KordaMentha’s impressive haste

Curious aspects abound in the administration of DCA Capital Pty Ltd and Digital Commodity Assets Pty Ltd (DCA Group) but for present purposes allow iNO to focus on the haste with which three KordaMentha partners concluded that they needed to be appointed to the companies as provisional liquidators (ProvLiqs).

Scott Langdon, Jennifer Nettleton and John Mouawad were appointed as receiver managers to the property of the DCA Group Fund on April 4 and somehow the rubber on justice’s notoriously slow moving wheels hit the road running that day because it was the same day certain DCA Group creditors had applied in the Federal Court for the appointment orders.

But if the court had moved quickly, it was nothing compared to the speed with which Langdon, Nettleton and Mouawad concluded that they should also be appointed as ProvLiqs, that freezing orders should be made, orders for the issue of examination summonses obtained and dates set down for public examinations to take place.

By April 10 the trio were installed as ProvLiqs, despite not seeking leave from the court to be appointed as such in circumstances where their appointments as receiver managers meant they were officers of the DCA companies and therefore precluded from being appointed as ProvLiqs without such leave by Section 532 (2) c (i) of The Act, which says that a person must not consent to be appointed as a liquidator, including as a provisional liquidator “if the person is an officer or employee of the company”.

The breach aside, what could have motivated the KordaMentha trio to conclude so quickly that their formal involvement should be more deeply embedded into the DCA Group’s affairs?

Surely it could not have been the appointment of Sule Arnautovic as voluntary administrator (VA) of the DCA entities on April 5, one day after the KordaMentha trio were installed as receiver managers?

Wry mutterings from parties close to the proceedings would indicate that some at least believe getting the company out of the control of a VA was the primary motivation for the application to have the trio appointed as ProvLiqs.

iNO makes no such suggestion but regardless the ordering of the appointment of ProvLiqs effectively extinguished Arnautovic’s appointment.

Setting the pace however has its downsides and the KordaMentha trio and the plaintiff creditors’ lawyers ERA Legal will have to keep the pedal to the metal, something they appear to be doing as evidenced by the most recent orders the’ve obtained pursuant to Section 596B of the Corporations Act requiring lawyers Tean Kerr and/or Aaron Edmonds “to be summoned to appear for examination by the Provisional Liquidators regarding the examinable affairs of the first and second defendants”.

Given Kerr and Edmonds no longer act for the companies and only represent director DCA Group Ashod Ohan Balanian it will be interesting to observe how the ProvLiqs go about forcing lawyers to breach privilege. Haste makes waste.