Liquidator evades removal bid – just

Romanis Cant principal Tony Cant has fended off an application brought by a creditor seeking his removal as liquidator of Foodcorp (Vic) Pty Ltd but only it would seem, by the skin of his teeth.

The judgment of Federal Court Judge Neil McKerracher in Sands Contracting Pty Ltd v Foodcorp (VIC) Pty Ltd [2020] FCA 1274 outlines the dismal imbroglio of events that led the judge to conclude last week that “the deficiencies of the administration are not in my view sufficient to require replacement of the Liquidators”.

No doubt Cant’s colleague and Foodcorp (Vic) joint and several liquidator Renee di Carlo will be mightily relieved.

While Cant had primary carriage of the matter she would have accompanied him in the tumbril if the plaintiffs had been made out a sufficiently condemnatory case.

“Mr Cant accepted that in the subsequent communication to creditors following the first circular, he did not correct the initial advice that there was one creditor of the Company owed in the vicinity of $250,000 and that that statement should have read that the creditor was ‘claiming’ such an amount” Justice Neil McKerracher.

As it turns out the pair have avoided removal, though in his concluding remarks the judge suggests that other remedies remain open to the plaintiff.

“I do not consider that it has been established that Mr Cant failed to act impartially and independently or fell so short in the exercise of duties that the rather extreme step of replacement is warranted, especially when other forms of relief may be available,” Justice McKerracher said.

“The Court is empowered in such circumstances to make such orders that it thinks are appropriate to do justice.”

The deficiencies and shortcomings alleged include the way Cant treated the claim of creditor Sands Contracting, his adjudication of Sands’ proof of debt and his subsequent admittance of that proof to vote at a meeting at a value of $1.

Justice McKerracher also dwelt on a howler of an error contained in the first circular to creditors.

“Mr Cant accepted that in the subsequent communication to creditors following the first circular, he did not correct the initial advice that there was one creditor of the Company owed in the vicinity of $250,000 and that that statement should have read that the creditor was ‘claiming’ such an amount,” the judge said.

“He accepted that the statement about the debt owing to the plaintiffs in that sum was one of only a few additions he had made to the otherwise pro forma content in the first circular to creditors.”

The judge ordered the parties to provide orders giving effect to his reasons including as to costs, so there may be some more mileage in this yarn yet. Support INO’s continued chronicling of the insolvency sector.