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.

Octaviar: Kerr considering fresh tilt at Barnett and Fletcher

RSM Bird Cameron's David Kerr

HAVING recently secured a $12.35 million settlement from Fortress Credit Corporation, Octaviar Limited's (OL) special purpose liquidator is, we are reliably informed, contemplating resurrecting a $515 million proof of debt claim against the liquidators of Octaviar Administration (OA).

The NSW Supreme Court made orders on May 26, 2015, discontinuing proceedings first brought by OL's receivers against Bentleys partners Kate Barnett and Bill Fletcher in 2014.

The orders made no directions as to costs and crucially, the defendants were prevented from raising any time bar defence, meaning Kerr is free to re-litigate the proof of debt adjudication issue at the heart of the dispute.

In their statement of claim, PPB as OL's receivers had argued that at the date of OA's winding up on October 3, 2008 it owed OL, OA's ultimate holding company, $514,685,948.12c.

Barnett and Fletcher's defence listed multiple grounds showing why OA's debt should be offset, along with counter claims they argued meant OA's parent owed it money.

When contacted by SiN yesterday, Kerr declined to confirm or deny he was reviving the claim, saying only that he was unable to assist "at this time".