Michael Hogan.
Liam Bailey.
Unlike the dreaded die, in this fateful tale the decision on how the vote was cast came after the active creditor voiced its view.
And from the reports of those who were there, it sounds like a classic case of a meeting – and an appointment – slipping from a liquidator’s fingers.
The venue was the Clarence Street offices of O’Brien Palmer (OBP). The occasion was a meeting of creditors of McCorkell & Associates, convened to vote on a resolution to remove the incumbent, OBP partner Liam Bailey.
Attendees who spoke to iNO on the condition of anonymity said Bailey was in control at the beginning of the meeting on Wednesday morning but as the questions mounted so did the angst.
We understand ousted McCorkell & Associates managing director Karen Powell turned up with her lawyer. Hogan Sprowles partner Micael Hogan, who’d been asked to provide a consent to act as Bailey’s replacement, was also present.
In addition to sole director Scott McCorkell who dialled in via Zoom were representatives of the ATO, the Fair Work Commission and FEG also attending online.
Given those authorities were attending a meeting convened specifically to consider a resolution that Bailey be punted, it’s a wonder he kept it together as well as he did.
One of the aspects of Bailey’s handling of the liquidation that irked some creditors was his decision to recommend to the director a valuer for the business.
That recommendation was provided to McCorkell before he appointed Bailey as liquidator.
The valuation – provided by Groves & Partners director Andrew Whittingham – formed the basis for a Business Sale Agreement (BSA) that McCorkell executed with the McCorkell Group.
As a consequence the assets and some staff were transferred to the McCorkell Group – which had been incorporated less than a month before McCorkell & Associates was wound up – for less than $30,000.
iNO was told that Hogan asked Bailey if he had referred any valuation work to anyone else in the previous two years, to which Bailey said “no”.
However in corroborating this anecdote Bailey told iNO that he had been asked if he had referred valuation work to anyone else in the past 12 months and that while he confirmed Groves & Partners had been the beneficiary of all such referrals Bailey said there hadn’t been many.
There were a lot of questions about the BSA and the conduct of the liquidation generally.
Bailey was asked what due diligence he undertook before approving the payment of $211,000 to McCorkell Group after the commencement of the liquidation?
He was also asked to produce documentation to support the transfer to the new entity of a $560,000 secured debt and had to dispatch a minion to undertake a search of the PPSR and print the result.
The meeting heard Bailey, who took a $33,000 indemnity from the director, had racked up $54,000 and had no funds to probe more deeply.
Crunch time arrived when it came time to vote on the resolution that he be removed and the vote was deadlocked.
According to Bailey he told the creditors that: “The issue now comes down to whether I am to exercise my casting vote in favour of the motion, or decline to exercise my casting vote, and the resolution be defeated.
“I then took comments from the meeting as to how I should exercise my discretion. Following comments from creditors, I chose to exercise the casting vote in favour of the motion,” Bailey said.
Our mail is that the FEG representatives were asked by certain unsecured creditors for their opinion and were told it was FEG’s view that a new liquidator be appointed.
Far from choosing how to exercise his discretion, when Bailey cast his vote in favour of the replacement resolution he did so because he had no choice.
Further reading:
On the factual matters set out in the Article it would seem to me on the authorities providing guidance to the exercise of the discretion that Liam Bailey properly exercised his discretion in connection with the efficient administration that was under his control and which was being considered by the meeting of creditors. He is to be congratulated.