Tuesday, 31 May 2016

Grant Thornton excoriated over Arrium

Westpac restructuring chief
Gwyn Morgan. 
HELL hath no fury like a banker denied the voluntary administrator (VA) of his choice, as Grant Thornton's Paul Billingham discovered during his truncated tenure as VA of Arrium.

As a result of accepting the appointment, SiN understands at least four receiverships were lopped from GT's advisory division in a day.

The axe was wielded by Westpac's restructuring chief Gwyn Morgan, who wanted good mate Peter Andersen's firm McGrathNicol installed to recast Arrium's slag heap of unsecured debt into an LME-grade recapitalisation. 

Morgan was apparently apoplectic when GT consented to act. SiN understands he expressed his displeasure by phone. Andersen - perhaps unwilling to have his own high dudgeon eclipsed - sent a "strongly worded" email.

Of course, such a set of events presumes that Westpac and the other three major banks - squirming on the hook for a collective $1 billion unsecured - believed McGrathNicol could be seen to act for all creditors with the appearance of independence.

Thursday, 26 May 2016

ASIC acknowledges liquidators' belated fall

RECENT hip surgery hasn't slowed Adrian Brown and today a fresh pair of scalps has been formally acknowledged as having fallen foul of the ASIC insolvency chief's continuing compliance jihad.

In a media release ASIC announced it had extracted enforceable undertakings (EUs) from Sydney-based registered liquidators, Peter George Burton and Brian Hugh Allen after a review of various external administrations found the Neutral Bay-based pair had failed to adequately and properly discharge their duties.

The EUs effectively ban Burton and Allen from reapplying to be registered as liquidators for five years but in reality the two had voluntarily walked the plank well before today.

Allen formally requested ASIC to cancel his registration as an official and registered liquidator back on March 16, 2015.

According to Burton's EU he stopped practicing in December 2015 but unlike Allen, there is no indication that he formally requested ASIC cancel his tickets.

Friday, 20 May 2016

"Ambitious" preference pursuit derailed by judge

Hall Chadwick's David Ross. Preference claim
described as "ambitious" by judge.
Photo: Hall Chadwick
Liquidators can on occasion err in pursuit of a preference but incorrectly defining insolvency and testifying as one's own expert witness? The cake has well and truly been taken. Or at least it has if you accept the conclusions of the Federal Court's Justice Jim Edelman In the matter of FPJ Group Pty Ltd (In Liquidation).

His honour's judgement deals with a $153,554.00 claim for alleged unfair preferences launched by Hall Chadwick's David Ross and Shahin Hussain.

The pair were appointed liquidators of Queensland-based building materials supplier FJP Group in July, 2014 and their claim homed in on a series of payments made to FJP's supplier, CSR, between January and June, 2014.

If they'd been successful, the recovered preferences would have gone towards paying their and their lawyers' fees. Nothing particularly unusual in that. But Justice Edelman had other ideas.

"This litigation was unfortunate and uncommercial," he said in his opening sentence. "In some circumstances the public interest in recovery proceedings being brought by a liquidator might justify a risk being taken that legal costs might exceed recovery. But that public interest diminishes substantially where, as here, some of the liquidators’ claims are ambitious," he said.

"Ambitious"? Ross, who as lead appointee had conduct of the matter, told SiN yesterday that the judge's remarks were a shock.

"If he is suggesting that any preference payment for $150,000 is uncommercial, well that will change the industry entirely," Ross said."We used all endeavours to try and settle this matter. It (the judgement) ignores all efforts we made to settle it."

Tuesday, 17 May 2016

Bruck probe puts Needham and Taylor fourth

HLB Mann Judd's Andrew Needham
THE politically-charged liquidation of Bruck Textile Technologies (BTT) has catapulted HLB Man Judd partners Andrew Needham and Barry Taylor to number four on the list of Assetless Administration Fund (AAF) recipients.

Since December 2014 Needham and Taylor have received $499,647.50 in AAF monies to fund their investigations into BTT's controversial restructure, which took place prior to their appointment by creditors voluntary liquidation on July 11, 2014. 

