HLB Mann Judd among first in line for FEG’s new focus

There will no doubt be much anticipatory lip licking in the FEG Recovery and Active Creditor divisions housed in the Department Employment and Workplace Relations (DEWR) now that the Federal Government has decided to unleash their particular expertise on the so far inadequately harvested orchard that is unpaid superannuation.

In a statement released as part of budgetary measures revealed on Tuesday night the government said it is “recalibrating the Fair Entitlements Guarantee Recovery Program to also pursue actions to recover outstanding superannuation guarantee charge (SGC) in insolvent estates”.

“The Chairperson advised that the two entities (Remagen ln2 & ln2B) which voted against the
funding arrangement are entities related to the Remagen Group, associated with the former Director of the Companies, Mr Simon Raftery. Part of the proposed investigations would be the conduct of the former Directors including Mr Raftery, therefore, any related party opposition to the funding and examination by Mr Raftery was not surprising.” Minutes of Meeting, IN2 Food Manufacturing, 26/02/2024.

Until now responsibility for SGC recoveries has lain with the Australian Taxation Office (ATO), which as we know already has a very full plate, what with tens of billions of unpaid company tax yet to be recovered from the nation’s small and medium enterprises (SMEs).

But from July 1 this year FEG will be in a position to fund liquidators to go after SGC and iNO has come across a case which might see HLB Mann Judd partner Todd Gammel among the first.

Coincidentally, the mater involves former BRI Ferrier practitioner Simon Raftery and his Remagen Capital Group, who featured in our recent coverage of the fallout from Remagen’s failure to secured $4 million in indemnity funding for the former administrators of New Wilkie Energy Pty Ltd.

At a concurrent meeting of four companies in the IN2 Foods Group back in February this year Gammel’s attempt to gain creditor approval to execute a funding agreement with FEG was foiled by Raftery’s Remagen lnvest ln2B Pty Ltd and Remagen lnvest ln2 Pty Ltd.

As the meeting minutes reveal: “The Chairperson advised that the two entities (Remagen ln2 & ln2B) which voted against the funding arrangement are entities related to the Remagen Group, associated with the former Director of the Companies, Mr Simon Raftery.

“Part of the proposed investigations would be the conduct of the former Directors including Mr Raftery, therefore, any related party opposition to the funding and examination by Mr Raftery was not surprising.”

When Gammel put to the meeting resolutions for approval of his fees and expenses the Raftery backed creditors voted in favour. Maybe Raftery was just thankful Gammel had admitted his unsecured claims?

Gammel’s report to creditors ahead of the February 26, 2024 meeting identified: “Outstanding Employee Superannuation contributions of circa $1.8m from mid-2022 onwards; Outstanding PAYG Withholding of circa $5m from May 2022 mitigated by GST credit of circa $2m; and initial insolvent trading claim of circa $12.5m subject to defences raised by the Previous Directors and other director duties obligations”.

Raftery’s blocking of the funding resolution however is not the end of it.

On May 7 Gammel initiated proceedings in the Federal Court seeking orders approving his execution of the funding agreement with FEG.

The matter is due for a first case management hearing on May 23 and the court file so far shows no sign of an objector.