Trustee insufficiently independent to be liquidator too

Two trustees, each in control of the property of a man and a woman now divorced, disputes between the trustees as to rights to property and one trustee wanted to be appointed liquidator of a company the couple previously jointly controlled.

“It is inconceivable how the Plaintiff could, as liquidator of the Company with duties to creditors, adjudicate on a proof of debt that he lodged in his capacity as trustee of the bankrupt estate.” Justice Penelope Neskovcin.

Even without the hurdles pertaining to independence that such a scenario involves, was there ever any prospect that the other trustee would agree?

Certainly not in this case, which pitted PCI Partners’ director Phil Newman against Oracle Insolvency Services’ Nick Cooper.

As is told in Newman (Trustee) v El-Sheikh Investment Holdings, in the matter of El-Sheikh Investment Holdings [2025] FCA 681 Newman is the trustee in bankruptcy of a Mr Khaled Mohamed El-Sheikh (Khaled).

He became trustee in bankruptcy in December last year after Khaled’s creditors, who are reportedly owed some $15 million, rejected a compromise via Personal Insolvency Agreement (PIA).

On being bankrupted Khalad’s shares in El-Sheikh Investment Holdings Pty Ltd vested with Newman, making the trustee sole shareholder.

One of those two shares however had been transferred to Khaled as part of final consent orders entered into between Khaled and his then wife Kylie El- Sheikh (Kylie) in Federal Circuit and Family Court of Australia proceedings on June 27, 2024.

Cooper was appointed as controlling trustee of Kylie’s property three days later and her creditors, who number far fewer than her ex-husband’s, accepted her PIA on October 29, 2024.

At the heart of the dispute is property held by El-Sheikh Investment Holdings Pty Ltd in Portland Victoria which was sold in 2021 with settlement due by December 2022.

An oddity of the sale that a liquidator would want to investigate is that the $675,000 price was only $15,000 more than the price paid for the property when it last changed hands in 2007.

Cooper wants 50 per cent of the property sale proceeds to go to Kylie’s creditors whereas Newman contends that such a division would be inequitable given the much larger number of creditors proving in Khaled’s estate. He’s also disputing that the company is bound by the final orders made in the Matrimonial proceedings.

Correspondence between the pair’s lawyers helpfully reproduced by Justice Neskovcin show that last month Cooper would drop his opposition to Newman being appointed liquidator of El-Sheikh Investment Holdings Pty Ltd if Newman agreed to a fifty fifty split of the property sale proceeds and of a sum of unclaimed money not covered by the final consent orders the couple agreed to last June.

Newman is clearly not prepared to let half go without a fight which was why it’s remarkable he believed a court might consider him sufficiently independent to seek to be appointed liquidator.

In her judgment justice Penelope Neskovcin said Cooper was sure to seek some variation of the final orders made in the matrimonial proceedings and in such circumstances, “It would be untenable for the Plaintiff to participate in a dispute regarding the Final Orders in his capacity as trustee of the bankrupt estate of Mr El-Sheikh and as liquidator of the Company, at the same time.”

And if untenable was insufficient, inconceivable works just as well, with her honour saying: “It is inconceivable how the Plaintiff could, as liquidator of the Company with duties to creditors, adjudicate on a proof of debt that he lodged in his capacity as trustee of the bankrupt estate.”

That left the only question being who would fill the role as liquidator. Both Newman and Cooper were agnostic on that issue and so orders were made installing Rodgers Reidy director Renée Di Carlo.