In the matter of Bowen Coking Coal Limited (subject to deed of company arrangement) (receivers and managers appointed) ACN 064 874 620

1. [1]

   Before the Court is the interlocutory process filed on 23 March 2026 by which Mr Holland and Mr Fraser (Administrators) as the joint and several deed administrators of Bowen Coking Coal Limited (Subject to Deed of Company Arrangement) (BCC) and BCC apply under s 444GA of the Corporations Act 2001 (Cth) (the Act) for leave to transfer all of the existing shares in BCC from the members of BCC to Argo Bowen 2 Pty Ltd (Argo) in accordance with the terms of the deed of company arrangement between BCC, the Administrators and Argo dated 11 March 2026 (DOCA).

2. [2]

   Ancillary relief is also sought under s 447A of the Act that the order made under s 444GA extend to share options (and similar rights) in respect of shares in BCC.

3. [3]

   In accordance with the procedural orders made by the Court on 23 March 2026, the Administrators have given notice of the application to all interested parties, including creditors and members of BCC. No person has filed an appearance or grounds of opposition to the orders sought, and there was no appearance at the hearing in opposition to the proposed orders.

4. [4]

   For the reasons set out below, I made the orders sought. Unless otherwise stated, a reference to a section is a reference to that section in the Act.

Background

1. [5]

   In support of the application the applicants rely on two affidavits of Mr Holland and an affidavit of Mr Fraser which deal with the history of the external administration including the sale process and the steps taken to give notice to members, creditors and other interested persons (including the Australian Securities and Investments Commission (ASIC)), and the basis for the present application, and an independent expert report of Ms Jennifer Nettleton dated 20 March 2026 (IER).

2. [6]

   BCC is a public company, the issued shares of which are listed on the Australian Securities Exchange (ASX) but has been suspended from quotation since 15 July 2025. It is the holding company of a group of companies (together, the BCC Group) which carry on a metallurgical coal exploration, development, production and export business headquartered in Queensland and with operations primarily in Queensland’s Bowen Basin. BCC’s principal asset is its shares in its operating subsidiaries and intercompany receivables owing by them, and it is also the employer entity of the BCC Group. The primary source of revenue of the BCC Group is from the sale of coal.

3. [7]

   The BCC Group comprises BCC, Bowen PCI Pty Limited, Coking Coal One Pty Limited (CCO), New Lenton Coal Pty Limited (NLC), Lenton Management and Marketing Pty Limited (LMM) and Bowen Coking Coal Marketing Pty Limited (BCCM).

4. [8]

   The BCC Group, through the operating subsidiaries of BCC, holds the following coal exploration, development and production assets:

5. [9]

   On 29 July 2025, the Administrators were appointed as joint and several voluntary administrators of each member of the BCC Group.

6. [10]

   On 31 July 2025, Mr Campbell, Mr Park and Ms Dunn of FTI Consulting (Receivers) were appointed receivers and managers of BCC, Bowen PCI and NLC pursuant to security interests in favour of Global Loan Agency Services Australia Nominees Pty Ltd (GLAS) and, on 17 September 2025, the Receivers were also appointed as receivers and managers of CCO. GLAS acts as security trustee for a number of lenders with the benefit of security interests over all of the present and after-acquired property of BCC, Bowen PCI, NLC and CCO.

7. [11]

   The secured creditors of BCC include Peabody Australia Mining Pty Ltd (Peabody), Taurus Mining Finance Fund No 2 LP (Taurus) and New Hope Corporation Ltd (New Hope). The IER records at [3.7] that the estimated claims of the secured creditors are very significant ($86.9 million in the case of New Hope, $61.7 million in the case of Taurus and $372,000 in the case of Peabody). It is largely for this reason that the issued shares in BCC are now worthless.

8. [12]

   In the Administrators’ Report to creditors dated 11 February 2026 (AR) the Administrators informed creditors that they had formed the view that the BCC Group became insolvent on, at the latest, 29 July 2025 and that it may have become insolvent from shortly before that date, on around 1 July 2025 once Taurus placed restrictions on the BCC Group’s use of secured cash. However, the Administrators’ preliminary assessment was that, considering all relevant issues including the availability of the ‘safe harbour’ defence for directors under s 588GA of the Act and that the BCC Group likely became insolvent only very shortly before being placed into voluntary administration, on balance a liquidator would have limited prospects of pursuing an insolvent trading claim.

