Consumer Affairs forces Panthera sale delay

If it hadn’t been complex enough when they were first appointed the four administrators attempting to harvest value from PF Group Holdings Pty Ltd (PFGH) and PF Management Holdings Pty Ltd (PFMH) (The Companies) have more recently had to deal with an intervention most disruptive.

In the Federal Court this week PwC’s Adam Colley, Andy Scott, Derrick Vickers and Stephen Longley won a further extension of the convening period for the second meeting of creditors, having been granted an initial extension on July 18 up to and including September 18.

“The essential reason underlying the need for an extension is that, on or about 23 July 2024, Consumer Affairs Victoria filed a charge sheet and summons in the Magistrates Court of Victoria against one of the subsidiary companies in the group, namely, Panthera Finance Pty Ltd.” Justice Angus Stewart.

At the first extension hearing the administrators argued that they needed more time to conduct a sale process and give any aspiring DoCA proponent an opportunity to prepare a proposal.

But 11 days after the Federal Court granted that extension Consumer Affairs Victoria (CAV) commenced proceedings in the Magistrates Court of Victoria, alleging that one of the Companies’ operating subsidiaries, Panthera Finance Pty Ltd, had been operating in Victoria illegally.

According to news reports on July 30 in 2020 Panthera was ordered to pay $500,000 in fines following action taken in the Federal Court by the Australian Competition and Consumer Commission (ACCC).

Under Victorian law, any debt collector found to have engaged in excessive harassment is banned from operating in Victoria for five years. In the Magistrates Court proceedings CAV alleges that Panthera Finance is in breach of the ban.

CAV declined requests to detail the nature of the alleged conduct or what penalties it’s seeking.

Sources advise that Panthera intends to vigorously defend the proceedings.

In Colley, in the matter of PF Group Holdings Pty Ltd (Administrators Appointed) (No 2) [2024] FCA 1089 Justice Angus Stewart approved a further extension of the convening period to February 7, 2025, based on the administrators’ view of the impact of the CAV proceedings.

“The essential reason underlying the need for an extension is that, on or about 23 July 2024, Consumer Affairs Victoria filed a charge sheet and summons in the Magistrates Court of Victoria against one of the subsidiary companies in the group, namely, Panthera Finance Pty Ltd,” the judge said.

“That proceeding has inevitably led to the extended processes of inquiry and response from and to potential participants in the sale process.

“In short, an additional layer of complexity to the administrators continuing the sale process has been added, which has resulted in a longer due diligence and negotiation period than anticipated at the time of the first application,” the judge said.

An additional layer is right. Currently Panthera Finance and other operating subsidiaries are not in administration.

They are however bound to The Companies by a deed of cross-guarantee. If Panthera was forced into administration by pecuniary penalties stemming from the CAV proceedings an unknown number of contingent creditors could prove as unsecureds in the administration of PFGH and PFMH.

Then there’s the potential layer of complexity in respect of the administrators’ independence.

In December 2023 PwC was engaged by the administrators’ subsequent appointors to produce an Investigating Accountants’ (IA) review of The Companies’ businesses and financial position. PwC was paid $221,00 including GST.

The administrators’ appointor is the Group’s secured lender, BSI PF Lender LP. If efforts to sell the business or get a DoCA away fall flat and The Companies are wound up, will the IA fee suddenly assume the appearance of a preference?

No doubt though, the $3 million indemnity BSI provided to the administrators will help deal with any further complexity that may arise.