Creditor opts for replacement over SPL

creditor
Lined up to replace Jirsch duo:
SV Partners’ Ian Purchas.

Trent Devine and Bradd Morelli are in for a fight this week, with the hearing of an application mounted by irate creditor to have the pair punted as liquidators of FW Projects commencing tomorrow.

This matter has been heading for a showdown in the court for several weeks but it was only at a motions hearing yesterday before Justice Julie Ward that the plaintiff creditor’s decision to drop its application to appoint a special purpose liquidator (SPL) became public.

Instead FW Projects’ creditor Hindmarsh Construction Australia (HCA) will tomorrow try to persuade Justice Ashley Black that the Jirsch Sutherland duo are hopelessly conflicted and must be replaced.

INO makes no suggestion of wrongdoing. The allegation after all emanates from a disgruntled creditor who asserts conflict on the basis of the liquidators’ decision to retain Mills Oakley to represent them.

Mills Oakley previously advised FW Projects in relation to a controversial restructuring of the company’s obligations late last year that saw unit holder Manassen Holdings Pty Ltd become senior secured lender.

The validity of that restructure is central to HCA’s aim, which is recover a judgment debt owed to it by FW Projects.

A Mills Oakley partner also referred the job to Devine and Morelli.

But having liquidators retain lawyers whose pre-retention work may require investigating is not the only provocation in HCA’s eyes.

The court heard yesterday that a week before FW Projects’ shift into formal insolvency via a creditors voluntary liquidation (CVL) on April 18, 2019, Mills Oakley produced a draft deed in which Manassen Holdings agreed to pay MO’s fees and indemnify FW Projects’ director Christopher Rose.

Manassen has also undertaken to provide $100,000 from the sale of properties within FW Projects’ mixed commercial/residential development to cover Devine and Morelli’s remuneration.

The proceeds of that sale are now languishing in a controlled monies account until further order of the court.

Incensed, HCA has fired off subpoenas and notices to produce with a key focus being any costs agreements between Mills Oakley and the liquidators or Mills Oakley and FW Projects.

Devine and Morelli initially refused access to much of the material on the basis of legal professional privilege but have since relented as HCA has narrowed its scope.

The plaintiff creditor however seems to have decided that regardless it wants the Jirsch duo gone, abandoning its bid to have an SPL appointed and focussing instead on installing a replacement.

To this end they’ve obtained a consent to act from SV Partners’ Ian Purchas. Please take a moment to support INO’s continued chronicling of the insolvency sector.

Further reading:

Jirsch Pair Fighting To Keep Freshwater Plum

About the Author

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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