PPB avoids “acrimonious” Willmott litigation

If avoiding an acrimonious trial involving serious allegations of impropriety can be categorised as a good result then PPB Advisory’s Ian Carson and Craig Crosby have engineered such after the Supreme Court of Victoria endorsed a deed of settlement between the pair as Willmott Forests‘ liquidators and the company’s responsible entity, Primary Securities.

In the recent judgment of Justice James Judd in Primary Securities Ltd v Willmott Forests Limited (Receivers & Managers Appointed) (In Liquidation) & Ors [2017] VSC 375 (27 June 2017) the general reluctance of the judiciary to approve or authorise a course of conduct by an insolvency appointee is set aside. 

“Courts do not automatically accede to an application by a liquidator to approve or authorise conduct,” Justice Judd said.

“Not every compromise, agreed between litigants, and requiring court approval, is approved. Thus, to include such a term as a condition to performance is to assume a risk that a court may properly decline to express its approval or authorise conduct,” he said.

“In the present case, all parties to the agreement were represented on the liquidators’ application for approval.

“Context included the commencement of what promised to be a long and acrimonious trial, extending over a number of weeks, coupled with serious allegations of impropriety made against the liquidators,” he said.

Every application however has to be dealt with on its merits. Mitigating circumstances must be given their due. Carson and Crosbie became Willmott’s liquidators in March 2011. Primary Securities became responsible entity in December of the same year.

They’ve been at each other ever since, with most of the friction has been generated by the liquidators wish to disclaim the timber growers’ leases so they could sell the land and Primary asserting the grower’s perceived rights, thereby creating an encumbrance the liquidators could not shift.

Between 2011 and May this year – when the settlement negotiations assumed a degree of urgency for reasons which are not specified – the parties had been all the way to the High Court.

The agreement allows for Primary to purchase the land for $4 million paid in instalments with $490,000 going to the liquidators in satisfaction of a lien and the remainder to be distributed to Willmott’s creditors.

The judge acknowledged how difficult the dispute had been, how bitter the trial – now unnecessary – would have been, and ended by offering his congratulations.

“Grower rights over the land, and thus the existence of an encumbrance, was at the heart of the dispute,” he said. 

“That dispute, with attendant risks to all parties, has been resolved. The outcome for creditors is fair and reasonable, having regard to the valuations, and the conditions attaching to alternative offers.

“In my opinion the parties are to be congratulated on arriving at the compromise, giving growers another opportunity to get some value from their investment, and the creditors a fair, reasonable and definitive outcome,” the judge said.

After the article was published today Craig Crosbie requested right of reply. SiN regrets that the usual courtesies were unable to be offered due to deadline pressures this morning. Craig Crosbie’s response is as follows:

“PPB Advisory was not approached for comment in relation to this article prior to it being published. We believe the opening paragraph is misleading in that whilst allegations of impropriety made against the liquidators by Primary are mentioned, the article omitted to reference the judge’s finding that such allegations were baseless (refer para 5 of the judgment: “While the expression of outrage [by Primary] was understandable, as a foundation for contending impropriety on the part of the liquidators, it was elusive”). The liquidators’ motivation for entering into the deed with Primary was about securing a very favourable result for creditors. This is why the judge congratulated us on our approach.” – Craig Crosbie, Partner PPB Advisory.