Administrators ousted after security ruled invalid

The rule about being around for a good time not a long time does not apply when it comes to formal insolvency administrations, particularly when a recent appointment’s swiftly declared invalid and costs ordered against those ousted.

Therefore iNO suspects that Hall Chadwick partners Marcus Watters, Richard Albarran and Brent Kijurina might be a tad testy in the wake of orders made last week in the Supreme Court of Queensland.

The threesome were appointed administrators of Jin Resources (Aus) Pty Limited (Jin) on October 18 pursuant to a general security agreement (GSA) Jin entered into with lawyer David Purcell’s Litigation Funding Solutions (LFS).

Last week Supreme Court of Queensland judge Tom Bradley found that their appointment was invalid and ordered that they remove themselves.

In a copy of the orders obtained by iNO, his honour declares that the purported appointment of the Hall Chadwick threesome by LFS in its own capacity and as trustee of the Omega Litigation Trust was invalid because on the true construction of the agreement dated 25 October 2021 and entitled “Litigation Funding Agreement” made between Jin, LFS and Omega Gold Limited, LFS was not, when the purported appointment was made, entitled to enforce its security interest in Jin’s property.

The judge also ordered that LFS and the Hall Chadwick trio pay Jin’s costs of the proceedings as well as reserved costs.

Given that Jin’s property includes an interest in a gold mine, Justice Bradley’s orders have potentially put to rest any scheme any party might have had of acquiring a gold mine at a bargain basement price via a deed of company arrangement (DoCA).

Curiously, iNO’s mail is that it was an offer of funding from Purcell that allowed Jin to extract itself from a previous GSA that saw Nicols + Brien principal Steve Nicols appointed as receiver of Jin in July 2021.

One August 2, 2022 the Supreme Court of Queensland ruled that the GSA under which Nicols was appointed was also invalid and Nicols resigned his appointment forthwith.

Yet only two months later Purcell had seemingly identified the basis of a default that justified installing Watters, Albarran and Kijurina as administrators, rather than receivers.

Emails sent to Purcell seeking comment were not responded to by deadline. Maybe the ex-Nelson McKinnon Machiavel was pre-occupied with lamenting a good time that never was.

Further reading:

Director’s Escape From Default Curiously Short-Lived