Crawford (Administrator), in the matter of Carbon Revolution Pty Ltd (Administrators Appointed) [2026] FCA 586

This Federal Court case dealt with an urgent application by the administrators of the Carbon Revolution companies to limit their personal liability for certain debts incurred while the companies continued trading in voluntary administration. The business manufactured specialised carbon fibre road wheels for the automotive industry and needed ongoing supplies of made-to-order components and other inputs with long lead times.

The administrators said they needed to place orders and enter supply arrangements during the administration to support a proposed recapitalisation through a deed of company arrangement backed by Orion Infrastructure Capital. Without court relief, they faced the ordinary operation of s 443A of the Corporations Act, which can make administrators personally liable for debts incurred in carrying out their functions. The Court made orders modifying that position for specified agreements, but only on defined conditions.

Carbon Revolution operated as a global Tier 1 automotive supplier and technology platform specialising in carbon fibre road wheels. The companies entered voluntary administration on 26 March 2026. The administration was planned with OIC as part of a recapitalisation strategy rather than as an unstructured collapse. The aim was to use a proposed DOCA so the companies could emerge with reduced debt and continue operating as a going concern.

Several key arrangements had already been put in place around the administration. OIC entered into a bridge loan agreement to provide working capital and meet administration costs. A restructuring support agreement was signed with OIC, the companies and certain senior noteholders. A side letter dealt with use of bridge funds for the administration. There was also a settlement and support agreement with General Motors LLC. The evidence before the Court also recorded substantial secured debt, trade creditors, deferred transaction cost creditors, accruals, statutory and other creditors, and significant employee entitlements.

After appointment, the administrators ran a process to seek a sale or recapitalisation. They invited expressions of interest, but OIC was the only party to submit a non-binding indicative offer by the deadline. The key feature of that offer was that OIC would acquire all shares in the Carbon Revolution companies through a proposed DOCA. The evidence said that this path would not require foreign regulatory approvals and would retain the workforce through assumption of the claims of continuing employees.

The administrators considered that successful implementation of the proposed DOCA was in the best interests of the companies because liquidation was likely to produce worse outcomes for creditors and other stakeholders. They also believed it was likely that creditors would approve the proposed DOCA at the second meeting, with completion shortly afterwards.

The immediate commercial problem was supply continuity. OIC asked the administrators to incur significant liabilities under contracts and purchase orders for goods expected to be supplied after completion of the proposed DOCA. These were not ordinary off-the-shelf items. The evidence described specialised carbon fibre components and other key inputs, including resin, that were made to order, often had minimum order quantities, and could require sea freight to the manufacturing premises in Geelong. Production lead time from order placement to arrival could be up to six months.

That timing created a real insolvency problem. Orders had to be placed during the administration if the business was to keep operating after the proposed DOCA, but the debts might only fall due after the administrators had ceased to control the companies, their property and their bank accounts. The administrators were concerned that they could still be personally liable under s 443A for those debts, while their practical ability to use their indemnity and lien rights would be severely constrained once the DOCA took effect.

The Court had to decide whether it should use s 447A of the Corporations Act and s 90-15 of the Insolvency Practice Schedule to modify the operation of Pt 5.3A so that the administrators would not be personally liable in the ordinary way under s 443A for certain debts incurred under specified purchase orders and supply agreements.

The judgment explains the ordinary position. Section 443A makes an administrator liable for debts incurred in the performance or exercise of their functions, including for goods bought and services rendered. The purpose is to give creditors confidence to trade with a company in administration and to discourage administrators from recklessly incurring debts. The Court also noted that a debt is ordinarily incurred when the promise is made that gives rise to the obligation, even if the obligation only arises in the future. That meant contracts entered during the administration could expose the administrators personally even if delivery happened later.

The administrators argued that the ordinary rule created an unfair and commercially unworkable risk in this case. They needed to enter supply arrangements during the administration to preserve the business and support the proposed DOCA, but the liabilities might mature only after they had lost practical control of company assets. The Court therefore had to consider whether targeted relief was appropriate, and whether the proposed safeguards for suppliers and creditors were sufficient.

Justice O'Callaghan made the orders sought. In substance, the Court ordered that Pt 5.3A operate as if s 443A(1) did not impose the usual personal liability on the administrators for two defined categories of agreements, subject to conditions.

The first category was purchase orders issued by the administrators to suppliers on or after 27 April 2026. To be covered, those purchase orders had to contain release from liability provisions substantially providing that the administrators and related persons did not incur personal liability in connection with the purchase order, except in cases of fraud, dishonesty or breach of law. The supplier also had to agree not to commence or continue proceedings against the administrators personally, had to release claims connected with the purchase order, and had to accept that any liability under s 443A would be on a limited recourse basis only, limited to the assets of the relevant company from which the administrators were indemnified under s 443D and over which they had a lien under s 443F. Those terms had to be accepted by the supplier as part of the purchase order, and notice of the orders had to be given to the supplier.

The second category was other supply agreements entered into on or after 13 April 2026. These were covered only where the supplier agreed to release the administrators from all obligations, liabilities and claims for amounts incurred by them under the supply agreement during the voluntary administration, and notice of the orders was given to the supplier.

