Why ASIC's gunning for Victorian liquidator

ASIC wants Ross McDermott
deregistered

ASIC's pursuit of a Federal Court inquiry into Ross McDermott is focussed on determining whether the Victorian insolvency practitioner (IP) faithfully fulfilled his obligations in terms of his duties and entitlements across 26 companies.

However apart from listing the 26 companies across four schedules ASIC's originating process doesn't give much away. The inquiry sought falls under under Sections 536 and 477 of the Corporations Act and ASIC wants orders banning McDermott from holding the position of registered and official liquidator for as long as the court sees fit. McDermott told SiN this week he did not want to comment at this time.

The regulator also wants him removed from his role as either liquidator, voluntary administrator or deed administrator of the 26 companies listed in the four schedules. If the inquiry supports ASIC's application an IP in the regulator's good books could pick up a ton of work.

Beyond that though, there's not much detail. The matter is due to return to the Federal Court on April 8, 2016. However a clue as to why McDermott's been targeted can be found in a judgment handed down in the Victorian Supreme Court in 2013.

In Ross John McDermott V Conalpin Pty Ltd and Dolmear Pty Ltd, Victorian Supreme Court judge John Efthim rejected an application by McDermott seeking to have his remuneration as liquidator of Conalpin Pty Ltd and Dolmear Pty Ltd approved. Both companies - which were the defendants in McDermott's application - are listed in ASIC's schedule of 26.

Cor Cordis pair forced to liquidate developer's delinquents

Ozem Kassem
Image courtesy Cor Cordis

Cor Cordis partners Ozem Kassem and Daniel Jurotawitch must continue winding up two companies controlled by Sarkis Nassif after a judge rejected the millionaire developer's application to terminate the liquidations.

Citing a lack of evidence and concerns that the companies may have exhibited "a lack of commercial morality," Justice Stephen Robb had invited the applicants to bring fresh evidence but the deadline for that passed this week, meaning Kassem and Juratowitch must continue liquidating two companies the judge said have neither assets nor liabilities.  

"I am also not satisfied on the present evidence that I should make the orders sought, because of a real issue of whether the companies were used, or conducted their activities in a manner, which exhibited a level of commercial immorality that would justify refusal of the orders," the judge said in a recent judgment.

"There are grounds for questioning whether 

Daniel Juratowitch
Image courtesy Cor Cordis

the taxation affairs of the companies were conducted having proper regard to the obligations of the companies to comply with the relevant taxation laws."

Justice Robb did concede that the initial reason for placing the companies into liquidation: "may have been the disallowance of a claim that the purchase of the Property did not involve a taxable supply, and that expectation was disappointed by the position adopted by the ATO."

And he emphasised that his concern in regards to agreeing to the application was an absence of sufficient evidence, "rather than any positive finding of the existence of conduct that would cause the court to exercise its discretion against making orders to terminate the windings up".

"However, the evidence suggests that both companies may have been seriously delinquent in relation to aspects of their taxation obligations. It is unfortunate that the apparent absolute confidentiality of the settlement agreement with the ATO impedes the illumination of this question."

Nassif's application - lodged in the Supreme Court of NSW in October 2015 - sought orders terminating the liquidations of Avenue Capital Investment Pty Ltd (ACI) and 82 - 84 Belmore Street Pty Ltd respectively. Nassif is ACI's sole shareholder. 82 - 84 Belmore is controlled by Holdmark Holdings, another Nassif-controlled entity.

Liquidators agree to vacate examinations while ATO audits Sarkis Nassif and Holdmark Group

Sarkis Nassif with former
Governor of NSW Marie Bashir
Photo: Holdmark Property Group

PROPERTY developer Sarkis Nassif has succeeded in postponing a grilling in the NSW Supreme Court after reaching agreement with liquidators to vacate a planned public examination.

Consent orders to vacate five days of examinations into the affairs of 82 - 84 Belmore Street Pty Ltd were made last week, despite Justice Ashley Black previously rejecting an application by Nassif and others to have the examination summons stayed or set aside.

Cor Cordis partners Ozem Kassem and Daniel Juratowich allege the company sold properties to related parties at depressed values and neglected to pay sales tax on apartment sales valued at $173 million.

Sarkis Nassif responded to SiN's enquiries through his solicitor Marc Ryckmans of Somerset Ryckmans.

"Mr Nassif completely rejects the claims made by the liquidators," Ryckmans said.

