Rival IPs bound for court over alleged $150m fraud

Rival insolvency practitioners could shortly be facing off control of a corporate group that’s allegedly defrauded the Australian Tax Office (ATO) of $150 million.

Before any showdown with lawyers occurs however, the rivals have time to negotiate a less adversarial outcome thanks to the decision of the administrators of Dalma Form Specialist Pty Ltd (DFS) on February 7 to adjourn the second meeting of the company’s creditors for 45 days.

“The ATO informed us that their investigations suggest that the Company may be part of a group of over thirty (30) companies over the past fifteen (15) years that have allegedly operated in a way to defraud the ATO of $150 million in unpaid taxes. This was not known to us prior to our appointment.” Bruce Gleeson and Daniel Soire of Jones Partners.

The 45 day adjournment means DFS administrators Bruce Gleeson and Daniel Soire have time to negotiate an alternative to a court battle with Stephen Hathway.

The Helm Advisory founder is liquidator of Admin Form Pty Ltd which is a creditor in the administration of DFS. Hathway’s also being bankrolled ed to investigate Admin Form’s affairs with funding from the ATO and has concerns about how Incline Hire Pty Limited, company controlled by DFS’s director could take on DFS’s business and remain a creditor admitted to vote in the administration of DFS.

If a satisfactory resolution can’t be achieved Hathway may apply to have a court rule on the appropriateness of the proofs as soon as the 45 day adjournment period expires.

We asked the Jones Partners pair if they had calculated that convening and then adjourning the February 7 meeting was cheaper than applying for a convening period extension in the courts but received no reply by iNO’s publication deadline.

The adjournment however raises question about the suitability of convening the second meeting in the first place.

It was a meeting that the administrators never intended to hold, not that creditors would have known unless they read a few key paragraphs among the 91 pages that comprise the administrators’ January 30, 2024 report and creditor pack.

“There are various aspects referred to in our Report that require further time to investigate and consider in terms of potential recovery actions,” joint administrators Gleeson and Soire said.

“Accordingly, we intend unilaterally adjourning the meeting pursuant to Section 75-140 of the IPR to allow further investigations to be undertaken.

“We consider this important because the estimated returns to creditors under a Liquidation scenario and DOCA scenario may change as a result of those further investigations thereby enabling creditors to make an informed decision on the future of the Company given that a DoCA has been proposed.”

iNO’s mail is that Gleeson and Jones declined to allow creditors and their representatives to speak before the meeting was adjourned. We asked Gleeson and Jones to either confirm or deny but received no response prior to iNO’s publication deadline.

Certainly creditors had at least one topic of conversation – an alleged $150 million fraud the ATO claims has taken place over 15 years and that the regulator brought to the Jones Partners’ attention after they were appointed on December 27, 2023.

“Following our appointment we were contacted by The Australian Tax Office (ATO),” Gleeson and Soire said.

“The ATO informed us that their investigations suggest that the Company may be part of a group of over thirty (30) companies over the past fifteen (15) years that have allegedly operated in a way to defraud the ATO of $150 million in unpaid taxes. This was not known to us prior to our appointment. The ATO further alleges that Mr Igor Cikes (Mr Cikes) may be a party to the alleged fraud and the “controlling mind” of the Group.”

If that wasn’t bad enough Gleeson then had to disclose that he’d previously accepted appointments as external administrator of three entities, two of which were owned and controlled by Rade Cikes and Rose Cikes. Rade Cikes is the father of Igor Cikes.

“Those appointments commenced and concluded more than ten (10) years ago,” the administrators said.

“As part of our role as Liquidator of those companies, we reported the findings of our investigations to the ATO and ASIC. The ATO and ASIC did not request any further action be taken by us as
Liquidators and the ATO did not provide any funding to conduct further investigations or inform
us of any facts or matters that required further investigations,” the administrators said.

iNO makes no suggestion of wrongdoing in relation to the individuals identified by the ATO and the administrators.