It’s past indiscretions at 10 paces in the Federal Court this week as interests associated with the Modscape Group continue to do everything they can to prevent the liquidator who had concerns about their 2017 restructure being paid the fees he earned and the expenses he incurred during his tumultuous, 11 month tenure.
“Mr Luntz does not appear to have been involved in the 2017 restructure and he is quite critical of the way the asset transfers were not documented by Cor Cordis or Arnold Bloch Leibler. We will submit that it is quite incredible that advisors of that calibre did not document such a sale agreement.” Daryl Williams KC.
During day one of a scheduled three day hearing, Federal Court judge David O’Callaghan heard that in 2009, former Modscape liquidator Michael Caspaney had allegedly admitted to being a co-conspirator in a substitution scheme in contravention of Victoria’s Harness Racing Rules.
Comments about the infamous Fine Cotton ring in of 1984 affair followed before the court then heard that the 2009 events came seven years before Caspaney applied for and obtained his registration as a liquidator.
The allegation was injected into the proceedings as the Modscape interests sought to challenge claims for remuneration and legal fees Caspaney is pursuing as a consequence of decisions he took between his appointment as liquidator of Modscape by the courts in February 2019 and his replacement by Magnetic Insolvency’s Peter Goodin in December of the same year.
The inference was clear, according to Nunzio Lucarelli KC for the Modscape interests, who sought to persuade the judge that the relief Caspaney was seeking should be refused because the remuernation and expenses claimed were improperly incurred.
The judge however wasn’t prepared to rely on what he described as an “administrative finding” by Harness Racing Victoria to justify a decision refusing the relief sought.
The decisions the Modscape interests want the court to focus on include Caspaney’s initial refusal to convene a meeting he suspected was aimed at replacing him just as he was preparing to issue summonses for public examination.
Those examinations were intended to get to the bottom of the company’s 2017 restructure, which including an asset sale agreement the court heard yesterday had been effected without being documented.
During cross examination of Modscape Holding’s auditor and advisor Paul Gronsbell-Luntz, Caspaney’s counsel Daryl Williams KC suggested that his client’s reluctance to convene a meeting to replace him when so many questions remained unanswered in relation to the restructure and asset transfer was wholly justified.
“Mr Luntz does not appear to have been involved in the 2017 restructure and he is quite critical of the way the asset transfers were not documented by Cor Cordis or Arnold Bloch Leibler (ABL). We will submit that it is quite incredible that advisors of that calibre did not document such a sale agreement,” Williams said.
Cor Cordis partners Rachel Burdett and Barry Wight had been appointed administrators of Modscape in 2018.
After advising creditors that they would not recommend the directors’ DoCA proposal the pair were replaced at a reconvened meeting of creditors by Goodin, who recommended the DoCA and was appointed as deed administrator.
Incensed by this turn of events Modscape creditor C&L International Pty Ltd took action to stay the DoCA while it sought orders to have the company wound up and a liquidator appointed. This was how how Caspaney came to be embroiled.
Unsurprisingly his attempts to be paid have been opposed all the way by the Modscape interests and while this week’s hearing was to take place last month the court heard yesterday that Goodin would now not be appearing following a serious health issue.
“The last we heard he was in a coma,” Williams told the court.
The hearing is scheduled to continue today and tomorrow and it remains to be seen if the dishonesty finding of 2009 will have any influence on the court’s thinking as to the decisions Caspaney took while liquidator.
Lucarelli sought to tie the harness racing finding to Caspaney’s application for registration as a liquidator in 2016. If unsuccessful he’ll no doubt be searching for new mud to fling.
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