Martin Ford.
iNO would like to make it clear at the outset that in respect of aspersions cast on the conduct of PwC partners Martin Ford and Melissa Humann in the winding up of GTW Investments (Aust) Pty Limited (GTW), the creditor doing the disparaging has form.
Back in 2020 the Mitris family’s Pacreef Investments (Pacreef), which yesterday intervened in proceedings brought by Ford and Humann in the Federal Court, applied in the Supreme Court of Victoria for a declaration that the administrators of Pacific Biotechnologies Ltd (Pacific Bio) weren’t fit to continue in that role.
“The DIRRI is as fulsome as you could ever imagine,” Barrister Sam Rosewarne.
Asserting itself as a creditor in Pacific Bio, Pacreef wanted the court to toss out Hall Chadwick partners Richard Albarran, David Ross and Steve Gladman, alleging that they were conflicted because they had previously acted for Pacific Bio’s secured creditor group, which included GTW with whom Pacreef was already in dispute with in regards to a transaction whereby Pacific Bio would acquire Pacreef via preference shares Pacreef says were guaranteed by GTW. Clear?
Good. The alleged existence or otherwise of the guarantee proved to be a point of bitter contention between Pacreef and GTW that ultimately led to a judgment in February this year in Pacreef’s favour. But more of that later.
As is told in Re Pacific Biotechnologies Ltd [2020] VSC 636 about two weeks prior to the Hall Chadwick trio’s appointment as administrators of Pacific Bio, Gladman was engaged – by the secured creditor group – to prepare an investigative accountant’s report on Pacific Bio.
When he and Ross and Albarran were subsequently appointed VAs Gladman was still owed $18,000 for the work, something he ensured was declared in their DIRRI.
At the second meeting of creditors Pacreef’s proof of debt was rejected by Gladman as meeting chair and creditors resolved to execute a DoCA and appoint the Hall Chadwick trio as deed administrators.
Pacreef was subsequently unsuccessful in having the deed administrators replaced and Pacific Bio went on to enter a DoCA, though when it emerged last month it was promptly wound up with Cor Cordis partner Barry Wright appointed liquidator via a resolution of its member.
Undeterred if not enraged, Pacreef was back at it yesterday, raising questions around the independence of Ford and Humann at a hearing of the PwC pair’s application for orders appointing them receivers of the assets of the GTW Trust, of which GTW is corporate trustee.
The application is being brought in circumstances where Ford and Humann are prosecuting an appeal initiated prior to their appointment by GTW director, sole shareholder and Pacreef nemesis Graeme Wood, the millionaire founder of Wotif.com
The appeal follows a judgement in favour of Pacreef against GTW in respect of the guarantee dispute, which led to the issue to GTW in March this year of a statutory demand for more than $18 million.
Barrister Sam Rosewarne told Justice Tim McEvoy yesterday that an application by liquidators seeking to be appointed as receivers of trust assets wasn’t the appropriate place for the allegations and complaints being raised for Pacreef by Tim North KC.
Nevertheless the court heard that the appeal was being run for the liquidators by Gilbert + Tobin, the firm Woods first engaged to seek leave to appeal the judgement and which is a creditor in the liquidation for around $190,000 and which may, North said, be investigated in respect of its involvement in the company’s affairs.
Also upsetting Pacreef were Ford’s comments in one of his four affidavits supporting the receiver application about the GTW’s external accountants.
Despite saying it isn’t his role to “critique prior accounting records” the court heard that Ford has identified assets that were omitted from earlier records and is working with GTW’s external accountants Kelly Partners to obtain earlier records in circumstances where he has been advised of irregularities and abnormalities in those accounts.
According to Wood’s RoCAP Kelly Partners has a claim in the GTW liquidation for $18,740.00.
Adding a layer of complexity in respect of their dealings with Kelly Partners is an investment GTW holds in the Kelly Partners Investment Office Special Opportunities Fund #1, a managed private equity investment unit trust.
As Ford and Humann said of the $250,000, 10 year investment in their most recent report to creditors: “There is no liquidity during the term unless the trustees decide to repay the principal investment amount earlier and is therefore entirely illiquid.”
North told Justice McEvoy that as an officer of the court Ford is required to be transparent about what he’s found.
But when it came time to respond to Pacreef’s complaints, Rosewarne didn’t hold back.
He told justice McEvoy that the matters raised by North “don’t go within a bull’s roar of getting a liquidator removed” and that Pacreef’s complaints about the liquidators’ alleged failure to adequately disclose their prior relationship with G+T were way off the mark.
“The DIRRI is as fulsome as you could ever imagine,” Rosewarne said.
Less fulsome was an affidavit Ford filed at the 11th hour in support of the application which Ford wanted suppressed and which North told the court he knew nothing about. The proceedings were ultimately adjourned to a date to be fixed. The appeal is expected to be heard in first quarter 2023.
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