JWS represented Daniel Walley and Philip Carter of PricewaterhouseCoopers in their capacity as voluntary administrators (Administrators) of IOUpay Limited (Administrators Appointed) (Company) in an unusual application to the Supreme Court of New South Wales. In the application, the directors of the Company sought orders to end the administration of the Company by authorising the directors to execute a refinancing agreement to restore the Company to solvency. In her Honour’s judgment, Justice Williams confirmed that:

  • the question raised by s 447A(2)(a) of the Corporations Act 2001 (Cth) (Act) is whether the company is solvent, not whether it is likely to be solvent in more than 12 months’ time;
  • the question of the likelihood of future insolvency will be relevant to the court’s exercise of discretion when deciding whether to make an order ending an administration, however, clear unequivocal evidence of future insolvency is needed; and
  • the terms of any refinancing proposal are central to the Court’s assessment, including, in particular, whether debts arising at the date of appointment are discharged.


On 26 April 2023, Daniel Walley and Phillip Carter of PricewaterhouseCoopers were appointed Administrators of the Company.

While the Company did not carry on business itself, it operated as the holding company for various subsidiary companies registered in Malaysia (the IOU Group), which provided financial technology services and digital commerce software to customers primarily in Malaysia and its neighbouring countries. Following their appointment, the Administrators concluded that only one subsidiary (of which the Company was the indirect holding company), i-Destinasi Sdn Bhd (IDSB) operated a profitable business; the remainder were either dormant or loss-making.

Following the discovery of significant fraud committed against the IOU Group, imposition of a trading suspension on 16 March 2023 and failed capital raising in April 2023, the Company’s directors formed the view that it was cashflow insolvent and appointed the Administrators.

Shortly after that appointment, a shareholder of the Company, Finran Pty Ltd (Finran), put forward a refinancing proposal to the Administrators which would return the Company to solvency and provide a basis for the administration to end (Finran Proposal). In short, the Finran Proposal proposed:

  • an advancement of a secured revolving facility in the amount of $4.5 million for a term of 13 months;
  • repayment of the principal and capitalised interest (at 6 per cent) at the end of the term; and
  • security granted over the assets of the Company to secure repayment obligations.

There was no dispute that the Finran Proposal would provide sufficient working capital to discharge the Company’s pre-appointment creditors (mainly comprising debts owed to the ASX and the Company’s directors and advisors) such that it would return to a state of cashflow solvency.

However, in circumstances where the Company did not generate any revenue and relied solely on distributions from its subsidiaries, the issue at hand was whether the Finran Proposal would truly return the Company to solvency such that it would enable the Company to repay the loan upon expiry of the 13-month term and thereby justify the Court making an order under s 447A(2) terminating the administration on that basis.

A notable aspect of the voluntary administration was that an extraordinary general meeting (EGM) seeking to replace the Company’s directors had been requisitioned prior to the appointment of the Administrators with the EGM being held on 3 May 2023, during the voluntary administration. At the EGM, resolutions were passed replacing the Company’s directors.

The application was brought by one of the Company’s new directors, Mr David Halliday, who also sought orders pursuant to sections 198G(3)(b) and 437D(2) of the Act approving the directors of the Company exercising their powers and functions to cause the company to enter into the Finran Proposal (given their powers were suspended by the appointment of the Administrators).

Ultimately, the Administrators did not oppose the application once they were satisfied that there were mechanisms in place to ensure that the facility funds would be paid to the Company and pre-appointment creditors would be paid.


Relying on the findings of the New South Wales Court of Appeal in Anchorage Capital Master Offshore Ltd v Sparkes [2023] NSWCA 88, the Court found that, on the evidence provided, the Company would immediately return to solvency upon entering and drawing down funds under the Finran facility.

Crucial to that assessment was that the Finran Proposal (as amended by the Administrators) required the Company to first apply the funds advanced to discharge all pre-appointment debts.

In assessing solvency, while the Court did not dismiss the relevance of future creditors and the potential that the Company may be unable to repay the loan, it reaffirmed that there needed to be clear evidence indicating, with a high degree of assuredness, that there was a sufficient risk that the Company would be unable to meet its debts at that future time for it to determine that the Company was not solvent.

In that regard, the Court considered:

  • the willingness of Finran to provide ongoing financing and support to the Company;
  • evidence that the Company had sufficient assets to repay the loan facility within 13 months; and
  • the possibility that the Company could take further steps to restructure its debt obligations during the term of the loan.

Her Honour was satisfied that “there was a very real likelihood that the Company would be able to repay the Finran loan facility when it falls due in June 2024”.

In arriving at the decision to exercise the Court’s discretion to end the administration, her Honour also considered that the Finran Proposal achieved the purpose of Part 5.3A of the Act by maximising the chances of the Company continuing in existence.


This decision confirms that a company’s potential future inability to meet its debt obligations may not prevent it being presently solvent. While potential future insolvency may be a consideration, save there being clear evidence that the company cannot meet a future maturing liability, the relevant question is (and remains) whether the company can pay its debts as and when they fall due and payable. However, where a company is returned to solvency as a consequence of a new facility, the terms of that facility will be crucial to the Court’s assessment as to whether to exercise its discretion to end an administration on the basis of solvency pursuant to section 447A.