Bruck probe puts Needham and Taylor fourth

HLB Mann Judd's Andrew Needham

THE politically-charged liquidation of Bruck Textile Technologies (BTT) has catapulted HLB Man Judd partners Andrew Needham and Barry Taylor to number four on the list of Assetless Administration Fund (AAF) recipients.

Since December 2014 Needham and Taylor have received $499,647.50 in AAF monies to fund their investigations into BTT's controversial restructure, which took place prior to their appointment by creditors voluntary liquidation on July 11, 2014. 

Half a million in AAF monies is of course well shy of the $730,000 extracted from ASIC by Storm Financial liquidators Ivor Worrell and Raj Khatri, who hold top spot on the AAF list. But in the life cycle - or death spiral - of BTT, potential remains for Needham and Taylor to apply for more.

Meanwhile Needham and Taylor are closing in on the other front runners. In second place is Deloittes' David Lombe, John Greig and Richard Hughes, whose handling of the fraud-riddled Kleenmaid liquidation required more than $600,000 in AAF grants. Not far behind is PwC, which wrangled $560,000 to assist with the byzantine Westpoint Group liquidation. 

Needham and Taylor's most recent grant 

When contacted Needham was quick to point out that the single largest sum to come out of his AAF grants to date is $200k paid to lawyers Henry Davis York and barrister Peter Kulevski, who conducted the public examinations of BTT's directors and others. (See: Bruck scrutiny attracts funds from ASIC and FEG)

Bruck scrutiny attracts funds from ASIC and FEG

BTT director Philip Bart 

Photo: SiN Images

ASIC and the Department of Employment's (DoE) Active Creditor Program are for the first time simultaneously funding liquidators in a bid to unpick the 2014 restructure of Bruck Textiles Technologies (BTT).

BTT was wound up by a creditors voluntary liquidation (CVL) initiated by its shareholder, Australian Textile Group (ATG) on July 11, 2014. HLB Man Judd's Andrew Needham and Barry Taylor were appointed joint liquidators.

A day earlier, a newly incorporated and related entity, Australian Textile Mills Pty Ltd (ATM), purchased BTT's assets and $11.247 million in net liabilities for $1. The assetless BTT shell was left owing almost $4 million in employee entitlements.

ASIC's head of insolvency practitioner regulation, Adrian Brown told SiN that the government was onto the matter immediately.

"ASIC and the DOE have worked together on the Bruck Textiles matter from the first day of the liquidators' appointment," he told SiN.

"ASIC liaises closely with the DOE concerning its program and our AAF. This way, we can collaborate to determine how best to enforce the law (ASIC's role) and recover FEG (Fair Entitlements Guarantee) advances for the Commonwealth.

Needham and Taylor entered into a funding agreement with ASIC in December 2014 after advising in their August 5, 2014 report to creditors that the BTT directors "may be guilty of an offence under section 596AB of the Corporations Act".

It should be noted that no such finding has been made against BTT's directors. Director and Bruck Group owner Philip James Bart told SiN late last month he had provided all information necessary to demonstrate that the statute had not been breached. He declined to respond to questions submitted in advance of publication, quoting legal advice.

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 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".

INSOL infiltrated by Australian achievers

PPB Advisory's Mark Robinson
is the new INSOL president.
Photo courtesy PPB Advisory

 AS the annual regional INSOL conference wraps up in San Francisco, Australians have emerged as prominent players in the organisation's leadership with PPB Advisory's Mark Robinson taking on the presidency after several years as vice president. 

A statement issued by PPB Advisory said Robinson's role would include "promoting a stronger, global turnaround culture" and expanding INSOL's reach into jurisdictions like South-East Asia.

"In the near term, Mark will be embarking on an active program to listen to the needs of market participants both here and abroad to shape his program to deliver the above priorities and broadening its membership base to include other turnaround market participants such as debt/hedge/private equity funds and financiers," the statement said.

Other Aussies ascending the INSOL ranks include the Queensland University of Technology's Ros Mason, who as Professor of Insolvency & Restructuring Law and a member of the Faculty of Law’s Commercial and Property Law Research Centre now heads up INSOL's academic group.

Henry Davis York chairman and insolvency specialist Scott Atkins, also takes a seat on the main INSOL board.

The appointments are an endorsement for the Australian Reconstruction, Insolvency & Turnaround Association (ARITA), which counts Robinson as a past president and Atkins as a current director.


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Uninvited crash Octaviar’s ex-parte

Bentleys' Kate Barnet
Photo: SiN Images

SUPREME Court Acting Justice Peter Young has spiked the punch at the Octaviar liquidators’ ex-parte party.

In a recent judgement the judge criticised liquidators Kate Barnet and Bill Fletcher for a lack of candour, branded Barnet’s performance during cross examination as “so vague as to be of little value” and rejected the Bentley pair’s attempts to repel interlocutories filed by former Octaviar Administration Pty Ltd (OA) and Octaviar Limited (OL) directors David Anderson and Craig White.

Barnet was singled out perhaps because the judge had heard her unfortunate cross-examination earlier in the year.

“She did not acquit herself very satisfactorily and her evidence would suggest that she had really very little day to day contact with this matter,” the judge wrote, before offering up some more conciliatory speculations.

“That may be unfair to her because it would seem that she did not realise that she was going to be called to give evidence before me and was involved in some other court case or conference immediately before she stepped into the witness box in my court at 10:38am.”