Standstill didn’t last for VAs juggling DoCAs

Some creditors of Emerson Holdings (AUST) Pty Ltd (Emerson) might have taken comfort from the September 9 report of Liam Bellamy and John Kukulovski.

The Mackay Goodwin duo, who were appointed administrators on August 13, advised that proceedings seeking their removal had been paused by consent.

For creditors who’d voted against the resolution to replace Bellamy and Kukulovski at the first meeting this might have seemed good news.

In their report the pair revealed that a standstill agreement had been reached so that the disgruntled plaintiff – Emerson director Ashram Ibraheim – could assume the position of deed proponent.

Without providing details they also disclosed that the standstill was conditional on “various arrangements …. entered into with respect to the Administration process and conduct of the Administrators”.

Conduct of the administrators?

Confirming yesterday that this is a shareholder dispute that’s bled into the insolvency space iNO also learned that Ibraheim had told his co-directors he was taking his family to France and asked that the issue be worked out.

While he was in the air his co-directors convened an emergency meeting and resolved to appoint Bellamy and Kukulovski.

Incensed Ibraheim obtained consents from Jirsch Sutherland duo Chris Baskerville and Glenn Crisp and sought to install them at the first meeting on August 25.

The resolution fell short – 47 per cent for, 53 per cent against and Baskerville, who attended the meeting invited chairman Andrew Ngo to explain why he declined to utilise his casting vote.

Ngo said the administrators were under no obligation to vote against themselves but what Baskerville should’ve done is ask Kukulovski, who attended the meeting, why he chose not to chair it.

Between August 25 and the distribution of the report to creditors on September 9 Bellamy and Kukulovski arranged a truce of sorts with Ibraheim.

At the same time they also elicited a deed proposal from a rival director, which might explain why Ibraheim’s commitment to the standstill on his replacement proceeding at some point disintegrated.

Alternatively the resumption of hostilities, which became public yesterday in the Federal Court, might relate to the disclosure in the September report indicating that while they favour Ibraheim’s proposal Bellamy and Kukulovski decided not to rely on their their own commercial judgment, advising creditors that “Tim Myers and Daniel Nott of Hall Chadwick were engaged by our solicitors for the purposes of conducting an independent forensic analysis of the Company”.

We fired off an inquiry to Bellamy asking that had happened. What was provided by way of reply was confirmation that the second meeting of creditors was held and immediately adjourned for up to 45 business days, shortly after lawyers for Ibraheim and the administrators appeared yesterday morning in court.

There Justice Amelia Wheatley had set down the removal application for hearing on October 20 and 21 and our mail is that independence is also likely to be raised given Bellamy and Kukulovski are already the deed administrators of six entities related to Emerson Holdings (AUST) through common director Nick Young.