Kalium Lakes Potash Pty Ltd (in liq) v Minister for Mines and Petroleum [2026] FCA 355

This Federal Court decision deals with an unusual insolvency problem. Two companies in liquidation had already disclaimed mining tenements as onerous property. Soon after, a purchaser approached the liquidators and negotiations led to a conditional sale agreement, later expanded to cover all relevant tenements. To make that sale possible, the liquidators asked the court to vest the disclaimed tenements back in the companies.

Banks-Smith J held that the requirements for a vesting order under section 568F of the Corporations Act were met and that it was appropriate to make the orders. The court also made clear that the vesting would not disturb the relevant registered mortgages and caveats. For business owners, the case is a practical example of how insolvency decisions can change when the commercial position changes, and how the court may step in to preserve value for creditors.

Kalium Lakes Potash Pty Ltd and Kalium Lakes Infrastructure Pty Ltd were involved in the Beyondie SOP Project. They entered administration on 3 August 2023, and receivers were appointed immediately after to the companies' assets and operations. On 18 March 2024 the companies went into liquidation, with Martin Jones and Matthew Woods appointed as joint and several liquidators.

When the receivers retired in early October 2024, a number of mining tenements remained under the liquidators' control. The liquidators decided those tenements were onerous property and disclaimed them. The notices of disclaimer said, in effect, that the tenements were unsaleable or not readily saleable, might expose the companies to liabilities or other onerous obligations, or were likely to cost more to realise than they would return. The court recorded that no one challenged the disclaimers and there was no issue about whether the liquidators had acted appropriately when they made them.

The commercial position then changed. On 13 November 2024, shortly after the disclaimers, a prospective purchaser contacted the liquidators about acquiring some of the tenements. Negotiations followed. Around 15 March 2025 a conditional sale and purchase agreement was entered into for certain tenements. Later, after negotiations expanded to all KLP and KLI tenements, an amended sale agreement was executed.

That created the central problem in the case. The companies had already disclaimed the tenements, but the proposed sale required the companies to apply for the Minister's prior written consent to transfer them to the purchaser. So the liquidators commenced Federal Court proceedings seeking orders that the tenements vest back in the companies immediately before those transfer applications were made.

The tenements were not free of third-party claims. A number of parties held registered interests over them, including Westpac as mortgagee and Greenstone, Kalium Corporate and Marputu as caveators over various tenements. The tenements were also subject to forfeiture proceedings in the Warden's Court. That made timing important. The applicants wanted the vesting orders quickly so the sale could complete before any forfeiture hearing proceeded.

The court set out the statutory pathway for a vesting order after disclaimer. Section 568F allows the court to order that disclaimed property vest in, or be delivered to, a person entitled to the property, a person in or to whom it seems appropriate that the property be vested or delivered, or a trustee for such a person. The application can be made by a person who claims an interest in the property or is under a liability in respect of the property that the Act has not discharged. The court must also hear from such persons as it thinks appropriate.

Drawing on earlier authority, the judge said there are three conditions that must be satisfied before a vesting order can be made. First, there must be property that has in fact been disclaimed. Second, the application must be brought by a person who claims an interest in the disclaimed property or is under an undischarged liability in respect of it. Third, the court must be satisfied it has heard from the persons it thinks appropriate.

The first condition was straightforward here because the tenements had plainly been disclaimed. The real work was in the second and third conditions, and then in the court's discretionary decision about whether vesting was appropriate.

On standing, the court stressed that the class of people who may apply should not be read narrowly. A person does not need to have already proved the claim to have standing. But the claim must be bona fide and have a reasonable legal and factual foundation. In this case, the companies said they had an interest because if the sale completed they would receive sale proceeds. They also said they had liabilities connected with the tenements because they were parties to forfeiture proceedings and, according to the Department's position in those proceedings, remained liable for arrears relating to the tenements. The court accepted both points and held that KLP and KLI had a bona fide claim to an interest and sufficient liability for the purpose of section 568F(2).

The judge also said, although it was not necessary to decide the point, that the liquidators themselves likely had a separate bona fide claim sufficient for standing. That was because any sale proceeds would be paid to and controlled by the liquidators in the liquidation, and because liquidators may have an equitable lien over assets under their administration in respect of outstanding fees.

On discretion, the court referred to factors identified in earlier cases. These included whether the property had previously been vested in the applicant, whether the disclaimer had been properly made, whether circumstances had changed since disclaimer, whether the change could now produce a return to creditors, whether seeking recovery of the property was consistent with the liquidators' duties, what would happen if no order were made, the position of other interested parties, and what the applicant proposed to do with the property if vesting occurred.

