Potential recovery action worth up to $22 million against Melodiol Global Health has moved closer after the Federal Court authorised liquidators to secure litigation funding and appoint external lawyers.
According to The West Australian, the court granted orders allowing WA Insolvency Solutions to deepen their investigations into possible claims involving the conduct of Melodiol, before it collapsed in late 2024.
Justice Katrina Banks-Smith approved suppression orders covering affidavits and written submissions to avoid prejudicing future litigation and to protect creditor interests.
In published reasons cited by the West Australian, Justice Banks-Smith said the liquidators had identified “multiple commercially viable claims” since transitioning from administrators, though further investigations were required.
She noted they had begun securing litigation funding “with a view to conducting further investigations, conducting negotiations, and if necessary, commencing proceedings”.
Melodiol – formerly Creso Pharma – was delisted by the Australian Securities Exchange in late 2024 for breaching listing rules, entering administration five weeks later.
Cannabiz previously reported that the company carried more than A$20 million in liabilities when it collapsed, including $10.2m owed to secured lenders and $9.7m to approximately 80 unsecured creditors.
The sprawling corporate structure of the group, which had just $8,405 in the bank when administrators were appointed, further complicated the collapse.
Across 19 subsidiaries listed in official filings, most were described as defunct or assetless, with only Health House – since sold to Little Green Pharma – and Canadian cultivation firm Mernova operating.
In April, the liquidator said deeper investigations risked being hampered by limited funding, warning that creditors were unlikely to see a return without external finance.
With litigation funding now progressing, the liquidators appear poised to test the commercial strength of any claims identified.