The Territory’s Project Sea Dragon has hit choppy waters again after Judgment

A major Territory project has hit choppy waters after a judge ordered liquidation.

Giant aquaculture scheme Project Sea Dragon has been placed in liquidation, pending appeal, after the federal court ruled its administration should be wound-up.

The $2bn prawn farm proposal that spawned the famous ‘road to nowhere’ as part of tens-of-millions in indirect government spending on roads, went into voluntary administration in February 2023 after an order to pay contractor Canstruct $13.9 million of unpaid fees.

PSD’s parent Seafarms Group later said it had entered into a Deed of Company Arrangement that could have limited payments to Canstruct to about 10 per cent.

Site of the proposed $2b prawn farm at Legune Station at the mouth of the Victoria River. NT. Facebook

Thursday’s court judgement ordered Seafarms Group to terminate the arrangement, saying it would be in breach of the Corporations Act because it would allow Project Sea Dragon to avoid liability for its payments.

It also ordered the project to be wound up in insolvency with Korda Mentha to act as liquidator.

The court initiated a stay of execution of the liquidation until the expiry of the appeal period on March 21.

The company remained optimistic the decision would be overturned on appeal.

A media statement outlined a pathway out of liquidation for investors.

Sea Farms stock is currently trading at four cents on the ASX.

Successive Northern Territory government have backed Project Sea Dragon, with former Chief Minister Adam Giles and the chairman of Seafarms Group Ian Trahar sign documents way back in 2015.

“There is no immediate impact to PSD’s parent, Seafarms Group Limited,” the company’s statement said.

“SFG does not become liable to Canstruct by operation of this judgment and SFG remains solvent.

“PSD and SFG intend to appeal the decision and will be seeking a further stay of the order until the appeal is heard. This means that Project Sea Dragon will continue its business as usual.”

Seafarms chief executive Rod Dyer said he was surprised at the judgement.

“The judgment delivered by the Federal Court today was surprising,” he said.

“On review of the judgement, our view is that it contains significant errors in both fact and law. Those significant errors provide a sound basis for an appeal that ultimately, we believe, will be successful.

Seafarms Group hoped to produce black tiger prawns.

“Despite the judge’s decision to the contrary, we remain of the view that PSD is solvent because it is paying all of its debts as and when they fall due.”

Adopted by successive NT governments after then CLP chief minister Adam Giles backed the project, Project Sea Dragon hoped to produce 100,000 tonnes of black tiger prawns a year at Lugune Station near the mouth of the Victoria River.

Territory taxpayers contributed — through commitments made by both the Territory and federal governments — more than $100m in supporting infrastructure, primarily roads.

The Gunn Point Road duplication - known as the road to nowhere - was intended to take workers to the site of a proposed hatchery, that never went ahead.

The NT Government contributed $56m in roads infrastructure, the Commonwealth contributed $63.45m, mainly also to roads, and the WA Government gave about $15m.

• The bullet point summary was created with the assistance of AI technology (PaLM2) then edited and approved for publication by an editor.