SiN hears Nick Combis and his former colleague at Vincents Peter Dinoris might be on the verge of a settlement with Bendigo and Adelaide Bank, which has been pressing for a judicial inquiry into their conduct as Trustees of the personal insolvency agreements (PIA) proffered by Bartercard co-founder and multi-millionaire Brian Hall.
The Trustees’ statement of contentions shows that irrespective of what the bank thinks of how they handled the PIA and its subsequent and more generous amended version, bankruptcy regulator AFSA has “never raised any issues or complaint as to the conduct of the Trustees in their administration as controlling Trustees or in the administration of the amended PIA”.
Combis and Dinoris also dismissed the Bank’s submission supporting its application for a review as lacking cogent evidence and described criticisms of their conduct as unfounded, pointing out that at no time did they cease investigating Hall’s affairs.
The events which are the subject of the dispute took place at the beginning of 2016. On February 11 the bank obtained judgment against Hall to the tune of $1.666 million. Hall though was prepared, having already appointed Combis and Dinoris as his controlling Trustees pursuant to section 188 of the Bankruptcy Act on January 5.
A day later Hall proffered a PIA which would require him to pay $350,000 to the Trustees in full and final satisfaction of all creditors’ claims, with no income contributions payable, no assets or property made available and a release in respect of any voidable or antecedent transactions.
The return to creditors, who had an estimated $10.515 million in unsecured debts against Hall, was approximately 2.86 cents in the dollar. In their report to creditors Combis and Dinoris said they had considered the Original PIA “carefully and at length” and formed the opinion that it was in the best interest of creditors to accept the proposal. But it never went to a vote.
The bank queried the Trustees in relation to the original PIA and by the end of March Hall had scraped together enough to double the contribution. Combis and Dinoris advised creditors that they had “considered the Revised PIA “carefully and at length” and formed the opinion that it was in the best interest of creditors to accept the proposal.
On April 19, 2016 the revised PIA was voted on and approved despite the Bank voting against it. Three days later Hall executed his PIA. Five days after that Hall secured an agreement from certain of his creditors – known as “the Bartercard Entities” to subordinate their claims and not seek a dividend under the Revised PIA.
Those claims purportedly tallied almost $6 million and the Bartercard entities had voted in favour of the revised PIA. Stripping out their claims increased the dividend to all other creditors to approximately 30 cents in the dollar but the agreement was conditional on the Bank withdrawing its threat to have the revised PIA set aside. The Bank refused.
Over much of the middle of last year correspondence flew back and forth as a hearing crept closer on the Bank’s application to have Hall’s estate sequestered in bankruptcy. By September 2016 Hall had found enough to make a payment of $1,702,885.51 to the Bank and pay out the remaining creditors, excluding the Bartercard Entities.
That satisfied the Bank as to Hall and it discontinued its bankruptcy proceedings against him. All that remained was the application for an inquiry into the Trustees’ conduct. The Bank’s submissions make much of examples it believes illustrate the inadequacy of the Trustees’ investigations into Hall’s affairs.
It cites Hall’s declaration to the Trustees of an apparent lack of assets despite his lengthy history of high income earning; the apparent doubling of his liabilities between March 2015 and January 2016; the fact that he told the Trustees he didn’t own a car but when the Bank pushed the Trustees to confirm it Hall admitted his company, Coralnet Pty Ltd, owns a 2015 Porsche Macan worth almost $90,000 that he drives.
The Bank also alleged in its submissions that Combis and Dinoris “did not investigate what happened to the Kawasaki 750XI jet ski and Cruise Craft boat that Mr Hall disclosed as assets in his loan applications to Bendigo Bank but were not listed in his Statements of Affairs”.
There was also a heap more in relation to Hall and his wife’s interests in shares and options in entities like BPS Technology Limited, which was incorporated in January 2014 as the vehicle to list the Bartercard business on the Australian Stock Exchange (ASX), but if the settlement chatter is on the money then the court won’t rule on whether an inquiry is justified.