Tahmoor Coal liquidators win bid to expand challenge to GFG-linked financing

The liquidators of Tahmoor Coal Pty Ltd have secured permission to broaden their challenge to a pre-liquidation financing transaction involving entities within the GFG Alliance, with the Supreme Court of New South Wales also ordering extensive discovery ahead of an eight-day hearing in November.

Shaun Fraser and Jonathan Henry of McGrathNicol, as joint and several liquidators of Tahmoor, commenced the proceeding in May seeking orders under sections 588FB and 588FF of the Corporations Act to unwind finance and security arrangements they allege constituted an uncommercial transaction. Their original claim also sought, in the alternative, relief under section 588FJ in relation to circulating security interests.

The liquidators have now been permitted to expand the transaction under challenge to include an “Upstream NCD Proceeds Loan” and payments totalling just over US$20 million made to Tahmoor by Clydesdale Engineering Limited and Liberty Primary Metals Australia Pty Ltd between 31 July and 5 November 2025.

They have also added a claim under section 588FF(1)(g), which could allow the Court to restrict the amount that the defendants are permitted to prove for in Tahmoor’s winding up if the underlying transaction is ultimately found to be voidable.

The amendments are significant because Clydesdale has relied on the US$20 million of advances as part of its defence, arguing that the funding provided liquidity to Tahmoor for genuine purposes while third-party financing was being pursued and directly benefited the company.

The liquidators dispute that characterisation. Their evidence is that the advances were insufficient to restore Tahmoor to solvency, did not reduce the amount owed to creditors and merely delayed what they say was an inevitable insolvency appointment. They also contend that unrelated unsecured creditors would have been better off had the transaction not occurred.

Justice Nixon rejected Clydesdale’s argument that the amendments had come too late. Much of the new pleading arose from evidence filed by Deepak Sogani on Clydesdale’s behalf on 9 July and the liquidators’ reply evidence filed on 31 July, with the proposed amendments served on 6 August. The Court found there had been no significant unexplained delay.

Clydesdale also argued that allowing the amendments was inconsistent with a 26 May deed under which it released security so that the Tahmoor mine sale could proceed. Justice Nixon rejected that position, noting that the deed did not prevent the liquidators from later amending their pleadings, seeking discovery or taking other ordinary procedural steps after receiving the defendants’ evidence.

The Court was also satisfied that Clydesdale understood the case it now had to meet. Although the liquidators have not settled on the precise section 588FF(1)(g) order they will ultimately seek, they have raised the possibility that the defendants could be prevented from proving for some or all of the US$20 million advanced to Tahmoor.

Any prejudice to Clydesdale could be addressed through additional evidence and an extended timetable, Justice Nixon found. The Court subsequently gave the defendants until 25 September to serve further lay or expert evidence and moved the final hearing from September to an eight-day block on 17 to 20 and 24 to 27 November 2026.

The liquidators also prevailed on their discovery application. Clydesdale has been ordered to produce documents addressing Tahmoor’s solvency, prospects for external funding, the rationale for the intercompany advances, the use and benefit of those funds and Sogani’s role and evidence.

Justice Nixon said those materials were directly relevant to Clydesdale’s defence that the advances were intended to support Tahmoor while third-party funding was being pursued and that there was a realistic expectation external financing would become available.

The Court additionally made a “Sabre order” requiring Clydesdale, where relevant documents are not in its possession but may be held by Sogani, to take reasonable steps to obtain them and explain by affidavit what efforts were made. Justice Nixon noted that Sogani had said his evidence was based on a review of GFG Alliance books and records, making it likely that relevant documents were available to him.

Clydesdale must complete discovery by 30 September 2026. The defendants have also been given leave to obtain expert evidence addressing Tahmoor’s solvency and the costs and conditions of funding available to the company during the relevant period.

Read the decision here.

• Vanessa Whittaker SC and Tim Rogan of Banco Chambers appeared for the liquidators, Shaun Fraser and Jonathan Henry of McGrathNicol.

• Norton Rose Fulbright, with Alister Henskens SC (the current NSW Liberal MP for Wahroonga) and Michael Connor of Greenway Chambers, acted for Engineering Limited.

• White & Case appeared for Global Loan Agency Services Australia Nominees Pty Ltd, while Bird & Bird acts for Liberty Primary Metals Australia Pty Ltd.