Ian Niccol.
Liquidators who think no downside can apply when you’re “sitting on a gold mine” should have a chat with Ian Niccol.
For the Sydney-based liquidator of Rio Dorado Limited it feels no different to being stuck between a rock and a hard place.
This is because since late last year when a judge of the NSW Supreme Court terminated the voluntary administration (VA) of Rio Dorado, ordered it be wound up and declined to appoint VA David Levi as liquidator because he preferred Niccol, the job of crystallising value for Rio Dorado’s creditors and shareholders seems to have become more difficult, despite the company’s stake in the rich Sabaleta Mining Concession in Ecuador.
Initially Niccol thought he had a sale to a buyer in America at a price that would see every creditor paid in full and a lavish surplus generated.
But as he said in a Circular distributed late last month: “It was my expectation at that time that the US Party would enter into a binding heads of agreement and provide me with a non-refundable deposit to secure their position as the purchaser in the transaction.
“Unfortunately, despite a number of assurances from the US Party that payment of the non-refundable deposit was imminent, the monies were never paid. Following this, my focus turned to ensuring that the Concession could be extended for another 12 months,” he said.
Getting the concession sold however is not Niccol’s only problem. A bitter shareholder dispute’s been festering for years, a promised listing in Canada never eventuated, convertible note holders haven’t been paid and further fundraisings have taken place whilst disputes around when debts are due and payable periodically flare.
From iNO’s perspective the shareholder dispute is the wellspring of Niccol’s grief.
In the most recent development, Niccol, who’s complained of being unfunded, sought funds to renew the Sabaleta lease before reporting in his April 29 Circular to creditors that the US$31,102.72 annual fee had been paid thanks to support from Rio Dorado’s “former directors”
The individuals who paid to renew the lease however received a refund from Niccol 10 days later.
Niccol told your correspondent this morning that Ecuador-based Byron Hidalgo, who is a director of the Rio Dorado subsidiary that holds the Sabaleta lease, paid the money out of his own pocket.
Niccol said he was then able to arrange for funding from Rio Dorado directors Terry Cuthbertson and Nicholas Lindsay which enabled him to repay Hidalgo.
Such an arrangement won’t pacify rival shareholders who want Niccol to focus on pursuing recoveries from Cuthbertson, Lindsay and Rio Dorado’s other director Gary Mares.
And now a long time shareholder has won leave from the NSW Supreme Court to commence defamation proceedings against the company in the NSW District Court in respect of an announcement by the company circulated to shareholders in March 2023, to which was attached an email dated February 20, 2023, well before Niccol had even heard of Rio Dorado, Sabaleta or golden thrones.
As is detailed in Farquhar v Rio Dorado Limited (in liquidation) [2024] NSWSC 585 NSW Supreme Court judge Anthony McGrath last week detailed how plaintiff and long term Rio Dorado shareholder Joshua Farquhar claims he was defamed by the distribution of the company announcement and attached email.
In February this year Farquhar’s lawyers sent correspondence to Niccol, attached to which was a proof of debt based on his damages claim of $250,000.
Through his solicitors Niccol told Farquhar he wouldn’t be making an adjudication on what he regarded as an unliquidated damages claim before the limitation period in which to commence the defamation proceedings expired.
The ball was back in Farquhar’s court and in mid-March he issued Concerns Notices to Rio Dorado’s directors Gary Mares, Terry Cuthbertson and Nicholas Lindsay and to the company.
According to Justice McGrath none of the recipients sought further particulars and Farquhar then sought leave in the Supreme Court to allow him to commence the defamation proceedings in District Court against the directors and against the company.
When has sitting on a gold mine ever been this uncomfortable?
Further reading:
Liquidator deserves favour from predecessor
Liquidator invites adverse findings scrutiny
Dissatisfied directors try again with Hall Chadwick
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