Union whistleblower Kathy Jackson declares bankruptcy

CORRUPTION whistleblower Kathy Jackson has declared herself bankrupt ahead of a Federal Court hearing due to commence today. Hall Chadwick's Paul Leroy has consented to act as Jackson's trustee in bankruptcy.

In the Federal Court in Melbourne, lawyers from the Health Services Union were to pursue allegations Jackson misused $1.4 million in union funds whilst employed as the HSU's East Branch executive president. Jackson denies the allegations but does not have sufficient funds to defend the claim.

Her decision to declare bankruptcy comes after she recently lost a Victoria WorkCover claim, lodged last year, for hundreds of thousands of dollars in worker's compensation benefits backdated to 2012.

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Crowe-Maxwell retires from BDO

Atle Crowe-Maxwell
Image courtesy: BDO

THE ructions continue at BDO with the company confirming this afternoon that Atle Crowe-Maxwell, partner-in charge-of the Sydney office's business recovery and insolvency division, has also left.

The admission comes a day after the firm announced it had stood down its East Coast Practice chief executive, Chris Brant.

"Mr Crowe-Maxwell had been on leave for some time for personal reasons, and he has now decided to step down from the partnership and take a short break," BDO said in a statement.

"Melbourne-based Partner and restructuring specialist, Rachel Burdett-Baker has taken up the role of Partner in Charge of BR&I.

"Mr Crowe-Maxwell joined BDO in 2012, with the integration of PKF’s Sydney and Melbourne offices. He is a 20-year veteran of insolvency and litigation support," BDO said.

BDO Sydney's managing partner Grant Saxon said Crowe-Maxwell's "retirement is due to personal reasons and comes at a time of his choosing.

"Chris Brant’s departure is a completely separate matter. Chris’ role was no longer required due to some restructuring and change of focus approved by the BDO Board."

“It’s a reality of business that as the environment changes, so must we. BDO is evolving and the decision to replace the CEO role with Managing Partners in Sydney and Melbourne is a strategic decision in line with our future plans.”

The announcement of Crowe-Maxwell's departure comes one day after SiN sought confirmation from BDO that he was on leave as a result of 'erratic behaviour', unconfirmed rumours of which continue to circulate. Crowe-Maxwell did not return calls.

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Wily's bankruptcy portfolio no bonanza - yet

Former bankruptcy trustee
Andrew Wily.
Image courtesy ArmstrongWily

WHEN it was revealed in February this year - exclusively by SiN - that Andrew Wily was relinquishing his registration as a trustee in bankruptcy, there was speculation around how many of his active files might have to be transferred to other trustees. Opportunity was in the air.

At the time, Wily was trustee appointed to a veritable hill of bankrupt estates and word was that Nicholas Crouch, of Crouch Amirbeaggi Insolvency Accountants, would snare the lion's share. But as it turned out, only 150 or so are active.

Nicholas Crouch
Image courtesy Crouch Amirbeaggi

On February 24, 2015, 11 days after SiN broke the story, the Australian Financial Security Authority (AFSA) issued a statement confirming Wily had voluntarily offered to resign.

It also laid out a time line for concluding the process by which Wily would conclude those jobs that he could and make appropriate arrangements for the remaining appointments.

"It presently is anticipated that the Inspector-General will accept Mr Wily’s request to cease to be registered shortly after 30 May 2015. In the interim, Mr Wily is not accepting new appointments," AFSA said.

Calls to the regulator last Friday seeking to determine if the process had been concluded were not returned. A spokeswoman said in an email that AFSA "does not comment on individual bankruptcy cases". Wily did not reply to calls and emails seeking comment.

What is known is that Crouch, who referred SiN's enquiries to Wily, took about 12 jobs and a further 16 went to former Hall Chadwick partner and barrister Geoff McDonald, who told SiN the files he took on "involve some complex unfunded litigation".

Barrister Geoff McDonald
Image courtesy: Windeyer Chambers 

The questions for AFSA are: how many of Wily's jobs were finalised prior to the May 30 cut-off: how many active files have been transferred to the Official Trustee, and of those, how many might ultimately be farmed out to the profession so creditors can at least resume entertaining the expectation of some action?

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Old phone taps could sink liquidator

PHONE taps made almost a decade ago during a Police Integrity Commission (PIC) investigation allegedly recorded a businessman and a prominent Sydney liquidator conspiring to stack creditors meetings for their mutual enrichment, confidential sources have told SiN.

The recordings - now in the possession of the NSW Fraud Squad - were created when PIC investigators tapped the phones of two serving police officers who had taken out loans from the businessman, who specialises in high risk commercial and property-backed loans.

According to SiN's sources, the businessman and the liquidator discussed appointing a controversial Sydney insolvency identity to various committees of creditors.

