Editor’s Note: On Friday, August 18, 2023 Justice Brigitte Markovic of the Federal Court of Australia dismissed ASIC’s case against liquidator Jason Bettles and ordered the regulator to pay Bettles’ costs.
The corporate regulator has returned to the fray in its ongoing campaign to rub out Jason Bettles, calling for the Worrells partner to be stripped of his liquidator’s ticket and banned for life.
In a 160 page Statement of Claim filed in the Federal Court last week, ASIC alleges that Bettles’ conduct in respect of the Members Alliance Group of Companies (MAG) “constituted so gross a departure from, and abrogation of, the duties of a registered liquidator, as to warrant the cancellation of the Defendant’s registration as a Registered Liquidator; and a lifetime prohibition on the Defendant from reapplying for registration as a Registered Liquidator.”
ASIC claims its investigations prove Bettles knowingly assisted a scheme conceived by MAG’s controllers, accountants and lawyers to funnel income producing assets into a new company to be ultimately controlled by those same individuals.
Described in the statement of claim as a phoenix, that scheme would deprive MAG creditors access to assets which would otherwise be available to a liquidator of MAG.
ASIC alleges that as liquidator of the group Bettles failed to pursue transactions that benefitted MAG’s controllers.
It’s also alleged that he uploaded a Powerpoint Presentation on Worrells’ document management system from which he had removed certain pages.
ASIC claims that if those pages – explaining key elements of the newco strategy – had been included Worrells staff who worked on the file would have challenged the scheme’s legitimacy.
Among the creditors is the Australian Tax Office (ATO), owed in excess of $27 million.
Bettles, who did not respond to requests for comment, has been defending the allegations since ASIC commenced proceedings in November 2019.
Worrells managing partner in Brisbane, Raj Khatri, told iNO yesterday: “We remain disappointed by the application made by the regulator.
“Jason continues to have the firm’s full support. His practice and leadership within the firm remain unaffected and we’re assisting him address ASIC’s concerns in the Federal Court,” he said.
While Khatri was a joint appointee with Bettles on multiple MAG entities and is identified in the Statement of Claim along with Worrells senior manager Brian Carey, neither are defendants in the proceedings and iNO makes no suggestion of wrongdoing.
Bettles and Khatri were appointed to multiple entities in the group in 2016. They were replaced in 2017 by Grant Thornton’s Michael McCann by order of the Supreme Court of Queensland.
ASIC regards Bettles as having acted improperly both in accepting the appointment and in his conduct of the administration based on what it alleges he knew about MAG’s affairs and the intentions of its controllers, accountants and lawyers prior to his and Khatri’s appointments.
Last year he succeeded in forcing the regulator into a humiliating backdown when the court set aside ASIC’s Concise Statement and its Supplementary Concise Statement and ordered the regulator to produce a State of Claim that properly particularised its allegations.
The October 28, 2020 judgment in Bettles’ favour highlighted the difficulties inherent in prosecuting allegations of illegal phoenix activity.
This week the court made orders that will see the proceedings return to court for further case management on May 31. Support INO’s continued chronicling of the insolvency sector.
Further reading:
Worrells Partner Wins Round One In ASIC Phoenix Fight
Great to see our ASIC fees put to good use. What a bunch of numpties. All we need now is for Carnell to take over from Shipton in the big chair and the death spiral will be back on track.
It is a pity after the criticism in the earlier proceedings that the new proceedings are made public without proper supporting evidence being tested. Serious issues of natural justice arise as to the approach taken by ASIC
What action is ASIC taking against MAG’s controllers, accountants and lawyers?
ASIC has absolutely no respect from any of the Registered Liquidators I speak with. What a farcical comedy its pursuit of Bettles has become. Time for a root and branch shake up of ASIC starting at the top and then down to its alleged team of professional support staff.