Economy
Liquidators’ gravy train rolls along
TANYA Hamilton-Smith owed $28,000 to her boyfriend’s company when it went belly-up.
The liquidator to this Adelaide retailer then spent half a million dollars chasing the debt. Don’t rub your eyes: that’s correct; they forked out nearly $500,000 to pursue a debt of just $28,000.
An abuse-of-process case is now afoot from the company’s founder, John Viscariello. That makes lawsuit number nine.
In an interim judgment a few weeks ago, South Australia’s Chief Justice Chris Kourakis found the liquidator, PPB, and its lawyers Minter Ellison, enjoyed a ”loosely defined fee-sharing arrangement”. They carved this baby up good and proper. One decade of litigation, $1 million in fees, one doughnut for creditors.
Welcome to the Dead Zone, the land of liquidations, administrations and receiverships, where bounty-hunters roam the apocalyptic landscape preying on the dying and the wounded.
And the big banks are there, hulking leviathans lazing in the distance with intent, pulling strings, deciding who lives and who dies, who does the undertaking and who reaps the spoils.
Increasingly, the banks are running both ends of the insolvency spectrum, the administrations as well as the receiverships. The relationships between banks and liquidators are not disclosed, whether contractual or just purely commercial.
Those who get the lion’s share of the work, lately PPB and KordaMentha, never claim against the banks. They never challenge the banks.
Take the case of SK Foods for mollycoddling. KordaMentha is the receiver, appointed by ANZ. The job is done. ANZ has been paid the $21 million it was owed from the estate, in full.
There are other creditors and shareholders to pay, people who don’t churn out a $4 billion bottom-line profit each year, but who are still owed for their work.
The liquidator, Sheahan Lock, has asked KordaMentha to release the $18 million it still holds, and retire, but bizarrely KordaMentha has refused.
It has told the Supreme Court of Victoria that it has to hang on to the money just in case it gets sued. Actually, it’s worse than that. It has to hang on to the money in case ANZ gets sued.