McKern insolvency estimate repels challenge

McGrathNicol partner Robyn McKern.
Grant Thornton’s Said Jahani.

If dignified crowing is heard during the next McGrathNicol zoom meeting of partners iNO won’t be surprised.

It’s not every day that a forensic accountant has their sums validated by a Federal Court judge.

“The referee concluded that the group of companies was insolvent from 31 January 2017 and thereafter. That is in contradistinction to the opinion of the liquidators who in an earlier report concluded that the group of companies was insolvent from at least 1 December 2016.” Justice Angus Stewart.

Nor is it every day that liquidators are ordered to pay defendants’ costs, but we’ll come back to that.

The partner entitled to full-throated, triumphalist chest beating in this case is Robyn McKern, Melbourne-based head of McGrathNicol’s dispute advisory and forensic division.

McKern’s forensic accounting expertise had been called on in respect of a joint unfair preference and insolvent trading claim being pursued by Grant Thornton’s Said Jahani and John McInerney in their capacities as liquidators of four entities in the Delta Mining Group (Delta).

McKern’s job was to produce a referee’s report to assist the court during what is to be a complex hearing involving dozens of defendants and claims totalling around $25 million.

Upon submittance of the McKern report however the liquidators found much about which to be agitated, though nothing was more objectionable than McKern’s estimate of the date the Delta entities became insolvent, which at January 31, 2017 was two months later than the liquidators’ estimates.

That two month difference would the liquidators told Federal Court judge Angus Stewart hack more than $4 million off the unfair preferences claim, which is aimed at recovering almost $14 million from 13 defendants.

The liquidators asked the court to find that McKern had erred in four areas of law and order that the report be sent back to its author for amendment. Unsurprisingly, the defendants thought McKern’s estimate spot on and resisted.

Yesterday Justice Stewart delivered his verdict in Jahani (liquidator) v Alfabs Mining Equipment Pty Ltd, in the matter of Delta Coal Mining Pty Ltd (in liq) (No 3) [2021] FCA 1195, rejecting the liquidators’ contentions and ordering they pay the defendants’ costs, an outcome they had already conceded should occur if they were unsuccessful.

Further reading:

Plenty At Stake As Referee And Liquidators Differ

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