Boka GPLs face off with SPLs’ appointor over costs

Boka Beverages
Worrells’ Dan Cvitanovic
Boka Beverages
Worrells’ Nick Malanos.

There’s heat aplenty being generated in the administration of Boka Beverages Pty Ltd, with a creditor successfully appointing special purpose liquidators (SPLs) but failing in its bid to force the general purpose incumbents to pay the costs of that SPL application personally.

In Melhelm Pty Ltd, in the matter of Boka Beverages Pty Ltd (in liquidation) v Boka Beverages Pty Ltd (in liquidation) (No 2) [2019] FCA 1809 the Federal Court’s Jacqueline Gleeson has ruled that Worrells’ Dan Cvitanovic and Nick Malanos can use Boka Beverage assets – presuming there are sufficient – to pay the costs Melhelm Pty Ltd incurred having Jirsch Sutherland’s Trent Devine and Andrew Spring appointed as SPLs.

Much of the heat revolves around the rejection by the GPLs of a proof of debt but Melhelm’s attempts to portray the GPLs resistance as improper failed to persuade.

Although noting that Boka Beverages director Marko Franovic ” … is the person most likely to benefit from a decision not to appoint the SPLs, in oral submissions Mr Krochmalik (Melhelm’s counsel) ultimately did not go so far as to submit that the GPLs were acting in their own interests or the interests of Mr Franovic, rather than the interests of the company,” Jusice Gleeson said.

“To the extent that the submission was maintained, I do not accept that the evidence supports such a serious finding.

“Rather, in my view, Mr Cvitanovic genuinely believed that it was in the company’s interests for the GPLs to raise the main issues that were raised in opposition to the appointment of the SPLs, namely, standing (on the basis of their opinion that the plaintiffs were not creditors of the company) and discretion (on the basis that all necessary steps in the liquidation had been taken and the scope of the proposed SPLs’ powers was excessively broad),” she said.

“In these circumstances, I do not accept that the GPLs acted unreasonably in their participation in the proceeding or that the hearing was unduly lengthened by their participation.”

Well, it was two hours and turned into two days but what the hell.

Melhelm clearly lacked the evidentiary firepower required to blow a hole in the case law fortifications Cvitanocic and Malanos’s legal team erected.

That said, with the SPLs in place and funded, a renewed barrage could be simply a matter of time. Support INO’s continued chronicling of the insolvency sector.

About the Author

Peter Gosnell
Insolvency News Online illuminates the practice of insolvency Australia-wide, highlighting the triumphs and travails of the nation’s registered practitioners and the accounting and legal professionals who work with them. INO is produced by Peter Gosnell, former business editor and senior business reporter at The Daily Telegraph newspaper. During a decade-long career, your correspondent reported on such notable corporate collapses as HIH, One.Tel, Westpoint and Fincorp as well as some of the nation's highest profile bankruptcies and the investigations and prosecutions arising from Australia's most notorious instances of white-collar crime.

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