Australia recognises both modes of trade, in allowing multinational corporate groups to trade here and providing a regime under the Corporations Act 2001 (Cth) for the registration of foreign companies.
Both modes of commerce also present complex challenges for Australian liquidators and Courts when foreign companies, or corporate groups, enter into insolvency. The decision of Justice Downes of the Federal Court of Australia in Gray (liquidator) v Marshall Investments GCP Pty Ltd, in the matter of Mawson Infrastructure Group Inc (in liq) [2026] FCA 848, shows some of those complexities.
The Facts
Mawson Infrastructure Group Inc (Mawson), is a company incorporated under the law of Pennsylvania in the United States of America. It was incorporated in 2012, and specialises in data centre operations. It was registered in Australia on 30 June 2021, and commenced operating two data centres in Australia.
On 31 May 2024, W Capital obtained a default judgment against Mawson in respect of debt owing under a Convertible Note, and W Capital commenced winding up proceedings in the Federal Court of Australia.
At the same time as the winding up application in respect of Mawson, W Capital, W Capital and two other creditors commenced an Involuntary Petition to place Mawson into bankruptcy in the United States Bankruptcy Court (known more commonly as an application for a “Chapter 11” bankruptcy). As a result of that Involuntary Petition being filed, s 362 of Title 11 of the US Code provided for a worldwide automatic stay against all “judicial, administrative or other action or proceeding against [Mawson] that was or could have been commenced” prior to the Involuntary Petition being filed.
Mawson was subsequently wound up in insolvency by the Federal Court of Australia, with the plaintiff, a liquidator, being appointed to it. Mawson argued on that application that the automatic stay would make a winding up under Australian law futile. Later again, orders were made in respect of the Involuntary Petition, dismissing it and making an order that “notwithstanding dismissal of the Involuntary Petition, the Australian liquidation proceeding against Mawson … in the Federal Court of Australia and any custodianship of the Liquidator in connection therewith shall not be reinstated”.
The Proceeding
Apparently in light of the orders made in the United States Bankruptcy Court, the liquidator of Mawson sought an order seeking to terminate the liquidation under section 482(1) of the Corporations Act 2001 (Cth). The liquidator was supported by Mawson’s director, and opposed by two of its creditors.
Quickly dealing with the question of the effect of the orders made by the United States Bankruptcy Court, her Honour observed that the “Australian liquidation proceeding” (being the winding up application) was at an end, and therefore any “reinstatement” could not occur.
Her Honour further observed that, notwithstanding those orders apparently introducing a “worldwide stay” and preventing the reinstatement of the liquidator’s “custodianship”, none of the steps prescribed under Australian cross-border insolvency legislation (such as the Cross-Border Insolvency Act 2008 (Cth), which itself gives force to the UNCITRAL Model Law on Cross-Border Insolvency (1997) (UNCITRAL Model Law) were taken to cause the proceeding in the United States Bankruptcy Court as a “foreign main proceeding”, with the effect that the various effects of such recognition under the UNCITRAL Model Law (including an automatic stay under article 28) did not occur.
In light of those matters, her Honour declined to terminate the winding up. Instead, her Honour made orders under section 90-15 of the Insolvency Practice Schedule (Corporations), confirming that the liquidator was justified in continuing to operate as the liquidator. Her Honour made further orders for the orderly continuation of the liquidation.
Takeaways and Risk
The decision in Gray (liquidator) v Marshall Investments GCP Pty Ltd, in the matter of Mawson Infrastructure Group Inc (in liq) [2026] FCA 848 bears lessons for both liquidators, companies and creditors alike.
For liquidators, it should be clear that this decision demonstrates the value of approaching the Court for directions early and often, particularly in circumstances where a question arises as to the effect of proceedings abroad which claim to have consequences far beyond their shores. In this case, taking the prudent step of seeking the Court’s guidance resulted in the liquidators receiving confirmation that they were justified in continuing to conduct the liquidation.
Similar considerations should also be kept in mind for foreign companies trading in Australia. Service on foreign registered companies by express post under section 109X of the Corporations Act 2001 (Cth) means that a company that only loosely overseas Australian operations can easily have default judgment entered against it. Keeping a vigilant eye on Australian operations minimises the risk of entering into the complexities of a liquidation stretching across jurisdictions (or even jurisdictions duelling for that jurisdiction).
For creditors, the decision demonstrates the importance of approaching recoveries carefully and analytically. While it can be tempting to move quickly and overwhelming, the effect of cross-border insolvency law (in particular the rules concerning recognition of foreign main proceedings) can add a layer of complication, or force a creditor to continue to take steps in a jurisdiction that is less favourable to them. Those kinds of risks can be avoided by taking advice as to effective recovery strategies early and often.
Disclaimer
This article is provided for general information purposes only and does not constitute legal advice. It is not intended to be a comprehensive statement of the law and is limited to a commentary on the facts, issues, and principles arising in Spotpress Pty Ltd v Spotpress Newspapers Pty Ltd [2025] NSWSC 1094. The discussion should not be relied upon as applicable to other circumstances.
If you require advice on (...), you should seek independent legal advice. Our Insolvency and Restructuring Team at Watson Webb is available to assist.
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