Fees continue to flow for Octaviar's appointees and advisors

Legal fees and costs orders are revealed
in Octaviar's latest accounts

THE latest accounts for Octaviar Administration (OA) show that Bill Fletcher and Kate Barnett earned almost $370,000.00 in fees in the past six months, taking total remuneration since they were appointed to $23.125 million.

The Bentleys' pair were installed as liquidators of OA and Octaviar Limited (OL) in September 2009 after the Public Trustee of Queensland, acting on behalf of creditors, removed Deloitte's John Greig and Nicholas Harwood.

By December 2012 Fletcher and Barnett had generated $15.7 million in fees on the OA side. Since then they've charged an additional $7.425 million for doling out dividends and, until this year, flinging cash from OA's bulging treasury accounts at a range of litigious stratagems.

However with the liquidation of OA and OL forecast to end in June 2016 it appears that they've drawn a line under the legal actions, including their costly pursuit of US finance house Fortress Credit Corporation. 

In May this year - at around the time that OL's special purpose liquidator reached a $12.35 million settlement with Fortress - Fletcher and Barnett settled their disputes. Though the precise terms have yet to be prised out, SiN understands OA's settlement required payment of Fortress's legal costs. In this respect a reference in the accounts to $2.35 million paid to the trust account of Fortress's solicitors, Baker & McKenzie, may be instructive.

Octaviar: Kerr considering fresh tilt at Barnett and Fletcher

RSM Bird Cameron's David Kerr

HAVING recently secured a $12.35 million settlement from Fortress Credit Corporation, Octaviar Limited's (OL) special purpose liquidator is, we are reliably informed, contemplating resurrecting a $515 million proof of debt claim against the liquidators of Octaviar Administration (OA).

The NSW Supreme Court made orders on May 26, 2015, discontinuing proceedings first brought by OL's receivers against Bentleys partners Kate Barnett and Bill Fletcher in 2014.

The orders made no directions as to costs and crucially, the defendants were prevented from raising any time bar defence, meaning Kerr is free to re-litigate the proof of debt adjudication issue at the heart of the dispute.

In their statement of claim, PPB as OL's receivers had argued that at the date of OA's winding up on October 3, 2008 it owed OL, OA's ultimate holding company, $514,685,948.12c.

Barnett and Fletcher's defence listed multiple grounds showing why OA's debt should be offset, along with counter claims they argued meant OA's parent owed it money.

When contacted by SiN yesterday, Kerr declined to confirm or deny he was reviving the claim, saying only that he was unable to assist "at this time".

Weston secures right of subrogation ruling

Pitcher Partners' Paul Weston

HOT on the heels of the Federal Government's plan to pursue receivers and secured creditors that fail to pay employee entitlements comes yesterday's Federal Court decision awarding priority to a secured creditor whose interest was diminished by employee payments.

As liquidator of 7 Steel Distribution, Pitcher Partners' Paul Weston applied to the Federal Court after secured creditor HSBC lodged a proof of debt for $7.322 million on May 15, 2015.

HSBC's claim comprised two components. The bulk - $5.547 million - represented the shortfall following the realisation of its security by receivers Peter Marsden and David Kerr of RSM Bird Cameron. The bank claimed it as an unsecured debt in the winding up of 7 Steel.

An additional $1.785 million however represented the sum the receivers paid to employees of 7 Steel in accordance with their obligations to priority creditors under Section 433 of the Corporations Act. HSBC argued it was entitled to claim this sum as a priority debt in the liquidation. (You can read the judgement here).

Octaviar liquidators bill $22 mill as Fortress claims settled

ANY insolvency that burns through five liquidators deserves special mention. When tens of millions of dollars - which might have been deployed beefing up creditor dividends - is instead spent pursuing a well-resourced, recalcitrant and foreign domecilled defendant, then the topic which so reliably provokes palpitations must be revisited.

Fees and expenses should be kept in the limelight. Like mushrooms they flourish in the dark. PPB Advisory's charges as receiver of Burrup Fertilisers - which became the focus of a judicial inquiry that wrapped up only last week - have again raised the question of whether creditors should focus more attention on liquidators' decisions to fund complex litigation from the coffers of companies in their control.

While there is no suggestion that the criticisms that led to PPB's expenses being scrutinised by Justice Antony Siopsis of the Federal Court apply in any way to the liquidators of failed property group MSF/Octaviar, there's also no doubt that given the modest settlements that recently concluded hostilities between Octaviar and US hedge fund Fortress Credit Corporation, scrutiny is justified.

Those settlements saw all proceedings mounted by Octaviar's liquidators against all Fortress subsidiaries dismissed by order of Queensland Supreme Court Justice Peter Applegarth on May 25, 2015. 

By good fortune, a large spreadsheet and a bundle of statements of accounts for Octaviar Administration (OA) recently unfolded on SiN's desk. Whilst some settlement terms have been kept confidential, the documents still make for illuminating reading.

To March 2015, Bentleys Bill Fletcher and Kate Barnett have racked up $22.75 million in remuneration since being appointed general purpose liquidators of OA and Octaviar Limited (OL). 

As at December 2012, they'd charged $15.7 million, meaning they've charged an additional $7 million in less than three years. The documents also show expenses incurred and disbursements paid in great detail.

In the most recent statement of accounts for example, expenses attributed to the liquidation included $7,981.79c for airfares, $5,542.87c for travel and $14,432.43 for "miscellaneous", spent during the period from September 2014 to March 2015.

In the same period $672,811.35c was paid to RSM Bird Cameron, under the terms of the "Funding Agreement Line of Credit". Law firm Henry Davis York (HDY) meanwhile raked in approximately $4.5 million.

When contacted, Barnett would say only that the liquidators' commercial arrangements are confidential and that Octaviar's committee of inspection "is responsible for approval of our fees".