Sozou (Liquidator), in the matter of Comm TC Pty Ltd (in liq) [2026] FCA 532

This Federal Court decision concerned two companies in liquidation, Comm TC Pty Ltd and Zenith Workforce. NSW Pty Ltd. The Court said they were part of a substantial labour hire group operating in the construction industry. Their liquidators asked the Court for more time to bring applications under section 588FF(1) of the Corporations Act in relation to possible voidable transactions.

The commercial background is important. A previous liquidator, Daniel Frisken, had already been appointed to each company. The present liquidators replaced him on 8 May 2025 by creditors’ resolutions. The evidence before the Court was that the administrations had been difficult from the start because the companies’ books and records were inadequate, cooperation from people involved in the companies’ affairs was limited, and funding was constrained.

After taking over, the liquidators did not sit still. The Court recorded that they had undertaken substantial work in a relatively short period. That included gathering and reviewing books and records, conducting forensic analysis of transactions, identifying possible claims and recovery avenues, engaging legal advisers and preparing for public examinations. Even so, they said they still needed more time to complete investigations and decide what proceedings should responsibly be commenced.

That is the practical setting for the case. It was not a final trial about whether any payment or arrangement was voidable. It was an application to preserve the liquidators’ ability to keep investigating and, if justified, later sue for the benefit of creditors.

Section 588FF(1) of the Corporations Act is the provision that allows a liquidator to seek court orders in relation to voidable transactions. Those orders can include recovery-type relief if a transaction is later shown to fall within the statutory regime. Section 588FF(3) then imposes a time limit. Relevantly, section 588FF(3)(b) allows the Court to extend the period for making a section 588FF(1) application, but only if the extension application itself is made within the prescribed time.

The Court therefore first had to confirm whether this application was itself in time. That required identifying the relation-back day for each company and then calculating the ordinary deadline.

For Comm TC, the sole member resolved on 15 December 2022 that the company be wound up and that Mr Frisken be appointed liquidator. The Court held that the relation-back day was therefore 15 December 2022, and the last day for a section 588FF(1) application under section 588FF(3)(a)(i) was 15 December 2025.

For Zenith, the sole member resolved on 19 January 2023 that the company be wound up and that Mr Frisken be appointed liquidator. The Court held that the relation-back day was 19 January 2023, and the last day for a section 588FF(1) application was 19 January 2026.

The originating process commencing the proceeding was lodged on 10 December 2025 and accepted for filing on 11 December 2025. That meant the extension application was brought before both deadlines. The Court expressly confirmed that point. This matters because if the extension application had been filed too late, the Court could not simply revive the claim period afterwards.

The liquidators were not asking for extra time in the abstract. The reasons identify both already identified claims and the possibility of further claims emerging from ongoing investigations.

For Comm TC, the most significant identified matter was a proposed uncommercial transaction claim arising from a labour hire arrangement with Commercial TC Pty Ltd. The liquidators said Comm TC may have received materially less than the amounts contractually due for labour supplied. The potential shortfall was presently estimated to be up to $4 million, although the Court noted that quantum and the proper defendants still required further investigation.

The evidence also identified specific transactions recorded in Comm TC’s bank statements that were said to be outside the ordinary course of business. The reasons refer to payments to Almira Kocic, Arthur Mitsoulis and Lusyn Mitsoulis, Senad Kocic, Rachid Zerouk, Michael Saad and Empryl Pty Ltd. The liquidators contended that potential claims might arise under section 588FB or otherwise by way of relief under section 588FF.

For Zenith, the reasons identify further transactions said to be outside the ordinary scope of its business, including payments to Andrew Saad, Nedzad Kocic, Nicolas Saad, Empryl and Tridium Enterprises. Again, the Court did not decide that any of these transactions were voidable. It accepted only that they were sufficiently identified and had enough apparent substance to justify preserving the liquidators’ position while investigations continued.

The liquidators also sought a longer extension for claims not yet identified with precision. The Court accepted that public examinations, further record gathering and merits advice were still required before a properly informed decision could be made about whether additional proceedings should be commenced.

The legal issue was whether it was fair and just to extend time under section 588FF(3)(b). The Court explained that this is a broad discretion used to mitigate the rigour of the statutory time limit in an appropriate case. But the liquidator bears the onus of showing that the ordinary time limit should not apply.

The reasons summarise the main considerations drawn from earlier authorities. They include the length of the delay, the explanation for the delay, a preliminary view of the merits of the proposed proceedings, and prejudice if an extension is granted. The Court also recognised the broader balance involved. People dealing with a company are entitled to commercial certainty, but creditors also have an interest in liquidators being able to pursue proper voidable transaction claims.

The Court further noted that where an extension is sought mainly to permit investigation into whether proceedings should be commenced, the merits may carry less weight than in a case where fully formulated claims are already ready to file. That is a practical point. A liquidator does not always need to present a finished statement of claim to obtain an extension, especially where the purpose of the extension is to complete investigations responsibly.

Another relevant consideration was diligence. The Court said it may take into account whether the liquidator has acted with reasonable diligence in pursuing the administration and using available procedures to avoid unnecessary delay. Here, that issue was central because the liquidators were asking for substantial extensions.

Cheeseman J granted the application. The Court was satisfied that the extension application had been brought within time and that, in all the circumstances, it was fair and just to extend the period for making section 588FF(1) applications.

