TGIF 12 June 2026 – Supreme Court puts ATO notice on ice during voluntary administration

This week’s TGIF considers the recent decision of the New South Wales Supreme Court In the matter of Hudson Global Resources (Aust) Pty Limited [2026] NSWSC 535, in which the Court suspended the operation of an ATO Notice where the company was in voluntary administration.  

Key takeaways

• A notice under section 260‑5 of Schedule 1 to the Taxation Administration Act 1953 (Cth) (ATO Notice), directing a creditor company to remit money to the Commissioner of Taxation is a ‘security interest’ under section 440B of the Corporations Act 2001 (Cth) (Act).
   
• The collection of money under an ATO Notice by the Commissioner, and the Commissioner’s refusal to withdraw the ATO Notice at the administrators’ request, does not constitute enforcement under section 440B of the Act. Something more is required, such as seeking a court order for payment or seizing property. 
   
• The Court has power under section 447A of the Act to suspend the operation of an ATO Notice to preserve cash of a company in voluntary administration.

Background

Hudson Global Resources (Aust) Pty Limited (Administrators Appointed) (Hudson) is a national recruitment agency. In 2021, Hudson entered into an invoice finance facility with Scottish Pacific Business Finance Pty Ltd (ScotPac). Under the facility, ScotPac agreed to advance up to 85% of Hudson’s receivables in exchange for fees, charges and rights of assignment.

Pursuant to the ATO Notice dated 30 March 2026, ScotPac was to remit to the Commissioner 20% of all drawdowns by Hudson under the invoice finance facility, up to $19.64 million.

On 22 April 2026, administrators were voluntarily appointed to Hudson. At the time of their appointment, Hudson’s financial position was precarious. It held approximately $950,000 in cash and owed ScotPac the equivalent of four weeks of receivables. ScotPac declined to allow any further drawdowns while Hudson remained in voluntary administration. 

The administrators negotiated a new funding agreement with ScotPac. The administrators drew down on the new funding agreement and ScotPac remitted approximately $804,000 to the Commissioner in compliance with the ATO Notice. 

The administrators wrote to the Commissioner requesting that the ATO Notice be withdrawn on the basis that Hudson was in voluntary administration. The Commissioner declined to withdraw the ATO Notice.

The administrators commenced proceedings seeking urgent orders including:

• restraining the Commissioner from collecting monies under the ATO Notice under section 440B of the Act; 
   
• a declaration that ScotPac was not required to comply with the ATO Notice; or
   
• suspending the operation of the ATO Notice under section 447A of the Act.  

The administrators also sought orders requiring the Commissioner to repay monies received from ScotPac after their appointment.

Primary issues for the Court’s consideration

Justice Brereton considered whether:

• section 440B of the Act, which restricts certain creditors and owners from enforcing security interests without the administrators’ consent or a Court order, applied to the ATO Notice; and
   
• the Court should make orders under section 447A of the Act to suspend the ATO Notice during the voluntary administration. 

Findings in relation to section 440B of the Act

Justice Brereton was satisfied that the ATO Notice created a ‘security interest’ and that the Commissioner was a ‘secured party’ within the meaning of section 440B of the Act. Further, his Honour found the statutory charge related to Hudson’s property, namely its contractual entitlement to monies from ScotPac.

However, his Honour determined that the Commissioner had not ‘enforced’ its security interest by continuing to passively receive payments from ScotPac pursuant to the ATO Notice. Nor had the Commissioner ‘enforced’ its security interest by refusing to withdraw the ATO Notice when requested to do so by the administrators.

Accordingly, section 440B of the Act, which would prohibit a secured party from taking enforcement steps during a period of administration, was not engaged, and no relief was available to the administrators under that section.

Findings in relation to section 447A of the Act

His Honour was satisfied, on the evidence, that the Court had power under section 447A of the Act to suspend the ATO Notice during the period of the administration.   

In arriving at his decision, his Honour considered:

• the overarching purpose of Part 5.3A of the Act was to maximise the prospects of the business continuing as a going concern and/or achieving a better return to creditors, including the Commissioner; 
   
• the administrators’ evidence that Hudson would shortly run out of cash and that, if the business was liquidated, employment entitlements of approximately $11.3 million would crystallise;
   
• that the ATO Notice had the effect of diverting monies to the Commissioner in priority to other unsecured creditors despite the Commissioner not having priority under section 556 of the Act; and
   
• the similarities between the ATO Notice and a garnishee order, which would ordinarily be automatically suspended during an administration under section 440F of the Act.

Clawing back payments made

The administrators were unsuccessful in clawing back payments made by ScotPac to the Commissioner post their voluntary appointment. His Honour determined that the relief sought depended on the Commissioner having enforced its security interest during the moratorium period. Because his Honour found that section 440B of the Act was not engaged, the administrators’ argument necessarily failed.

As the section 447A order suspended the ATO Notice only going forward, earlier payments made by ScotPac to the Commissioner could not be unwound. 

Comment

Administrators aware of an ATO Notice that threatens cash preservation and business continuity should act quickly to seek urgent relief to suspend monies being diverted away from the company. Administrators should not assume that section 440B of the Act will preclude ongoing payments under an ATO Notice post‑appointment, or that they will be able to claw back payments made prior to their appointment retrospectively.

To enhance prospects of success, administrators should carefully prepare evidence showing the continuation of the company and the potential return to creditors would be jeopardised by the ongoing operation of the ATO Notice during the administration. 

Creditors should be aware a court may suspend an ATO Notice if satisfied that doing so is in the best interests of the company and its creditors (including the Commissioner) and preserves the company’s position during the administration. For unsecured creditors this may mean that the Court will not facilitate statutory charges taking priority to other unsecured debts.