The administrators of Liberty Bell Bay (LBB) were prepared to abandon the company’s ailing manganese smelter despite a fresh injunction of funds for workers’ entitlements being received late yesterday a court has heard.
Lawyers for the administrators told Federal Court justice Cameron Moore this morning that an Environmental Protection Notice (EPA Notice) issued to LBB by the Tasmanian state Environmental Protection Authority (EPA) on April 14 meant EY’s Morgan Kelly, Robyn Duggan and Sam Freeman – who were appointed on March 24 by private equity group Whiteoak – could be held personally liable for any costs EPA Director Catherine Murdoch incurred in remedying any breach of the requirements contained in the notice.
The court heard that under State environmental legislation if the EPA Director incurred an expense to remedy a breach of a formal notice that expense would become a debt recoverable from the offending entity, and that under Section 443A of the Corporations Act Kelly, Duggan and Freeman could be held personally liable.
Without orders granting immunity from such liability Justice Moore was told, the administrators couldn’t continue.
“It puts the administrators in a position where on any given day the may not be able to comply and the EPA debt would be captured by Section 443A and the administrators don’t wish to carry that liability,” counsel for the administrators said.
“The don’t want to be concerned day to day with the risk of the EPA director telling them there’s been an overflow of a pond, the EPA is going in to deal with it and you will be personally liable for it.”
“There are limited resources available to meet the environmental obligations and the administrators are trying to avoid a situation where the company is placed into liquidation and the smelter is disclaimed,” he said.
The environmental liability issue was the second of two critical matters the EY trio had to deal with this week.
Late yesterday the other issue was resolved when additional funds were provided by the State and Federal Governments to cover the entitlements of LBB’s 213 workers, most of whom have not worked since May 2025.
Kelly, Duggan and Freeman had been provided with an initial round of funding from which an allocation for entitlements was exhausted this week.
Without more the administrators were seeking “stand down” orders ahead of a mass lay off of smelter staff planned for tomorrow.
The court heard yesterday that the Stand Down option was proposed by the unions of the effected members – the Australian Workers’ Union, Australian Manufacturing Workers’ Union, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and the Mining and Energy Union.
No surprises there. Although entitlements won’t crystallise as in liquidation it means the workforce is hypothetically available to be employed by any buyer who wants to take LBB on thereby preserving essential value, and there may be foreign metals refiners keen to lock in reliable supply, even if the operation is marginal from a profit perspective.
And if no sale occurs and LBB goes into liquidation the workforce will still be able to tap FEG for their entitlements.
Having averted that potential disaster Kelly, Duggan and Freeman sought relief from the threat posed by the EPA Notice and after a 40 minute hearing on the merits Justice Moore this morning agreed to make the necessary orders.
The ugly side of ESG and timing has started to arise as to EA liability. The reasons will be closely looked at.