When directors don’t get their preferred external administrator, the unwanted incumbent can anticipate consequences.
When that company has a toe on a supposedly rich gold deposit then the unwanted appointee can expect those consequences to manifest swiftly, as Sydney insolvency practitioner Ian Niccol recently discovered.
The Aston Chase principal was installed by the courts as liquidator of Rio Dorado Pty Limited on November 10 after a failed bid by the company to have adjourned the hearing of a creditor’s winding up application.
The company has for years been promoting development of a rich alluvial gold deposit in Ecuador, the rights to which it purports to hold through a large stake in a local subsidiary, though recent court hearings have ventilated the possibility that those rights are less than securely held.
At the time of the winding up hearing the company had been in voluntary administration (VA) since October 23 and under the control of Sydney liquidator David Levi.
Levi it was who instructed the lawyers and counsel who appeared before NSW Supreme Court judge Ashley Black to oppose the winding up.
Levi had in turn been appointed VA by Rio Dorado’s directors Terry Cuthbertson, Nicholas Lindsay and the Caymans Islands’-domiciled Gary Mares, the same day the directors executed a share sale agreement with an unidentified party which had terminated a proposed joint venture the day before.
That share sale agreement required Rio Dorado creditors to vote in favour of a deed of company arrangement (DoCA) which could only be put to creditors if the winding up proceedings were adjourned so Levi could prepare a Report and convene a second meeting.
As iNO has reported, Levi’s legal representatives were unsuccessful in having the winding up adjourned and Niccol was subsequently appointed. But recent events demonstrate that Rio Dorado’s directors were never prepared to stomach outcome.
Last week creditors received correspondence from Niccol titled Notice of Meeting advising that a virtual meeting would be convened on Friday, December 22 to consider two resolutions.
One involved payment of Niccol’s remuneration and expenses as liquidator for a period of approximately five weeks which amount to more than $150,000 including GST.
The other and more pertinent resolution calls for the replacement of Niccol by Hall Chadwick partners Richard Albarran and Brent Kijurina.
According to their Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) the appointment was referred to the Hall Chadwick pair less than a week after the court appointed Niccol by an unnamed representative of “Commercial Litigation Funding“.
A search of the ASIC database shows only deregistered companies under that name and requests for clarification about the identity of the referrer sent by email to Albarran, Kijurina were not responded to by deadline.
For Rio Dorado’s unsecured creditors the question now is whether they want to vote for a scenario that could position three sets of insolvency practitioners ahead of them with priority claims for remuneration to be paid from from an as yet unrealised asset, though as iNO has revealed elsewhere in today’s edition, one of those three may be precluded from making such a claim, and that might not be the worst of his troubles.
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