Tuesday, 29 September 2015

Bookarelli insists it's solvent as court dismisses opponent's judgement

THE sparring between litigation funder Bookarelli and its former agent Katanga Developments appears to be drawing to a climax as the two countdown to October 7, when an application by Katanga to wind up Bookarelli is due to be heard in the NSW Supreme Court. But will it get there?

On September 17 NSW District Court Judge James Curtis set aside the judgment upon which Katanga is relying for its $172,000.00 claim against Bookarelli.

Katanga lodged the wind up application after a statutory demand requiring Bookarelli to pay the debt expired unsatisfied in August.

Lawyers for Bookarelli however insist their client is solvent, and said the judge's decision to set aside the judgement derailed Katanga's claim.

In a letter they said the winding up application had "lost its substratum or underlying cause in that the judgement upon which it was founded was set aside. They said their client was also opposing being wound up on other grounds.

"A strike out application is in the process of being made by us ....," and "Katanga will be responsible for the costs of this application as well as the costs of a Security for Costs Application to be made shortly also," they said, pointing out that in setting aside the judgement, Judge Curtis also ordered  costs in Bookarelli's favour.

Tuesday, 22 September 2015

KPMG's Templeton wins appeal to have remuneration downgrade reviewed

KPMG partner Damian Templeton
IT'S taken 12 months but KPMG's Damian Templeton has - with  King & Wood Mallesons' help - overturned a September 2014 judgement rejecting his application for a review of an earlier determination slashing his and former partner Phil Hennessy's remuneration as receivers of the illegal Letten Schemes by $545,000.

Last Friday the Court of Appeal set aside a September 2014 judgement of Justice Michelle Gordon (now of the High Court) refusing Templeton and Hennessy's initial application to have the fee reduction reviewed. It also ordered that their application for a review be heard again by another judge.

SiN has paraphrased from the judgement, which you can read at: Damian John Templeton, Philip Arthur Hennessy and KPMG Australian Partnership v Australian Securities and Investments Commission.

In March 2014 Registrar Timothy Luxton fixed the receivers’ remuneration, costs and expenses for the period 1 January 2012 to 31 March 2013 at $3,764,738.39. This followed the filing on 17 June 2013 by the receivers of an interlocutory application seeking approval for their remuneration, costs and expenses for that period.

Their claim was into seven categories — Administration and Risk Management, Assets, Creditors, Investigations, Investors / Distribution, Statutory Obligations and Trade On. The total was $4,309,813.79

Friday, 18 September 2015

Litigation funder facing liquidation as colourful identities blue over Bookarelli

Richard Kurland (L) and Bruce Dennis.
Photo: SiN Images
IT’S ironic that litigation funder Bookarelli Pty Ltd is facing potential liquidation, given how profitable its proof-of-debt facilitation sideline appears to have been for the $1 company linked to sometime fraud investigator and Blue Mountains resident Richard Kurland.

According to a September 2013 District Court judgement, between 28 June 2011 to 28 March 2012, almost $800,000 was paid into a solicitors' trust account linked to Bookarelli.


The funds, paid by McGrathNicol in its capacity as deed administrator of ION Limited, were dividends for the failed auto parts makers creditors, who executed a deed of company arrangement (DoCA) on May 27, 2005.

The dividends went to the solicitor's trust account in accordance with agreements entered into between Bookarelli and the ION DoCA shareholders, a group of shareholders that had accepted Bookarelli's offer to facilitate lodging their proofs-of-debt with the deed administrators. 


Under the agreement the solicitor - Marcel Joukhador - is required to pay 50 per cent of the dividends to the ION DoCA Group shareholders and 50 per cent to Bookarelli, its fee for pursuing the shareholders' claims on their behalf.

But Bookarelli hadn't found ION shareholders willing to forgo half their dividend on its own. Back in 2010 Bookarelli entered into an agreement with Katanga Developments whereby Katanga would market Bookarelli's services to nominated shareholders of ION, Babcock & Brown and other other insolvent entities.

