Jirsch punted as Westpac declares preference

Insolvency practitioners need to be a thick-skinned and philosophical lot.

Resentful creditors, regulators inclined to scape goat and duplicitous directors make for a generally adversarial stakeholder group that’s all too eager to pillory appointees at the merest whiff of an oversight.

It’s no profession for those who need to be loved and when a practitioner cops a kicking they need to demonstrate iron resilience, as Jirsch Sutherland’s Chris Baskerville no doubt knows after his most recent dust up with the fates.

In this instance the drubbing came shortly after Baskerville accepted the appointment as administrator of multiple entities within director Scott Dwan’s Scooter Group of companies.

As is outlined in his DIRRI for Dwan’s ABC Group Holdings Pty Ltd, Baskerville knew early on that this was a medium-to-large sized administration – the Group employed several hundred tradesmen and was a significant supplier of carpenters and plasterers to the construction sector – and so he asked for $200,000 in indemnity funds to be deposited in the Jirsch trust account.

Lawyer Chad Gear who referred the appointment to Baskerville subsequently asked if $100,000 would cut it.

Turns out it would. Baskerville accepted appointments as voluntary administrator (VA) of ABC Group Holdings Pty Ltd on November 28, 2022 and on November 30 was appointed VA of Scooter Group Pty Ltd, as well as VAs to other group entities.

But any thoughts he had of getting his teeth into the job – and pre-appointment meetings suggest a trade-on was contemplated – were soon dashed.

Among the attendees at the first meeting of ABC Group Holdings on December 8 were Deloitte’s Tim Heenan and Sam Marsden, who’d been appointed receiver managers of Scooter Group Pty Ltd on December 5 by secured creditor Westpac.

Also attending was Grant Thornton partner Graham Killer and as the Minutes show, after Baskerville advised the meeting that Killer and GT colleague Matt Byrnes had provided a consent to act as replacement administrators he asked the lawyer acting for Westpac to explain to creditors why the bank was proposing to replace him. It was an invitation probably best left unextended.

KL Gates partner Jason Opperman took the floor and said his client “held concerns with a number of pre-appointment transactions and agreements that would require significant investigations from the appointed Administrator”.

Westpac he said has a strong working relationship with Grant Thornton and is comfortable with the firm’s expertise in forensic accounting as well as its available resources being an international firm.

Opperman added that the appointed administrator would require financial assistance to conduct investigations, which Westpac has agreed to provide to Killer and Byrnes in the event that they were appointed as joint and several administrators of the companies and that appointing the GT pair would, in Westpac’s view, maximise the return to Westpac as well as to priority and unsecured creditors of the Companies and align creditor values.

Now if you were a thin-skinned type or a practitioner who’d not yet racked up much experience you could be inclined to take that a might personal.

After all, the explanations provided by Opperman are akin to him saying Westpac doesn’t think Jirsch can tackle the job and the bank’s not going fund it to try.

And if Baskerville was hoping to find an allay in that most perennial of unsecureds he was disappointed.

When asked for his view as to the appropriateness of changing administrators Deputy Commissioner of Taxation (DCoT) representative Reeves D’Souza replied that while he had no issue with the incumbent he “accepted the reasons provided by Mr Opperman” and confirmed that “the ATO would support the replacement of Administrator in this instance”.

The herd had mooed and as a consequence Killer and Byrnes were appointed VAs replacing Baskerville on seven entities in the broader Dwan group. But he was still VA of ABC Group Holdings.

That changed on December 15 when creditors delivered the coup de grace, ditching Baskerville and Jirsch from this appointment too.

But before the vote, Baskerville had filled creditors in on the Grant Thornton pair’s ascendancy and then asked the new appointee’s representative Matt Mullen “whether it was the replacement joint and several administrators’ intentions to seek approval for Jirsch Sutherland’s remuneration conducted up to 8 December 2022 on the above matters as well as work conducted with respect to the company (should he be replaced at this meeting) in their report to creditors pursuant to Section 439A of the Act and Division 75-225 of the IPR”?

Al the Minutes record in respect of any response is: “Mr Mullen advised that he was not aware as to the joint and several administrators intentions in this regard.”

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