Pre-insolvency sharks are quick to detect distress and the chance of easy meat, or in the case of Mobius Distilling Company Pty Ltd (Mobius), a decent drink.
Mobius was an award winning distiller of millennial gins and other derivatives of Mother’s Ruin.
Its two directors who were also shareholders placed the company into administration in October 2023 with Worrells’ Graeme Beattie appointed voluntary administrator (VA) after their personal and professional relationship imploded.
Prior to Beattie’s appointment however two parallel courses of action aimed at resolving the dispute were being pursued.
One involved the directors entering into a sale agreement so the value of the assets and their respective shareholdings could be realised.
The directors – Phillip Leonard Crossley and Alex David Hardie – were seemingly closing in on an agreed form of words for the agreement in August 2023.
But Crossley had a Plan B and to that end had been availing himself of advice from pre-insolvency specialists de Jonge Read in secret while negotiating over the sale terms.
As court documents and evidence given at a hearing of oppression and breach of contract proceedings brought by Hardie and his sister and co-shareholder Carrie shows, Crossely’s alternative pathway involved among other things he and an associate issuing statutory demands to Mobius for payment with the aim of forcing a winding up on the ground of insolvency. Not that Crossly ever believed the company was insolvent.
This week NSW Supreme Court judge Ashley Black delivered judgment on oppression and breach of contract proceedings commenced by the Hardies after Mobius deed administrators sold the business to Infinity IP, a company Crossley incorporated after he began meeting with Hank de Jonge, Sandra Ciganda and James Leslie-Watt of de Jonge Read in June 2023.
iNO does not suggest that any of the individuals named advised Crossley to perform acts that constituted breaches of his duties as a director, only that they were advising him when some of the acts took place.
It was Infinity IP for example that was ultimately the successful purchaser of the Mobius business which was sold by David Ross and David Ingram of I&R Advisory after they were elected as deed administrators of Mobius in early 2024.
The Minutes of the reconvened second meeting show that Hank de Jonge – as proxy for Crossley and Crossley’s company Myline Brewing & Distilling Solutions Pty Ltd (“Myline“) – extracted an agreement from Beattie to accept a significant discount on his remuneration, caping it at $75,000 even though creditors were told the time costs incurred by Beattie and Worrells staff amounted to more than $90,000.
And as the judgment In the matter of Mobius Distilling Pty Ltd (in liq) [2025] NSWSC 539 shows, Crossley preferred the cunning plan he conceived – apparently with assistance from de Jonge Read – to a jointly-agreed sale with Hardie and he has pursued that scheme to his ruin.
“I find that his (Crossley’s) conduct as a whole which involved committing Mobius to a retainer of de Jonge Read (DJR) which was advising him how to bring about its demise, then causing the issue of the statutory demands and declining to explore the opportunity for Mobius to obtain finance to pay them; thereby bringing about the insolvency administration of Mobius and the forced sale of its business; and then asserting a right to ownership of the recipes to undermine the sale of its business other than to Mr Crossley’s associated companies, in a manner that was plainly adverse to Mobius’ interests in maximising the sale price of its business and that preferred Mr Crossley’s own interests to Mobius’ interests, all while Mr Crossley remained a director of Mobius – was a breach of his directors duties.”
Not only did the Hardies’ succeed in obtaining findings that Crossly breached his director’s duties but Lancaster Law & Meditation which represented them appears to have created new law in persuading the court to order that Crossley to buy the Hardie’s shareholding at a respectable value despite the company being in liquidation.
Costs are certain to follow the event and given the extent of the Hardies’ success Crossley must now be wondering if there’s ever been a worse way to spend $25,000, which is what he paid to retain de Jonge Read.
It is always the ones you expect.
It seems that Black J is perhaps saying “too clever by half”.
Oh well, never mind.