Question mark over Strong Room “jewel in the crown”

Federal Court judge Roger Derrington indulged all the parties when the freezing orders he granted ex-parte to investor EVP against Strong Room Technology Pty Ltd (SRT) returned to court yesterday.

EVP commenced the proceedings on March 31, three days after HLB Mann Judd trio Todd Gammel, Barry Taylor and Matthew Hocking were appointed voluntary administrators (VA) at an SRT board meeting held at approximately 2:30pm on March 28.

According to the Administrators’ DIRRI Gammel attended an earlier meeting on the 28th and gave a short presentation in respect of the administration process but wasn’t present at the later meeting during which it was resolved to install VAs.

And while it was Bridges Lawyers’ Ben Dibden who referred the appointment to the HLB trio, Dibden is acting for plaintiff EVP and it was Misha Saul, the head of the EVP Opportunities Fund who joined the SRT board only on February 26 this year who surely activated the alarm that’s seen recent media reports of fraud allegations made by EVP against some of SRT’s founders.

Curiously though, whilst the VAs are conducting an urgent sale process, it’s not entirely clear whether they have full control of all relevant assets given the comments of Ashurst partner Michael Sloan yesterday.

The DIRRI describes Ashurst as acting for SRT and Sloan told the court that a question mark remains over the capacity of SRT subsidiary Member Benefits Australia Pty Ltd (MBA) to continue to trade given the restraints imposed by the freezing orders.

That was critical he said because, MBA “is the entity of substance and worth”, and the “jewel the crown” and it was being forced to trade conservatively whilst the freezing orders were in place.

A search of ASIC records for MBA shows it’s a wholly-owned subsidiary of SRT but is not in external administration.

Neither the VAs or Sloan would comment when iNO asked why SRT and the administrators are being represented by William Henry Lawyers whilst the company’s wholly-owned “jewel in the crown” – which shares the same directors as SRT apart from Dipak Sanghvi who resigned as an MBA director on February 13 – has separate legal representation.

Clearly there’s a rift at board level between EVP’s nominee Saul and the SRT founders and creditors will get an opportunity to quiz the VAs on this and other matters at the first meeting on April 8.

Creating further issues for creditors, the VAs and the various parties to the proceedings is the presence as receiver of SRT’s bank accounts of Martin Walsh of Walsh & Associates.

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