The court also noted the unusual feature of the case: the liquidators were asking for the same property to be vested back in the same companies that had previously disclaimed it. The judge held that the text of section 568F does not exclude that result.

Banks-Smith J concluded that KLP and KLI were persons in or to whom it was appropriate that the tenements be vested under section 568F(1)(b). The court accepted a number of matters as supporting that conclusion.

First, before disclaimer the companies had been the holders of the tenements and they continued to appear in official records as the registered holders. Second, the disclaimers had been properly made and in accordance with the liquidators' duties at the time. Third, there had been a genuine change in circumstances because the purchaser only came forward after the disclaimers. The judge said it was readily apparent that the liquidators would not have disclaimed the tenements had they known of the purchaser's interest earlier.

Fourth, seeking vesting was consistent with the liquidators' duties because it was directed to maximising the realisation of assets for creditors. The evidence showed the liquidators had gone to considerable lengths to negotiate the sale, the purchaser had remained actively involved, had undertaken due diligence and had paid a significant sum into escrow, and the sale documents had been executed. The court also noted evidence that, if the sale completed, the purchaser had agreed to bear costs, fees, penalties, arrears and expenses relating to the tenements.

Fifth, the consequences of refusing relief strongly favoured vesting. If no order were made, the proposed sale would fail, the companies and liquidators would lose the benefit of sale proceeds, the tenements would likely be forfeited in the Warden's Court, and the State would receive what the court described as a significant windfall exceeding any interest it may have as a creditor. The judge placed particular emphasis on the potential prejudice to creditors of the companies and to those with pre-disclaimer interests in the tenements.

The court therefore made orders vesting the identified KLP and KLI tenements in the respective companies immediately prior to each company making an application to the Minister for prior written consent to transfer the tenements to the purchaser. Each party was ordered to bear its own costs, and there was liberty to apply.

One of the most practical parts of the judgment is the treatment of registered interests. Kalium Corporate appeared because it wanted to protect interests that had previously been protected by caveat. The court said it was not in issue that, if the tenements revested, each tenement should remain subject to the relevant interests that were registered at the time of disclaimer and still remained registered in official records. The purchaser also acknowledged that the vesting would be subject to those registered interests. The orders were therefore framed to preserve those mortgages and caveats.

That matters because a vesting order is not necessarily a clean slate. If there are secured lenders, caveators or other registered interest holders, the court may preserve their position rather than displace it. In practical terms, that can make a vesting application more workable because it avoids unfairly stripping third parties of rights they already held and can reduce opposition to the application.

Urgency also mattered. The tenements were already subject to forfeiture proceedings in the Warden's Court. The applicants wanted orders before any forfeiture hearing proceeded. The court accepted that completion of the sale would minimise the risk of forfeiture, having regard to payment obligations the purchaser had agreed to meet under the sale arrangement. For businesses, this is a reminder that insolvency issues rarely sit in isolation. Court applications, regulator approvals, secured creditor rights and separate proceedings can all be moving at once.

The broader lesson is not limited to mining tenements. Many distressed businesses hold assets that are difficult, expensive or risky to keep, such as leases, licences, permits, project rights or regulated operating authorities. A liquidator may properly disclaim those assets when they appear to have no net value. But if the market changes, a buyer appears, or a transaction structure becomes available, the court may be prepared to help recover value through a vesting order.

For directors, founders and advisers, the judgment also shows the importance of evidence. The applicants succeeded because there was a clear record of the original disclaimer decision, the later change in circumstances, the proposed sale, the interests of creditors, the existence of registered encumbrances, service on affected parties and the practical consequences if no order were made.

This page is based on the Federal Court of Australia decision in Kalium Lakes Potash Pty Ltd (in liq) v Minister for Mines and Petroleum [2026] FCA 355. The applications were heard together before Banks-Smith J. Orders were made on 24 March 2026 and the reasons were published on 26 March 2026.

The judgment concerns applications under sections 568D, 568E and 568F of the Corporations Act 2001 (Cth), with the main focus on section 568F. The reasons also refer to earlier authorities including Lucan, Vision Forklifts, Energy Brix, Moya, Walsh and ENZED Nominees.

Some details of the sale agreement and a royalty agreement were kept confidential because the court accepted that disclosure could prejudice creditors if the transaction did not proceed. For that reason, the public reasons do not set out every commercial term of the proposed sale.