A Federal Court judge showed Jon Adgemis’ controlling trustees a kindness this week, releasing them from an obligation to deliver a further supplementary report to creditors by this Thursday on the ground that Adgemis could be bankrupt by Friday. And Scott Pascoe and Ben Ho were certainly due a little kindness.
Since being appointed on June 20 this year the WPL Restructuring pair have exhausted their funds, endured criticism from creditors incensed by Adgemis’s 0.15 cents in the dollar offer of compromise, and been forced to adjourn a creditors meeting and undertake further investigations under threat of suspension and disciplinary action from the bankruptcy regulator.
The further investigations and requirement for a further supplementary report to creditors were imposed on Pascoe and Ho by Inspector General in Bankruptcy Tim Beresford after the WLP Restructuring pair recommended that creditors accept Adgemis’s compromise offer of 0.15 cents in the dollar via a Personal Insolvency Agreement (PIA).
The last straw would have been completing a report in circumstances where it’s finalisation and distribution to creditors by this Thursday’s deadline would be made instantly redundant the following day if Adgemis is bankrupted, as counsel for the Deputy Commissioner of Taxation (DCoT) indicated was his client’s intention when the parties came before Justice Elizabeth Raper on Monday.
Her honour was expecting to rule on the DCoT’s application for substitution as petitioning creditor and its application for order sequestering Adgemis’s estate. The substitution application was unopposed and the judge quickly made the necessary orders, meaning the DCoT replaced lender Richard Gazal as petitioning creditor on proceedings which Gazal, who’s owed $16 million, commenced in April.
But while Adgemis wasn’t going to dispute a change of petitioner, the DCoT’s request that its application for sequestration be heard immediately was another thing entirely.
Adgemis’s barrister David Sulan SC told the court that his client would be denied procedural fairness if required to defend the sequestration application there and then.
Sulan said Adgemis’s lawyer Scott Taylor had not had the opportunity to deal with the material served on his client in the time available, partly because he had been in Aberdeen, Scotland when the DCoT filed its application on September 16.
The respondent, Sulan said, should be granted more time, knowing full well that the adjourned meeting to vote on the PIA was scheduled to be reconvened on October 9.
But justice Raper had only one bone to throw. Racks of lamb, served rare on a silver platter could not be conjured for counsel with gilt-edged expectations of what latitude the court could provide and Sulan was then lectured on the general inadequacy of the Federal Court’s resources, a lecture that regrettably would have undermined the faith of anyone who believed our justice system is top tier. And the lone bone her honour had to throw wasn’t for Sulan’s client anyway.
Explaining the situation in respect of the October 2 deadline hanging over his clients, Pascoe and Ho’s barrister Frank Tao sensibly said, and the judge accepted that given the DCoT could obtain sequestration on Friday, the controlling trustees should be allowed the freedom to determine when, if at all, their further supplementary report should be issued.
Her honour accordingly made orders releasing Pascoe and Ho from what had become a pointless and potentially costly obligation and the parties will now return to court on Friday for the hearing of the sequestration application.
If the DCoT succeeds Pitcher Partners’ Andrew Yeo will be appointed as Adgemis’ trustee in bankruptcy.
Further reading:
That would be appropriate in circumstances of the administration where there was no statutary stay under Part X – the date of the first meeting of creditors having passed and the disclosed position of creditors. It then became a matter for discretion of the Court on hearing of the Creditor’s Petition.