Mark Korda.
It didn’t take long. In June PKF partners Glenn Franklin and Jason Stone were conducting public examinations into the circumstances surrounding the 2019 acquisition of the SKM Group by rival Cleanaway Waste Management (Cleanaway).
This month they pulled the trigger, commencing proceedings in the Victorian Registry of the Federal Court alleging multiple breaches of confidence against Cleanaway and various of its subsidiaries, against KordaMentha (KM) and its co-founder Mark Korda, as well as long time KM partner Bryan Webster and KM’s M&A unit 333 Capital.
For good measure the PKF pair are also alleging that in their capacities as receivers and managers of the SKM assets Korda and Webster breached Section 420A of the Corporations Act by failing to get the best price for the SKM assets.
The alleged breaches of confidence involve commercially sensitive information KM obtained in early 2019 when it was engaged to undertake an Independent Business Review (IFR) by SKM senior secured lender Commonwealth Bank of Australia (CBA).
Franklin and Stone also allege that the seriousness of the confidentiality breaches is magnified by the obtaining of commercially sensitive information by 333 Capital from Deloitte Financial Advisory (DFA), which in 2017 had been engaged by CBA to prepare an independent business review (IBR) of the SKM Group’s business and operations following a serious waste fire at the Group’s Coolaroo site in suburban Melbourne.
333 Capital it’s alleged used that confidential information to prepare the loan-to-own and receivership strategy KM then recommended to the Cleanaway board in circumstances where CBA was concerned about issues of conflict and wanted to avoid controversy by appointing receivers from KPMG.
But apparently having Cleanaway subsidiary Transpacific Innovations Pty Ltd purchase the CBA debt in exchange for $60 million and full indemnification from any blowback from SKM owners the Italiano family alleviated the bank’s concerns.
The allegations are contained in a lengthy statement of claim lodged with court by the liquidators’ lawyers, Holman Fenwick & Willan (HFW).
They claim that Transpacific Innovations acquisition of CBA’s secured debt prevented the SKM Group Companies from proceeding with a sale process that had been dubbed Project ©scar or any receivership process controlled by the CBA with independent receivers and managers from KPMG.
The relief sought includes an account of profits and/or equitable compensation, damages for breach of contractual duty of confidence and in respect of the claim for breach of section 420A of the Corporations Act, damages, equitable compensation or such further or other order as the court thinks fit.
As at the time of writing none of the respondents had filed a defence but no doubt a response will be coming. It wouldn’t be outlandish to see KM and Cleanaway apply to have the claim struck out.
A KordaMentha spokesman told the Australian Financial Review that the firm viewed the allegations as being without merit and insisted it had acted ethically and professionally at all time. Cleanaway also told the AFR it intends to vigorously defend the claims.
The matter is due to return to the court on August 22.
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