Deed administrators block pub group dividend

Lavishing creditors with a fat dividend on the eve of the festive season is no doubt an aspiration close to the heart of every insolvency practitioner, so one can imagine the distinctly unChristmas-like sentiments that must have echoed through the Pitt Street offices of Wexted Advisors early Monday morning.

Unwelcome correspondence had arrived you see, correspondence the contents of which caused angst and consternation for Wexted principal and founder Joe Hayes and colleague Andrew McCabe, who until that point perhaps thought that their plan to pay a pre-Christmas divvie to creditors and unitholders of the Peak Invest Group would by approved by the courts unopposed.

“Due to an overlap in the shareholding structure of the companies and unit holding structure of the trusts to which Wexted are appointed as Receivers and Managers, the Deed Administrators supported an adjournment of Supreme Court of NSW proceedings 2021/348287 in order to allow for further investigations to be conducted.” David Armstrong, Mills Oakley.

But opposed it was, and as NSW Supreme Court judge Ashley Black heard later that morning, the opposition is based on Hayes’ and McCabes’ intention to include their appointor, Peak Invest director Damian Kelly as a unit holder eligible to receive a dividend.

Key among the opponents are Hall Chadwick partners John Vouris and Sule Arnautovic in their capacities as deed administrators of the Peak Invest Group’s operating entities, which are separate to the corporate trustees to which Hayes and McCabe were appointed firstly as administrators back in 2021.

Subsequently Hayes and McCabe were appointed liquidators and then receiver managers of the trust assets, which included several NSW pubs.

Simultaneously with the receivership appointments the Hall Chadwick duo were appointed voluntary administrators to the operating entities’ by their directors, with the exception of Kelly.

According to the various counsel appearing for the opponents on Monday, there are doubts about the legitimacy of Kelly’s unit holding.

Nine Wentworth’s David Weinberger for opposing creditors and Mills Oakley’s David Armstrong representing the deed administrators each told Justice Black that their clients only objected to Kelly receiving a distribution.

Upon inquiring as to why Kelly should be excluded from the Christmas largesse Hayes and McCabe’s counsel Daniel Krochmalik told the judge that the objectors want Hayes and McCabe to determine from where Kelly sourced the money he used to acquire his unit holding.

The court also heard that Kelly’s solicitors want the opportunity to participate and that Hayes and McCabe would lead evidence to demonstrate the extent of their investigations.

Armstrong then stood up and told the court the deed administrators would be making their own inquiries, and the matter could become more complicated, depending on what if any replies they received.

In response to iNO’s inquiries, Armstrong said: “we confirm that various members of the companies have raised objections to the recorded holdings of Damian Kelly (and his nominees).

“Due to an overlap in the shareholding structure of the companies and unit holding structure of the trusts to which Wexted are appointed as Receivers and Managers, the Deed Administrators supported an adjournment of Supreme Court of NSW proceedings 2021/348287 in order to allow for further investigations to be conducted,” Armstrong said.

With time running out to get a dividend paid before December 25 his honour instructed the parties to get their evidence and submissions on ahead of a hearing of the liquidators’ application for judicial guidance in respect of the proposed dividend on December 12.