PwC pair lose to Pitchers duo in Pluton DoCA fight

The arm wrestle over $835,021.94 paid into a deed of company arrangement (DoCA) has come to a possible conclusion in the West Australian Supreme Court of Appeal with a judge overturning an earlier decision of the WA Supreme Court.

As a result Pitcher Partners’ Bryan Hughes and Daniel Bredenkamp as receivers and managers of Pluton Resources have been found to be entitled to the funds ahead of the objectors, Pluton’s liquidators, Sam Marsden and Derrick Vickers of PwC.

Pluton borrowed about $29 million from General Nice Recursos Comercial Offshore De Macau Limitada (GNR) in April 2013 to fund its high grade but troubled Cockatoo Island iron ore operations and the funds were secured under terms making GNR effectively an all PAP, no exception security holder.

That meant its security covered all of Pluton’s property, rights and undertakings whether present or future, real or personal property, tangible or intangible, wherever they were located.

Hughes and Bredenkamp were installed as receivers on September 8, 2015. Pluton’s board duly appointed EY’s Vince Smith and Sam Freeman as voluntary administrators (VA).

The EY pair’s time however was short-lived with various Pluton creditors objecting on the basis of work done for the company by Smith and Freeman’s equivalents in EY’s tax division. Hence their replacement in October 2015 with the PwC pair.

By December 2015 a DoCA proposal had been out to creditors by World Systems Capital Investment Ltd (BVI) (WSC), a related entity of GNR and in January 2016 the parties executed the DoCA.

A variation to the DoCA terms was approved by the participants in May 2016, conditional on WSC paying a further $3.5 million and in July 2016 it was executed.

By November 2016 Marsden and Vickers had made application for orders that they be free to apply the leftover funds to the payment of their costs and expenses and that they be entitled to reject any claim by the receivers or GNR to the funds.

In Pluton Resources Ltd (Receviers & Managers Appointed (In Liq)) [2017] WASC 142 (26 May 2017) it looked like the liquidators had prevailed in part. While ruling that the liquidators were not entitled to tap the fund for their costs and expenses the judge also ruled that the secured creditor didn’t have a claim on the surplus.

Then late last month that finding was overturned. In Hughes V Pluton Resources [2017] WASCA 213 (22 November 2017) the WA court of appeal decided otherwise.