Administrators: Recovery of Post-Removal Remuneration

Re Trpcevski [2025] FCA 1511 (“Trpcevski”)

Voluntary administrators may be removed from office whilst a company is still subject to some form of external administration by:

1. a resolution of creditors at the first meeting of creditors; s 436E(4), Corporations Act (“CA”);

2. a resolution of creditors passed at the meeting to decide the company’s future where those creditors also resolve that the company execute a deed of company arrangement; s 444A(2), CA; or

3. a resolution of creditors passed at the meeting of creditors to decide the company’s future at which the creditors also resolve that the company be wound up; s 499(2A), CA.

Notwithstanding their removal from office, the former administrators may undertake further work concerning the continuing management of the company’s affairs whether it continues to be in voluntary administration, be subject to a DoCA or be in liquidation. May the former administrators be remunerated for that further work?

Sections 60-10(1), Insolvency Practice Schedule (“IPS”) makes specific provision for the determination of the remuneration payable to an administrator. However, “s 60-10(1) is limited to remuneration ‘that an external administrator of a company … is entitled to receive …’”; Trpcevski at [15].

Section 90-15(1), IPS, by way of contrast, confers more general powers on the court to make orders in respect of the administration of companies. It is in these terms:

“The Court may make such orders as it thinks fit in relation to the external administration of a company.”

So far as concerns the operation of that section in the context of a claim for post-administration remuneration, the court in Trpcevski said:

“[22] Section 90-15 authorises the determination of substantive rights … An order approving pre- or post-appointment remuneration is squarely within the scope of the power and, depending on the circumstances, may find substantial justification in the cost savings that it will provide to creditors and all concerned by doing away with the need to establish and thus dispute the existence of a legally binding contract.

[23] In my view, in order to claim remuneration pursuant to s 90-15, the former administrators need not establish all the elements of a legally binding contract (or a quantum meruit claim), but they must establish at least an objectively manifested mutual understanding with duly authorised officers of the company that the former administrators are undertaking the work at the express or implied request of those officers, or otherwise with their assent.”

As to the circumstances in which the claim in Trpcevski for post-administration costs was made, the court summarised the matter in this way (at [30]):

“These interactions [being the correspondence and other communications between the continuing administrators and the former administrators] show that former administrators were undertaking work in the post-appointment period. That work was being done at the request of the new administrators, who, through correspondence, asked the former administrators to undertake certain work in order to facilitate the handover of the administration of [the company]. Although this correspondence does not necessarily show an express request by the new administrators, it is clear from the correspondence that an implied request was made. This implied request arose through discussions with the former administrators to facilitate various payments that were necessary to be made to contractors, suppliers and employees of [the company] were made.”

Those interactions were initiated by the new administrators and were sufficient both as justification for the former administrators to undertake the post-administration work and to support an order for their remuneration on account of that work being made under s 90-15, IPS.

Authors: Michael Sloan, Partner and Richard Fisher, Consultant.