The idea was that that individual would then persuade other creditors to vote for resolutions favourable to the liquidator and the businessman.

The sources said the PIC did not initially refer the contents of the discussions to other authorities because it was concerned only with determining if the officers under investigation were being pressured by the businessman to pervert the course of justice. Conversations not directly relevant to the investigation were not a priority.

It's believed a NSW Fraud Squad investigation that led to fraud charges being laid against the businessman last year imbued the PIC recordings with fresh significance and they were subsequently passed on.

As more detail emerges SiN will update this evolving story, identifying those recorded by the telephone taps as soon as is practicable.

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Lavin bankruptcy a curly one for Worrells

Bankrupt artistic agent, Dolores Lavin
Image: DLMLA

WORRELL'S Aaron Lucan must be having an interesting time at present, variously cajoling and coercing the rival claimants to the estate of Dolores Lavin, a bankrupt artistic agent whose assets are linked to an accountant given to slinging work Worrells' way.

In his first report to creditors as Lavin's trustee in bankruptcy, Lucan told creditors: "There are many complex and varied issues affecting Ms Lavin's assets and liabilities." He wasn't kidding.

For a start there seems to be genuine contention in regards to proprietorship of Lavin's apartment in Potts Point. She paid $3.8 million for the Wylde Street pad in 2008 with a mortgage from Westpac. Current valuations are coming in anywhere between $2.058 million and $3.2 million.

For Lavin's creditors, Wylde Street represents real potential, though Lucan has yet to disclose how much, if any of their $5.32 million in claims he's accepted in proofs of debt.

According to Lucan's report, Lavin, who filed for bankruptcy via a debtors petition on February 19, 2015, is sole registered owner on title to the apartment. However Lucan told creditors there are "unregistered dealings on title" that may effect the validity of the mortgage.

These dealings appear to be at odds with orders made in the Supreme Court of NSW in February 2014 and according to Lucan, Lavin neglected to disclose the property's existence in her Statement of Affairs (SoA). But that's perhaps because she doesn't regard herself as sole registered proprietor.

"During an interview with the bankrupt on March 9, 2015, I was advised that the bankrupt was registered on title in her capacity as trustee for the Wylde Family Trust," Lucan said.

"I was provided with documentation relating to a change of trustee. I requested a copy of the trust deed.

"On 16 March 2015 I received a copy of the trust deed accompanying a letter from a solicitor purporting to act for the trustee of the Wylde Street Trust, Billy Buckle Pty Limited.

"I have received information and documentary evidence from a creditor refuting the assertion that the property is held on trust," Lucan claimed.

EXCLUSIVE: Taxman's May wind-up blitz a record

THE Australian Taxation Office (ATO) issued more wind-up notices in the month of May than in any given month since July 2012, figures obtained exclusively by Sydney Insolvency News (SiN) show.

The ATO numbers - collated from company wind up activity initiated by the offices of state revenue, workers compensation insurers, ASIC, the ATO and non-government sources - show the ATO filed 556 applications to wind-up non-compliant companies last month. From all sources, the number of wind-ups filed in May reached 722, also a record for the period.

                                                     Courtesy Insolvency Notices

According to Insolvency Notices, produced by Jamieson Louttit & Associates, the next busiest month was August 2013, when the ATO issued 361 notices out of a total of 624.

"If you look at the ATO's annual reports and work out the averages, the number of wind-ups the ATO has filed in May 2015 represents more than half the annual average," Louttit said.

The ATO's annual report for the year to June 30, 2014 shows that since 2009/2010 the taxman has initiated wind-up action an average of 1,103 times per annum. That indicates a monthly average of 92 wind-up applications.

"If you look at the red line on the graph, there's been a significant uptrend by the government to push insolvencies," Louttit said.

"There's a positive in this in that if they are cleaning the system out of people who aren't paying their taxes then it gives everyone the ability to do business with someone who is compliant with the laws."

In March 2015, ATO commissioner Chris Jordan flagged the ATO was taking a tougher stance against non-payers. And Louttit said wind-ups by the ATO and other statutory agencies this month could equal May's record number.

"If you look at the statistics for June, the applications to courts already banked up suggest it's probably going to be the same amount," he said. "It's being increased significantly and it's the SMEs being hit."

Louttit said applying to wind-up non-compliant companies generally results in half of those companies being placed into liquidation while the other half finally pay their outstanding bills.

The ATO has begun working harder to recover billions of dollars in taxes SMEs have failed to pay after conciliatory strategies to debt recovery saw tax debt grow, both in terms of total amount owing and the length of time the debt had been outstanding. See: EXCLUSIVE: ATO in debt assault on SMEs

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