Administrator ditched in shareholder dispute

Shareholders in dispute, oppression suits, an administrator ousted, DoCAs of doubtful provenance, even a phoenix sighting – dull moments are rare birds in the Corporations List of the NSW Supreme Court.

This week the aforementioned elements swept monotony aside when representatives of the warring parties appeared in the matter of Mobius Distilling Company Pty Ltd.

“Mr de Jonge advised that it was not necessary for him or his client to provide an explanation or the reasons for the proposal for the replacement of the Appointee.” Meeting Minutes, January 16, 2024.

In less than 12 months the resurrected liquor maker has passed through administration, a deed of company arrangement (DoCA) and a sale to its present state of liquidation while its two director/ shareholders – Alex Hardie, 41 of Castle Hill and Philip Crossley, 58 of Croydon Park – remain locked in litigation.

Hardie is pressing claims of oppression and director’s duty breaches against Crossley, whose lawyers did not respond to an invitation to comment on behalf of their client for this story.

Crossley and Hardie have been at odds for an extended period over the running of the business and ownership of Mobius Distilling’s liquor recipes.

For iNO’s purposes what’s of interest is how Hardie’s desire for the appointment of a provisional liquidator in mid-2023 led to the appointment of Crossley’s nominees as deed administrators (DAs) at the beginning of this year.

Around July last year the company was issued with a number of statutory demands, several of which were from entities linked to Crossley.

According to Hardie in his first affidavit filed in September 2023 the statutory demands “appear to
be improper debts and constructed on advice from “pre-insolvency advisors” and designed to force Mobius into liquidation so that the First Defendant can acquire the goodwill and assets of Mobius below market value”. iNO does not represent these claims as true and they have not been tested in court.

Indeed, around the time Hardie was contemplating a ProvLiq, Crossley availed himself of professional advice.

On the legal side he retained JHK Legal’s Pat Hanrahan and Alex Demlakian. On the business side he brought in pre-insolvency advisors Hank de Jonge and Sandra Ciganda of de Jonge Read, the latter of which has since taken up a risk management role with Commonwealth Bank of Australia (CBA). Crossley also incorporated a new company called Infinity IP Pty Ltd.

While Crossley wasn’t enamoured of Hardie’s proposal to appoint a ProvLiq he did not oppose the alternate proposal which was to appoint Worrells’ Graeme Beattie as sole administrator.

According to the Minutes of the second meeting of creditors on November 10 Beattie, who’d been trading the business, had fielded some interest, but no firm offers. The meeting was adjourned to allow Crossley to propose a DoCA.

When the meeting resumed on January 16, 2024 Crossley had submitted his DoCA and De Jonge and Hanrahan had been appointed proxies for Crossley and Myline Brewing & Distilling Solutions Pty Ltd, a company Crossley incorporated in 2019.

According to the Minutes, on January 15 Beattie issued a Circular which included a Consent to Act, Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) and Schedule of Rates received from de Jonge Read on behalf of David Ross and David Ingram of I & R Advisory.

At the meeting on the 16th Hardie’s lawyer, Yianni Agisilaou of Stand Up Legal queried the appropriateness of changing administrators when Beattie had already undertaken a significant amount of work.

Beattie declined to provide an opinion on the replacement resolution but wanted the Minutes to record that “he held concerns, having regard to the requirements of Sections 444A and 445A of the Corporations Act (2001)”.

Worrells manager Jeremy Mudford meanwhile asked de Jonge and Ciganda to explain why new administrators should be appointed.

“Mr de Jonge advised that it was not necessary for him or his client to provide an explanation or the reasons for the proposal for the replacement of the Appointee,” the Minutes record.

History shows that Ingram and Ross were subsequently appointed DAs and the business sold to Crossley’s Infinity IP. As part of the DoCA Mobius Distilling was then placed into liquidation with Ingram and Ross appointed liquidators.

On Monday Hardie’s solicitor Graham Lancaster of Lancaster Law & Mediation told the court that the transaction was a phoenix but that claim may never be tested in the proceedings currently on foot and iNO makes no suggestion of wrongdoing.