Twinza Oil - Case Update

The Federal Court of Australia has rejected an attempt by a substantial shareholder and creditor of Twinza Oil to hold a general meeting to remove three of Twinza’s directors, a move which could have had derailed the company’s proposed scheme of arrangement.

In August, we wrote about how the Federal Court had granted orders convening a single meeting of scheme creditors for a proposed scheme in respect of Twinza Oil, an Australian public company pursuing the Pasca A offshore gas project in Papua New Guinea, while rejecting a request for an adjournment by two interested persons linked to the company’s founder, Bill Clough, including WM Clough Pty Ltd, a substantial shareholder and creditor of Twinza Oil. The proposed scheme contemplates the reduction of secured debt from US$324 million to US$30 million in exchange for the lenders taking majority equity. The purpose of the scheme is to avoid a winding up and unlock funding to allow the project to proceed.

Now, the Court has granted an application by receivers Hayden White and Ian Francis of FTI Consulting to restrain WM Clough from holding a general meeting to remove three of Twinza’s directors. Under the scheme implementation deed (SID), if the company’s directors are removed or new directors appointed, or if shareholders seek to call a meeting, the senior lenders can terminate the deal. WM Clough nonetheless issued notice of a meeting under s 249F of the Corporations Act to remove directors and install replacements, including its own nominee.

The Court assessed whether there was a serious question to be tried and whether the balance of convenience favoured granting an interim injunction. It held there were arguable issues as to whether the board’s decision to postpone the meeting was valid, whether WM Clough’s notice complied with s 203D (which requires two months’ notice before voting on director removal), and whether the meeting was convened for an improper purpose (to frustrate the SID and trigger termination rights). The Court noted that WM Clough’s explanatory statement omitted key information about the consequences of derailing the scheme, including that unsecured creditors and shareholders would likely receive nothing in a liquidation scenario.

On the balance of convenience, the Court found that allowing the meeting to proceed risked catastrophic prejudice, since senior lenders could terminate the SID and force Twinza into liquidation, while shareholders and creditors would lose the prospect of a restructuring that offered far better returns. By contrast, WM Clough and its supporters could still voice their concerns at the second court hearing to approve the scheme.

The Court granted an interim injunction restraining WM Clough from holding the general meeting scheduled for 17 September 2025 or any other meeting not fixed by Twinza’s board, pending final determination of the proceedings or further order.

Read the decision HERE.

Professionals involved:

• Kanaga Dharmananda SC and Leon Firios and Long Pham of Quayside Chambers (instructed by Lavan) for Twinza

• Martin Bennett of Bennett Law for the Clough entities