Spyrou v Thorn, in the matter of IAZ Logistics Pty Ltd

This was a corporations and insolvency case, not an intellectual property dispute. The company, IAZ Logistics Pty Ltd, had already been wound up in insolvency on the application of the Deputy Commissioner of Taxation. Its sole shareholder and director then asked the Federal Court to terminate that winding up under s 482(1) of the Corporations Act 2001 (Cth).

The commercial story was simple in outline but difficult in execution. The plaintiff wanted the company restored quickly. He said there was enough money to pay creditors and that the business should be allowed to continue. But the application was brought on an urgent basis, creditors were given very little notice, the liquidators had only just been appointed, and the evidence about future trading was limited. The court therefore had to decide whether the winding up should end despite serious concerns about process and presentation.

The judgment is useful because it shows how these applications are actually assessed in practice. The court did not treat the matter as a technical exercise. It looked at what had happened commercially, how creditors had been approached, whether the liquidators had enough time to form a view, and whether there was a real basis for confidence that the company could trade on without exposing future creditors to unacceptable risk.

The plaintiff did not argue that the original winding up order should be undone because of some fundamental irregularity. That mattered. It meant the application was not treated as an attempt to show the original order should never have been made. Instead, the court approached the case as an application to terminate an existing winding up, with solvency and creditor protection at the centre of the analysis.

Owens J identified four real issues. First, whether proper and adequate notice had been given to creditors. Secondly, if notice was inadequate, what weight could be placed on the evidence about creditor attitudes. Thirdly, what significance should be given to the liquidators being unable to express a view because they had only recently been appointed. Fourthly, and most importantly, whether it had been satisfactorily proved that the company was solvent and would remain solvent going forward.

The judgment makes clear that current creditors are not the only concern in an application of this kind. The court also considers future creditors. A company may be able to clear old debts with a one-off injection of funds, but that does not automatically justify returning it to the commercial mainstream. The court wants confidence that the company can continue without an appreciable risk of ending up back in liquidation.

The court was plainly dissatisfied with the way creditor support had been sought. Creditors were emailed on the evening of 18 December 2025 and given only two business days’ notice of the hearing. The judge referred to authority indicating that even five days may be insufficient in some circumstances. The plaintiff said the matter was urgent from his perspective, but the court said personal urgency did not justify depriving affected parties of a proper opportunity to consider their position and obtain advice.

The next day, an employee sent a further email from the company’s accounts department asking creditors to provide letters of support. The court considered that communication problematic for several reasons. It purported to come from the company itself, even though the company was in liquidation and under the control of the liquidators. It asked for support for the company’s “fight” to be successful. It also said that if the application succeeded, creditors would be paid in full immediately, but if the liquidator remained in control, creditors might not be paid in full and might not be paid at all.

The judge said there was no evidentiary basis for those statements about likely creditor outcomes. In fact, they sat awkwardly with the plaintiff’s own case that the company was and had been comfortably solvent. The court was left with a significant degree of discomfort about the basis on which creditor views had been obtained.

The evidence of creditor support was also weaker than it first appeared. Six statements of support were tendered, but four of the entities were not actually creditors at all. They were suppliers that had previously done business with the company. The court treated their support as irrelevant. Two actual creditors did express support, but the weight that could be placed on that support was reduced because of the questionable way it had been obtained. Two other creditors, including the Deputy Commissioner of Taxation and Vella Civil NSW Pty Ltd, did not give unqualified support. Their position was effectively that they wanted an outcome that would lead to payment, and they were relying on the court to determine whether termination of the winding up would achieve that.

For business owners, this part of the case is a warning that creditor communications are evidence. If they are rushed, inaccurate or tendentious, they can damage the application even if the underlying commercial proposal is workable.

Solvency was the decisive issue. The judge said that in applications like this, the most important matter will usually be whether the company is solvent and can continue without an appreciable risk of returning to liquidation. The court therefore separated the analysis into two parts: current creditors and future trading prospects.

On current creditors, the evidence was reasonably consistent. Excluding related party loans, the total amount owing was under $1 million, including the liquidators’ costs and expenses incurred to date and the petitioning creditor’s costs. There was some lack of complete clarity about available cash, but it appeared uncontroversial that at least $200,000 was available. The plaintiff also committed to contribute $792,000 for the purpose of paying creditors, and that amount had already been paid into his lawyers’ trust account. He further undertook to make up any shortfall. On that basis, the court was comfortably satisfied that all existing creditors could be paid in full if the winding up were terminated.

The harder question was future solvency. The judge noted that applicants commonly provide forecast evidence about future revenue, liabilities and timing so the court can assess whether the company is sufficiently capitalised to return to ordinary trading. Here, the plaintiff did not provide that kind of forecast material. Instead, he relied on two sets of accounts: one for the year ended 30 June 2025 and one for the period from 1 July to 3 December 2025.

