Controversial auction platform Grays Online has been placed into administration just days after being sold to Slattery Auctions for $2 million, raising questions over whether the move was designed to sidestep a $10 million penalty imposed by the Australian Competition and Consumer Commission (ACCC).

The appointment of administrators was confirmed late Friday by Jason Preston, Executive Chair and Partner at McGrath Nicol.

The collapse follows a July Federal Court ruling that ordered Grays to pay a $10 million fine and compensate hundreds of car buyers misled by deceptive advertising, which left consumers more than $3 million out of pocket. The court found Grays had misrepresented the make, model and features of at least 750 vehicles sold between July 2020 and June 2022, while failing to disclose “obvious faults”. Some buyers were forced into costly repairs, while others were forced to resell their vehicles at a loss.

The decision to liquidate also casts doubt on the fate of $115 million owed by former owner Quadrant to Westpac Bank. Quadrant, which had been trying to offload Grays for months amid reputational damage and regulatory pressure, has not responded to media inquiries. Advisory firm 333 Capital (KordaMentha) had been engaged to manage Quadrant’s options.

Last month, Tim Slattery of Slattery Auctions acquired the Grays.com online platform for $2 million. The business had previously been owned by listed leasing company Eclipx, now known as FleetPartners.

In a circular to creditors, Preston said he and his team had been appointed Joint and Several Voluntary Administrators of the Grays Group, taking control of its operations and assets. He added that funding was in place to support the administration process, including staff wages and ongoing operations.

“We will work closely with Grays employees, customers, financiers and other stakeholders to achieve the best possible outcome for all parties,” Preston said.

However, the administrators have not explained why no expressions of interest were sought for the wider business and its online platform before the collapse.