Director’s escape from default curiously short-lived

You would think that having convinced a court to declare a general security agreement (GSA) invalid and thereby ridding oneself of the receiver appointed pursuant to that GSA, that a director might be as it were, in the clear.

Well not necessarily, and not in the case of Jin Resources (Aust) Pty Ltd (Jin) director Richard Trevillion, who shed receiver Steve Nicols in August only to be reburdened with administrators in October.

Details of how the Supreme Court of Queensland determined that the GSA under which Nicols was appointed was invalid are contained in the exceedingly thorough judgment of her honour Susan Brown in Jin Resources (Aus) Pty Ltd ACN 641 111 195 & Others v Steven Nicols & Anor [2022] QSC 158.

The judge delivered her decision on August 2 and Nicols lodged his notice of ceasing to act on August 5.

But last month insolvency practitioners were back in control of Jin at the behest of another secured creditor who opted to appoint Hall Chadwick trio Marcus Watters, Richard Albarran and Brent Kijurina as administrators.

According to their DIRRI, the Hall Chadwick threesome were referred the appointment by LFS Litigation Funding Pty Ltd, a $2.00 company controlled by Gold Coast-based lawyer David Purcell as sole director and shareholder.

Further, in that section of the DIRRI detailing pre-appointment dealings, LFS is described as a secured creditor and “the Litigation Funders of the company”.

Purcell didn’t respond to requests for comment but iNO’s mail is that Purcell’s claim as a secured creditor is based on debts Jin or an associated entity owe to ENYO Lawyers.

Purcell has supposedly undertaken to pay ENYO’s debts though we understand no formal assignment has taken place.

The DIRRI also reveals that debt collector Stewart Wilkinson ‘s Blackbird Finance contacted Kijurina on October 18 requesting that appointment documents be prepared on behalf of LFS.

On the same day, Watters met with Purcell “to discuss the background of the referrer’s involvement as Litigation Funders of the Company and to execute the appointment documents appointing voluntary
administrators”.

The third paragraph refers to telephone conversations Albarran had with Purcell to discuss “the background of the litigation funded by the referrer and the different options available to the referrer with respect to an appointment of external administrators”.

The administrators declared that the discussions between Albarran and Purcell occurred prior to October 18 but precisely when is not disclosed.

According to the administrators they’ve never had a referral from LFS before which must be correct but it would be surprise iNO if none of the three appointees had ever taken a referral from Purcell before given his industriousness in the insolvency space when at Nelson McKinnon Lawyers.

The first meeting of creditors was held last Friday and the Minutes reveal that the Hall Chadwick trio’s tenure may, like Nicols’, be disrupted.

Meeting chairman Watters revealed that “neither LFS Litigation Funding Pty Ltd and Litigation Funding Solutions (Australia) Pty Ltd” had provided any supporting documentation, so his referrer and the secured creditor supposedly entitled to appoint the administrators was admitted to vote for a value of $1.00.

The meeting then moved to discussion of an originating process and affidavit served on the administrators by Colin, Biggers & Paisley, the lawyers for Trevillion who successfully prosecuted his efforts to have the original GSA ruled invalid.

That originating process envisaged the bringing of an application in the Supreme Court of Queensland to have the administrators removed.