In In the matter of Nexus Energy Ltd (subject to a deed of company arrangement) [2014] NSWSC 1910, the deed administrators of Nexus Energy Limited (subject to a Deed of Company Arrangement) (Nexus) sought leave of the Court to transfer all ordinary shares in Nexus to SGH Energy (No 2) Pty Ltd (SGH2). SGH2 was the proponent of the Deed of Company Arrangement (DOCA) and was also associated with the secured lender.

Nexus was a listed company and its wholly-owned subsidiaries held significant interests in gas and resources. While Nexus was placed into administration in June 2014, its subsidiaries were not placed into administration and continued operating.

SGH2 proposed a restructure via a DOCA whereby the secured lender was paid in full, noteholders would be paid 74 cents in the dollar, employee entitlements and trade creditors would be paid in full, Nexus would be recapitalised, operations would continue and the shares in Nexus would be transferred to SGH2. The shareholders of Nexus were to receive no consideration under the DOCA for their shares.

The deed administrators sought leave under s 444GA of the Corporations Act(Act) to compulsorily transfer the shares to SGH2.

Section 444GA provides that “the Court may only give leave…if it is satisfied that the transfer would not unfairly prejudice the interests of members of the company”.  Several shareholders of Nexus opposed the application.


Black J considered whether the transfer would result in unfair prejudice to the shareholders by comparing whether the shareholders would receive a better return if the proposed DOCA was rejected.

Ultimately, his Honour agreed with the deed administrators in finding that it was inevitable that Nexus would be placed into liquidation if the proposed DOCA was rejected. Based on expert evidence his Honour found that the shares in Nexus had no residual value in a liquidation of Nexus and such a liquidation would likely have resulted in either the liquidation or receivership of the operating subsidiaries.

His Honour also found that there was no prospect of the shares obtaining value within a reasonable time, and there was no suggestion that the shareholders could or would fund Nexus including its capital requirements.

Accordingly, his Honour found that the proposed transfer did not involve prejudice to the shareholder of Nexus. And even if there was prejudice, it was not unfair prejudice, given the benefits that the proposed DOCA would provide to other stakeholders independent of the proponent, including: trade creditors, note holders, employees and those that benefitted from the continued operations of Nexus.


Section 444GA of the Act can provide a useful tool to give effect to a restructure where shares need to be transferred in order to preserve value in the corporate entity and shareholders refuse to provide their consent.