Topknotz - Case Update

The Supreme Court of New South Wales has validated the appointment of a voluntary administrator following a technically defective board resolution.

The case arose after Gerard Dover, one of two directors of Topknotz Pty Ltd, appointed Bruce Gleeson of Jones Partners as voluntary administrator by board resolution on 13 May. The other director, Laurence McAllister, challenged the validity of the resolution, claiming it lacked the quorum required under section 248F of the Corporations Act 2001, as he was not present. Mr Dover sought relief under section 447A of the Act to have the appointment deemed valid despite the technical defect.

Topknotz was established in July 2023 by Mr Dover, who held 33.77% of the company’s shares, and Mr McAllister, who held 66.23% of the shares. Topknotz owned intellectual property for a marine-based television program and had entered into a $2.845 million production agreement with RJMedia Pty Ltd. Funding was to be provided by unsecured loan deeds with Mr McAllister and a company owned by Mr Dover. Mr Dover’s company advanced funds, but Mr McAllister failed to make any contributions.

As of March 2025, the company had a net asset deficiency of nearly $800,000, with the primary liability being unpaid production costs to RJMedia. Though Mr Dover initially believed Mr McAllister would fund the business based on earlier correspondence, he later concluded that no funds would be forthcoming. On that basis, and following a failed drawdown and increasing debts, Mr Dover believed the company was insolvent and proceeded to appoint a voluntary administrator without Mr McAllister’s participation.

Mr McAllister initially contested the appointment and claimed it was for an improper purpose, but the parties reached a confidential settlement prior to the hearing. Mr McAllister resigned as director and relinquished all claims, becoming neither a director, shareholder, nor creditor at the time of the decision.

The Court held that although the resolution was procedurally defective due to the lack of quorum, the Court had the power under section 447A to cure the defect. The Court found that Mr Dover had genuinely held the opinion that the company was insolvent based on clear financial evidence and the absence of promised funding. The Court further determined that validating the appointment served the public interest by facilitating proper administration of an insolvent company, and that no substantial injustice would result.

Read the decision HERE.

Professionals involved:

• Frank Tao of Ninth Floor Selborne Chambers (instructed by Sparke Helmore Lawyers) for the administrator and Topknotz

• Mangioni Biggs + Co for Laurence McAllister

• David Robertson of Nigel Bowen Chambers (instructed by Pinsent Masons) for Gerard Vernon Dover