9. [13]

   The AR sets out at [9.1] the various factors which contributed to the financial difficulties encountered by the BCC Group which include: (a) tough macroeconomic conditions such as sustained downward pressure on metallurgical and thermal coal prices from FY 24 to FY 25; (b) an increased cost burden imposed by amendments to Queensland’s progressive coal royalty regime, administered by Queensland Revenue Office (QRO), from July 2022 which increased royalty rates on coal sales; (c) operational working capital impacts associated with the expiry and non-renewal of a mining services agreement with BUMA Australia Pty Ltd (BUMA) on 30 June 2025; (d) the inability to negotiate alternative commercial arrangements with the BCC Group’s two largest creditors (BUMA and QRO) and its senior secured creditor, Taurus; (e) the inability of the BCC Group to secure fresh debt or equity capital in a depressed coal market; and (f) the decision of the QRO on 29 July 2025 to reject a deferral of State royalty payments requested by the BCC Group, to allow solvent recapitalisation avenues to be pursued.

10. [14]

    Also, as noted in the IER at [3.11.1], BCC commenced operations in a declining market for metallurgical and thermal coal, with prices for both commodities having declined from peaks achieved in mid-2022 amid market dislocation following Russia’s invasion of Ukraine and the resulting sanctions regime. Further, between FY 21 and FY 25, BCC recorded a net loss each year, cumulatively totalling $317.6 million.

11. [15]

    By around 28 August 2025 the Administrators had formed the view that it was in the best interests of the creditors of the BCC Group for the Administrators and the Receivers to pursue a sale or recapitalisation process in respect of one or more of the companies in the BCC Group or their assets. As a result, a sales process was followed which is described in Part 6 of the AR.

12. [16]

    Ultimately the Administrators identified the offer made by Argo as the preferred transaction which is now embodied in the DOCA (DOCA Proposal), which in summary involves:

    1. (1)

       the entire issued capital in BCC is to be transferred to Argo, subject to certain conditions including the Administrators obtaining the orders under s 444GA of the Act sought in the present application and an exemption being granted by ASIC from the application of Chapter 6 of the Act;

    2. (2)

       a creditors’ trust (Creditors’ Trust) will be established whereby, upon completion of the DOCA, the claims of creditors against the DOCA Companies (except for certain preserved claims) will transfer to, and become claims against, the Creditors’ Trust with the Administrators to become the trustees of the Creditors’ Trust;

    3. (3)

       related parties of the BCC Group are ineligible to claim, and excluded from claiming, in the Creditors’ Trust;

    4. (4)

       the consideration to be provided by Argo is a payment by it of $60 million (funded by a financier), plus residual net cash held by the BCC Group;

    5. (5)

       Argo will procure or provide replacement of the BCC Group’s rehabilitation bonds to the value of $45.2 million (noting that by the separate DOCA propounded by Maverick M Australia Pty Ltd, there will be further release of the rehabilitation bonding for Bowen PCI, thereby releasing a further $9.9 million):

    6. (6)

       the outstanding royalties owing to the QRO will be paid;

    7. (7)

       the DOCA provides ongoing employment for the continuing employees of the BCC Group, ongoing trading with suppliers and the continuation of the BCC Group’s business;

    8. (8)

       following completion of the DOCA, Argo will assume control of the BCC Group (save for Bowen PCI, which owns the Bluff Mine, which is the subject of a separate share sale to another purchaser – see below) and continue to trade the group as a going concern; and

    9. (9)

       the members of BCC will receive no payment from the Creditors’ Trust and no other payment in return for the transfer of their shares to Argo.

13. [17]

    A separate deed of company arrangement was proposed for and executed on 10 March 2026 in respect of Bowen PCI, which relates to the Bluff Mine. That arrangement is applicable to the creditors of Bowen PCI only, and no orders are sought from the Court in respect of this separate arrangement.

14. [18]

    In the AR the Administrators recommended the DOCA proposal to creditors on the basis that it is likely to provide a greater anticipated return to creditors than would be achieved in a liquidation and accordingly recommended the creditors resolve that the DOCA be entered into. A significant reason why the DOCA is a better outcome for creditors than liquidation is the $60 million cash contribution to be made by Argo.

