Turks recently successfully opposed an application by voluntary administrators to adjourn a winding up application under s 440A of the Corporations Act 2001 (Cth) (the Act).¹ The Court declined to allow the administration to continue and instead made orders winding up the company.

The outcome serves as an important reminder that the appointment of voluntary administrators after the commencement of winding up proceedings does not automatically result in an adjournment. Where administrators seek an adjournment under s 440A of the Act to allow creditors to consider a proposed deed of company arrangement (DOCA), the Court must be satisfied that continuing the administration is in the best interests of creditors. That requires clear, persuasive and properly supported evidence.

The issue before the Court

The company had failed to comply with a creditor’s statutory demand for payment of a debt and was facing a winding up application. Rather than defend the application, administrators were appointed to the company under Part 5.3A of the Act. The administrators then sought an adjournment of the winding up application under s 440A of the Act so that creditors could vote on a proposed DOCA.

Our client opposed the adjournment on the basis that the administrators had not established that continued administration was in the interests of creditors.

The applicable principles in s 440A applications

The Court reaffirmed the well-established authorities in In the matter of Tahmoor Coal Pty Ltd [2026] NSWSC 74 at [52]- [54] and In the matter of Tahmoor Coal Pty Ltd (admins apptd) [2026] NSWSC 218 at [5]- [8] and highlighted several key matters it is likely to consider in a s 440A application, including:

• whether the proposed DOCA is properly funded and supported by reliable evidence;
• whether any proposed upfront contribution is documented, unconditional and realistically available;
• whether key creditors support, oppose or have a clearly evidenced position on the proposal;
• whether projected future trading performance is realistic and properly explained;
• whether the company’s recent profitability is genuine or affected by unusual accounting or related-party treatment;
• whether the proposal depends on speculative future trading over an extended period;
• whether any director guarantee or security is supported by evidence of actual financial capacity; and
• whether potential insolvent trading or voidable transaction claims may produce a better outcome in liquidation.

Outcome

The Court accepted that the administrators had not discharged the necessary onus under s 440A of the Act. The adjournment application was refused and the company was wound up.

Significantly, the proposed DOCA largely depended on assumptions that were not sufficiently supported by evidence.

The Court looked closely at the evidence underpinning the administrators’ opinion. Where the evidence was uncertain, incomplete or optimistic, the Court was not prepared to adjourn the winding up application simply to allow the administration to continue.

Takeaway

The decision is a useful reminder that s 440A is not a protective shield automatically available whenever an administrator is appointed after winding up proceedings have commenced.

The Court is not likely to adjourn a winding up application merely because a DOCA has been proposed. For administrators (and directors), the decision serves as a clear reminder that an application under s 440A must be supported by clear and persuasive evidence that continuing the administration is likely to be in the interests of creditors when compared with liquidation, and not merely by opinion or report unsupported by that evidence.

[1] In the matter of Luxe Coatings 2Pac Specialists Pty Ltd (administrators appointed) [2026] NSWSC 315 (30 March 2026)