KordaMentha trio ousted after 11th hour appointment

A Federal Court judge has killed off any chance three KordaMentha parters had of generating a ton of fees from the administration of a troubled investment fund.

Instead the fees will flow into the coffers of Deloitte’s insolvency and restructuring practice after Justice Mark Moshinsky yesterday ordered that Michael Korda, John Mouawad and Scott Langdon be removed and Jason Tracy and Luci Palaghia replace the KordaMentha trio as administrators of Keystone Asset Management Ltd (Keystone).

The application to oust Korda, Mouawad and Langdon was brought by ASIC, which was already smarting from a failed attempt to appoint Tracey and Palaghia as provisional liquidators (provliqs).

After the court refused the appointment of provliqs ASIC obtained orders on August 27 appointing Tracey and Palaghia as receivers.

According to their DIRRI, the KordaMentha trio had discussions on the same day with Keystone’s directors Maadhvi Patel and Paul Chiodo following a referral from Ashurst.

“There were a number of other interactions within the 24 hours prior to our appointment with the Company’s directors or stakeholders by way of email or phone,” the three stated.

“These were not substantive and mainly related to organising meetings or requests for and the provision of information.”

iNO asked Langdon if he and his colleagues were appraised of ASIC’s earlier attempt to appoint rival practitioners from Deloitte as provliqs but no reply was forthcoming prior to publication.

At the hearing yesterday ASIC’s barrister Michael Rush KC argued, successfully as it turned out, that allowing the KordaMentha trio to remain in office would lead to duplication of work and diminish the value of the existing asset pool.

In opposing the application Keystone’s barrister Christopher Withers SC said concerns about duplication “were misplaced” because the administrators’ and receivers’ roles differed.

Referring to material in evidence the judge however said the risk of duplication was high and made the orders ASIC sought.

Whatever costs the KordaMentha trio incurred up to that point however will be paid out of Keystone’s assets so in the end the risky gambit to potentially entertain a DoCA proposed by the directors or a related party won’t cost them a cent. Worth a try? Always!