The court worked through those accounts in detail. As at 30 June 2025, current liabilities exceeded current assets by $84,818. By 3 December 2025, current assets exceeded current liabilities by $266,190. Trade creditors had decreased significantly, with a smaller decrease in trade debtors. But there were warning signs. With only trivial exceptions, all debts as at 3 December 2025 were overdue. More than 55% were more than three months overdue, and nearly 85% were at least two months overdue.

The debtor position was somewhat better, with over 60% of amounts owing to the company current or less than one month overdue. But around 20% of debtors were more than three months overdue, and the evidence did not explain why. The liquidators’ preliminary report suggested that a substantial number of debtors disputed their debts, which meant some receivables might be uncertain.

The trading figures also required careful handling because the accounts had not been prepared consistently. The judge accepted the accountant’s evidence that the fairest comparison was between total revenue and total expenses in aggregate. On that basis, the company appeared to have performed better in the roughly five months to 3 December 2025 than in the previous financial year. But the court could not be confident about the extent of any improvement because the evidence did not show whether revenue was earned consistently across the year, whether some expenses were irregular or yet to be incurred, or how changes in revenue would affect variable and fixed costs.

The plaintiff also said the liquidation had caused significant customers to leave the business, accounting for more than $2 million in annual revenue. The court treated that evidence cautiously. The customer communications tendered did not specifically say liquidation was the reason they had left, and the plaintiff had not provided evidence showing how any lost revenue would be offset by reduced costs or replaced in future trading.

Even so, the court found some comfort in the company’s trading history and, more importantly, in the capital buffer that would remain after current debts were paid. The judge considered that after clearing existing debts, the company would still have somewhere around half a million dollars, or possibly more, from surplus reserves and future receipts from existing debtors. That buffer was central to the result.

The court granted the application and terminated the winding up under s 482(1) of the Corporations Act. But the judgment makes clear this was not an easy win. Owens J said he was only just persuaded that the interests of future creditors would be sufficiently protected. He did not say the company was barely solvent. Rather, he said he was barely persuaded, on the slender evidence chosen by the plaintiff, that the company would remain solvent in its foreseeable trading future.

The result depended heavily on the structure of the orders. The plaintiff was required to give an unconditional and irrevocable authority directing his solicitor to apply the $792,000 held in trust to the liquidation bank account. The liquidators then had to apply funds in a specified order of priority, including payment of the Deputy Commissioner of Taxation’s costs, winding up expenses, the liquidators’ remuneration, creditor claims listed in the liquidators’ report, and tax liabilities arising from BAS and income tax returns for the trust relating to periods ending before the orders. If there was any shortfall, the plaintiff had to pay the additional amount into the liquidation bank account.

The trust structure had a practical effect on the outcome. Because the business was conducted through the IAZ Logistics Trust and the company held the trust assets as bare trustee, the court made separate orders under the Insolvency Practice Schedule and the Trustee Act 1925 (NSW). Those orders authorised the liquidators to conduct the winding up on the basis that the trust assets were held as bare trustee property, to deal with and distribute those assets, to realise debts due to the company as trustee, and to execute BAS, income tax returns and financial statements relating to the trust. The court also fixed the liquidators’ remuneration for the period from 3 December 2025 to 24 December 2025 at $42,393 excluding GST.

In short, the winding up was terminated, but only with detailed machinery designed to ensure that creditors were actually paid and that the trust-related issues in the administration were properly addressed.

If you are a director, shareholder or owner-manager thinking about reversing a liquidation, this case shows that the court will test both substance and process. It is not enough to say that money can be found to pay old debts. The court will want to know whether the company can trade on safely, whether creditors have been treated fairly, and whether the evidence is coherent and reliable.

The case is also a warning about rushing. The judge said the plaintiff took a significant risk by prioritising an urgent hearing over proper and careful preparation. That is especially relevant for SMEs, where records may be informal and owners may rely heavily on accountants or advisers. If the application is brought too quickly, the liquidators may not have time to investigate, creditors may not have time to respond, and the court may be left with an incomplete picture.

Another practical point is that the court may be more willing to grant relief where there is a concrete payment mechanism rather than a general promise. Here, the plaintiff had already placed substantial funds into his lawyers’ trust account and undertook to cover any shortfall. That gave the court a practical way to protect current creditors immediately.

Finally, if your business operates through a trust, do not treat that as a side issue. Trustee arrangements can affect asset characterisation, the liquidators’ powers, tax filings, remuneration and the form of orders needed to unwind the administration. In this case, the trust structure required a separate set of orders before the winding up could be terminated.