Quasar Constructions - Case Update

The Supreme Court of New South Wales has refused to grant final asset freezing orders against a company’s sole director, but has indicated it may be willing to grant interim orders in light of evidence indicating that the director may be liable for insolvent trading.

Quasar Constructions entered voluntary administration in September 2024 and liquidation in December 2024. Liquidator Alan Walker of WLP Restructuring sought final asset freezing orders under section 1323(1) of the Corporations Act 2001 (Cth) against James Crawford (the former sole director of Quasar), his company Crawford 6 Pty Ltd (C6PL), and Brookhollow Investments Pty Ltd (Brookhollow), a related entity. The liquidator contended that Quasar was insolvent for several months prior to its voluntary administration and sought to preserve assets amid concerns about asset dissipation by Mr Crawford, C6PL and Brookhollow.

The Court found there was a seriously arguable case that Quasar had been insolvent from at least March or July 2024 and that Mr Crawford may be liable for insolvent trading under section 588G, with potential claims of up to $24 million. Additionally, there were allegations of uncommercial transactions, improper payments to Brookhollow, and breaches of directors' duties. The evidence also showed that Mr Crawford and his wife sold several properties shortly before the company's administration, with at least $2.88 million in sale proceeds unaccounted for.

Despite these concerns, the Court declined to grant final freezing orders under s 1323(1), holding that it lacked jurisdiction because examinations conducted by a private liquidator under sections 596A and 596B (unlike statutory investigations conducted by ASIC under the Australian Securities & Investments Commission Act) do not qualify as an “investigation under the Act” for the purposes of section 1323. While liquidator-led examinations are investigative in nature, they do not fall within the statutory meaning of "investigation" as intended in the legislative history and relevant case law.

However, the Court was satisfied that interim freezing orders were appropriate under the Uniform Civil Procedure Rules rules 25.11 and 25.14, and indicated it would consider granting such relief until August 2025, pending completion of the liquidator's examinations, and invited submissions on whether an undertaking as to damages should be required.

Read the decision HERE.

Professionals involved:

• James Parrish of 3 St James’ Hall (instructed by Hilton Bradley) for the liquidator

• Geoffrey McDonald of Windeyer Chambers (instructed by HFK Law and Emerson Lewis) for the defendants