Queensland Revenue Office attacks Comlek DoCA

Wexted Advisors’ Andrew McCabe knew he was in a difficult position back in January when he came to chair the second meeting of creditors of the Comlek Group.

As the largest single creditor with a claim in excess of $9 million the Queensland Revenue Office (QRO) had already made it clear to McCabe and joint administrator Joe Hayes that it didn’t favour the deed of company arrangement (DoCA) being proposed despite terms which would see 60 per cent of the deed fund allocated to the QRO.

McCabe and Hayes however were aware that if the Group fell into liquidation 140 employees would be making a $1.8 million claim via the Commonwealth’s Fair Entitlement Guarantee, piquing the interest of the enthusiastically interventionist FEG Recovery Division. Rock and hard place much?

When time came to vote the DoCA had the numbers but not the value thanks to the QRO’s opposition so McCabe used his casting vote to get the deed approved.

In doing so he noted that the QRO objected because on its view the Comlek directors were using the DoCA regime for an improper purpose.

This was because the QRO had assessed a potential insolvent trading claim of up to $6.5 million against the directors, notwithstanding McCabe and Hayes’ investigations suggesting those directors had perhaps $500,000 in unencumbered assets.

In respect of the QRO’s opposition the Minutes of the second meeting record McCabe as saying: “The QRO has put the Administrators on notice that if the Directors’ DOCA is approved and executed, the Commissioner of State Revenue may apply to the Court to review the exercise of my casting vote in favour of the Directors’ DOCA, and further or alternatively to have the Directors’ DOCA set aside under section 445D of the Act”.

In April this year the QRO made good on its threat, with the Commissioner commencing proceedings in the Federal Court of Australia seeking a review of McCabe’s decision to use his casting vote or alternatively for orders setting the DoCA aside.

A hearing is expected later this month and in the meantime the Wexted pair have had to apply to the court for declarations that they are acting properly in declining to make any distribution to Comlek creditors until the outcome of the QRO proceedings are known.

See: McCabe, in the matter of Andrew McCabe and Joseph Hayes in their capacity as joint and several deed administrators of the companies listed in Schedule 1 [2023] FCA 1042

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