In exchange for Katanga persuading ION shareholders to take up the offer, Bookarelli would direct either Joukhador or a second nominated solicitor, Paul Lee Ming, to pay Katanga 25 per cent of the distributions.

Katanga Developments is controlled by Fred Gulson, the man who sprang to national prominence when the late Rolah McCabe became the first Australian to successfully sue a tobacco company for personal injury, though her 2002 win was overturned in the court of appeal after her death.

Wednesday, 16 September 2015

Bruce Dennis guilty of professional misconduct

Guilty of professional misconduct: retired solicitor
Bruce Vernon Dennis
SYDNEY'S insolvency profession may be interested to learn that ex-solicitor Bruce Vernon Dennis  - who has acted for many liquidators and trustees in the past - has been found guilty of professional misconduct by the Council of the Law Society of NSW.

In a 34 page judgement handed down today the Council detailed a litany of breaches of statutory obligations by Dennis, whom the Council refers to as "the Solicitor". 

Overcharging, failing to appropriately account for monies and unauthorised transfers of funds from so-called "estate" accounts to general accounts figure prominently in the breakdown of Dennis's alleged transgressions, of which more than a few are admitted. 

" ... the statement of agreed facts reveals multiple breaches by the Solicitor of his professional obligations many of which are enshrined in statute," the Council said.

"The community would have particular concern about those breaches which involve a failure to give the utmost care and attention to the handling of trust money.

"In many of the instances mentioned in the Statement of agreed facts the Solicitor seems to have regarded with contempt the quite specific obligations created by sections 254 and 255 of the Legal Profession Act and the provisions of the Act regards disclosure of costs."

Monday, 14 September 2015

EY Oceania absorbs Canberra's Kazar Slaven

New EY Oceania partner
Henry Kazar 
CANBERRA-based insolvency practice Kazar Slaven has been taken out by EY Oceania, a division of global professional services heavyweight, Ernst & Young (EY).

In a note to clients last Thursday, firm principals Henry Kazar and Michael Slaven said the transaction would be completed by the end of the month.

"We’re pleased to advise you that the professional services firm Ernst & Young (EY), has moved to acquire Kazar Slaven," the pair said.

"The acquisition is intended to be completed by the end of September 2015. Following completion, we will both join EY Oceania as partners, and 11 Kazar Slaven employees will be made offers of employment by EY." 


According to the Kazar Slaven website the firm has 18 partners and staff. Four have the surname Kazar.

Interestingly, while the note acknowledged the potential for a shift to accommodate EY's creditor-based specialisation, it also assured its existing, personal insolvency-focussed network that these relationships remain paramount.

Thursday, 10 September 2015

Constantinidis repo coughs up curious connection

George Constantinidis
Photo: SiN Images 
IT'S remarkable what emerges from a property visited in the process of being repossessed.

SiN attended a single story house on Woodford Road, Rockdale recently which had been owned by George Constantinidis, an undischarged bankrupt and a relative of Achilles "Big Al" Constantinidis, who long ago partnered with Paul Keating in a piggery.


George Constantinidis has been opposing attempts by BPS Recovery's Max Prentice to secure the house since his interest in the property vested with Prentice as Constantinidis' trustee in bankruptcy in May 2014. 

Those efforts included attempts to obtain alternate financing with which to discharge the debt of approximately $940,000.00, owed to Westpac in respect of mortgages over the Rockdale property and another at Erowal Bay on the NSW South Coast. The second property is held jointly by Constantinidis and his wife Gemma.

Constantinidis' efforts also included asserting that he had no equity in the Rockdale property; that it was leased to Australasian South Pacific Educational & Commercial Training Incorporated (ASPECT); that ASPECT sub-leased rooms in the house to nine tenants and that the trustee had failed to serve either ASPECT or the sub-lessees with notices to vacate.

Court judgements recount how Prentice told the bankrupt by letter in July 2014 that as a result of his investigations, he did not believe the ASPECT lease existed.

