Good money to be made before burying dead companies

The Ansett collapse has provided a boon for undertakers. Photo: Dallas Kilponen

Quite often there is more money to be made from a company dead than alive. Ansett, for instance, is still in liquidation after 14 years. Its liquidators from KordaMentha won’t say but observers believe they may have raked in a billion dollars selling planes and parts from the bankrupt airline.

Ansett has been far more profitable for KordaMentha than it ever was for shareholders.

Then there is Lehman Brothers Australia, which went belly up during the financial crisis. Its liquidators from PPB are about to drop their maiden dividend (10.99¢) to local councils, charities and churches who blew up hundreds of millions buying their dodgy  credit instruments.

Illustration: Michael Mucci.

During the past six years, the liquidators and their lawyers have clipped the ticket for roughly $69 million ($13 million and $56 million respectively), or $11 million a year for the arduous task of paper shuffling.

No rush to get that job done. They have been sitting on $210 million cash for almost seven years and, having gone as far as the High Court to block a deed of company arrangement for creditors, are finally paying them something, get this, from insurance.

Then there is John Viscariello, the Adelaide retailer whose business went bust the same year as Ansett, 2001. His liquidator, Peter Macks, then of PPB, splashed half a million dollars from the estate chasing a debt of just $28,000.

Viscariello, who put himself through law school, has been on a one-man crusade till this day, pursuing liquidator Peter Macks  right up to even the High Court; and let’s not forget the Legal Profession Conduct Commissioner.

Last week he had an application dismissed in the Supreme Court. But Justice Parker found the state’s Legal Profession Conduct commissioner, Greg May, had technically breached Section   17 of the Public Sector (Honesty & Accountability) Act.

Although the breach had no effect on the outcome. We asked the commissioner to comment and he declined.

Last year,  Chief Justice Chris Kourakis found liquidator Peter Macks, now of Macks Advisory, had fabricated documents, given “evasive and unconvincing testimony” to a creditors’ committee and engaged in multiple breaches of the Corporations Act.

Macks’ lawyers Minters – where Greg May had been a partner – also came in for a hiding. ASIC has finally moved to investigate Macks. Without tenacious types like John Viscariello fighting for vindication, the insolvency “profession” would be an utter wasteland of lawlessness.

Paying the Piper

How’s this for a shifty move? The Australian public already pays the world’s highest fees to access public information – via the database of the Australian Securities & Investments Commission – information it has already paid for.

Now, the government is selling the registry, a monopoly provider of critical information, and is considering double-charging by keeping the world’s highest registry fees (already at $680 million a year) and imposing $260 million in new cost recovery fees.

The proposal to sell (Recommendation 51, ASIC Inquiry) was always based on the premise that the registry fees would fall with the introduction of cost recovery.

Instead, according to a story by Nathan Lynch at Thomson Reuters, the government is trying to “double dip” by imposing cost recovery fees and selling off the registry with current fees intact.

The office of Assistant Treasurer Josh Frydenberg would not rule out double charging, saying there had been “no decision” on fees.

The government is conflicted. This information should be free but if it tarts up the asset with the promise of future riches for a private operator it can sell at a higher price, ergo budget repair.

Ironically, this is the very information Fairfax Media has relied upon, and had to buy, in conducting its investigations into multinational tax avoidance. While doing little to combat knavish tax schemes by our biggest companies though, Canberra has the cheek to thwack the public with another tax.

Every small business will be hit. As long as  corporate lobbyists keep snaking around the halls of Parliament pleading for their big clients, they might top it up with a 50 per cent rise in the GST to boot!