA 4 Holdings - Case Update

The Federal Court of Australia has dismissed an application for leave to appeal a decision recognising the bankruptcy of a Canadian crypto miner, rejecting arguments that the recognition was manifestly contrary to Australian public policy.

IREN (previously known as Iris Energy) is a public company registered in Australia and listed on the NASDAQ. It is the parent company of the Iris Energy Group, which includes IE CA 3 Holdings and IE CA 4 Holdings, Canadian companies which operate as bitcoin miners.

In October 2024, the Federal Court recognised the Canadian bankruptcy proceedings of IE CA 3 and IE CA 4 in Australia. IREN had argued that recognition was sought for an improper purpose — namely to enable the trustee to carry out examinations in Australia, which it argued would be an abuse of process since the British Columbia Supreme Court had jurisdiction in relation to, and had already ruled on, the extent to which the trustee could undertake examinations. The Court, while “sympathetic” to IREN’s position, found that IREN’s submissions ignored the obligations imposed on the trustee in completing its statutory duty — to continue its investigations into the affairs of two insolvent companies by undertaking further public examinations. It simply proposed to do so in Australia, rather than in British Columbia.

The Court also found that this situation did not come close to meeting the standard for invoking the public policy exception, which is to be construed restrictively and reserved for exceptional circumstances in relation to matters of fundamental importance for Australia.

In November 2024, the Federal Court refused to stay the recognition order pending IREN’s appeal, but did find that there were genuine and reasonable points to be argued on the appeal.

Now, Justices Derrington, Stewart and Feutrill of the Federal Court have refused leave to appeal, concluding that the primary decision was not “attended by sufficient doubt as to warrant its reconsideration”, nor that IREN would suffer substantial injustice should leave be refused, since any examination orders would still be subject to future objections.

The Court emphasised that the public policy exception must be interpreted narrowly and that the trustee’s purpose — seeking further information to protect creditor interests — was legitimate under the Model Law’s objectives.

The Court also rejected IREN’s argument that the primary judge misapplied the necessity requirement in Article 21 of the Model Law, which permits the court to grant appropriate relief in a foreign proceeding “where necessary to protect the assets of the debtor or the interests of the creditors”. The Court affirmed that “necessary” in this context does not mean “essential,” but rather refers to whether the relief is desirable or needed to enable the foreign representative to fulfil their functions.

Ultimately, the Court dismissed IREN’s application for leave to appeal with costs.

Read the decision HERE.

Professionals involved:

• Stewart Maiden KC of List G Chambers and Vicki Bell of List A Barristers (instructed by White & Case) for PwC in its capacity as foreign representative

• Jeremy Giles SC of 7 Wentworth Selborne and Celia Winnett of Sixth Floor Selborne Wentworth Chambers (instructed by Norton Rose Fulbright Australia) for IREN