Breach of an undertaking not to enter insolvency, an undertaking that was “not worth the paper it was written on”

In a penalty judgment against GetSwift, Justice Michael Lee had some comment to make about GetSwift’s entry into voluntary liquidation in 2022 despite undertakings earlier given to the Court in 2020 that it would not do so: Australian Securities and Investments Commission v GetSwift Limited (Penalty Hearing) [2023] FCA 100 (16 February 2023) (


As the Judge described, GetSwift was a public early stage technology company that generated operating losses in every year of its existence. Notwithstanding this, it managed to raise over $104m from investors based upon its “unlawful public-relations-driven approach to corporate disclosure”. When this became apparent to the market, Getswift transferred over $80m in funds overseas.  The company then re-domiciled to Canada after the Federal Court approved GetSwift’s scheme of arrangement to create a new Canadian holding company, GetSwift Technologies Ltd. That company, as GetSwift’s only member, gave an undertaking to the Court on 17 December 2020 that it would not take any steps to wind up GetSwift and would indemnify GetSwift in relation to any penalties imposed: GetSwift Limited, in the matter of GetSwift Limited (No 2) [2020] FCA 1733, Farrell J.

As Justice Lee said

“(t)he undertaking was not worth the paper it was written on”

with GetSwift Technologies resolving on 29 July 2022 to place GetSwift into voluntary liquidation and itself filing for bankruptcy in Canada.

In the end Justice Lee thought that it was a matter for Justice Farrell as the Judge who received and acted upon the undertaking to determine what, if anything, should happen next,

“including whether the matter should be referred to the Principal Registrar of the Court for contempt proceedings to be instigated”.

The liquidators

As to the liquidators, while they were not initially aware of the undertaking given to the Court they became aware on 8 August 2022.  They did not inform the Court, Justice Lee only becoming apprised of the liquidation of GetSwift when ASIC filed its submissions on penalty.

“Although I express no conclusion, this silence causes me some pause. Without the benefit of detailed submissions, I am not presently convinced it was appropriate for this information not to have been communicated to the Court to further the interests of the proper administration of the company”.

In response, the solicitor for the liquidators informed the Judge that “there was really nothing that the liquidators could do to reverse what had happened” … Implicitly, as the Judge said, this meant that

“the liquidators did not consider they had any legal obligation to disclose to the Court the fact that the foundation of their appointment was based upon a resolution passed in defiance of a solemn promise made to this Court, potentially punishable by contempt”.

Justice Lee said:

“This may all be correct, but, in the absence of argument, it is, at least to my mind, intuitively surprising”.

The Judge went on to explain the Court’s supervisory jurisdiction over external administrators under Schedule 2 of the Corporations Act, including to investigate matters further, under s 90-5. But he did not think it appropriate for him to look into what appeared to be a clear breach of the undertaking and the circumstances of the Court only finding out about that breach later.  That might be examined by another Judge. 


The liability of GetSwift had already been determined: ASIC v GetSwift Limited (Liability Hearing) [2021] FCA 1384.  This was a hearing to determine the penalty.

Leave was granted pursuant to s 500(2) of the Corporations Act to continue the penalty proceeding against GetSwift in liquidation.

The Court then ordered GetSwift to pay to the Commonwealth a pecuniary penalty of $15,000,000, pursuant to s 1317G(1A) of the Corporations Act. 

However, that penalty is to no financial effect because such penalties are not provable debts.  Penalties are nevertheless imposed by courts on companies in liquidation as a means of supporting general deterrence for others contemplating such unlawful conduct. 

On the other hand, the penalties imposed on the individuals involved – $2m, $1m and $75,000, and banning orders – were real. Bankruptcy may not discharge them.

Apart from the recovery of the penalties, there may be further action taken in respect of what may have been a contempt of court. 

As for the liquidators, it would be unusual for a company to undertake not to enter insolvency, certainly if it were insolvent, and for a court to require or accept that undertaking.  Nevertheless, because the circumstances were unusual, it may be that there was more of a responsibility of the liquidators to inform the court promptly of the breach. While, as their solicitor said, there was nothing that they could have done to reverse what had happened, the Court needed to know that the company it was about to penalize was in fact in liquidation.

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