The long running dispute between the director of the WA based fertiliser business, Burrup Fertilisers Pty Ltd, and its Receivers and Managers from PPB Advisory continues with the Federal Court ordering a review of the fees and expenses incurred by them in the Oswal, in the matter of Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Carson, McEvoy and Theobald (Receivers and Managers) (No 6)  FCA 1435
Judge Siopis, J made orders on the 24 December 2014 that there be an inquiry under s 423 of the Corporations Act 2001 (Cth) into the following matters:
(a) the level of the fees and expenses charged by the defendants during the last six weeks of the receivership of Burrup Fertilisers Pty Ltd (the company) between 17 December 2011 and 1 February 2012;
(b) the propriety of the defendants’ conduct in accepting the appointment to act as the receivers and managers of the company;
(c) the extent to which the defendants, in respect of the whole period of the receivership of the company, charged:
(i) fees for the professional time that Melbourne based partners and staff spent in travelling; and
(ii) the expenses and disbursements incurred by Melbourne based partners and staff in respect of travel, accommodation and related activities; and
(d) the extent to which the fact that persons who worked on the receivership of the company were based in Melbourne, increased the fees, expenses and disbursements which were charged by the defendants in respect of the receivership.
Various allegations have been made by Oswal in this case with several of those finding their way into the print media (here). The Federal Court will ultimately pass judgement as to whether these allegations are true (assuming a settlement does not occur) but this case continues to serve as a reminder to all in the insolvency profession that we are under constant scrutiny when we are placed in a position of trust to administer over an insolvent business.
Generally speaking every insolvency practitioner strives to do the best job that they can and in doing that work comes with an expectation that they will be remunerated for undertaking that work. Often the work undertaken by an insolvency practitioner is complex and they are forced, as a result of the position you occupy, to deal with stakeholders who are aggrieved. Not all work that a practitioner undertakes is related to asset recovery. Many times many hours can be spent in corresponding or dealing with issues raised by aggrieved parties who expect the practitioner to somehow bring justice and right the wrongs of others (often the directors wrongs are done by the company directors) or in defending or prosecuting claims in the name of the insolvent entity. These issues take time to deal with and if no benefit is perceived by the stakeholder, then justifying the fee charged for this work suddenly gets just that little bit harder for the practitioner.
Regular communication with interested parties is a well used tool in many practitioners box of tools to ensure that all stakeholders are aware of the work being undertaken so that when fee approval is required, those stakeholders have been on the journey and are fully aware of the challenges that have been met. Those practitioners who isolate themselves and toil away in the dark have only themselves to blame if stakeholders become skeptical when asked to approve fees for which no tangible value can be identified.