Friday 18 May 2012

Allco receivers contemplating tilt at Fell

GORDON Fell must be thinking hard about the six days he spent being quizzed by ASIC investigators after the fall of Allco.

Following a Federal Court ruling this week, Allco’s receivers are free to utilise ASIC’s records of interview from those six days in a possible multi-million dollar recovery action aimed squarely at the one of the most controversial related-party transactions of 2007.

This was Allco’s purchase – for $64 million in cash plus Allco shares – of the 79.6% of Rubicon Holdings (Aust) Ltd it didn’t already own.

Dr Fell was closely associated with Rubicon’s vendors. So was Allco founder David Coe, whose four days of examinations by ASIC are also the subject of this week’s judgement.

Previously Ferrier Hodgson’s Peter Gothard and Steve Sherman were prevented from using the ASIC material by confidentiality undertakings they had provided in a bid to see the ASIC files in the first place.

But after applying to have their undertakings overturned Federal Court Justice Peter Jacobson declared that Gothard and Sherman were entitled to use the material.

An affidavit by Corrs Chambers Westgarth’s Allco specialist Andrew Korbel and paraphrased by Justice Jacobson in his judgement outlines what’s at stake.

“In particular, the Receivers’ solicitors stated that the causes of action against Dr Fell which the Receivers wish to consider include, but are not limited to, whether Dr Fell breached his duties to Allco under s 180(1) and/or s 181(1) of the Corporations Act:

"by failing to disclose to the company matters known to him, in particular regarding the financial position of Rubicon, which were material to the Rubicon Transaction.

“In further correspondence, the Receivers’ solicitors suggested that any claim for damages against Dr Fell is likely to exceed $60 million having regard to the cash payment made to the vendors in the Rubicon Transaction.”

Dr Fell and Mr Coe were among 21 parties who opposed the receivers’ application. They challenged whether the receivers had met the “special circumstances” test necessary for breaching confidentiality undertakings and raised a number of other points of law but Justice Jacobson granted the receivers' application nonetheless.

Dr Fell’s lawyer, Arnold Bloch Leibler partner Jonathan Milner advised that his client did not wish to comment.

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