The Australian Taxation Office (ATO) is making life a tad difficult for Cor Cordis partners Ozem Kassem and Jason Tang with a judge this week hearing that the joint liquidators of Project 1876 Pty Ltd needed to reschedule a meeting of creditors for a second time.
SiN understands the application was made so as to allow the ATO, which is the company’s major creditor, more time to consider a most extraordinary offer of settlement.
Exactly why the ATO needs more time to consider the spectacularly unsatisfactory offer of $750,000 to discharge all creditor claims, including the ATO’s $9.23 million debt, is unclear.
The offer was originally due to be voted on on November 11 but as SiN reported in: Cor Cordis Forced To Adjourn Vote On Dyldam Deal, the tax personage demanded that meeting be adjourned.
It was. Until December 2. But the vote didn’t take place on that date either and on Monday Kassem and Tang sent barrister Geoff McDonald before Justice Paul Brereton to ask for a more significant deferment. The meeting is now adjourned until January 31, 2017.
This week SiN has uncovered some detail which may shed light on why Kassem and Tang can’t, or won’t force Project 1876’s major creditor to vote.
It transpires that ASIC and the ATO’s audit and high wealth individuals teams are collaborating on an investigation into how the millions of dollars the liquidators say should have been available to distribute to creditors were instead diverted to Project 1876’s shareholders, who include Dyldam construction group head Sam Fayad and Dyldam co-founder Joseph Khattar.
According to the liquidators’ August 27, 2016 report, the shareholders have told them they are entitled to the money on the basis of unregistered mortgages securing loans allegedly advanced to the company by the shareholders in 2002. Kassem and Tang said they have not been provided with sufficient documentation to determine if the securities are valid.
To be fair to the Cor Cordis pair, they have commenced proceedings against Fayad, Khattar and others in relation to recoveries. After issuing letters of demand in May they filed an originating process on June 30 to preserve their position and a statement of claim for $12.592 million on August 8. What’s mystifying is why those proceedings remain unfunded.
Kassem and Tang approached the ATO in 2015 seeking money to pursue Fayad, Khattar and others. The ATO declined. SiN asked the liquidators if they’d applied to ASIC for a grant from the Assetless Administration Fund (AAF). They declined to reply but ASIC has requested that they refrain from finalising the liquidation.
What is certain is that they were approached last month by Litigation Funding Solutions – principal David Purcell confirmed such when contacted – and had not as at time of writing replied. One wonders how many other litigation funders might have made enquiries and been rebuffed.
The liquidators are recommending creditors accept the settlement and in the August 27 report said they had legal advice indicating that they were not required to seek creditor approval to enter into the settlement deed themselves. As a consequence the initial $250,000 settlement fund payment was already sitting in their trust account when the distributed the report outlining the terms.
Only creditor approval is lacking and the ATO’s obstinance must be irritating Kassem and Tang. They, their staff and advisors are owed $740,000 plus GST. But the following excerpt from the August 27 report might explain the impasse.
“When the level of costs which have been incurred in attending to this matter are taken into account, the entirety of the Settlement Sum, will be used to meet these costs, and there will be no return for any class of creditors.”