Being cross-examined can’t be fun for any liquidator and Katherine Barnet won’t feel like the one who dodged the bullet after fronting the NSW Supreme Court yesterday.
The insolvency specialist and director at Bentleys Corporate Recovery was brought in to talk about failed property investment group Octaviar.
She began by getting confused about which of the two witness boxes to occupy.
Perhaps the courtroom atmosphere was distracting. It smelt like the aftermath of a prolonged inundation.
Then, having been sworn in and seated, Barnet faced six senior counsel – including Bernie Coles QC.
Along with her Bentleys’ colleague William Fletcher, Barnet is official liquidator of Octaviar Administration Pty Ltd and Octaviar Limited.
The two replaced Deloitte pair John Greig and Nicholas Harwood axed in September 2009 at the behest of the Public Trustee of Queensland, one of the failed property group’s major creditors.
The Deloitte duo were removed by court order after a controversial $20 million payment was made to another Octaviar creditor, Fortress.
Yesterday’s questioning sought to determine the relation back date Barnet and Williams used to base an unfair preference claim proposed against the Deputy Commissioner of Taxation (DCOT).
Going by the apparent difficulty Barnet had in recalling details to her own satisfaction, this was not as straightforward a line of inquiry as might be assumed.
In her affidavit of September, 2011 the Bentleys’ duo refer to “significant issues” that had been uncovered which would have to be resolved before the liquidators could pursue claims for unfair preferences.
However, Status Update Reports on voidable transactions prepared for Octaviar’s Committee of Creditors prior to September 2011 seem to show that Barnet and Williams were eyeing the DCOT with a view to suing earlier than this.
Barnet explained that the Octaviar insolvency is almost unique in its complexity, particularly in relation to mapping inter-company loans. Nobody disagreed.
The hearing comes at a tense time for the insolvency profession. The Bentleys pair have already been criticised by Ferrier Hodgson’s Will Colwell, who represents Octaviar investment note holders as liquidator. As at December, 2012 Barnet and Williams had charged $15.7 million.
Nothing emerged yesterday to suggest Barnet and Williams have charged excessively and, given the unanimously accepted complexity of the Octaviar administration, how can anyone really know what sum will turn out to be fair and reasonable?
However, liquidators’ fees and the conduct of appointments are under the microscope via ASIC’s Liquidator Compliance Program.
It wouldn’t have thrilled Barnet – current secretary of the NSW and ACT divisions of the IPA – as she sat there in the witness box listening to her mischievous inquisitor toss around phrases like “prudent liquidator” tests in open court.
The hearing concluded with judgement reserved.