Woodhouse, (Liquidator), In The Matter Of Forex Trading Capital Pty Limited (In Liquidation)[2022] FCA 600

The regime for the adjudication of proofs of debt is well established. Liquidators act in a "quasi-judicial capacity" when adjudicating proofs according to standards no less than the standards of a court or judge. But what if a Liquidator is faced with over 8,000 complex creditor claims and has a limited time in which to adjudicate to access an undertaking to pay those same claims?

In Re Woodhouse (in their capacities as joint and several liquidators of Forex Capital Trading Pty Ltd (in liq) (ACN 119 086 270) [2022] FCA 600, the Federal Court of Australia made orders permitting the Liquidators to conduct an abridged process for the adjudication of proofs of debt, which included 8,600 former customer claims with an aggregate value of AUD$69.5 million.


Prior to its liquidation, Forex Capital Trading Pty Limited (Forex) formerly held an Australian Financial Services Licence and provided high risk, over-the-counter derivative products, including margin foreign exchange and contracts-for-difference.

The Australian Securities and Investment Commission (ASIC) had commenced Federal Court Proceedings against Forex which resulted in several declarations made by the Court in relation to contraventions of the Corporations Act 2001 (Cth) (Corporations Act), and the ASIC Act 2001 (Cth) (ASIC Act).

The Court concluded that Forex engaged in an unconscionable system of conduct contrary to the Corporations Act and the ASIC Act and to the detriment of its customers. Forex's customers were unsophisticated and were subjected to high-pressure sales tactics. The Court ordered Forex to pay an AUD$20 million pecuniary penalty and a disqualification order was also made against Forex's director. Less than a month later, Forex went into voluntary liquidation.

Upon their appointment, the Liquidators of Forex were met with some 8,600 claims by former customers of Forex which were complex misleading or deceptive conduct and unconscionable conduct claims against Forex, totalling around AUD $69.6 million. Forex's ultimate holding company, Invesus Group Ltd (Invesus) gave an undertaking to the Liquidators to provide financial support to meet any debts of the Company; however, that undertaking was due to expire within 13 months from the date of Forex's liquidation.

Liquidators' Application

The Liquidators were keen to utilise Invesus' undertaking, were cognisant of the extraordinary costs that would be incurred in adjudicating on 8,600 proofs of debt in the usual way and estimates those costs to be approximately AUD $6.2 million. Consequently, the Liquidators approached the Court for orders under s 90-15 of Schedule 2 – Insolvency Practice Schedule (Corporations) of the Corporations Act (IPS) seeking orders for an abridged process for the adjudication and admission of creditors' claims in respect of Forex (Abridged Adjudication Process).

The Liquidators expedited their review of the nature and admissibility of customers' claims based on a randomised sample of customers and which had objective characteristics to adequately capture the different types of former customers of Forex.

The Liquidators reviewed the books and records and other materials, such as the documents filed in the earlier proceedings, to determine whether the misleading and deceptive conduct claims of the sample customers could be established. If so, the Liquidators were willing to infer that such claims could be made out by all of Forex's former customers who claimed to have suffered a loss.

The Abridged Adjudication Process was described in the Liquidators' evidence and involved the following:

  1. First, the Liquidators would pre-populate claim forms for Forex's customers, with each former customers' net loss included based on the information in Forex's books and records. Helpfully, the books and records had been audited to assist in expediting this process;
  2. Secondly, the Liquidators would request Forex's customers elect by a certain deadline whether they wanted to participate by claiming their net loss based on the net loss figure provided by the Liquidators but with a 15% discount of value, in exchange for exempting them from providing further detailed evidence as to each element of the alleged claims and establishing causation; and
  3. The Liquidators would admit claims where Forex's customers elected to accept the 15% discount on the specified net value without a further adjudication. Forex's customer was then permitted to claim for a larger amount such as the balance 15% later but after the termination of the undertaking.


The Court characterised the Liquidators' approach as a "creative and efficient proposal tailored to the particular circumstances" and made the orders sought by the Liquidators. In making those orders, the Court observed at [85]:

The Liquidators also propose the discount on claims as a matter of fairness: in their view it provides a fair price for the ease of saving the former customers the need to collate evidence and formally prove their individual claims. On the evidence before me, it is apparent that considerable care and effort has been employed by the Liquidators in assessing the veracity of the Selected Former Customers' claims, the former customers' claims generally and the net losses. The orders sought are within the scope of the relief contemplated by s 90-15 and in my view, it is open to the Liquidators to proceed in accordance with the Expedited Process. To do so is consistent with their obligations as liquidators.

The Court was satisfied that all interested parties, namely ASIC, the former customers of Forex and Invesus, had been fully informed of the Proceedings and were provided the opportunity to be heard albeit proceeding ex parte (in the absence of any other parties).

What does this decision mean for Liquidators?

Where it is impracticable for Liquidators to assess a high volume of complex creditor claims, it is open for Liquidators to approach the Court for orders under s90-15 IPS for an expedited process to adjudicate those claims provided such process is consistent with their overriding duties.

Prior to any application being brought to adopt an expedited process, Liquidators should ensure that they are able to address and adduce evidence of:

  • any inferential reasoning in the review of creditors' claims including the calculation of losses to ensure that any reasoning extends beyond mere "conjecture";
  • exercising considerable care and effort to assess the veracity of claims (including the classification of types of creditor claims if sample sets are utilised);
  • the methodology for the calculation of losses is sufficiently clear for the purposes of any claims that the Liquidators propose to admit;
  • the expedited process being in the interests of creditors and propounded on a proper basis; and
  • appropriate notice of any proceedings seeking s 90-15 IPS directions is provided to third parties to enable them an opportunity of being heard on the Liquidators' application.


1 Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332.
2Corporations Act, ss 912A, 946A, 961K(2), 961L, 963F, 963J, 991A, 1041H.
3 ASIC Act, ss12CB and 12DA

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