Federal Court: Removes Hellyer Metals Liquidator Over Impartiality

• The Federal Court removed the liquidator of Hellyer Metals Pty Ltd due to impartiality concerns.
• The court found that those who transferred Hellyer Metals' assets to a newly formed company also appointed the liquidator.
• The liquidator failed to conduct adequate investigations and showed a conflict of interest by engaging with former directors' lawyers.
• Goshawk Mining Pty Ltd and Saxby Capital Investments Pty Ltd, creditors with disputed claims, successfully argued for the liquidator's removal.
• The court clarified that the right to lodge proofs of debt grants creditors standing in liquidation matters under the Corporations Act 2001 (Cth).

The court firmly rejected the liquidator's stance, stating that his duty "most certainly was not to preserve the value of the assets in the hands of Celestial Group."

The Federal Court has ordered the removal of the liquidator appointed to Hellyer Metals Pty Ltd, the former parent entity of operators for a Tasmanian gold mine. The decision, handed down on November 10, 2026, in the case of Goshawk Mining Pty Ltd v Hellyer Metals Pty Ltd, in the matter of Hellyer Metals Pty Ltd (in liq) [2026] FCA 1676, cited significant concerns regarding the liquidator's impartiality. The court concluded that a fair-minded observer would reasonably question the appointee's independence in the liquidation process.

As a direct consequence of this ruling, the court mandated the appointment of a new liquidator for Hellyer Metals. Furthermore, the outgoing liquidator was explicitly directed to promptly transfer all corporate books and records to the newly appointed insolvency practitioner. This pivotal decision arose from an application lodged by Goshawk Mining Pty Ltd and Saxby Capital Investments Pty Ltd, both creditors of Hellyer Metals, who sought the liquidator's removal.

The origins of this complex corporate dispute trace back to December 2023, when Goshawk Mining Pty Ltd initiated legal proceedings against Hellyer Metals in the Supreme Court of Tasmania. Goshawk Mining sought damages totaling $36.4 million, stemming from the collapse of a $25 million agreement concerning a tin mine business. Hellyer Metals not only contested these claims but also filed a counterclaim against Goshawk Mining.

A critical development occurred on November 5, 2025, when Hellyer Metals transferred its entire asset base, comprising shares in its subsidiary companies, to Celestial Pacific Group Pty Ltd. Notably, Celestial Pacific Group was incorporated on the very same day as this significant asset transfer. Shortly thereafter, in January 2026, Hellyer Metals entered into voluntary liquidation, setting the stage for the subsequent challenges to its appointed liquidator.

The Federal Court's determination to remove the liquidator was predicated on a series of findings that collectively raised "acute questions of a lack of independent judgment." The court noted that the individuals responsible for the contentious share transfer to Celestial Group were also instrumental in appointing the liquidator. Further compounding these concerns, the liquidator subsequently engaged as his solicitor the same legal professional who had initially introduced him to these parties.

Beyond these foundational issues, the court identified several operational shortcomings. The liquidator's time records indicated a mere 30.35 hours dedicated to investigative work between January and May 2026, with a minimal 12 minutes allocated to exploring litigation funding options. Crucially, the liquidator failed to leverage statutory powers to secure essential company records, including the Xero accounting data. A "serious error of judgment" was also identified when the liquidator solicited feedback on a draft report to creditors from the company's directors and former general counsel. Despite offers from Goshawk Mining and Saxby Capital from March 2026 to finance an investigation, the liquidator did not engage meaningfully. Following the commencement of the removal proceedings, the liquidator entered into a funding agreement initiated by lawyers representing two bankrupt former directors, a situation the court explicitly recognized as an "obvious conflict" of interest between the creditors and the former directors. The liquidator's report further suggested that pursuing recovery actions would likely diminish the value of the transferred assets, a stance the court firmly rejected, stating that his duty "most certainly was not to preserve the value of the assets in the hands of Celestial Group."

A significant aspect of the court's judgment clarified the standing of creditors in such proceedings. The liquidator had initially contended that Goshawk Mining and Saxby Capital lacked standing due to their claims being disputed and contingent. However, the court rejected this argument, distinguishing between the strict criteria for initiating a company winding-up and the broader definition of a financial interest in a liquidation under the Corporations Act 2001 (Cth). The court affirmed that both Goshawk Mining and Saxby Capital possessed the right to lodge proofs of debt, thereby confirming their legitimate standing to apply for the liquidator's removal.

This ruling underscores the judiciary's commitment to ensuring the integrity and impartiality of insolvency administrations. The court's detailed examination of the liquidator's conduct, from appointment mechanisms to investigative diligence and engagement with stakeholders, sets a clear benchmark for the expected standards of independence. To facilitate the appointment of a new liquidator, Goshawk Mining and Saxby Capital had already deposited $200,000. The court indicated that decisions regarding costs for the proceedings would be determined following the submission of written arguments from the involved parties.

Source: Original reporting via Australasian Lawyer