Australian Securities and Investments Commission v Marco (No 20)

This judgment sits inside a much larger Federal Court matter about an unregistered managed investment scheme. The Court had already appointed liquidators to the scheme and to AMS Holdings in December 2020. It had also already made important orders in 2023 about how remaining scheme property should be identified, pooled and distributed among scheme members.

That earlier work mattered because the Court had already accepted that the scheme members' funds had been mixed and that it was not practical or economical to trace each participant's exact proprietary interest through the remaining property. The Court had therefore approved a pooled distribution approach for identified scheme property. By 2026, the liquidators were not asking the Court to reinvent that framework. They were asking whether a further category of property, namely causes of action they had commenced in several court proceedings, should be treated in the same way.

The liquidators had started seven proceedings in the Supreme Court of Western Australia and one in the Federal Court. According to the judgment, those claims broadly targeted two kinds of recipients of scheme funds. One group was third parties who allegedly received scheme money in breach of trust, including money used to build residences or pay down liabilities secured by mortgages over real property. The other group was certain scheme members who allegedly received more scheme money than they had originally contributed.

Some of those proceedings had already settled. Others were still ongoing. So the practical question for the Court was simple to state but commercially important: if money comes back through those claims, does it belong in the same pooled fund already established for scheme property, or does it need to be dealt with separately?

The liquidators sought directions under the Corporations Act and the Insolvency Practice Schedule confirming that they would be acting properly if they treated the identified causes of action, and any proceeds realised from them, as assets and property of the scheme. They also sought directions that any such proceeds could be treated as part of the existing fund referred to in the earlier 2023 orders and distributed under the same priorities and methodology already approved.

This was not a trial of each underlying claim. The Court was not deciding whether every defendant in every recovery proceeding was liable. Instead, the Court was deciding how the liquidators could properly characterise and administer the claims and any money recovered from them. That distinction matters. Liquidators often seek directions where they need judicial confirmation that a proposed course is proper before taking steps that affect a broad group of stakeholders.

The liquidators also sought a suppression order in relation to annexures to a later affidavit that contained settlement agreements from two Supreme Court proceedings and the Federal Court proceeding. The Court had required full disclosure of the facts and circumstances underpinning the proposed orders, including the settlement terms. The liquidators therefore needed to put confidential material before the Court while also trying to preserve confidentiality.

Feutrill J held that the liquidators would be acting properly and would be justified in treating any and all proceeds of realisation of the identified claims as if they were assets and property of the scheme. The Court also held that the liquidators would be acting properly and would be justified in treating those proceeds as forming part of the existing fund created under the earlier orders, to be distributed in accordance with the priorities and methodology already approved.

The reasoning depended heavily on Marco (No 13). In that earlier decision, the Court had already concluded, among other things, that the scheme had Ponzi-like features, that scheme members' funds were mixed, that tracing each person's exact proprietary interest was not practically or economically feasible, and that the liquidators were justified in treating identified scheme assets and their proceeds as a single mixed fund. The Court had also already approved a distribution method that, while unlikely to reflect the true proprietary interests of every member perfectly, gave the most complete effect available to the hotchpot principle in a pro rata distribution of the remaining mixed fund.

Against that background, the 2026 question was whether the newly identified causes of action and their proceeds should be treated as part of the same scheme property pool. The Court said yes. On the evidence before it, there was no doubt that the causes of action formed part of the property of the scheme. Any proceeds obtained by settlement or judgment would therefore augment the remaining mixed and deficient fund comprising scheme property.

The Court also said there was no evidence of any change in circumstances since the 2023 orders that would affect either the nature of the priorities or the appropriateness of the earlier distribution method. That point is important. The Court was not creating a new distribution model. It was extending the operation of an existing one to additional recoveries.

The judgment separately addressed claims against scheme members who had allegedly received more than they contributed. The Court accepted that those proceedings could not be advanced on the same footing as the earlier assumption in Marco (No 13) that scheme members who had received payments were bona fide recipients for value without notice and could not be compelled to repay. But that did not undermine the earlier distribution reasoning. Assuming those defendants were entitled to retain the amount of their original contributions, they would not have any admissible claim against the remaining scheme property. So any overpayments recovered from them would simply enlarge the mixed fund available for distribution among other members with admissible claims.

The procedural context matters when reading this case. The orders were made after notice of the proposed pooling and distribution orders and the hearing had been given to all parties and to certain other interested persons who were not parties. The judgment records that the plaintiff, first defendant and fourth defendant advised they did not wish to be heard. The legal representatives of the fifth and sixth defendants did not have instructions to appear on their behalf in relation to the proposed orders. The liquidators were in control of AMS Holdings. No party or potentially interested person, other than the liquidators, appeared or made submissions regarding the proposed orders.

