The question of independence, or its alleged absence, will loom large in the deliberations of NSW Supreme Court Judge Scott Nixon once lawyers acting for the protagonists in Keybridge Capital Limited’s (KBC) bruising shareholder stoush make their final submissions this afternoon.
His honour has been asked to bring to an end the administration of the ASX-listed KBC by investor Geoff Wilson, who is the major shareholder of KBC through WAM Capital and other entities within his Wilson Asset Management (WAM) Group.
With the help of Keybridge director Anthony Catalano and his 10.7 per cent stake, Wilson had been preparing to vote out incumbent directors Nicholas Bolton, John Patton and Richard Dukes at a general meeting of KBC scheduled for Monday February 10.
But the day before Lowe Lippman partner Gideon Rathner consented to being appointed administrator on the basis that KBC had defaulted on repayment of a $4.6 million loan called in by Yowie the previous Thursday. Chocolate manufacturer Yowie is part-owned and chaired by Bolton.
So before Wilson can remove Bolton, Patton and Dukes he must first persuade Justice Nixon that the moratorium should end and Rathner be removed.
According to material put before the court this week by Wilson’s legal team at Mills Oakley, the most effective way of achieving this was to present evidence of what they allege is Rathner’s hopelessly conflicted position.
Whilst iNO does not preempt the judge’s decision, on the face of it such evidence would seem to be in surplus.
As well as being administrator of KBC Rathner is liquidator of PR Finance Group Ltd and its subsidiaries (PRFG Group), having been appointed by secured creditor MB Finance Pty Ltd, a wholly owned subsidiary of KBC.
Similarly, Rathner is the liquidator of Eye Plantain Pty Ltd and Blue Sennar Air Pty Ltd, appointed by secured creditor KBC.
And up until June 2024 Rathner was receiver of Plenus Residential Pty Ltd and Plenus Retail Pty Ltd, having been appointed by Bridge Property Investments Pty Ltd a wholly owned subsidiary of KBC.
In his DIRRI Rathern declared that he had obtained expert advice from an unidentified Kings Counsel which gave him comfort that he could accept the appointment despite his other involvements with KBC or certain of its directors and shareholders.
In the court this week Wilson’s lead barrister James Emmett SC told the court that the KC consulted was Dever’s List counsel Daryl Williams.
And as Emmett turned the screws, drawing from Rathner, Patton, Bolton and Dukes what they recalled had and had not had been said in the weeks leading up to Rathner’s appointment it emerged that Williams KC may not have been provided with all he needed to provide a fully informed opinion.
Cross examined for much of Wednesday, Rathern couldn’t confirm for example that he’d told Williams that for much of the period leading up to his appointment Patton and Bolton believed they had a claim for misleading and deceptive conduct against him in respect of their funding of a separate litigation.
Rathner explained this by saying the litigation in question had been commenced on the basis of advice provided by his solicitors at Tisher Liner, not by him, the inference being that Williams therefore didn’t need to know.
Rathner also chose not to tell Williams that Bolton and Patton were directors of Yowie, or that the PRFG liquidations and the Eye Plantain and Blue Sennar Air liquidations were separate.
Emmett also quizzed the examinees about how they came to select Rathner, with the court hearing that of a list of 10 possible appointees considered by Bolton and Patton, two – Hall Chadwick and William Buck – were assessed as conflicted and the remainder, which included KordaMentha, were deemed “too big” and “too expensive”.
Yet the court also heard that Rathner wanted $500,000 to conduct the KBC VA, and that he had been utilising funds from the Eye Plantain liquidation to cover remuneration and expenses incurred in the PRFG job.
Another aspect of Rathner’s involvement likely to occupy the judge’s mind as he assesses Wilson’s case is that in November last year Lowe Lippman had joined proceedings as a supporting creditor to wind up KBC on the basis of an unpaid invoice for $179,000.
The proceedings, which had been brought on by Wilson, were unsuccessful and the invoice was reversed on January 5. According to his DIRRI Rathner and Bolton had their first conversions about the possibility of an appointment as administrator of KBC one month later.
The hearing concludes this afternoon and judgment is expected to be reserved.
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