Keeping it Civil as creditors dump Jirsch

Jirsch Sutherland's Daniel Civil (L)

IT was fortuitous that no vases were present in the Ming Room at 3 Spring Street last Friday because the unsecureds in attendance were fit to topple a dynasty.

When they learned that the patriarch had had a seizure, they laughed. When the contents of his doctor's certificate were divulged, derision and cynicisms were elicited. When told he was too ill front, they overthrew his liquidator instead.

The occasion for this intransigence was the first meeting of creditors of Bermuda Constructions, a family-owned builder placed into liquidation at the behest of its director, Philip Keith McDonald, 64 of Vaucluse and its shareholders, son Ben Robert McDonald, 32 and wife Jo-Ann.

After being referred to Jirsch Sutherland by their external accountant Peter Chu, the McDonalds met with partner Daniel Civil several times and he was appointed liquidator on March 1, 2016, with Otim Oluk as his right hand man.

For unspecified reasons, PKF had been engaged as the company's accountants from June 2015 and SiN understands PKF senior manager Sam Musgrave attended St Joseph's college at Hunters Hill with Ben McDonald. But in his Declaration of Independence, Relevant Relationships and Indemnities (DIRRI), Civil said the McDonalds were referred to him by Chu.

He detailed in his first report to creditors that Bermuda has debts in excess of $823,000. He said the McDonald family had told him it failed because of an unpaid debt owed to the company in the order of $100,000.

The family's lawyer - insurance specialist Ian Enright - was invited to read a statement to creditors. A dispute over a development in Mosman, they heard, had cost the company dearly. Keith and his family were "devastated".

Jirsch manager receives 'severe reprimand' over Ariff

Tina Battye

TUCKED away in the July edition of Acuity magazine is the news that Jirsch Sutherland senior manager Tina Battye has been severely reprimanded by the Professional Conduct Tribunal of the organisation of Chartered Accountants Australia and New Zealand (CAANZ). 

The conduct hearing took place on February 19. The Tribunal's recently announced decision refers to various breaches "in the course of carrying out her professional duties during her prior employment as evidenced by her testimony during the course of proceedings in the District Court of New South Wales".

Battye has had her membership of the CAANZ cancelled for a period of three years and been billed $2,900 towards the costs of the disciplinary proceedings. The relevant conduct took place almost a decade ago when Battye worked for Stuart Ariff Insolvency Administrators.

After securing an indemnity from prosecution from the Director of Public Prosecutions, Battye became in 2011 the star witness for the criminal prosecution case against struck-off liquidator Stuart Karim Ariff.

During the hearing Battye admitted inserting false information into a balance sheet for a family company, HR Cook Investments, to which Ariff had been appointed administrator.

Battye told the court she did so under duress and on Ariff's instructions. She said she regretted staying at the company after realising Ariff was using funds from HR Cook to fund legal expenses pertaining to a separate administration.

''I had worked with Mr Ariff for a number of years and notwithstanding his actions I still felt some loyalty to him and to his staff,'' Battye told the court.

''With the benefit of hindsight I really wish I had left at that stage,'' she said. ''I think I was just enclosed in this bubble and this environment that I guess I just was not thinking clearly at the time.''

Albarran and Pleash prepare to defend DoCA allegations

Richard Albarran
Photo: Hall Chadwick

WHEN insolvency practitioners recommend a Deed of Company Arrangement (DoCA), it's generally based on their expectation that applying the oil of deed administration will facilitate a troubled company's passage to resolution.

For Blair Pleash and Richard Albarran however, no amount of commercial and accounting acumen has been sufficient to free up seized property developer Joe & Joe Developments.

Since the Hall Chadwick partners were appointed voluntary administrators to Joe & Joe on February 9, 2009, they and their solicitors have generated about $1.4 million in fees administering the company, which remains subject to the terms of a DoCA designed to achieve what the company’s owners couldn’t - concluding on mutually agreeable terms - their commercial and residential property development at Narrabeen on Sydney’s northern beaches.

Blair Pleash
Photo: Hall Chadwick

Pleash and Albarran became Joe & Joe’s deed administrators on March 31, 2009 but the company’s two shareholder families were locking horns as early as 2008. 

Those frustrations came to a head when one family – the Kossaifis – initiated winding-up proceedings in the NSW Supreme Court.

Liquidation posed a threat to the livelihood of members of the other shareholder – the Elias family – who are builders, and following attempts at mediation the matter was brought to Hall Chadwick in early 2009.

More than five years on, the families remain at loggerheads, Joe & Joe is still subject to the terms of its DoCA  and the mounting costs have so enraged the Elias family that it is suing Pleash and Albarran in the NSW Supreme Court, alleging the two have managed the affairs of Joe & Joe in a way prejudicial to the company’s creditors and its members. The Hall Chadwick duo reject the allegations.

Lord to lead Jirsch Sutherland's northern push

John Lord will lead  Jirsch Sutherland's
push north by opening a Brisbane office

SIFTING the harbour's revelatory silts recently, SiN learned that John Lord, the colourful Sydney liquidator who fell foul of ASIC a couple of years back, has joined Jirsch Sutherland.

Lord and the corporate regulator clashed a few years back in the wake of the Premium Collections affair.

Opting to relinquish his official liquidator status before ASIC got pushy, the former head of what was PKF's Sydney insolvency and restructuring division retired, pointed The Liquidator - his beloved aquatic pleasure vessel - north, and settled on the Gold Coast.

Now SiN hears Lord is set to open a Brisbane office, a move that represents a big step in Jirsch Sutherland's east coast expansion ambitions and a major comeback for one of the profession's more engaging characters.

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Keddie creditors shedding trustees

Casa Barakat, Roseville Chase
Photo: SiN Images

CREDITORS of the former partners of legal firm Keddies want to slash the number of bankruptcy trustees in a bid to reduce fees - and who can blame a former Keddies client for being a little testy on that topic?

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.