Liquidator and DoCA DAs feud over $8 million

With $8 million awaiting distribution it’s no surprise an enterprising practitioner has identified a potential means to relive a deed fund of half its contents, and no surprise the deed’s administrators are resistant.

If successful, TTJ Advisory’s Thyge Trafford-Jones will have to amend his earlier reports to creditors of Special Gold Pty Ltd (In Liquidation) in which he advised that he did not expect to pay a dividend.

In the Federal Court this morning Justice Ian Jackman heard that Trafford-Jones believes half the $8 million in the Dyldam Developments deed fund is Special Gold’s property.

Cathro & Partners’ Simon Cathro and Andrew Blundell will have bad news for creditors participating in the Dyldam Developments Deed of Company Arrangement (DoCA) should their defence of Trafford-Jones’s assault fail.

The court heard that the alleged misconduct of Special Gold’s former director Sam Fayad enlivened a claim on behalf of Special Gold’s creditors for up to $4 million against the deed fund, which Cathro and Blundell are eager to distribute.

Trafford-Jones is alleging that a scheme was put in place aimed at removing the assets of Special Gold for the benefit of the Fayad family. iNO makes no suggestion of wrongdoing.

Counsel for the deed administrators Farid Assaf told the judge that Trafford-Jones’ claim was hopeless because director’s duties breaches couldn’t be brought against a company, even when leave has been granted to proceed against a corporation in external administration.

We can only speculate on how Trafford-Jones is funding his legal team, which today saw Marcus Pesman SC and Michael Rose appear instructed by ERA Legal but imagine the ATO, which 12 months ago lodged a proof of debt for more than $500,000 in the Special Gold liquidation, might know the answer.