Octaviar: $514 million proof of debt up for appeal

RSM's David Kerr has $514 million reasons
to smile

OCTAVIAR's general purpose liquidators Kate Barnett and Bill Fletcher were served a major setback in the NSW Supreme Court yesterday.

In handing down his judgement Justice Paul Brereton ruled that RSM's David Kerr - currently special purpose liquidator of Octaviar Limited (OL) - can apply to extend his powers, paving the way for an appeal of Barnett and Fletcher's rejection in April 2014 of a $514 million proof of debt (PoD).

The PoD was lodged on April 11, 2011 by OL's former receiver, Steve Parbery of PPB. The judge said that if Kerr were to appeal then the Bentleys pair - as general purpose liquidators of OL and its subsidiary Octaviar Administration (OA) - would be in an untenable position.

"It is plain enough that, in respect of any such appeal, the liquidators would be in a position of conflict - as liquidators of the appellant OCV (OL) prosecuting the appeal, and as liquidators of the respondent OA opposing it," Justice Brereton said.

The judge also raised the prospect that Barnet and Fletcher may have engineered their potential disqualification as liquidators of OL when they settled their long running litigation with Fortress Credit Corporation in May this year.

"The issue arises because the general purpose liquidators of OCV (OL) are, in their capacity as liquidators of OA, "officers" of OA, and it appears possible, although it is not entirely clear, that the settlement of the OA/Fortress proceedings involves OA taking an assignment from Fortress of security held by Fortress over the assets of OCV (OL).

"If so, the liquidators qua liquidators of OA may thus have become officers of a "secured party" of OCV (OL), so as arguably to be disqualified from acting as liquidators of OCV (OL) by operation of Corporations Act, s 532(2)(c)(ii).

"It suffices to accept that there is a presently unresolved and not insignificant possibility that the general purpose liquidators may be disqualified from continuing to act as liquidators of OCV (OL)," the judge concluded.

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.