Thursday 6 December 2012

Keddie queries Donnelly's determinations

 Bankruptcy veteran Max Donnelly
Photo: Ferrier Hodgson 
STRUCK-off solicitor Russell Keddie applied for a review of $1.26 million in creditor interest claims just days before his bankruptcy trustee sought authorisation to pay a pre-Christmas dividend.

In a letter to Max Donnelly, Keddie advises his trustee that he’s filed an application in the Federal Magistrates Court to preserve the 21-day time limit a bankrupt has to challenge trustee determinations of proofs of debt.

The letter – dated November 30 - is signed by Keddie’s lawyer Sally Nash. Accompanying it is a copy of the application and a supporting affidavit dated November 27.

Keddie, according to the letter, has a problem relating to “partial determination of Proofs of debt”.

“Pending determination of the part of the stood over aspect of the Proofs of Debt we advise we will be applying for an adjournment of the Application without further directions pending determination of each Proof of Debt”, the letter concludes.

The trustee's schedule of Creditor Claims dated November 8 shows the interest portions of at least 27 creditors’ claims - amounting to more than $1.26 million – have been stood over. Donnelly explained that their debt claims, while provable, were not backed by court judgements.

Under the Bankruptcy Act, debts that are not bound by a signed agreement or backed by court judgement do not automatically qualify for interest.

The Ferrier Hodgson bankruptcy veteran said he has invited the non-judgment creditors to run a test case to determine if a court will rule the stood over interest portions are admissible. That may be what spurred Keddie to act. Sally Nash said she was unable to comment.

But Donnelly, who doesn't believe the non-judgment creditors are entitled to interest either, has a more immediate problem. 

Russell Keddie's current bolt-hole.
Photo: SiN Images
He has cash to distribute now and was preparing his own application to the Federal Court when served with Keddie's review notice.

Donnelly’s application –  to be heard on December 19 – seeks orders enabling him to pay an interim dividend of more than $4 million to the Keddies Law Partnership creditors.

And Donnelly told SiN he recently stuffed some more cash into the creditors' Christmas sock after serving Keddie with a 139ZQ notice that extracted $400,000 in excess super contributions.

Nash’s application on behalf of Keddie is scheduled for hearing on February 4, 2013 but things could change radically before then. 

Donnelly's not the only trustee in bankruptcy dealing with the fallout from the Keddies Partnership collapse _ at least not yet.  

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