Pitcher Partners’ Paul Weston is displaying exceptional optimism as he attempts to prosecute an insolvent trading case without the benefit of books and records of Starcom Group Pty Ltd.
Weston was appointed liquidator of Starcom in early 2011 but only launched the $5.5 million claim in early 2017.
Since then he’s reached settlements with Starcom’s chief financial officer and its company secretary and, emboldened and in funds, has continued to press chief executive officer (CEO) Jega Muttucumaru Rajan and non-executive director Mariapillai Pathmanaban.
This week however the defendant directors pushed back via an interlocutory application for a permanent stay of the insolvent trading proceedings, heard in the Federal Court by Justice Michael Lee.
Ironically, while Weston’s case seems optimistic, the defendants are drawing on pessimism.
Rajan and Pathmanaban are arguing that it is unfair and unrealistic to expect them to defend a complex insolvent trading claim when they have no books and records upon which to found a defence.
Weston is opposing the stay, arguing that the directors are to blame for the books and records’ absence, which they deny. And there are complicating factors.
Starcom’s external accountant was BDO NSW-Victoria, which broke up in 2012 owing $100 million to CBA and Westpac.
While numerous staff and partners fled to Grant Thornton it is unclear if any of Starcom’s financial records went with them or what happened to them. And in 2013 Starcom’s auditor died.
Then there’s the issue of Starcom records kept by a document storage facility that continued to send its invoices to Starcom’s post office box for the first few years of the liquidation.
They were never paid so eventually the storage firm destroyed the material but Weston and his Pitchers’ team – who at that stage had no funds – didn’t discover the existence of the facility until much later when they undertook a detailed review of what files they did possess ahead of launching the insolvent trading claim.
Complicating the picture even further is that four related entities in the Starcom Group were subject to a deed of company arrangement (DoCA) prior to Starcom Group Pty Ltd’s liquidation.
And then there’s the Netsuite software system which can’t be accessed because nobody seems to know the password.
Justice Lee told the parties he was about to go on leave for a month so the matter won’t be decided till August earliest, if one is optimistic.