For Comm TC, the Court ordered that the time for identified claims referred to in the affidavit be extended to 1 March 2027, and the time for any other section 588FF(1) applications be extended to 29 April 2028. For Zenith, the Court made the same two extension dates: 1 March 2027 for identified claims and 29 April 2028 for other claims.

The Court accepted the liquidators’ explanation for delay. It found that the delay was not caused by inactivity or a failure to progress the administrations with reasonable diligence. Instead, it was substantially occasioned by the state of the companies’ records, the lack of cooperation available to the external administrators and uncertainty as to funding.

On the merits, the Court held that the identified claims were not merely speculative. In particular, the labour hire claim involving Commercial TC was treated as having sufficient apparent substance to justify further investigation. The Court also referred to the earlier Touchline decision, where materially similar relief had been granted in relation to other companies in the same broader corporate group. In this case, the liquidators sought extension periods to the same effect as those granted in Touchline, and the Court noted that the evidence relied on here was the same or substantially similar.

The Court was careful not to express a concluded view on the ultimate merits. But it was not satisfied that the identified claims were so lacking in apparent substance that it would be unfair to permit further time. For unidentified claims, the Court said no detailed merits review was presently required because the extension was being sought to allow further investigation.

The judgment also deals with notice and prejudice, which are often important in extension applications. The liquidators had taken steps to notify as many potential defendants as possible. The reasons refer to service being proved on CBS Developments Pty Ltd, Commercial TC, Empryl, Tridium Enterprises, Arthur Mitsoulis, Lusyn Mitsoulis and Michael Saad. The evidence also described unsuccessful attempts to serve other individuals, some of whom were later confirmed to be represented by solicitors. ASIC was also served and confirmed receipt of the relevant materials.

The Court was satisfied that all reasonable steps had been taken to notify relevant persons. That did not automatically decide the application, but it mattered to the fairness of the process.

The Court also expressly noted that although a number of interested persons had previously indicated that they might oppose the application, by 10 April 2026 that opposition had fallen away. The application was therefore determined without opposition and on the papers.

As to prejudice, the Court accepted that refusing the extension would cause real prejudice to the liquidators and creditors. The companies had minimal assets available for distribution, and the identified claims were said to involve potentially significant recoveries. If time were not extended, claims that might otherwise be available under Part 5.7B could be lost before the necessary investigations were completed.

Against that, the Court recognised the ordinary prejudice that comes with continuing exposure to possible suit. But in this case no specific forensic prejudice was shown. No party maintained opposition, and there was no evidence that the extension would make it unfair in any concrete way to defend any later proceedings. The Court concluded that the prejudice to the liquidators and creditors if the extensions were refused materially outweighed the presumptive prejudice to those who might later be sued.

The liquidators also sought a confidentiality order over a confidential affidavit and confidential exhibit. The Court granted that relief under section 37AF of the Federal Court of Australia Act 1976 (Cth).

The reason was practical and commercially significant. The confidential material contained sensitive information about the liquidators’ investigations and potential recoveries. The Court accepted that wider disclosure would create a real risk of prejudice to the conduct of those investigations and to the prospects of recovery. In those circumstances, and having regard to the public interest in the due and beneficial administration of insolvent companies for the benefit of creditors, the Court held that a confidentiality order was appropriate.

The order was to continue until the conclusion of the winding up of the plaintiff companies. For businesses, this is a reminder that not every detail of an insolvency investigation will be publicly available while the investigation is still live. Courts may protect material where disclosure could undermine recoveries or the proper administration of justice.

This case is a practical warning for businesses that trade with distressed companies, especially in industries like construction and labour hire where services, staff and payments may move across multiple related entities. The ordinary deadline for voidable transaction claims is important, but it is not always final. If a liquidator applies in time and can show a proper basis, the Court may preserve the ability to sue for years longer.

The decision also shows what tends to persuade the Court. The liquidators here did not simply ask for more time because the administration was difficult. They pointed to substantial work already done, explained what remained to be done, identified at least some proposed claims with enough detail to show apparent substance, and showed that the delay was caused by real obstacles rather than inactivity.

If your business receives payments from a company that later enters liquidation, keep the documents that explain the commercial basis for those payments. If there are related-party dealings, unusual transfers, management fees, labour hire arrangements or transactions outside the ordinary course of business, make sure the records clearly show what was provided and why the arrangement made commercial sense at the time.

If you are a director or founder, this case is also a governance reminder. Inadequate books and records do not just create compliance problems. They can prolong liquidations, increase investigation costs, delay distributions and make it easier for a liquidator to argue that more time is needed to investigate transactions. Good record-keeping will not eliminate insolvency risk, but it can reduce uncertainty and help explain the commercial rationale for decisions later scrutinised in a liquidation.

The judgment was delivered on 1 May 2026 by Cheeseman J in the Federal Court of Australia. The matter was determined on the papers. The Court recorded that by 10 April 2026 any foreshadowed opposition had fallen away, so the application proceeded without opposition.

The extension periods granted in this case mirrored those granted in an earlier related decision involving another company in the same broader corporate group, Sozou (liquidator) v Touchline Pty Ltd, in the matter of Touchline Pty Ltd [2025] FCA 1516. The Court noted that the evidence relied on here was the same or substantially similar to the evidence relied on in that earlier matter.

The orders made were procedural and preservative. They do not establish that any identified transaction was voidable. They preserve the liquidators’ ability to continue investigating and, if appropriate, bring proceedings within the extended periods.