Federal Court Approves Fast-Tracked Business Sale in Voluntary Administration Without Public Marketing

Mike Chenoweth

PrincipalAitken PartnersView Profile

Sam Merrylees

Senior AssociateAitken PartnersView Profile

For insolvency practitioners navigating distressed business sales, balancing speed, value preservation and procedural fairness is rarely straightforward. This decision highlights the factors the Court will consider when assessing whether a tailored sale process is capable of delivering the best outcome for creditors.

The Federal Court's recent decision in Olsen, in the matter of Babyskin Laser & Cosmetic Clinic Pty Ltd (Administrators Appointed) (No 2) [2026] FCA 917 provides important guidance for insolvency practitioners, voluntary administrators and restructuring professionals on

the circumstances in which a business sale may proceed without an open-market campaign. The case confirms that, where evidence demonstrates that a public sale process would add cost and delay without improving creditor outcomes, the Court may support an expedited sale process, including a sale to a director-associated entity.

Background: Voluntary Administration and Business Sale Overview

Babyskin Laser & Cosmetic Clinic Pty Ltd entered voluntary administration in April 2026. The administrators had previously obtained an extension of the convening period for the second creditors' meeting while they investigated the company's affairs and explored restructuring and sale options.

Following those investigations, the administrators concluded that the best outcome for creditors was likely to be achieved through the sale of the business and assets. Importantly, competing offers had been received from parties associated with the company's two directors. The administrators formed the view that a sale on terms similar to those offers could potentially result in all creditors being paid in full, with a possible return to shareholders.

Despite that conclusion, the administrators were concerned about proceeding without a public sale process. They were also conscious of criticism that had been raised by the directors regarding aspects of the sale process and negotiations. Accordingly, they sought directions under s 90-15 of the Insolvency Practice Schedule (Corporations) confirming that they would be justified and acting reasonably if they completed a sale:

• without a public marketing campaign;
• to an entity associated with a director;
• as soon as reasonably practicable; and
• on the best available terms.

Federal Court Decision on Sale Process in Voluntary Administration

Justice Vandongen granted the orders sought. The Court accepted evidence from the administrators that a public marketing campaign was unlikely to produce a materially better outcome and would involve additional delay and cost. Relevant considerations included:

• the relatively modest size of the business;
• the strong existing interest from the directors and their associates;
• the estimated cost of a marketing campaign (between approximately $22,000 and $54,000);
• the fact that the business had already ceased trading;
• uncertainty regarding occupation of the premises;
• the fact that the sale would result in known creditors being paid in full; and
• concerns that a competing business operating from the same location could erode value if the sale process was delayed.

The Court accepted that the administrators' preferred course was likely to maximise returns to creditors and that a traditional sale campaign would add cost and delay without a corresponding benefit. On that basis, the Court held that the administrators would be justified and acting reasonably in proceeding with a sale to a director or an associated entity without undertaking further marketing.

The Court also granted a temporary suppression order over confidential evidence relating to the sale offers, finding that disclosure could undermine the sale process and therefore prejudice the proper administration of justice.

Key Implications for Insolvency Practitioners and Administrators

Judicial guidance remains available where sale processes may attract scrutiny

The decision demonstrates the continuing utility of s 90-15 applications where practitioners anticipate challenges to the propriety or reasonableness of a proposed course of action. Although courts are generally reluctant to approve pure commercial decisions, the jurisdiction remains available where concerns arise regarding the process being adopted or the potential for later criticism.

Open market campaigns are not mandatory

The Court reaffirmed that an administrator is not required to undertake a public marketing campaign in every case. Where there is persuasive evidence that a campaign would increase costs, delay the administration and be unlikely to improve recoveries, a more targeted sale process may be justified.

This is particularly relevant in smaller administrations where the economics of a formal sale campaign may not be proportionate to the value of the assets being sold.

Related-party sales can be appropriate

The case is another example of the courts recognising that a sale to a director, shareholder or related entity is not inherently problematic. The critical question is whether the administrator can demonstrate that the transaction is in the interests of creditors and represents the best available outcome in the circumstances.

That said, practitioners should continue to ensure that any related-party transaction is supported by robust evidence and a clearly documented decision-making process.

Notice to creditors is not always necessary

The Court was also prepared to dispense with notice of the application to creditors. This reflected the administrators' evidence that the proposed sale was likely to generate sufficient funds to satisfy all identified creditor claims. While fact specific, the decision illustrates a pragmatic approach where creditor interests are unlikely to be adversely affected.

Key Takeaways for Insolvency and Business Sale Practitioners

The decision reinforces that insolvency practitioners are not required to pursue a "one size fits all" sale process. Where evidence demonstrates that a conventional marketing campaign would add cost and delay without improving outcomes, the Court may support a more streamlined approach, including a sale to a related party. The case also highlights the continuing value of s 90-15 applications as a risk management tool where administrators anticipate scrutiny of the sale process or prospective allegations regarding the exercise of their powers.

If you require tailored advice or assistance with voluntary administration, business sales, or insolvency matters, contact our expert team today for a confidential discussion.