McGrathNicol’s Jason Preston.
While reading the declaration of independence, relevant relationships and indemnities (DIRRI) filed by the four McGrathNicol partners appointed voluntary administrators (VAs) of RCR Tomlinson Ltd last week, INO was gripped with a sense of deja vu.
The DIRRI provides significant detail on McGrathNicol’s pre-appointment involvement with the failed engineering firm, much like the supplementary DIRRI KordaMentha lodged on June 22, 2017, a week after its initial disclosures in respect of extensive pre-appointment work undertaken by that firm for Ten Network Holdings (TNH).
We all now how that ended. Sandra Sully’s still reading the news an hour before her rivals. The Project’s still trying to out-ABC The Drum.
RCR Tomlinson however looks less likely to attract a cashed up saviour from afar, though if reports in this morning’s Australian Financial Review are correct then that’s not what they want.
According to the AFR it’s blood that’s sought, directors’ blood, spilt during public examinations that would require the company to be placed into liquidation and the liquidators, whoever they might be, to be adequately funded. That could instil a sense of deja vu too, come to think of it.
Also like the supplementary DIRRI documenting KordaMentha’s pre-VA involvement at TNH, McGrathNicol’s DIRRI lists the dates of meetings and the names of participants who attended 20 of those meetings in the months leading up to the decision by the company’s directors to place RCR Tomlinson Ltd in VA.
And like Korda’s supplementary, the McGrathNicol DIRRI discloses that while McGrathNicol had been engaged to assist with assessing things like cashflow, contingency planning for a formal insolvency appointment was also well in the mix.
Apparently the contingency planning for a VA ” …. did not involve the provision of any advice to any RCR Group member’s board, their individual directors or the management of the RCR Group on their duties under the Corporations Act 2001, the management of the RCR Group or in relation to their management of the affairs of or the solvency or insolvency of the RCR Group.”
Further, we learn that the pre-appointment work was conducted in two phases with the first beginning on August 13 this year when RCR Tomlinson chairman Rod Brown approached McGrathNicol partner Robyn McKern while RCR Tomlinson’s legal advisor Tim Klineberg from King & Wood Malleson’s (KWM) made contact with McGrathNicol cashflow specialist Jason Ireland.
The DIRRI is signed off by Jason Preston, Jamie Harris, Matt Caddy and Rob Brauer and as Preston looks likely to be the lead appointee it will be interesting to hear creditors’ questions at the first meeting to be convened on Monday, December 3. So much pre-appointment involvement. So little cause for conflict.
Peter
It is called Pre Planning and if done by big firms it is acceptable. If Small IP firms conduct them selves in this way it is branded Pre Packaging and we know that is not allowed. So I support Pre Planning for the big and for all. When it is for all it is called a level playing field. Not asking for much. Cheers
Peter.
Sorry I missed the newly coined term in this space. Contingency Planning. Allowing one to give advise on a whole range of things and come back and review how $100 million dollars of fresh capital gets burnt following your appointed as an independent external administratior..
Should have crossed referenced the contingency planning work that McGrath did for several months before their appointment in the Toy r us administration. Great work when you can get it.
Cheers
Peter
The Dirri makes it clear that the money was paid into McN trust account prior to the invoice being raised therefore there is no debtor creditor relationship and implicity no unfair preference. This is too clever by half. Suggest you ask how much of the work that was invoiced was performed prior to the payment of funds into trust.
Ripping us off for $500k! Mcgrathnicol need to pay it back immediately and distribute to creditors! Will be raising at the creditors meeting.
MGN allege no unfair preference because the invoices were raised after funds paid into trust.
Possibly still an unfair preference if the work was performed prior to the funds being paid.
To convince members to adhere by the rules of the game, the rules have to be applied to all parties within an industry equally. I leave it to the readers to judge for themselves whether was the case here.
In my humble opinion, this is a case of having one’s cake and eating it as well. Firms, large or small, have to at the start decide whether they are going to service their clients as a restructuring advisor or as an Administrator, not constantly trying to find ways to sidestep clearly set out guidelines by ARITA on what constitutes conflicts of interests. Otherwise it makes a mockery of ARITA’s recent emphasis on ethics in its educational module.
ASIC and ARITA, perhaps less harping on accidental late ASIC lodgements by otherwise well-meaning SME practitioners, and more enforcement of your own conflict of interest code of conduct on the bigger end of town?