ASIC queries KordaMentha independence in Ten case

0 4


The corporate regulator has raised concerns about KordaMentha’s independence ahead of its appointment as administrator to Network Ten, at a hearing in the Federal Court on Monday.

The hearing was sought by KordaMentha to apply for an extension of the administration period. 


Network Ten enters into receivership

PPP Advisory will now look to sell Network Ten, with Lachlan Murdoch and Bruce Gordon looking to purchase the network once media laws are changed by the government. Vision courtesy: ABC News 24.

Justice David O’Callaghan in the Federal Court in Melbourne granted a 120-day extension until midnight November 20, which means the second creditors meeting can be held any time between now and then with five days’ notice.

However, lawyers for the Australian Securities and Investments Commission (ASIC) also joined proceedings on Monday to raise concerns about a “reasonable apprehension of bias” that KordaMentha might have because of “the work that’s been done by KordaMentha prior to their appointment”.

In particular, barrister Stewart Maiden referred to the “circumstances of the engagement and the nature of the work done and the way that it is done”.

He told the court ASIC is not concerned that the scope and duration of KordaMentha’s involvement or that they received remuneration from Ten would “of themselves give rise to an apprehension of bias”.  In fact, it was “prudent and diligent” of Ten’s board to have putative administrators on hand. 

However, the regulator is concerned that KordaMentha may not be perceived as independent and able to objectively conduct an investigation into preferential payments, as administrators normally would.

This is because KordaMentha  was paid nearly $1 million by Ten for work done in the months prior to their appointment as voluntary administrators on June 14. And the legal firm that recruited KordaMentha, Gilbert and Tobin, has also received payments from Ten in recent months. 

If either firm had received preferential payments (ahead of other creditors) these would be voidable and repayable if Ten went into liquidation. 

“Australia’s insolvency system is built around a system of independent [and] objective outsiders … It  is crucial to the effective operation of that system that independence exists or is seen to exist,” Mr Maiden said. 

ASIC has agreed to the 120-day extension and orders submitted by Leon Zwier from Arnold Bloch Liebler requesting the court appoint Ferrier Hodgson liquidator Peter Gothard to conduct the investigation on preference payments to avoid concerns about independence. 

In the afternoon hearing Mr Zwier confirmed his law firm is acting pro-bono for KordaMentha to help the industry set a precedent for putative administrators. 

“It is important as a matter of policy that someone does not look at this example and apply [it] wrongly to small enterprises”, he told the court. 

Having a court-ordered registered liquidator report on KordaMentha’s work – and paid for through the administration process – will set a good example for the restructuring profession, he added. 

The matter was heard in Melbourne to reduce travel costs for himself and Mark Korda, who attended Monday’s hearing. A representative from the Australian Restructuring Insolvency and Turnaround Association (ARITA) was also present. 

Mr Zwier said neither ASIC nor ARITA have any concerns with an updated declaration of independence submitted by KordaMentha on June 22, but noted it was updated after ASIC wrote to Mr Korda on June 19 to say the original declaration was insufficient. 

Network Ten went into voluntary administration last month after its billionaire shareholders told it they would no longer guarantee a key loan. It appointed KordaMentha as voluntary administrator of the company and its subsidiaries.

However shareholder guarantors have agreed Ten can access a further $30 million of the $200 million facility from Commonwealth Bank, but only until August 31.  



Source link

You might also like More from author

Leave A Reply

Your email address will not be published.