Liquidator off the hook for assignee approval bid

Liquidators with no funding will be relieved to learn that entering into a contract to assign a chose in action is not invalidated simply because it’s the assignee applying for court approval rather than the liquidator.

The question came before NSW Supreme Court Corporations judge Ashley Black yesterday after two parties turned up seeking leave to be heard in opposition to just such an application.

Assignee Raffy Holdings Pty Ltd (Raffy) was bringing the application for orders approving entry into a deed of assignment between it and Trent Hancock, in his capacity as liquidator of Digital Health Ventures Pty Ltd (DHV).

Raffy is linked to DHV director and IT entrepreneur Matthew Donnellan, who is also director of mobile commerce app developer TouchToBuy Pty Ltd, the petitioning creditor that initiated proceedings in November last year to have DHV wound up.

Hancock was appointed liquidator on February 27 this year but before he’d been able to access the books and records he entered into the deed of assignment with Raffy, conditional on the payment of $10,000 and the obtaining of court approval to assign to Raffy choses in action which Raffy intends to fund itself.

The real sweetener for Hancock is that if Raffy wins any recoveries, Hancock gets 10 per cent to help with any shortfall in remuneration and disbursements and potentially fund a dividend.

DHV was a 50/50 joint venture formed in 2014 between TouchToBuy and NIB Holdings Pty Ltd.

In his RoCAP Donnellan states that the assets of the company include debts owed to DHV by fellow directors Brendan Mills, Roslyn Toms and Michelle McPherson, the latter currently chief financial officer (CFO) at IAG.

Also identified as a debtor are NIB Holdings, NIB Healthcare Limited and NIB Holdings director Mark Fitzgibbon.

Donnellan declared that both Raffy Nominees Pty Ltd and TouchToBuy are owed money by DHV and states that the company ceased trading in 2017 after the main assets were sold and the proceeds of sale transferred in full to NIB Holdings.

Those assets were sold to digital healthcare directory Whitecoat for less than $5 million. In 2021 Whitecoat was acquired by CBA.

Through that period acrimony between Donnellan and his former colleagues at NIB burned ever brighter.

The NIB parties are now seeking monies they claim Donnellan owes as part of his 50% shareholding in DHV.

Donnellan has launched a cross claim and is chasing what he claims is his cut of the proceeds of sale of the DHV assets to Whitecoat.

NIB’s claims and the cross claim are due to be heard in the NSW Supreme Court next week.

Yesterday counsel for NIB Holdings James Arnott SC explained that if he was granted leave to be heard he’d seek to have Raffy’s approval application adjourned and heard by the trial judge.

The court heard that Hancock, after serving on the parties notice of his intention to enter into a deed of assignment with Raffy had received letters from law firm Mallesons warning him that their client would seek to derail the assignments and pursue him personally for costs.

At the heart of NIB’s argument against the assignment were clauses in the contract entered into between Hancock and Raffy which on Arnott’s construction indicated that for the choses to be assigned, Hancock had to be the party making the application for the court’s approval.

Justice Black however wasn’t having it, preferring the submissions of Raffy’s silk Doran Cook SC

In his ex-tempore judgment he said that despite what the wording of the clauses of the Deed of Assignment might indicate, the application was not invalidated by the fact that the assignee rather than the liquidator was the party making the application.