15. [19]

    On 18 February 2026, the second meetings of creditors of the BCC Group were held concurrently and the creditors of the DOCA Companies overwhelmingly endorsed and voted in favour of the DOCA Proposal, with no creditor voting against and only one creditor abstaining from voting.

16. [20]

    On 11 March 2026, the DOCA and the Creditors’ Trust Deed, which takes effect on and from completion under the DOCA, were executed by the Administrators, the Receivers, Argo and each of the DOCA Companies.

17. [21]

    Ms Nettleton, a highly experienced insolvency practitioner, states in the IER that it is her opinion, for the detailed reasons set out in the IER, that: (a) if the DOCA does not complete and the members of the BCC group (apart from Bowen PCI) are placed into liquidation, the shares in BCC will have nil value, and (b) there is little to no prospect of the shares in BCC attaining value within a reasonable period of time (12 months).

18. [22]

    Ms Nettleton also expresses the opinion that if the present application is not granted and the DOCA does not proceed to completion, BCC (and the other members of the BCC Group) will be placed into liquidation and the creditors of the BCC Group are likely to be worse off for the detailed reasons she gives: IER [6.3].

19. [23]

    I note in particular the following aspects of Ms Nettleton’s analysis in support of her opinions in the IER:

    1. (1)

       The IER includes a valuation of the equity in BCC on a liquidation basis by analysing the value of its net assets (that is, assets less liabilities) by a piecemeal sale of the underlying assets: IER [6.3.1]. The assessment of the asset valuations is supported by expert valuation reports prepared by Measured Group Pty Ltd of the mineral assets held by the BCC Group, and by Gordon Brothers Pty Ltd of the BCC Group’s plant and equipment, each prepared using the orthodox methodologies for the relevant assets: IER [6.4].

    2. (2)

       Ms Nettleton assessed the residual equity of BCC through an estimation of the realisable value for each of the Bowen Group’s assets on a liquidation basis, aggregating these values and then deducting the total value of creditors’ claims to arrive at the residual equity value of BCC: IER [6.6]. As noted earlier, given BCC’s only assets are receivables owed by and shares in its subsidiaries, this approach is orthodox (as no value could accrue from those receivables or shares unless and until the secured claims against the subsidiaries were first satisfied).

    3. (3)

       The valuation of BCC on that basis yields a significant deficiency in net assets (of $221 million in a low case to $125 million in a high case): IER [6.6].

    4. (4)

       The value of the equity in BCC is nil. This is because the total creditors of BCC have very substantial debts owing to them that exceed (by hundreds of millions of dollars) the value of BCC’s business or assets.

    5. (5)

       If BCC is to be wound up, then its financial position would worsen having regard to the ongoing holding costs of keeping the mines in care and maintenance until their sale, the continued accrual of interest on the secured debt, and the costs and downward pressures of a “forced sale” in a liquidation scenario.

20. [24]

    As stated by Mr Holland in his affidavit evidence, the Administrators are of the view, based on the IER and their own investigations to date as administrators and deed administrators of the BCC Group entities, that (consistently with the conclusions reached by Ms Nettleton in the IER), BCC’s shareholders have no residual equity in BCC because, in a liquidation scenario, the shares will have a nil value as there will likely be a deficiency of assets to meet creditor claims, and the shares are not likely to attain value within a reasonable period of time.

21. [25]

    The DOCA proposal requires relief from ASIC under s 655A(1)(a) of the Act from the takeover provisions in Ch 6 of the Act. ASIC has made an ‘in principle’ decision to grant the relief sought, subject to the relevant orders being made by the Court under s 444GA.

22. [26]

    As explained by Mr Holland in his affidavit evidence, there was some urgency in this application, as the date for completion of the DOCA is 8 May 2026 and the parties expect the commercial conditions precedent to be satisfied by that date. If there were any delay in completion of the DOCA that will involve additional expenditure in relation to each mine held in care and maintenance. For that reason I made the orders sought with reasons to follow.

