FTI partner supplanted by SPL as FEG claims phoenix

FTI Consulting’s Joanne Dunn has been supplanted by a special purpose liquidator (SPL) after the Commonwealth’s FEG Recovery Unit decided it wanted someone else to investigate possible phoenix transactions involving companies within the Intelara Group (Intelara).

Last week in the Federal Court Justice Roger Derrington heard that FEG wanted Perth-based practitioner Jack James appointed SPL of a company known only by its Australian Company Number – ACN 093 117 232 Pty Ltd.

Dunn and former FTI colleague Stefan Dopking were appointed to ACN 093 117 232 Pty Ltd via members voluntary liquidation on December 7, 2015.

Dopking, a former ASIC investigator, resigned when he left FTI to join BRI Ferrier.

In the application to appoint James as SPL the court heard that FEG suspected a phoenix transaction disguised as an asset sale agreement to a related entity involving around $700,000 had been executed to discharge a debt the company’s directors owed to secured creditor the NAB.

The asset sale agreement was executed on the date of Dunn and Dopking’s appointment.

The judge, who had read the affidavits and submissions sounded as if he was inclined to agree, saying: “this has all the appearance of asset stripping of one company setting up a phoenix whilst discharging the employee liabilities and disposing of the employee liabilities so the Commonwealth can pick it up.

“That’s what appears,” he said while conceding that it may not be what it seems and reiterating that he was in no way making any findings in relation to Dunn’s conduct on the liquidation.

According to FEG’s counsel Carolyn Conway: “it’s apparent from emails that were written that there was a recommendation made either by Mr Schweizer or Ms Dunn that Mr Rosenblum be contacted.”

The Rosenblum referred to is David Rosenblum of AMR Capital. The Schweizer referred to is ex-FTI Consulting staffer Oliver Schweizer of 22 Capital, an outfit run by Dunn’s old colleague Lachlan Macintosh who left FTI in 2015.

Neither Rosenblum, or a third individual, described in court as “pre-insolvency advisors” had been served with the the FEG application because, the court was told, they had no interest.

” ..they don’t have an interest at present, but no doubt in the fullness of time, they may become very interested in it,” Justice Derrington responded.

Dunn told Insolvency News Online (INO)  she does not believe that the transaction FEG wants reversed is voidable.

That view did not stop her approaching FEG seeking funding to investigate the transaction, which also involves Intelara Engineering Consultants Pty Ltd, the other party to the share sale agreement.

Intelara Engineering Consultants which was placed into liquidation in January, 2016. Jirsch Sutherland’s Chris Baskerville is liquidator appointed.

FEG declined her approach, perhaps because of its interpretations of the emails exchanged pre-Dunn and Dopking’s appointment and the inappropriateness of Dunn undertaking that role given what Justice Derrington said would happen if FEG succeeds in reversing the transaction.

“What the effect will be, if they’re successful, is that those liabilities will come back to the company,” he said.

“The monies paid out by the liquidator – general purpose liquidator – ought never have been paid out the monies, and the liquidator was told about this.

“But the whole arrangement looks like, and I’m not saying that it is, I’m just saying it has an appearance, of what insolvency restructuring people do.

“Protect the directors of the company who have provided securities to secured creditors, and that’s what this transaction – I’m not saying it was the intention – it had the effect.

“It relieved the secured creditors, the directors, of their liability to the NAB,” he said.

The final orders made and which were consented to by Dunn, are likely to see James undertake public examinations funded by FEG.