Phosphate assets frozen as Gutnick battle heats up
From: The Australian
Indian fertiliser giant IFFCO has convinced a court to freeze the assets of a company controlled by bankrupt mining magnate Joe Gutnick’s sister, Pnina Feldman, as part of efforts to claw back phosphate deposits worth up to $87 million.
The potentially lucrative tenements near Mount Isa were transferred to Queensland Phosphate, a company controlled by Ms Feldman and her son Sholom Feldman, as Mr Gutnick’s Legend International teetered on the brink of collapse in April.
IFFCO is owed $79m by Mr Gutnick and Legend after it won a legal battle over a failed 2008 business deal.
Victorian Supreme Court documents show Legend’s liquidators, Mark Korda and Craig Shepard of KordaMentha, have issued subpoenas demanding information about the transaction from Mr Gutnick, his long-time associate Peter Lee, Pnina Feldman, Sholom Feldman and a receiver key to the deal, Christopher Palmer of O’Brien Palmer.
Mr Shepard has also threatened to report Mr Palmer’s behaviour to the corporate regulator for allegedly breaching his duties under the Corporations Act during the sales process, the documents show.
In a separate proceeding, the liquidators are also seeking to have Mr Palmer grilled under oath.
Mr Palmer declined to comment.
Judge James Elliott slapped an order freezing up to $25m in assets over Queensland Phosphate in May after IFFCO said it feared the deposits might be sold, making it impossible for it to collect its debt.
The order has since been lifted but Queensland Phosphate last week promised the court it would not sell the assets before August 17.
Ms Feldman told The Australian Queensland Phosphate was in talks to settle the case.
She said the Legend side was reviewing paperwork Queensland Phosphate had provided.
“I think they’ll come to the conclusion it was a legitimate deal,” she said.
“I think the outcome of this one will be a good one and I hope it will be settled relatively quickly.”
Mr Korda and Mr Shepard “didn’t need to send us the subpoenas because we’ve got nothing to hide”, she said. Legend owes IFFCO $25m after the Victorian Court of Appeal in February refused Mr Gutnick’s bid to have an arbitration ruling set aside. Mr Gutnick has applied to the High Court for special leave to appeal but this is yet to be heard.
In November last year, Queensland Phosphate agreed to buy bonds issued by Legend worth between $1m and $2.5m, repayable in two years.
In return, Queensland Phosphate got security over Legend subsidiary Paradise Phosphate, which held the tenements.
Under the deal, if a court ordered Legend or any subsidiary to pay more than $1m it would be taken to have defaulted, triggering a requirement to repay 150 per cent of the face value of the bonds.
A stay of the court’s orders against IFFCO expired on February 12.
In an affidavit filed with the court, IFFCO’s solicitor, Ashurst partner Michael Sloan, said his firm wrote to Queensland Phosphate and Paradise Phosphate in February, urging them to preserve the status quo, but got no response. On March 11 Queensland Phosphate used its rights under the bond deal to appoint Mr Palmer as receiver of Paradise. He then sold all the shares in Paradise to Queensland Phosphate in a deal Mr Sloan said raised “serious issues” about Mr Palmer’s compliance with his duties as a receiver under the Corporations Act.
Solicitor for Legend’s liquidators, Arnold Bloch Leibler partner Leon Zwier, told the court: “The sale was effected within six weeks of the receiver’s appointment.” “No public sale process was conducted and only one independent valuation had been obtained,” he said in an affidavit.
He said the liquidators had issued the subpoenas “to enable them to investigated whether the entry of Legend and Paradise into the bond deed” and share sale could be reversed.