DoCA and conflicts on the menu for 2nd meeting

The tension promises to be thick when creditors of air conditioning installer Dynatech Industries Aust Pty Ltd (DIA) assemble tomorrow in circumstances where the incumbent voluntary administrators (VAs) are already deeply unpopular with many of both the unrelated and the unsecured.

That unpopularity manifested at the first meeting of DIA on May 14 when KPT Restructuring partners Ozem Kassem and Jason Tang faced efforts to replace them with Blair Pleash of Hall Chadwick and Graeme Beattie of Worrells.

Whilst the there were enough votes to keep Kassem and Tang appointed, creditors had also commenced winding up proceedings prior to the VAS’ appointments and hearing in the Federal Court is scheduled for Friday.

So how did the amiable Ozem and Tango attract such animosity? In a word, conflict.

As their replacement DIRRI explains, on March 20 this year the VA appointment was referred to them by Samir Bachir, a relative of DIA’s director and referrer of other insolvency matters previously.

On the same day Kassem was appointed liquidator of Ductech Sheetmetal Pty Ltd (Ductech) which is described as “a former supplier to the Company” (DIA).

DIA’s director Rabei Bachir was a director of Ductech from 29 February 2016 to 1 March 2016.

A Ms Lauren Bachir was also a director of Ductech from 29 February 2016 to 11 April 2016. Ms Bachir is the sole director and shareholder of Culver Management Pty. Ltd. which owns 50 per cent of DIA.

Also on March 20 this year Kassem accepted an appointment as liquidator of Anama Engineering Pty Ltd (Anama), another former supplier to DIA.

Perhaps coincidentally, a Lauren Bachir also works at a firm called SolarArk, which Kassem and Tang said in their Report to Creditors was the recipient of more than $500,000 from DIA by way of an investment.

“Management have advised that this debt is not recoverable. We are liaising with Management for further information with respect to this investment,” Kassem and Tang said.

The involvement of Kassem as liquidator of ex-suppliers to the company linked to DIA and its director motivated at least one creditor to rally others in support of a resolution to replace Kassem and Tang.

A circular sent by Ceasefire Passive Fire Protection to other DIA creditors argued that: “Due to the current involvement of KPT in the administration of Dynatech’s sub-entities, we believe the appointment of KPT Restructuring is a potential conflict of interest and leaves open the possibility of administrators favouring creditors that are wholly or substantially owned by, or associated with, Dynatech Industries.”

Kassem and Tang confirmed that a review of DIA’s records showed that there may be debtor/creditor claims between the Company and Ductech and the Company and Anama but Kassem’s appointments will “not influence our ability to be able to fully comply with the statutory and fiduciary obligations associated with our appointment to the Company in an objective and impartial manner”.

From what iNO hears, those assurances have received a chilly reception from those creditors who want DIA wound up and a liquidator other than Kassem and Tang appointed so some heat can be anticipated to be generated at tomorrow’s meeting.