Monday, 30 July 2012

Pascoe to tackle Obeid trusts if appeal bid fails

PPB Advisory's Scott Pascoe.
Image courtesy PPB Advisory.
PPB Advisory's Scott Pascoe has agreed to act as trustee in bankruptcy to the estate of Moses Edward Obeid, in the event the son of former NSW Labor minister Eddie Obeid fails in his bid to reverse a $12 million debt judgment.

Pascoe consented to act after the City of Sydney Council commenced creditors petition proceedings against Obeid in the Federal Court on June 5.

 The petition is the latest in a series of bankruptcy-related applications the council has pursued since February, 2012, when the Supreme Court finalized orders from its 2011 judgment awarding damages in the millions to the Council in its dispute over smart poles with 41 year-old Obeid and his company, Streetscape Projects (Australia).
 Court documents show Obeid owes City of Sydney $12,520,712.09c. The judgment sum includes $397,242.00 in accumulated penalty interest.

The Court of Appeal is scheduled to hear Obeid's challenge to the Supreme Court judgment from November 26 to 28, 2012.

When asked this week if he had agreed to act on the condition the council guarantee indemnities and some cash upfront Pascoe said it would be inappropriate to comment before the appointment is confirmed.

Other trustees and insolvency law specialists contacted by SiN said the council would need to provide an indemnity and possibly even a fighting fund before any trustee took on the Obeid family trusts, which keep Moses and his wife Nicole in a style to which the majority of us are unaccustomed.

Pascoe's appointment is hypothetical for now. On July 11 both sides consented to an adjournment of the petition application until February 23, 2013. By that time it's expected the Court of Appeal will have handed down its decision.

The council’s willingness to adjourn suggests it has come only recently to an understanding of the potential cost to ratepayers if the debt judgment is overturned.

Up until the decision to adjourn the council was acting in accordance with the conclusions of Federal Magistrate Kenneth Raphael, who in his judgment of May 30 2012 highlighted the risks of delaying the bankruptcy proceedings.

"I have been informed that the case has been set down for the hearing of an appeal on 26 November 2012, Magistrate Raphael wrote.

"If the appeal is heard then, it is unlikely that a decision will be made upon it for some months so that time for compliance will be extended by over a year from the date of issue of the (bankruptcy) notice.

"This will cause a significant prejudice to the creditor in terms of the date of the act of bankruptcy and the relation back date.

"The relation back date is particularly important in a case such as this where the applicant appears to have no assets of his own but has available to him very significant assets through the use of trusts."

A bankruptcy law specialist contacted by SiN suggested the council might have relented after Moses agreed to a number of orders preventing him disposing of assets during the adjournment period.

The specialist said also that reversing a sequestration order could prove costly for Sydney City ratepayers if Moses Obeid was to win on appeal.

Contact SiN

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