Navigating alleged invalidity in administrator appointments

In a recent decision out of the Supreme Court of New South Wales, the Court considered whether the purported appointment of a company administrator could be validated, notwithstanding that the appointment had been facilitated by the forgery of a director's signature.

In 2021, Premier Energy Resources Pty Ltd (the Company) entered into an agreement with Delta Electricity under which it would supply coal fines to a power station. As it transpired, by early 2023 Delta Electricity had alleged that the Company breached the supply agreement and threatened to commence legal proceedings. At around this time, the Company had two directors: Mr Connor and Mr Clark. Mr Connor, being of the view that the Company did not have the funds for a legal battle, took the position that the company should go into administration. This was a step that had been resisted by two of the four shareholders.