The US directors of Mawson Infrastructure Group Inc (MIGI) have been denied leave to set aside the W Capital Advisors DoCA and ordered to pay their opponents’ costs. Given they’ve yet to provide MIGI’s Australian liquidator with the company’s books and records despite having 18 months to do so, the process of recovering those costs might yet provide further grist for iNO’s mill.
This morning’s decision to dismiss MIGI’s application for leave is the second blow the Yanks have copped in a week.
On Tuesday Federal Court judge Kylie Downes declined to terminate the winding up of MIGI – which is a foreign registered corporation operating in Australia – and ruled that its liquidator – HM Advisory’s Cameron Gray – would be acting appropriately in defending proceedings for contempt brought against him in the US Bankruptcy Court in Delaware by those same US directors.
Justice Downes also gave Gregory Martin, Michael Hughes and Philip (or Phillip) Stanley seven days to hand over the company’s books and records and ordered that they pay Gray’s costs, W Capital’s costs and those of interested party James Manning, a former director, founder and CEO of MIGI pursuing entitlements he claims he’s owed.
Gray may not be particularly happy about Justice Downes declining to terminate the winding up – it was his application after all – but he at least now has the Federal Court of Australia’s imprimatur to act as a liquidator is required, free from the encumbrances imposed by orders made in the US Bankruptcy Court.
That freedom includes defending himself against proceedings for contempt brought in the US, though given this week’s decisions down under much could happen before July 8 when the contempt motion returns to the court in Delaware.
And you never know. Now with clarity from an Australian court the US directors may obtain better informed advice and find no good reason to withhold the books and records any longer. We shall see.
Justice Downes also determined that Gray was entitled to use indemnities provided to him to cover his remuneration and costs in the liquidation, which NSW Supreme Court judge Ashley Black this morning described as not “a model of international cooperation in cross border matters”.
In declining to grant leave to proceed against the W Capital Advisors DoCA Justice Black focussed on the almost $30 million in proof of debts lodged with Gray and the absence of any firm indemnity or security that Gray, as a necessary party to the set aside proceedings, could rely on in the event of an adverse costs order.
Justice Black also ordered that the MIGI’s US interests pay the costs of Gray and the W Capital Advisors’ deed administrator Brad Tonks, who’d neither consented to or opposed the application but adopted W Capital Advisors’ submissions in opposition.
The next step in this international imbroglio comes next week in the US when we’ll find out if the MIGI interests intend to press on with the contempt claim against Gray.
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