SV Partners pair ditch dubious appointment

Well this might propel skyward even the most obese of eyebrows.

In a judgment delivered in April this year but updated yesterday NSW Supreme Court judge Ashley Black recounts the curious tale whereby SV Partners’ Daniel Quinn and Darren Vardy took charge  – albeit briefly – as voluntary administrators (VAs) of Hunter Valley-based Dan Phillips Holdings Pty Ltd.

Their appointment came just as a wind up hearing was imminent and despite their appointor simultaneously conducting proceedings to prove the company was solvent.

For the purposes of his judgment – which ruled on whether a winding up hearing should have been adjourned given the company was in VA – Justice Black said Quinn and Vardy were appointed VAs by the sole director on March 31.

“There are matters in this case which raise concern as to the circumstances of the appointment of the administrator, and I say that without any criticism of the administrator, and as to the good faith of that appointment. On any view, the appointment came at the last moment, and contrary to the basis on which the matter had previously proceeded before the Court.”

He then reveals how even this is a matter of dispute citing correspondence between Quinn and secured creditor Westpac indicating the appointment date as March 31 and Vardy deposing that the the appointment documents arrived on April 2.

ASIC company records also list March 31 as their appointment date and April 13 as the date they retired. The same records indicate Smith Advisory’s Andrew Smith was appointed receiver/manager on April 5 and Mackay Goodwin’s Grahame Ward came on as court-appointed liquidator on april 3. But it’s not so much when as why the SV pair were appointed that prompted the judge to comment.

“On any view, the appointment came at the last moment, and contrary to the basis on which the matter had previously proceeded before the Court,” he said.

“Orders had been made by a Registrar on 15 February 2017 for the companies to serve the evidence on which they relied by 22 February. That had not occurred and, on 6 March 2017, I made orders, on the application of Counsel then appearing for the companies, permitting them to lead expert accounting evidence as to their solvency, including any issues as to balance sheet classifications, by 27 March 2017.

“It was implicit in that application that the companies then sought to lead expert accounting evidence to establish the fact of their solvency, not the contrary.

“Now, without explanation, and immediately before the winding up application was due to be heard, it appears that a person recently appointed, or possibly recently appointed, as the sole director of the companies has formed the view that they are insolvent or likely to become insolvent so as to appoint administrators to them.”

Also raising disquiet was the fact that the SV pair’s appointor had only very recently been installed as sole director.

“A second area of concern relates to the identity of the directors of the companies, since there are some inconsistencies as to the question of who was a director of the companies, and when, which may not impugn the validity of the appointment of the administrators but may nonetheless raise questions as to the good faith of that appointment,” Justice Black said.

To read the full judgment see: In the matter of Dan Phillips Holdings Pty Ltd & Anor [2017] NSWSC 954