|Casa Barakat, Roseville Chase|
Photo: SiN Images
The first step towards paring the four trustees back to one will be taken on December 19 when former partner Tony Barakat submits a proposal for a composition.
The composition - under section 73 of the Bankruptcy Act - comprises an offer by Barakat of $2 million.
The funds comprise $450,000 to be prised out a super fund with a 139ZQ notice and $1.55 million sourced from the proceeds of the sale of his wife Karan Barakat's apartment in the Toaster at Circular Quay.
Barakat's joint & several trustees Scott Pascoe and Andrew Scott from PPB Advisory have another $1.954 million to tip in.
Also on the table are Barakat's Slater & Gordon shares, which he received when S&G bought Keddies for $32 million in cash and stock in 2011.
Proceeds will be realisable once they come out of escrow. Pascoe said this could raise an additional $700,000 depending on the share price at the time.
And finally there is $450,00 in debts owed to Barakat by two relatives.
One is Lebanese businessman Anthony Ghalloub, who stormed to unfortunate prominence in March this year when it was reported that a 32 year old man known to Mr Ghalloub had turned up at the family home one evening and shot himself dead in an en-suite bathroom. The other relative is real estate boss John Sukari.
Pascoe said neither man had responded to letters seeking repayment of the debts and that he had engaged a debt collector to try and recover the money. SiN's calls to Mr Sukari were not returned.
To get the funds Barakat is offering however, creditors must agree to two conditions.
One is acceptance that endorsing the composition will see Barakat's bankruptcy annulled. The second involves appointing a composition trustee.
The man nominated is Ferrier Hodgson's Max Donnelly, who confirmed he has consented to act for Barakat.
Donnelly is already trustee in bankruptcy to the estate of ex-partner Russell Keddie. He has also consented to act for the third former Keddies partner, Scott Roulstone, who is preparing a draft composition proposal with the assistance of his trustee, Rod Sutherland of Jirsch Sutherland.
However even if Barakat's creditors reject the Composition, Pascoe and Scott are required to put to a vote a resolution seeking the appointment of Donnelly in their place. In their most recent report to creditors Pascoe and Scott argued it was against creditor’s interests to “have one trustee managing all three estates”.
The resolution was requested by Firths Compensation Lawyers, which represents a large proportion of creditors.
Curiously, in Donnelly's determination of creditor claims released on November 8 for the purposes of paying an interim dividend, he rejected that portion of each creditor's claim that represents the fees Firths has charged. The total is in the hundreds of thousands of dollars.
Donnelly, who was appointed to administer Russell Keddie's estate in June, has agreed to cap his composition administration fees at $50,000 plus GST.
Coincidentally, he has applied for a hearing in the Federal Court on the same day as the Barakat meeting - December 19 - seeking orders that will allow him to make a pre-Christmas distribution to creditors of the Keddie estate, most of which are also creditors of Barakat and Roulstone.
Further reading: Donnelly halves Slater & Gordon's Keddies claim