When Is It Just and Equitable to Pool Companies?

Krejci (liquidator), Neway Holdings Pty Limited, in the matter of Neway Holdings Pty Limited [2025] FCA 1233

Facts

In Krejci (liquidator), Neway Holdings Pty Limited, in the matter of Neway Holdings Pty Limited [2025] FCA 1233, the liquidators sought a pooling order under section 579E of the Corporations Act 2001 (Cth). This order was in respect of five related companies: Neway Holdings Pty Ltd, NT Queensland Pty Ltd, N.T. Southaus Pty Ltd, NT Westaus Pty Ltd and NT VIC Pty Ltd.

NT Queensland Pty Ltd, N.T. Southaus Pty Ltd, NT Westaus Pty Ltd and NT VIC Pty Ltd were all subsidiaries of Neway Holdings Pty Ltd, the parent company.  All five of these companies formed part of the same corporate group, which were controlled and owned by BRN Holdings Pty Ltd. Although each company conducted its own operations in different states, they traded collectively under the Neway brand as a national enterprise.

Following extensive investigations, the liquidators found a high degree of financial and operational interdependence between the companies. Neway Holdings Pty Ltd and NT VIC Pty Ltd were shown to have entered customer contracts on behalf of the group, where revenue earned was distributed to companies that performed the work. Funds were also transferred between companies to cover day-to-day operational expenses and were recorded as related-party loans, and employees were shown to have worked across several entities.

Together, these factors demonstrated a joint, collective enterprise, which the liquidators relied on in their submission to treat the companies as a single entity to facilitate a unified winding up.

Legal Issues

The main legal issue in this case involved whether the court should grant a pooling order under section 579E of the Corporations Act, thereby treating the companies as a single group for the purpose of liquidation.

To assess whether it should be granted, the court must be satisfied that:

1. There is a group of two or more companies.
2. Each company in the group is being wound up.
3. Each company in the group is a related body corporate of each other company in the group
4. It is just and equitable to make the pooling order.
5. The pooling order would not materially disadvantage any eligible unsecured creditor

Decision

The court held that the liquidators were entitled to treat all five companies as a pooled group, as the conditions under Section 579E of the Corporations Act were met. The activities and business of each of the companies were found to be intermingled, given the shared customer contracts, shared employees, and related-party loans between the companies.

In addition, all creditors were notified of the pooled winding up application and no objections were received. Thus, the benefits of pooling, such as cost and time savings, outweighed the disadvantages of financial harm to creditors. As a result, based on these factors, the court found that it was just and equitable to proceed with a unified, grouped winding up.

To further facilitate the enforcement of the pooling order, the liquidators were granted ancillary relief under section 579G of the Corporations Act. The court allowed the liquidators to lodge a single set of annual and end-of-administration returns, as opposed to separate returns for each company, resulting in significant time and cost savings.