That does not mean the Court simply rubber-stamped the application. The reasons show that the Court still worked through the statutory power to give directions and the earlier findings that justified pooling and distribution. But the absence of opposition is part of the procedural story and helps explain why the Court could deal with the application as a directions matter rather than as a contested trial.

For business readers, this is a reminder that procedural fairness still matters in insolvency applications. If you are a stakeholder whose interests may be affected by a proposed distribution or confidentiality order, silence can matter. If you receive notice and do not object, the Court may proceed on the material before it.

The confidentiality part of the judgment is especially useful for businesses that settle litigation with liquidators or other court-supervised officeholders. The liquidators wanted protection for annexures containing settlement agreements. Those agreements included confidentiality terms. The Court accepted that there is a very significant public interest in the settlement of litigation and that this interest can be undermined if the public can access and report on matters the parties agreed would remain confidential.

The Court also recognised a further point specific to insolvency administration. Liquidators who must come to court for approval or directions should be able to place relevant material before the Court fully and frankly without apprehension that doing so will prejudice the interests they are administering. The judgment referred to authority recognising that this can justify confidentiality protection in the context of liquidators seeking court approval in relation to litigation matters.

Even so, the Court did not grant the broader suppression order sought under section 37AF of the Federal Court of Australia Act. One reason was procedural. A contravention of a statutory suppression order can be an offence, yet no potentially interested person had been given notice of an application for that kind of order or an opportunity to be heard on it. The Court therefore declined to use that mechanism on the facts before it.

Instead, the Court used rule 2.32 of the Federal Court Rules. It ordered that the affidavit sworn on 30 January 2026 be confidential on the ground that this was necessary to prevent prejudice to the proper administration of justice. The Court noted that although the affidavit had been read on the application, it had not in fact been read out loud in open court and its contents had not otherwise been publicly disclosed. The Court also noted that non-parties are not automatically entitled to inspect affidavits and generally need leave.

Importantly, the Court's approach was not a blanket suppression of all settlement information forever. The orders required the liquidators to file a redacted version of the affidavit with the confidential annexures removed so that non-confidential parts could still be inspected. The reasons also make clear that a party or a non-party may later apply for leave to inspect the unredacted affidavit, and that any such application can then be determined with the applicant having an opportunity to be heard.

For businesses, the practical message is that confidentiality in court is procedural, not automatic. A confidentiality clause in a settlement agreement helps explain why protection may be appropriate, but it does not by itself decide the issue. The Court will still weigh open justice, the administration of justice, the procedural rights of interested persons and the least restrictive mechanism available.

Most businesses will never be involved in the winding up of an unregistered managed investment scheme. But the commercial lessons are broader than that niche setting.

First, if your business receives or applies money for investors, members or clients, segregation and record-keeping matter. Once funds are mixed and tracing becomes impractical, later disputes may be resolved through court-approved approximations and pooled methodologies rather than through neat account-by-account ownership analysis. That can change who shares in recoveries and in what order.

Secondly, a cause of action can itself be treated as part of the property being administered. That means a recovery claim is not just a piece of litigation strategy. In the right setting, it is an asset of the estate or scheme, and any settlement or judgment proceeds may need to be distributed under an existing court-approved framework rather than dealt with in a commercially intuitive but legally incorrect way.

Thirdly, if you are settling with a liquidator, think ahead about what may happen if the liquidator later needs court directions or approval. The settlement terms may need to be disclosed to the Court. Confidentiality may still be preserved, but only if the Court is satisfied that protection is necessary and only through an appropriate procedural mechanism.

Finally, this case should not be overread. It does not stand for a general proposition that all recoveries in all insolvencies can be pooled. The result depended on the earlier findings in Marco (No 13), including mixed funds, impractical tracing and an already approved distribution method. Businesses should treat it as a case about a specific failed scheme and a specific procedural context.

The Court made the relevant orders on 6 February 2026 and published its reasons on 9 February 2026. The judgment records that the liquidators had originally been appointed on 7 December 2020. It also records that the earlier key distribution orders were made on 13 February 2023, later amended on 20 December 2024, and on 9 March 2023.

This was a further directions judgment. It did not finally determine the merits of every underlying recovery proceeding. Instead, it confirmed how the liquidators could properly treat the claims and any proceeds recovered from them within the existing winding up and distribution framework.