Wave Projects DoCA facing termination bid

A group of creditors are hunting three Rodgers Reidy scalps after one of them used their casting vote to get a divisive DoCA over the line at the second meeting of creditors of Wave Projects Pty Ltd.

iNO’s mail is that in the event that the deed’s opponents succeed in having the DoCA terminated EY’s Morgan Kelly and Claire Bailey will be appointed liquidators, bringing to an end the involvement of Jack James, Paula Smith and Nicole Allmark, the three Rodgers Reidy WA partners referred the job by KordaMentha’s Richard Tucker, who’d been advising Wave Projects’ directors as part of a safe harbour engagement.

And while terminating a Deed of Company Arrangement is no lay down mazaire, a judge of the Supreme Court of West Australia last week concluded that the objecting creditors have a potential case, granting them an injunction to prevent the deed’s effectuation ahead of the hearing of their termination application.

The injunction was granted on July 7, the day after the second meeting at which James as chair deployed his casting vote when the the resolution approving the DoCA failed to generate a majority by value and those opposed were in a minority by number.

In their S439A Report of June 28 the administrators had recommended creditors endorse the DoCA, despite having identified a potential insolvent trading claim of between $6.1 million and $12 million.

The problem with the claim was that the administrators were unfunded and the directors could potentially raise defences courtesy of the safe harbour engagement.

James told creditors that the administrators had approached an undisclosed number of litigation funders and identified three – Omni Bridgeway, Harbourside and the Neil Cussen-backed Clover Risk Funding – as having signalled no interest.

Creditors also heard that the administrators had approached major creditor and Wave Projects’ client Paddington Gold in an almost certainly futile effort to obtain funding.

This was because Wave Projects’ directors had sought safe harbour after talks with Paddington to commit to additional funding broke down.

Creditors also heard that Paddington Gold’s $16 million proof of debt had been accepted for voting at the second meeting for its full value but “objected to” by deed proponent by Karli Holdings, a company controlled by certain Wave group directors.

Fuelling the urgency of those creditors seeking the injunction last week was the proposed three day period between execution of the DoCA and implementation of a creditors trust immune to termination.

Petitioning creditor Paddington is being represented by Minter Ellison while supporting creditors have engaged Vincent Young’s David Greenberg. The matter is due to return to court on July 25.