ASIC’s pursuit of a Federal Court inquiry into Ross McDermott is focussed on determining whether the Victorian insolvency practitioner (IP) faithfully fulfilled his obligations in terms of his duties and entitlements across 26 companies.
However apart from listing the 26 companies across four schedules ASIC’s originating process doesn’t give much away. The inquiry sought falls under under Sections 536 and 477 of the Corporations Act and ASIC wants orders banning McDermott from holding the position of registered and official liquidator for as long as the court sees fit. McDermott told SiN this week he did not want to comment at this time.
The regulator also wants him removed from his role as either liquidator, voluntary administrator or deed administrator of the 26 companies listed in the four schedules. If the inquiry supports ASIC’s application an IP in the regulator’s good books could pick up a ton of work.
Beyond that though, there’s not much detail. The matter is due to return to the Federal Court on April 8, 2016. However a clue as to why McDermott’s been targeted can be found in a judgment handed down in the Victorian Supreme Court in 2013.
In Ross John McDermott V Conalpin Pty Ltd and Dolmear Pty Ltd, Victorian Supreme Court judge John Efthim rejected an application by McDermott seeking to have his remuneration as liquidator of Conalpin Pty Ltd andDolmear Pty Ltd approved. Both companies – which were the defendants in McDermott’s application – are listed in ASIC’s schedule of 26.
Justice Efthim’s 18 page judgment – a hard copy of which has been obtained by SiN – outlines allegations of a lack of independence and conflict of interest made against McDermott by the former director and controlling shareholders of the two companies. The judge also makes the point that McDermott did not at the time deny the allegations.
Based on Conalpin’s accounts husband and wife Paul and Natalie Petersen, along with a company they control – IAMNSP Pty Ltd – held the majority of debts against Conalpin and Dolmear.
Paul and Natalie Petersen opposed McDermott’s application for remuneration, arguing that he should never have accepted the appointments due to a lack of independence.
According to Paul Petersen’s affidavit, McDermott was appointed liquidator to Conalpin on May 16 2012 via voluntary liquidation on the resolution of its shareholders, Geoff and Suzanne Petersen, the parents of Paul Petersen. The appointment came as a result of a dispute between Paul Petersen and his parents.
The dispute had kicked off two years earlier after a meeting the father and son had with Pitcher Partners’ Ian Stewart and Gavin Debono. At that meeting Geoff Petersen had wanted to arrange the liquidation of two companies he was associated with – Trackerjack Australasia Pty Ltd and Ringwood Cove Pty Ltd.
He also resigned as a director of Conalpin and Paul Petersen was appointed to replace him. Paul Petersen believed himself to be a shareholder of Conalpin at that time but later discovered that he was no longer recorded as a shareholder. He told Justice Ethim he had never signed a share transfer document removing his interest.
Following the meeting at Pitcher Partners, Trackerjack Australasia was placed into voluntary administration in January 2011. McDermott was appointed voluntary administrator and Paul Petersen paid $60,000 to McDermott for a deed of company arrangement (DoCA).
According to Justice Efthim, McDermott had advised the father and son that Trackerjack should not be placed into liquidation … “because the liquidation process would likely uncover things that Paul Petersen and his parents did not want to be uncovered and this could have an effect on Paul Petersen’s ability to trade further with his company Conalpin Pty Ltd.”
Approximately 18 months later, on May 16, 2012, McDermott was appointed liquidator of Conalpin by resolution of Geoff and Suzanne Petersen who claimed voting rights to the tune of $1.8 million.
At the first meeting of creditors McDermott was questioned by chartered accountant Ian McBain about the content of his Declaration of Independence, relevant relationships and Indemnities (DIRRI).
Acting on behalf of Paul Petersen McBain asked McDermott about his failure to disclose his role as liquidator of Ringwood; the payments he received via the Trackerjack DoCA, or details of the meeting of Ringwood he’d chaired where employee entitlements had apparently been transferred to Conalpin.
In addition there was the tricky issue of the $1.8 million in debts claimed against Conalpin by Geoff and Suzanne Petersen and $30,000 incorrectly billed to Conalpin by Pitcher Partners for work it did on the Trackerjack VA. At the first meeting Geoff Petersen held the proxy for the Pitcher debt.
According to the judgment, documents provided by Conalpin’s accountant identified Paul and Natalie Petersen and IAMNSP as being the majority creditors with a collective debt of $330,000. McDermott admitted to the meeting he had not been provided with any details of the claimed $1.8 million debt.
At the second meeting of creditors On June 1, 2012 McDermott’s attempts to have his remuneration approved failed and he was replaced by then Cor Cordis partner Glenn Spooner and Daniel Juratowitch. Somewhere along the line ASIC’s decided the issues warranted investigation and it’s now brought its findings to court but the matter is not due for directions until April 8. Plenty could happen before then.