Tuesday, 8 September 2015

SV ditches executive director

Ditched SV Partners executive director
Stephen Hathway
Photo courtesy SV Partners 
STEPHEN Hathway, the man who with Tim Heesh established SV Partners in NSW almost a decade ago has been dumped by the firm, with clients advised of his departure via email last week.

"Dear Colleagues, we advise that Stephen Hathway, Director in our New South Wales practice, has ceased to have an active involvement with SV Partners and is presently on extended leave. 


"Stephen joined SV Partners in 2006 and was an integral part of growth in our New South Wales practice," the firm said.

When contacted Hathway said he couldn't say talk about the reasons for his departure until the details had been finalised.

"I set up SV in NSW with Tim Heesh nine years ago but it's interesting, you get employed by firms and obviously take an employment contract, but then I took about 120 appointments in my own name," he said.

In circumstances where people leave firms, Hathway said there is work that registered liquidators have in terms of specific appointments that employment contracts don't adequately account for.

"Some are in our own name and we've been put there by creditors, not necessarily by the firm," he said, implying that appointments of this kind would need to be accounted for in his compensation and entitlement arrangements. "I'm a shareholder of SV so that also has to be worked out," Hathway added.

SV founder Terry van der Velde declined to go into detail about why Hathway had left. He said the firm has "... a clear process for staff transition and normal procedures are being followed to ensure that all client work continues according to requirements. The full SV Partners team is supporting clients during this change," van der Velde said.

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Thursday, 3 September 2015

More assertive ATO good for insolvency professionals as wind-ups jump in August

ATO-initiated wind-up activity
from March to August, 2015
Chart courtesy Insolvency Notices
ANY thought that the Australian Tax Office (ATO) might begin reducing the number of wind-up applications it's been lodging since it set a new monthly record of 582 wind-ups last May has been dispelled by the August numbers, which show the tax man sought to appoint liquidators to 488 companies last month.

This is almost 100 more than the number lodged in July and also exceeds the June figure of 449 wind-ups lodged. The long term average for ATO-initiated wind-ups of companies with unpaid tax debts is 92 per month.

In a statement the tax office confirmed it had adopted a more active policy on debt recovery, an essential change one would've thought given there's approximately $20 billion of recoverable debt on the ATO's books. More than 60 per cent of the arrears is owed by small to medium-sized enterprises (SMEs).

"The ATO is focused on making it as easy as possible for businesses, and other taxpayers, to understand and meet their tax obligations," the ATO said.

"As the Commissioner said during his address to the National Small Business Summit on 16 July, our intention is to be more active to prevent debts, to provide appropriate help and support when people are in debt, to take the right action to prevent debts from escalating, and to take legal action earlier when it is warranted."

Michael McCann, president of the Australian Restructuring Insolvency & Turnaround Association (ARITA) said there is no doubt the ATO has taken a more assertive stance. The question is whether it is a temporary measure to deal with a back log or is to be sustained.

"If there is in fact a catch-up that's one thing but if there is actually a sustained program by the ATO of being more assertive that would suggest that it is going to be acting earlier," McCann said.

Tuesday, 1 September 2015

Ex-liquidator avoids incarceration

Ex-liquidator Geoffrey Stewart Turner has avoided gaol time after a magistrate last week handed down a raft of suspended sentences in the NSW Local Court.

Turner pleaded guilty to 11 counts of dishonestly obtaining financial advantage by deception and two counts of obtaining money by deception on July 15 this year. Each count carries a two year term of imprisonment.

Last Friday Local Court Magistrate Joanne Keogh suspended the custodial component of each sentence, ordering instead that Turner enter into a good behaviour bond for a period of two years.

The charges followed an investigation by the Australian Securities and Investments Commission (ASIC) which found Turner failed to carry out his duties as a liquidator after reviewing 60 external administrations as part of its proactive liquidator compliance program.


The ASIC investigation saw Turner deregistered as a liquidator in late 2012 after entering into an enforceable undertaking with ASIC. Among other things the EU required him to request ASIC cancel his liquidator's registration.

According to the EU, Turner must never apply to be re-registered as a liquidator and never perform duties or functions that are the exclusive preserve of registered liquidators.