Half a million in AAF monies is of course well shy of the $730,000 extracted from ASIC by Storm Financial liquidators Ivor Worrell and Raj Khatri, who hold top spot on the AAF list. But in the life cycle - or death spiral - of BTT, potential remains for Needham and Taylor to apply for more.

Meanwhile Needham and Taylor are closing in on the other front runners. In second place is Deloittes' David Lombe, John Greig and Richard Hughes, whose handling of the fraud-riddled Kleenmaid liquidation required more than $600,000 in AAF grants. Not far behind is PwC, which wrangled $560,000 to assist with the byzantine Westpoint Group liquidation. 

Needham and Taylor's most recent grant 

When contacted Needham was quick to point out that the single largest sum to come out of his AAF grants to date is $200k paid to lawyers Henry Davis York and barrister Peter Kulevski, who conducted the public examinations of BTT's directors and others. (See: Bruck scrutiny attracts funds from ASIC and FEG)

Thursday, 12 May 2016

Bruck scrutiny attracts funds from ASIC and FEG

BTT director Philip Bart 
Photo: SiN Images
ASIC and the Department of Employment's (DoE) Active Creditor Program are for the first time simultaneously funding liquidators in a bid to unpick the 2014 restructure of Bruck Textiles Technologies (BTT).

BTT was wound up by a creditors voluntary liquidation (CVL) initiated by its shareholder, Australian Textile Group (ATG) on July 11, 2014. HLB Man Judd's Andrew Needham and Barry Taylor were appointed joint liquidators.

A day earlier, a newly incorporated and related entity, Australian Textile Mills Pty Ltd (ATM), purchased BTT's assets and $11.247 million in net liabilities for $1. The assetless BTT shell was left owing almost $4 million in employee entitlements.

ASIC's head of insolvency practitioner regulation, Adrian Brown told SiN that the government was onto the matter immediately.

"ASIC and the DOE have worked together on the Bruck Textiles matter from the first day of the liquidators' appointment," he told SiN.

"ASIC liaises closely with the DOE concerning its program and our AAF. This way, we can collaborate to determine how best to enforce the law (ASIC's role) and recover FEG (Fair Entitlements Guarantee) advances for the Commonwealth.

Needham and Taylor entered into a funding agreement with ASIC in December 2014 after advising in their August 5, 2014 report to creditors that the BTT directors "may be guilty of an offence under section 596AB of the Corporations Act".

It should be noted that no such finding has been made against BTT's directors. Director and Bruck Group owner Philip James Bart told SiN late last month he had provided all information necessary to demonstrate that the statute had not been breached. He declined to respond to questions submitted in advance of publication, quoting legal advice.

Thursday, 5 May 2016

FTI yet to consent to Parbery as SPL

FTI Consulting's Quentin Olde 
AN application to appoint PPB Advisory's Steve Parbery special purpose liquidator (SPL) of Queensland Nickel (QN) has been lodged in the Federal Court but the stricken nickel firm's general purpose liquidators (GPLs) are yet to declare whether they will consent to or contest the move.

Quentin Olde, one of four FTI Consulting partners formerly appointed GPLs to QN on April 27 told SiN yesterday that the company's creditors are also undecided.

"We had a meeting with the committee yesterday (Tuesday) and we're trying to understand their views and concerns and are continuing to work with the applicants to better understand the basis for the application and the extent of the role of the SPL," Olde said.

Creditors are understood to have expressed doubts about the need for an SPL. Nor is it rocket science to conclude that FTI might be underwhelmed with the prospect of PPB nicking its gig. The application's originating process seeks orders which include preventing the GPLs from doing anything specified as a designated, SPL task without first obtaining written consent.

That includes pursuing claims, conducting public examinations, commencing legal proceedings and conducting investigations into any of the matters outlined in the application's supporting affidavit, authored by King & Wood Mallesons' insolvency gun, David Cowling.

Further, FTI's gang of four - Olde, John Park, Stefan Dopking and Kelly-Anne Trenfield - reject any suggestion that they have a conflict of interest with their appointor, which is the usual justification for installing an SPL.

Yet unanswered is the question of why the SPL applicants - The Department of Employment (DoE) and the Commissioner of Taxation (CoT) - won't fund the GPLs.