EY partners may face disciplinary action over Pindan

EY’s Sam Freeman.
EY’s Colby O’Brien.

Two of EY’s finest are not letting any impending ARITA sanction impede progress of their work as administrators and liquidators of Pindan Group, the West Australia-based construction and property group that availed itself of EY’s reassuringly familiar services in May of this year.

Last month in the Supreme Court of West Australia Sam FreemanColby O’Brien and Vincent Smith obtained various grants of relief including extending for a second time the convening period, limiting their liability as VAs and approving their entry into various arrangements related to a refinancing with Pindan’s Singapore-based parent Oxley Holdings Limited (Oxley).

As it turns out, the liability limitations and refinancing relief were sought as part of efforts to ensure that senior secured creditor CBA doesn’t lose patience and do something inconvenient, like appointing receivers.

” …. the purpose of the refinance proposal is to seek to maximise the financial outcome of the realisation of the Properties by ensuring that any sale process of the various Properties is undertaken in a non-enforcement scenario,” West Australian Supreme Court Judge Larissa Strk said in Pindan Group Pty Ltd (Administrators Appointed) and (ors) [2021] WASC 347.

“Mr Freeman further deposes that the existing creditor, CBA, has to date declined to appoint receivers and managers pending the finalisation of a proposed refinanced transaction.

“He says that CBA may have no choice but to appoint receivers and managers, unless the refinance is approved and implemented.”

In the judgment, which was only made public this week, her honour also alluded to being advised at the September 13 hearing that Freeman and Colby’s intention to make a separate application in respect of their independence and reported disciplinary proceedings underway at ARITA, where both are members though Smith is not.

According to media reports that application was heard on October 4 but there is no indication of what was sought or whether the orders made – in the administrators favour as turned out – had the effect of staying ARITA’s disciplinary proceedings or preventing the application of any ruling by an ARITA disciplinary committee.

Unsurprisingly iNO’s enquiries elicited zero response from Freeman or ARITA.

ASIC however has been sniffing around the pre-appointment relationship and reportedly forced EY to repay monies paid to it by Oxley for a 2019 report on a restructuring of Pindan Group.

It was further reported that Freeman and his co-appointees had asked ARITA to suspend its inquiry into whether they had breached the ARITA code on independence and conflicts until after their appointments as VAs conclude.

This is expected to occur later this month when creditors vote to either wind up the relevant entities or execute a deed of company arrangement (DoCA).

But if Justice Strk has okayed their independence as has been reported then maybe they’re telling ARITA rather than asking?

Further reading:

EY’s Pre-Pindan VA Involvement A Sight To Behold

EY Trio Updates Pindan DIRRI After ASIC Queries

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