Three Deloitte restructuring and insolvency partners have gone within a whisker of being ordered to submit to a conduct inquiry but remain potentially at risk after a judge of the Federal Court last week left the way open for the plaintiff in the proceedings to continue its pursuit.
Orders made by Justice Michael Feutrill last week mean West Australian electricity generator Bluewaters Power (Bluewaters) has the opportunity to refashion its complaints in respect of the conduct of the receivers and managers of Griffin Coal Pty Ltd (Griffin).
Griffin, which was placed into liquidation in September 2022, labours under long term coal supply agreements (CSAs) with Bluewaters which are as unfavourable to Griffin as they are beneficial to Bluewaters.
“When the former Liquidators, evidently acting on legal advice, proposed taking a less robust approach to disclaimer than that which the Receivers and Griffin Coal’s financiers advocated, steps were taken to have the former Liquidators removed and replaced with the new Liquidators. The Receivers appear to have played a role in that affair.” Federal Court judge Michael Feutrill.
The receiver managers wanted the then liquidators of Griffin Coal – Cor Cordis WA partners Tom Birch and Jeremy Nipps – to disclaim the CSAs.
The liquidators’ legal advice however was to tread softly.
The disparity in perspectives culminated in Nipps and Birth being removed at a meeting of creditors who were replaced with WPL Restructuring’s Scott Pascoe and Glenn Livingstone in late September 2023.
“When the former Liquidators, evidently acting on legal advice, proposed taking a less robust approach to disclaimer than that which the Receivers and Griffin Coal’s financiers advocated, steps were taken to have the former Liquidators removed and replaced with the new Liquidators. The Receivers appear to have played a role in that affair,” the said in Bluewaters Power 1 Pty Ltd v Donnelly, in the matter of Griffin Coal Mining Company Pty Ltd [2024] FCA 596.
Shortly after the liquidators were replaced Bluewaters brought its application for an inquiry into the conduct of Deloitte trio Matt Donnelly, Sean Holmes and Grant Sparkes in their capacities as receiver managers of Griffin Coal.
His honour said that while the evidence showed that the conduct of the receivers enlivened the court’s discretion in respect of ordering an inquiry, “in the circumstances of this case, the discretion should not be exercised to order an inquiry at this time”.
His honour’s use of the term “in the circumstances of this case” may be a reference to the ongoing efforts to disclaim the CSAs, which iNO understands is proving challenging for Pascoe and Livingstone as they discuss with creditors how to fund such an exercise.
The judge nevertheless left the door wide open for Bluewaters to reagitate for an inquiry, saying he wouldn’t dismiss the proceedings and would allow Bluewaters “an opportunity to commence other proceedings and, depending on the outcome of any proceedings commenced, the application may be renewed”.
iNO also asked Donnelly if our exceptionally well informed sources were correct in asserting that he was leaving the big four professional services firm and while no response was forthcoming prior to publication our mail is that it’s a sure thing.
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