KordaMentha Provliqs intervene to repel rival

There’s nothing like a banquet of calorific assets to pique the appetite of an insolvency profession underwhelmed by the nutrient-deficient work currently dominating appointment lists.

And there’s nothing more certain than that any practitioners with such a lavish spread within reach are unlikely to let a rival take the last plate, which brings us to proceedings being heard this morning in the matter of DCA Capital Pty Ltd and Digital Commodity Assets Pty Ltd (DCA Group).

On Monday in the NSW Supreme Court judge Anthony McGrath heard from investor creditors seeking to be substituted for other creditors who had apparently been paid out. Voidables anyone?

The applicants also wanted the companies wound up and Simon Cathro appointed liquidator.

Acting for those investor creditors seeking substitution, Barrister Hugh Somerville stressed to the judge that his clients wanted the orders winding up the companies appointing Cathro to be made that day, explaining that the proceedings had been commenced in January, the relation back date was critical in respect of possible unfair preferences and there was no reason for further delay.

Opposing Somerville at the bar table was ERA Legal’s Blake O’Neill, who it emerged thought delay would be just the thing.

O’Neill was representing a rival group of investor creditors who last week in the Federal Court obtained orders from Justice Brigitte Markovic appointing three KordaMentha partners as provisional liquidators (ProvLiqs) of the DCA entities as well as freezing and other asset preservation orders.

Scott Langdon, Jennifer Nettleton and John Mouawad were appointed ProvLiqs by the court on April 9, five days after being appointed receiver managers of the Digital Commodity Assets Fund and of the assets of DCA director Ashod Ohan Balanian, 43 of North Ryde, who appears to have amassed an impressive property portfolio while the DCA entities simultaneously accumulated an impressive tax debt.

O’Neill told Justice McGrath that the ProvLiqs weren’t parties to the Supreme Court proceedings brought by Somerville’s clients and were concerned that if the Supreme Court appointed General Purpose Liquidators (GPLs), Justice Markovic’s freezing orders would be extinguished, thereby imperilling the companies’ assets, which the court heard could be worth as much as $100 million.

Upon their appointment the ProvLiqs had also sought and obtained the issue of examination summonses and Justice McGrath heard that these and the ProvLiqs’ wider investigations were also at risk if he appointed GPLs.

O’Neill’s intervention however raised the question of who ERA represented. Was it the ProvLiqs? The petitioning creditors in the Federal Court proceedings? All of the above?

This raised the spectre of conflict but of more immediate concern to Justice McGrath was having related proceedings in separate courts.

Whichever court would ultimately take on the matter, a transfer application was front of mind for his honour, and iNO’s mail is that events over the last 24 hours will likely see the matter transferred to the Federal Court this morning, though not because Somerville’s clients are ceding the winding up to the ProvLiqs. Apparently an egg requires unscrambling.

Meanwhile, Sule Arnautovic, who was appointed voluntary administrator (VA) of the DCA companies on April 9 following a referral from lawyer Tean Kerr and despite knowing the KordaMentha trio had been appointed receiver managers on April 4, resigned the following day.

Arnautovic was provided with a $50,000 indemnity by the director in respect of his appointment and referred in his DIRRI to a second payment of $50,000 to be made by the director on April 12. Rich pickings for some.