As far as stumbling blocks go $50 million’s hard to miss and Shaun Fraser and Jonathan Henry surely anticipated a trip hazard emerging after insisting on a carve out of such proportions from the sale proceeds of the Tahmoor Coal mine south of Sydney.
In the NSW Supreme Court on Wednesday lawyers for the McGrathNicol partners arrived determined to force the hand of the primary obstacle, that being purported Tahmoor secured creditor Clydesdale Engineering (Clydesdale), a company associated with Tahmoor director and beleaguered British industrialist Sanjeev Gupta.
The court heard that the parties could not agree on a way to quarantine the anticipated proceeds of sale of the mine, binding offers for which are required by early next month.
Quarantining is required because Clydesdale’s second ranking security is disputed.
The liquidators however don’t want the hearing of that issue to derail their sale, which could take place as early as next month.
So they served papers on Tuesday night giving notice to the relevant parties of their intention to seek an expedited hearing.
Clydesdale sees no justification for expedition. Justice Ashley Black heard that as there was no binding offer to purchase the mine questions sought to be raised regarding Clydesdale’s security were “highly anticipatory and the just, quick and cheap determination of the issues doesn’t justify bringing on the hearing if there is no binding offer”.
“In open correspondence the liquidators propose to take out $50 million for themselves and their funder in priority to my client’s security,” counsel for Clydesdale said.
“Our clients have offered certain undertakings pursuant to sale proceeds. The sticking point is the provision of some oversight to ensure their interests are not sacrificed.”
Clydesdale also tended a document which “contains what we say is an admission that my client is a secured creditor”.
In response to that assertion counsel for the liquidators Vanessa Whittaker SC said her side does not accept that the correspondence, which contained details of the “funding waterfall” being proposed by Fraser and Henry, constituted any admission by the liquidators in respect of Clydesdale’s claimed security.
After hearing from the parties the judge agreed expedition was called for and made orders for a hearing on June 3 and 4.
Justice Black made no comment about Fraser and Henry’s proposal that they be entitled to carve out $50 million from the sale proceeds to repay their funder Alex Hone of Keyview Capital and cover their remuneration and costs. Most likely he wants dry powder to discharge on that particular topic when the matter is heard.
Further reading:
Tahmoor Coal – funder’s identity VAs’ biggest burden
Deed administrator silent on Tahmoor Coal shares
A very sensible outcome. Which was to be expected from the Court