Jirsch duo may shake SPL scrutiny as lender blinks

Threats of special purpose scrutiny might shortly be lifted from the shoulders of Jirsch Sutherland partners Bradd Morelli and Trent Devine after one of the players in the hotly disputed FW Projects Pty Ltd liquidation blinked.

Manassen Holdings, the investment arm of wealthy food importer Roy Manassen and wife Cynthia last month wrote to lawyers representing the IGA-affiliated Karellas family.

In that correspondence, details of which were aired yesterday in the Federal Court, Manassen Holdings said it was abandoning its long held reliance on a contested security interest.

In the spirit of capitulation Manassen invited Karellas Investments, which is the party seeking to have a special purpose liquidator (SPL) appointed to FW Projects, to discontinue its application.

If Karellas agrees then Morelli and Devine, who have no objections to the appointment of an SPL, will be free to finalise a liquidation that has been dogged by litigation, most of it focussed on how Manassen Holdings came to be a secured creditor.

Karellas Investments has been working on opening an IGA supermarket at FW Projects’ Albert Street, Freshwater development for some time and has previously provided Morelli and Devine with third party funding. It commenced the proceedings to appoint an SPL in April of this year.

At a case management hearing before Federal Court judge Elizabeth Cheeseman Manassen’s lawyer Alan Shearer told the court that Karellas Investments wanted an SPL to “impeach the security”.

By relinquishing its reliance on that security Shearer said his client had removed the need for the circumstances surrounding its granting to be investigated.

Manassen Holdings had been funding FW Projects sole director Chris Rose and his investment arm Albert Investment Holdings in the underlying Freshwater Developments unit trust, which was financing the construction of the Albert Street development.

In September 2018 that funding was, with advice from Mills Oakley partner Damien Ward, elevated to project level and converted to a secured interest.

By April 2019 Morelli and Devine had been appointed to FW Projects via a creditors voluntary liquidation and within months their appointment was under challenge from Hindmarsh Construction Australia (HCA) and Bellerive Homes Pty Ltd, the latter of which had obtained judgment against FW Projects following an adjudication in respect of disputes that had arisen during construction.

As can be seen from In the matter of FW Projects Pty Limited (in liquidation) [2019] NSWSC 892 the attempts to remove Morelli and Devine and the basis of a bias were unsuccessful.

But the September 2018 arrangements which saw Manassen elevated to the priority position continued to rankle and if Karellas Investments’ proceeds and succeeds with its application for the appointment of an SPL, public examinations of the relevant parties, including Manassen’s officers and advisors will follow.

Now that Manassen however has offered to abandon reliance on the disputed security Karellas Investments might well choose to discontinue.

In that event the question of why Manassen Holdings would relinquish its rights to millions in property sale proceeds may well remain a mystery.

Further reading:

Jirsch Pair Endure As SPL Bid Resurrected

How Hard Is It To Replace Liquidators? This Hard.

Jirsch Pair Fighting To Keep Freshwater Plum

Karellas Investments Pty Ltd v FW Projects Pty Limited (in liq) [2021] FCA 870

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