Brother’s link to referrer complicates liquidator’s life

With its connections to Knox Grammar and the Baptist Church high profile building industry failure Clifford Constructions was always going to present added complications for whichever liquidators won the appointment, and that’s without the further complication of one of the liquidator’s brother’s links to the referrer.

The link and the potential for conflict it creates is disclosed in the Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) of Clifford liquidator Stewart Free, who along with Jirsch Sutherland colleague Bradd Morelli took on the Clifford administration on April 30 before being appointed liquidators on June 4.

The DIRRI discloses that the appointment was referred to Free and Morelli by Moore Stephens partner Ross Jones.

As well as being a referrer from time to time to Jirsch, Jones also performs accounting work for Jirsch Sutherland, Free’s DIRRI reveals before revealing that Free’s brother Matt is also a partner at Moore Stephens.

“Mr Matthew Free is not and will not be in a position to exert any influence on our conduct as administrators,” Free and Morelli declare.

“There is also no suggestion or evidence at this stage that the administrator or the company has any potential actions against Moore Stephens.

“If this ever became the case, then the administrator would seek directions from the court,” Free and Morelli said.

Creditors at the first meeting had clearly read the DIRRI and wanted to satisfy themselves as to Free’s brother’s potential infuence.

One asked the administrators – as they then were – what options would be avaialble claims against Moore Stephens were identified.

Free told them that he could make an application to court to have a special purpose liquidator (SPL) appointed to deal with that part of the administration or assign to another party the rights to pursue any currently hypothetical claim against Moore Stephens. Support INO’s continued chronicling of the insolvency sector.

4 Comments on "Brother’s link to referrer complicates liquidator’s life"

  1. Disclosure of a conflict does not cure it. There is a business relationship in play here. They should not have taken the appointment. Unpaid subcontractors don’t always have the time or understanding to analyse the DIRRI contents and its impact on the conduct of the administration, let alone the ability to engage professionals.

  2. Great article Mr Gosnell. The DIRRI confirms the liquidators are not independent due to the many intertwined relationships. No amount of explanation can remove the conflicts which exist. Where are ARITA and ASIC. Asleep at the wheel again?

  3. ARITA set the precedent on Channel 10 when it abandoned its own Code of Conduct by agreeing to accept whatever the Court – which was free to ignore the ARITA Code – decided.

    To the astonishment of everybody else, ASIC didn’t see a problem. So when the Court – quite reasonably in context – found nothing wrong, ASIC and ARITA were painted into a corner.

    This egg can’t be unscrambled. The only thing that can fix it is a change to the law. Chances of that? Close to zero.

  4. Very true Pnut. The big question is when are the Gov/Senate going to accept this is the case and do something about it.

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