Principles

1. [27]

   Section 444GA of the Act permits a deed administrator to transfer shares in a company if the administrator has obtained leave of the Court. The section provides:

2. [28]

   The critical issue is the Court’s assessment of whether or not the share transfer brings about any ‘unfair prejudice’ to the members of the company: s 444GA(3).

3. [29]

   The relevant principles were summarised by Black J in Re Mirabela Nickel Ltd (subject to deed of company arrangement) [2014] NSWSC 836 at [38]-[41] (and recently applied by his Honour in Re Aeon Metals Limited [2025] NSWSC 237 at [14] and Re Fleet Technologies Limited (subject to deed of company arrangement) [2025] NSWSC 736 at [18]):

4. [30]

   Whether a transfer is unfairly prejudicial is to be determined having regard to all the circumstances of the case and the policy of the legislation: Re Habibi Waverton Pty Ltd (in liquidation) (administrator appointed) [2021] NSWSC 1443; (2021) 154 ACSR 701 at [31]. As the Western Australian Court of Appeal recently noted in Fitzroy River Limited Liability Company v Richard Scott Tucker as joint and several administrator of Yeeda Pastoral Company Pty Ltd (Subject to Deed of Company Arrangement) [2025] WASCA 118 at [13]:

   1. (1)

      the key consideration, posed by s 444GA(3), is that the Court must be satisfied that the proposed transfer would not unfairly prejudice the interests of members of the company;

   2. (2)

      assuming that the court is so satisfied, there is a residual discretion as to whether to grant leave to a deed administrator to transfer shares in the company; and

   3. (3)

      the discretion must be exercised having due regard to the object of Part 5.3A of the Act, as set out in s 435A.

5. [31]

   The question of whether shareholders hold any residual equity of value in a relevant sense (for the purpose of assessing the existence and nature of any unfair prejudice) is determined by comparison with the position of the shareholders in a winding up, at least where that is the likely or necessary consequence of the transfer of shares not being approved: Mirabela Nickel at [42]; Re Paladin Energy Limited (subject to Deed of Company Arrangement) [2018] NSWSC 11 at [31]. That makes it necessary to consider a valuation of the assets and liabilities of the company by reference to a liquidation scenario, rather than as a going concern: Paladin Energy at [7]; Re OrotonGroup Limited (Subject to Deed of Company Arrangement); Application of Strawbridge and Kanevsky [2018] NSWSC 1213 at [28].

6. [32]

   As White J observed in OrotonGroup at [37], if liquidation is the only realistic alternative to a proposed transfer of the shares, and the shares would have no value in a liquidation, then there is no prejudice, or no unfair prejudice, to the interests of members if leave is given pursuant to section 444GA(1)(b).

7. [33]

   The Administrators bear the legal onus of proving that the discretion to allow the share transfer should be exercised in their favour. However, the Shareholders bear an evidentiary onus to establish the facts relevant to any prejudice on which they rely in such an application: Paladin Energy at [33].

8. [34]

   Machinery orders may be made under s 447A of the Act to put into effect the proposed transfer of shares, including orders permitting deed administrators to execute and lodge share transfer documents and to ensure the entry of the acquirer’s name on the company’s register of members: Tucker, in the matter of Black Oak Minerals Ltd (subject to a deed of company arrangement) (in liq) [2019] FCA 293; (2019) 134 ACSR 472 at [39]-[40]; Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 9) [2020] FCA 1652; (2020) 148 ACSR 648 at [36].

Determination

1. [35]

   Mr Krochmalik, who appeared with Mr Tao for the applicants, submitted that the evidence of Ms Nettleton and Mr Holland establishes that the shares in BCC have no economic value. The shareholders of BCC would be in the same financial position regardless of whether the DOCA is completed or the DOCA fails and DOCA Companies are wound up, as they will not receive any return in either scenario. In contrast, however, completion of the DOCA provides for a greater estimated return to creditors in comparison to realising the assets of the DOCA Companies in a winding up, brought about principally by the $60 million cash contribution by Argo, the release of cash-back bonds and the transfer of the mining assets and associated operations of the Bowen Group to a new owner as a going concern in contrast to a liquidation scenario where the mining operations would remain in care and maintenance and only a small number of staff would be retained, the practical effect of which would be to further deplete potential return to creditors. Further, the restructure under the DOCA will enable continuing employees to retain their employment with BCC.

