Appointee grilled as PE Capital fallout spreads

There’s certainly been private lenders burnt by the flame out that was Victorian developer PE Capital Funds Management Ltd but more recently some of the insolvency practitioners appointed to wind up parts of the group have also felt the heat.

In terms of public grilling none can be said to have been put to the char quite like Lowe Lippmann director Matthew Sweeny, who yesterday endured several hours before the blowtorch of cross-examination in the Federal Court before returning to complete the caramelisation this morning.

Sweeny and Lowe Lippmann partner Gideon Rathner were appointed liquidators of PE Capital Nominees (Nominees) by court order back in August 2021 upon application by a company called Wollert Project Investments Pty Ltd.

iNO hesitates to describe Wollert as petitioning creditor because under questioning yesterday Sweeny was unable to confirm that the books and records of Nominees confirmed the existence of the debt upon which Wollert relied in applying to have the company wound up.

What he did say was that he and Rathner had not yet called for formal proofs of debt and that because of the complexity relating to the underlying trusts to which Nominees was or had been appointed as trustee it wasn’t necessarily correct to declare that Wollert wasn’t a creditor.

“Are you saying you believe a debt was owed to the petitioning creditor, Sweeny’s interrogator asked.

“I’ve no reason to believe there was not,” he replied.

A development site at Wollert comprised the primary asset of the PEC Wollert SPV, a trust to which Nominees had been appointed trustee.

As the court heard yesterday, investor Paul Turner was one of the lenders. As the court also heard, Turner is funding the liquidators in litigation they commenced to confirm Nominee’s right of indemnity against trust assets like the Wollert development site, control of which had seemingly passed to mortgagees registered in the Seychelles and connected to the now-Dubai based ex-PE Capital chairman Martyn Barnes. iNO makes no suggestion of wrongdoing.

That led to questioning about an unsolicited offer they received in late 2021 to buy one of the development sites.

“Your solicitors prepared a contract of sale for this property at the end of 2021. You or someone gave instructions to prepare a contract of sale without going to market and the property was not in the name of the company at that time so it was no impediment in late 2021 to be involved in the sale or marketing even though the property wasn’t in the company name,” Sweeny’s interrogator said.

“I put it to you that you didn’t take the property to market because it didn’t suit Mr Turner.”

Sweeny denied that he and Rathner didn’t sell then because it didn’t suit Turner, who was paying their legals and was to pay their professional fees.

“We were trying to maximise the return to creditors,” Sweeny said.

He was then referred to another offer, also unsolicited, to purchase land held by the PEC Mt Duneed SPV trust for approximately $7 million.

Sweeny was asked about the various conditions contained in the offer document.

“This is gobbledygook isn’t it? There were incomprehensible conditions attached to an offer. Are you saying you didn’t pick that up?

“No liquidator acting responsibly could possibly suggest an offer put in those terms should be accepted.

“Yet here is Mr Rathner doing that. What do you say to that?

Sweeny responded that the offer was acceptable at the time we sent the letter.

“Looking back would you accept that that was an oversight? A mistake?

“Yes,” Sweeny responded.

The hearing resumed this morning and while Sweeny is again in the hot seat there’s also a chance Rathner and Pitcher Partners’ Andrew Yeo are scheduled for singing, with the latter having accepted an appointment as receiver of Nominees by Runner Investment Limited, one of the mortgagees and one of the two the Seychelles-domiciled defendants in the proceedings brought by Rathner and Sweeny.