For both categories, the Court ordered that although the liabilities were debts incurred by the administrators in the performance of their functions, the administrators would not be personally liable to repay or satisfy them. There was one important qualification. If the relevant company was wound up and the administrators were appointed as liquidators, any personal liability would be limited to the extent that the assets of that company were sufficient to satisfy the liability.

The Court also imposed procedural safeguards. The administrators had to give notice of the orders to any counterparty to an existing applicable agreement and to any proposed counterparty before that counterparty entered into an applicable agreement. They had to keep a schedule noting each applicable agreement entered into on behalf of the companies. They also had to provide an update to creditors at a creditors' meeting about the nature of the applicable agreements entered into or proposed, together with the total estimated debts that might be incurred in respect of each applicable agreement.

In addition, the Court made confidentiality orders over the unredacted Crawford affidavit and a confidential exhibit, with access restricted until the external administration was finalised. The administrators were required to take all reasonable steps within one business day to notify creditors, ASIC, the Deputy Commissioner of Taxation and the Attorney-General's Department of the orders, and to place sealed copies of the orders and originating process on the administration website. Any person with a sufficient interest was given liberty to apply on three business days' notice to vary or discharge the operative orders.

This case should be read as a practical insolvency decision about keeping a business alive while a recapitalisation is being put to creditors. The Court accepted that the administrators could not reasonably be expected to continue trading and incur substantial debts personally where those debts related to long lead-time supply and might only become payable after the administrators had lost control of company assets. The relief was therefore directed at preserving the administrators' ability to keep the business operating for the benefit of creditors.

The judgment also shows that the Court was not prepared to grant open-ended immunity. The orders were tied to carefully defined agreement types, specific dates, supplier notice, supplier acceptance of contractual protections, and reporting back to creditors. That structure matters. It means the relief was justified not just by the commercial need for continued supply, but by the way the risk was disclosed and allocated.

If your business is in administration and depends on specialised stock, custom manufacturing, imported inputs or long lead times, this case is a reminder to identify supply-chain pressure points early. A proposed DOCA may look commercially attractive, but it can still fail if administrators cannot safely place the orders needed to bridge the period between administration and implementation. Funding documents, supplier negotiations and court applications may all need to work together.

If you are a supplier, the case is equally important. Many suppliers assume that dealing with an administrator gives them the comfort of administrator personal liability. This decision shows that assumption can be changed by court order and by the terms you accept. A purchase order or replacement supply agreement may include a release, a promise not to sue the administrators personally, and a limited recourse clause tied to company assets. Those are not minor drafting points. They go directly to who bears the insolvency risk if the restructure does not proceed as planned.

The judgment is especially useful because it spells out the process obligations that sat alongside the liability relief. The administrators were not only required to use the right contractual wording. They also had to notify existing counterparties to applicable agreements and any proposed counterparty before entry into an applicable agreement. That means the orders were designed to operate transparently, not in the background.

The Court also required broader notification within one business day after the orders were made. Creditors had to be notified by email where an email address was available, or by post where only a postal address was available or an email had bounced. The administrators also had to place scanned, sealed copies of the orders and originating process on the administration website. ASIC, the Deputy Commissioner of Taxation and the Attorney-General's Department also had to be notified.

On confidentiality, the Court ordered that the unredacted Crawford affidavit and a confidential exhibit be marked confidential on the electronic court file and not be published or accessed except by court order until the external administration had been finalised. The stated basis was that the order was necessary to prevent prejudice to the proper administration of justice. For business readers, that means some commercial details were deliberately withheld while the administration remained on foot.

The Court also preserved a mechanism for oversight. Any person who could demonstrate a sufficient interest was given liberty to apply to vary or discharge the operative orders on three business days' notice to the plaintiffs and the Court. That is an important reminder that these orders can affect counterparties and creditors, and the Court left room for objections or later adjustment if needed.

For administrators, the case points to a practical sequence. First, identify which contracts must be entered during the administration to preserve the business. Secondly, separate existing arrangements from new purchase orders and replacement supply agreements. Thirdly, ensure the proposed contractual wording matches the relief sought from the Court. Fourthly, build a notice process so counterparties receive the orders before they contract. Fifthly, maintain a schedule of covered agreements and prepare creditor reporting on the nature and estimated debt exposure of each category.

For suppliers, the practical sequence is different. Confirm whether the document is an ordinary company order or an administrator-issued order intended to fall within a court order. Read the release wording carefully. Check whether you are agreeing not to sue the administrators personally. Check whether any remaining recourse is limited to company assets available for the administrators' indemnity. Then assess whether the commercial upside of continued supply justifies the altered recovery position.

The official source is the Federal Court of Australia judgment in Crawford (Administrator), in the matter of Carbon Revolution Pty Ltd (Administrators Appointed) [2026] FCA 586, with orders made on 29 April 2026 and reasons delivered on 12 May 2026. The judgment confirms the factual setting, the statutory provisions relied on, the operative orders and the main reasoning.

The published material also shows that some affidavit evidence was kept confidential and that part of the reasons available publicly is truncated. Even so, the key commercial story and the terms of the Court's orders are sufficiently clear to explain the decision's practical effect for businesses and suppliers.