"We note that there are proceedings currently on foot in which my clients have traversed by way of denial each of the allegations raised by the liquidators of 82-84 Belmore Street Pty Ltd (in Liquidation).

"In particular the liquidators have alleged that certain units were transferred to related entities at undervalue. This particular allegation is strenuously rejected and my clients assert that all units were transferred at values determined by independent expert valuers."

The issue of sales tax is pertinent because the Australian Tax Office (ATO) - potentially the only significant creditor of the company apart from the liquidators - is in the middle of an extensive audit of Nassif and his Holdmark Property Group.

"So far as concerns the ATO, Mr Nassif and his group of companies is a substantial developer. Its current advisers are presently working with the Australian Taxation Office and those discussions remain confidential," Ryckmans said.

Initially Kassem and Juratowitch opposed the set aside application, arguing that another opportunity to hold the examinations might not present itself before April 2015 when the three year statute of limitations on challenging transactions on the basis that they may be uncommercial expires.

But a statement from the liquidators' lawyer indicates that compliance with notices to produce documents - combined with an unspecified "commercial settlement" between the liquidators and Nassif - was sufficient for them to back off.

Obeid's Streetscape DoCA terminated

Streetscape Projects director
Moses Obeid. Photo: Optus Zoo

THE deed of company arrangement (DoCA) governing Moses Obeid’s Streetscape Projects is toast after a court yesterday ordered the controversial DoCA be dissolved.

In the NSW Supreme Court, Justice Ashley Black terminated the deed and, under the relevant sections of the Corporations Act, ordered that the termination give the same effect as if a special resolution to wind the company up had been passed.

As a consequence deed administrators Ozem Kassem and Robert Kyte of Cor Cordis are out and Deloitte’s senior insolvency operator David Lombe is in. 

Appointing Lombe as  liquidator is a victory for City of Sydney Council, which brought the application as Streetscape's major unsecured creditor. 

Lombe to oust Ozem if Obeid DoCA voided

David Lombe
Photo: Deloitte

DELOITTE's David Lombe is queued to liquidate the Obeid-backed Streetscape Projects if an application before the NSW Supreme Court succeeds.

Filed by major unsecured creditor City of Sydney Council, the application seeks to reverse a controversial deed of company arrangement (DoCA) executed on August 9, 2012 at a meeting of Streetscape’s creditors.

EXCLUSIVE: Mother who fled hospital aided Obeid in Streetscape stoush

Alan Sullivan QC for City of Sydney Council
Photo: SiN Images

BELINDA Burcham, the woman who sparked a frantic search after vanishing from a Sydney hospital over New Year, allegedly “procured” proxy votes ahead of a critical meeting of creditors of Moses Obeid’s Streetscape Projects.

The meeting, held on August 9, 2012, saw Streetscape avoid liquidation only after voluntary administrator Ozem Kassem used his casting vote as chair of the meeting to break a deadlock between creditors.

Some of those creditors, including known Obeid associates and former employees, voted in favour of a deed of company arrangement (DoCA) proposed by Moses Obeid. The DoCA promises a return to creditors of no more than 3c in the dollar.

Others, including major unsecured creditor City of Sydney Council, wanted Streetscape wound up and a liquidator appointed.

Kassem, as chairman of the meeting was holding creditor proxy votes directed in favour of the DoCA. To break the impasse he voted the proxies endorsing the DoCA.

Obeid's Streetscape DOCA off to court

The council was not happy when
Ozem Kassem endorsed the Streetscape DOCA.
Photo: Cor Cordis

OZEM Kassem’s decision to vote for a Deed of Company Arrangement (DOCA) in favour of signage firm Streetscape Projects (Australia) Pty Limited could come under scrutiny as the deed is challenged in the courts.

City of Sydney Council, which is Streetscape’s largest creditor with a debt in excess of $17 million, has applied to have the DOCA set aside. A first directions hearing is scheduled for Monday, November 12.

Streetscape was placed in voluntary administration on June 21, 2012 by sole director, Moses Edward Obeid.

At a meeting of creditors on August 9, a numerical majority of creditors voted in support of the deed. However for a DOCA to be passed, a majority of the debt must also be voted in favour.

Streetscape DOCA open to challenge

Ozem Kassem:
Cor Cordis

TIME is running out for City of Sydney Council to reverse the deed of company arrangement (DOCA) approved at a recent meeting of creditors for the Moses Obeid-controlled firm Streetscape.

Under section 444B of the Corporations Law, a DOCA must be signed by the firm's directors within 15 business days.