Liquidators win $20m settlement from Merhis Corp

Merhis
AIIP president Stephen Hathway.
Consent of one liquidaotr enough despite joint appointment judge rules
Helm Advisory’s Phil Hosking.

iNO hears that common sense and self-interest have prevailed to deliver a big win for liquidators Stephen Hathway and Phil Hosking, and that means a big win for unsecured creditors of multiple entities associated with the Merhis construction group.

While official confirmation is pending, iNO can reveal that the people behind Merhis have agreed to pay around $20 million to Hathway and Hosking in their capacity as liquidators of Southern Cross Estate Developers Pty Ltd (SCED), Stacey ApartmentsArgyle Builders Pty LtdSouthern Cross Rigging & Construction Pty Ltd and Liverpool Business Estate Pty Ltd.

The settlement will discharge outstanding GST and income tax liabilities the companies owe to their largest unsecured creditor, the Australian Tax Office (ATO).

Critically, the settlement will see Hathway and Hosking discontinue an application for court orders freezing $30 million worth of assets and shelve plans to publicly examine members of the Merhis family.

If the application had been granted Merhis Corp would have been unable to complete sales of apartments, an unsustainable position for a firm operating in a sector accounting for between 20 per cent and 25 per cent of all insolvencies according to a March 2019 report by the Building Industry Credit Bureau.

It was only in May this year that the Merhis family through lawyers Gillis Delaney rejected allegations of phoenix activity made by Hathway the previous month at a meeting of creditors of another insolvent Merhis entity, Sidway Constructions.

In the statement Gillis Delaney said “amounts allegedly due to the ATO are not due” and that “It is our clients’ intention to see to it that amounts which are truly due to the ATO are paid as soon as practicable.”

Sidway’s liquidator Liam Bailey of O’Brien Palmer confirmed this morning that he and colleague Chris Palmer had signed a settlement agreement this week and would convene a meeting of the Sidway Constructions’ Committee of Inspection to seek formal approval as soon as possible.

The settlement comes only a few months after Hathway and Hoskings obtained orders setting aside a deed of company arrangement effectuated over SCED and orders that it be reinstated and the pair be appointed as its liquidators. Please take a moment to support INO’s continued chronicling of the insolvency sector.

Further reading:

Embattled IP May Be Grilled On Curious Proof Of Debt

About the Author

Peter Gosnell
Insolvency News Online illuminates the practice of insolvency Australia-wide, highlighting the triumphs and travails of the nation’s registered practitioners and the accounting and legal professionals who work with them. INO is produced by Peter Gosnell, former business editor and senior business reporter at The Daily Telegraph newspaper. During a decade-long career, your correspondent reported on such notable corporate collapses as HIH, One.Tel, Westpoint and Fincorp as well as some of the nation's highest profile bankruptcies and the investigations and prosecutions arising from Australia's most notorious instances of white-collar crime.

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