Jirsch accepts Candelori’s SPL gig after SVP declines

Veritas Advisory’s David Iannuzzi.

You win some you lose some it seems with Jirsch Sutherland’s sibling practitioners Sule Arnautovic and Amanda Young scooping up a gig as special purpose liquidators (SPLs) of Umberto Pty Ltd, the former owner of Candelori’s Restaurant, after SV Partners’ Shumit Banerjee and Jason Porter apparently found aspects of the proposed funding agreement not to their taste.

The four practitioner’s names came up in proceedings in the Federal Court last week brought against Umberto and its liquidator, Veritas Advisory principal David Iannuzzi.

GDK Projects Pty Ltd – a substantial creditor of Umberto – is apparently unwilling to fund Iannuzzi to investigate a potential uncommercial transaction which saw the iconic Candelori’s Restaurant at Smithfield in western Sydney pass to related parties controlled by members of the Candelori family just prior to its winding up in 2015, allegedly for no consideration.

While SiN makes no suggestion of any wrongdoing, if proved such an arrangement could reasonably raise the question of whether Candelori’s creditors were served phoenix instead of pheasant?

Ralph Notely, counsel for GDK Projects, told the court that at least as far back as 2012 the financial records of the company incorrectly recorded an outstanding debt of $1.157 million owed to Umberto by director Ross Candelori as goodwill and that GDK may also have a claim for failing to keep “true, fair and correct accounts”.

The court heard that the acquirer of the business, Ross and Gina Candelori’s Life Investment Pty Ltd, in lieu of consideration took over Umberto’s debt obligations under a financing facility with National Australia Bank (NAB). GDK however intends to dispute the validity of that arrangement.

Iannuzzi meanwhile has no funds and has neither opposed or consented to the appointment of SPLs. His first report to creditors indicates he took on the job for a capped fee of $20,000 plus GST and accepted a $10,000 indemnity from Ross Candelori.

The report also shows GDK as having a registered a debt of $248,000 against Umberto but that has clearly blown out given under the funding deal put before the courts last week, GDK would bankroll the SPLs to the tune of $450,000 to investigate four potential claims, at least one of which will be statute barred if not launched soon.

During the proceedings the court also heard that the orders sought required the changing of the names of the consenting SPLs. Banerjee and Porter’s names were to be replaced with Arnautovic and Young.

SiN’s mail is that the SVP pair weren’t prepared to agree to certain of the terms of the as yet undisclosed funding agreement and the judge questioned whether the agreement as it was put before her allowed the SPLs to do anything other than rubber stamp the invoices that would be generated by GDK’s lawyers, ERA Legal.

Her concern, she said, was that the lawyers would be paid well before any fruits of litigation were likely to be realised and she insisted that the funding deed expressly state that ERA’s invoices only be paid by the funder after the SPLs had confirmed that the legal fees were “reasonably incurred”.

Representing Iannuzzi at the hearing was Stefano Calabretta in one of his first engagements as principal of his new firm Barton Creswell Lawyers.

He told the court that his client had recently received an offer of $100,000 from Candelori Nominees to buy various choses of action, some of which might fairly be assumed to resemble the claims being pursued by GDK. Judge Farrell is expected to make orders imminently.

About the Author

Peter Gosnell
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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