Pre-appointment work raises creditor suspicion

Few things provoke creditors more than the suspicion – validly held or not – that administrators are in cahoots with their appointors, though charging $650,000 in fees for four week’s work can also prove combustible.

In the case of Perth home builder Mercedes Group, there’s a surfeit of doubt amongst the unsecureds due in part to the administrators’ unfinished pre-appointment work on an investigative analysis (IA) report commissioned in January.

The administrators – Cameron Shaw, Richard Albarran and Hugh Dominish – were appointed as voluntary administrators (VAs) of Mercedes Group Pty Ltd and Inka Builders Pty Ltd and liquidators of parent entity Western Alliance Pty Ltd on March 20, 2025.

Our mail is that creditors are upset about the IA report, which Hall Chadwick was engaged to prepare by the companies’ directors in exchange for $10,000 plus GST upfront and a further $10,000 plus GST upon completion.

While Shaw and his colleagues magnanimously declined to demand the second payment since the report remained unfinished at the time of their appointment, their pre-appointment involvement – detailed in two DIRRIS – has some in a flap, particular in relation to $3 million said to be owed to the business’s former owners and a $1 million indemnity offered by appointing director and 51 per cent David Reynolds and outlined in the second DIRRI.

The DIRRIs include details of meetings with the former owners and iNO ha been told creditors are suspicious about the vendors’ secured claim for the $3 million and want more detail, including who from Perth law firm Hotchkin Hanly met with the Shaw and his Hall Chadwick colleagues prior to their appointment.

Creditors were due to vote on a DoCA proposal this week and while iNO cannot report on the outcome just yet, that’s not a cause for suspicion.