Tuesday 27th November 2012
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The firm hired for separate liquidations of the Cedenco group of companies in Australia and New Zealand has been ticked off by the High Court for using information gained during the New Zealand administration in its work across the Tasman.
In the High Court in Auckland, Justice Paul Heath took a dim view of the Cedenco liquidators' use of a transcript interview with ANZ New Zealand relationship manager Kate Dekker for its Australian liquidation before getting her approval, according to a Nov. 15 judgment.
John Sheahan and Ian Lock of Sheahan Lock were appointed liquidators for both the Australian and New Zealand wind-ups, and were seeking retrospective approval from the court for their use of the transcript in Australia.
"Because Messrs Sheahan and Lock hold office as both Australian and New Zealand liquidators, they cannot, as Australian liquidators, assert that they did not know what they were doing, as New Zealand liquidators," the judge said. "In effect, they (as Australian liquidators) were parties to the misconduct of the New Zealand liquidators."
Justice Heath refused to give retrospective approval for sharing the material and urged the liquidators to disclose what has happened to the Australian Federal Court to seek orders on further use of the transcript.
"It is also open to ANZ NZ or Ms Dekker, in light of what I have said in this judgment, to apply to the Federal Court for such an order as they might think appropriate to forbid or limit the ability of any other person to inspect (or otherwise use) the transcript," he said.
ANZ Bank pulled the pin on Cedenco in 2009, appointing receivers when it breached an earnings covenant. The following year the Australian receivers sold those businesses for A$93 million to Japan's Kargomi, satisfying all creditors, while the New Zealand units were sold to Japan's Imanaki for $29.5 million, which also left a surplus.
Sheahan Lock were appointed liquidators to deal with the residue.
The firm did gain some ground as Justice Heath backed the $2.39 million in fees and expenses charged by the liquidators, turning down ANZ's assertion it had overcharged for its services to such an extent as to amount to misconduct.
The judge said it would take an extreme case where a liquidator's misconduct stepped on the rights of creditors where "there would be jurisdiction to exercise a discretion for the remuneration or expenses to be paid personally by a liquidator."
Justice Heath agreed with the liquidator's counsel that "'it is officious and an abuse of process' for ANZ NZ to attempt to put improper pressure on the liquidators by suggesting they have overcharged."
The liquidators were unsuccessful in their bid to obtain bank documents and another interview with ANZ's Dekker for the New Zealand administration, with the judge saying it would be "oppressive" to her and that the attempt to re-examine her "can, in my view, fairly be characterised as being for an ulterior purpose."
The judge adjourned an application for her to be examined by the Australian administration saying the liquidators can either file expert evidence on the point or seek a Federal Court direction under Australian law.
In an Aug. 14 update, Sheahan and Lock said they have paid out $3.03 million to unsecured creditors.
Creditors will be entitled to post-liquidation interest claims if there's sufficient surplus once the liquidators have wrapped up the residual matters.
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