2. [36]

   He also submitted:

3. [37]

   I agree with those submissions and I am satisfied that, in all the circumstances, the transfer of the shares in BCC under the DOCA will not unfairly prejudice the members of BCC.

4. [38]

   I note that a detailed description of the structure and the impact on members has been provided in the form of the Explanatory Statement and shareholders have been given a full opportunity to appear in opposition to the application. No shareholder has sought to appear or otherwise raised any principled objection, save for, in a very small number of cases, the expression of what amounts to an understandable disappointment that the shares in BCC are now worthless. However, that is not relevant to the issue for the Court under s 444GA(3) of the Act.

5. [39]

   In relation to the ancillary relief sought under s 447A(1) of the Act referred to at [2] above, the Administrators have identified that before their appointment as Administrators, BCC had issued shares, options, convertible notes and performance rights (Options).

6. [40]

   Insofar as the holders of the Options have a right to be issued shares in BCC, then the DOCA treats any such right as a ‘claim’ that is compromised by the DOCA: see cl 14.2 of the DOCA. However, in the event that the DOCA does not compromise such claims (eg because the holders of the Options have claims that are properly conceived of as equity in BCC), then (to the extent necessary) the Administrators seek orders pursuant to s 447A(1) of the Act that Part 5.3A of the Act is to operate as if the reference to the word ‘shares’ in subsection 444GA(1) and ‘members’ in subsection 444GA(3) includes:

   1. (1)

      all vested or unvested share options, warrants or shares in BCC; or

   2. (2)

      instruments convertible into securities in BCC, including any shares or options to which the Instrument Beneficiaries may be entitled,

7. [41]

   Similar orders were made by Beach J in Clubb (deed administrator), in the matter of Toys “R” Us ANZ Limited (subject to deed of company arrangement) [2025] FCA 1135 and Stewart J in Freeman, in the matter of Regional Express Holdings Ltd (subject to deed of company arrangement) (No 7) [2025] FCA 1598.

8. [42]

   Mr Krochmalik submitted, and I accept, that it is appropriate in this case to grant the relief sought by the Administrators in relation to the Options because as the shares in BCC have no economic value, whether in a DOCA scenario or a liquidation scenario, it must also follow that the Options in respect of the shares in BCC have no economic value, and consequently, no prejudice to the holders of the Options would be occasioned. If the DOCA is not completed, then, for the reasons given above, it is inevitable that BCC will be placed into liquidation, and the Options will have no residual value (whether they are treated as a claim for the purposes of s 553 or as equity). In other words, the position of the holders of the Options (qua their holding of Options) is identical to that of the shareholders. Further, to the extent that the Options are not compromised by the DOCA, such an order is consistent with the objectives of the restructure and Part 5.3A of the Act.

9. [43]

   For these reasons I made the following orders sought by the applicants at the conclusion of the hearing on 23 April 2026 as follows:

   1. (1)

      Pursuant to section 444GA(1)(b) of the Corporations Act 2001 (Cth) (“Corporations Act”), the First Applicants (“Deed Administrators”) have leave to transfer all of the existing shares (“Shares”) in the Second Applicant (“BCC”) from the members (as defined in the Corporations Act) (“Members” and each, a “Member”) of BCC to Argo Bowen 2 Pty Ltd (“Proponent”) in accordance with the terms of the deed of company arrangement executed on 11 March 2026 (“BCC DOCA”) (including satisfaction or waiver of the conditions precedent to completion of the BCC DOCA).

   2. (2)

      Pursuant to section 447A(1) of the Corporations Act or section 90-15 of the Insolvency Practice Schedule (Corporations) (“IPSC”), any of the Deed Administrators may, jointly or severally, in their capacity as Deed Administrators of BCC:

   3. (3)

      Pursuant to section 447A(1) of the Corporations Act:

   4. (4)

      Pursuant to section 447A(1) of the Corporations Act or section 90-15 of the IPSC, any of the Deed Administrators may, jointly or severally, in their capacity as Deed Administrators of BCC:

   5. (5)

      The Applicants’ costs of, and incidental to, the application be costs and expenses in the deed administration of BCC.

   6. (6)

      The exhibits be returned.