High-stakes case for Tinkler
The action follows a decision by the NSW Supreme Court on Tuesday to approve a funding agreement between Blackwood Corporation and the liquidators of Mulsanne Resources - one of Mr Tinkler's failed companies - after Mulsanne failed to buy $28.4 million of Blackwood shares last year, despite agreeing to do so.
That decision cleared the path for liquidators to sue Mr Tinkler and Mulsanne's other directors.
The finding also meant Blackwood could provide the funds for liquidators Ferrier Hodgson to wind up Mulsanne and pursue Mr Tinkler for insolvent trading.
Late on Thursday, Ferrier Hodgson confirmed it had filed proceedings in the NSW Supreme Court against Mr Tinkler and two other former Mulsanne directors, Matthew Keen and Troy Palmer.
Blackwood said in a statement that if the court finds Mulsanne's directors liable for insolvent trading, it may make compensation orders against them personally.
"In this case, the liquidator has indicated that it will enforce the orders against any or all defendants," the Blackwood statement says. "Blackwood will continue to monitor the recoverability of the monies owed to the company under the [agreement] and will keep the market updated on further developments."
In a statement, Tinkler Group said: "The directors of Mulsanne strongly deny allegations of trading while insolvent and will strongly defend any legal action instigated by the liquidators."
The legal action dates to events of May last year, when Mulsanne agreed to acquire more than 94.6 million shares in Blackwood for $28.4 million. It failed to pay the money by the agreed date, and also missed a four-week extension for the payment.
Liquidators conducted a public examination of Mr Tinkler and Mr Keen in March this year.
Evidence was given by both men that, at the time Mulsanne agreed to buy the Blackwood shares, they believed funding for the deal would flow from the sale of a royalty stream controlled by the Tinkler Group.
But when Mulsanne failed to come up with the money on time, Blackwood filed an application to have the company wound up. Mulsanne did not defend the application to wind up.
In documents tendered in the NSW Supreme Court, Ferrier Hodgson said Mulsanne's directors had no reasonable grounds to believe the company could pay the $28.4 million when the time came to do so.
Frequently Asked Questions about this Article…
Liquidators Ferrier Hodgson have filed proceedings in the NSW Supreme Court alleging Nathan Tinkler allowed one of his companies, Mulsanne Resources, to trade while insolvent and breached directors' duties. The action follows Mulsanne's failure to pay for a share purchase of Blackwood Corporation and a court-approved funding agreement that cleared the way for the suit.
Ferrier Hodgson's court proceedings name two other former Mulsanne directors: Matthew Keen and Troy Palmer. The action targets those former directors in relation to Mulsanne's alleged insolvent trading and breaches of duty.
The dispute dates to May last year when Mulsanne agreed to buy more than 94.6 million Blackwood shares for $28.4 million but failed to pay by the due date and also missed a four-week extension. Blackwood then applied to have Mulsanne wound up, which Mulsanne did not defend, and that sequence led to the liquidators pursuing legal action.
The NSW Supreme Court approved a funding agreement between Blackwood Corporation and Mulsanne's liquidators, which cleared the path for Ferrier Hodgson to wind up Mulsanne and to sue the directors for alleged insolvent trading. The approval also allowed Blackwood to provide funds to pursue the action.
Blackwood has warned that if the court finds Mulsanne's directors liable for insolvent trading, the court may make compensation orders against them personally. The liquidator has indicated it may enforce any orders against any or all defendants, and Blackwood says it will monitor recoverability and keep the market updated.
In a public examination in March, both Nathan Tinkler and Matthew Keen gave evidence that at the time Mulsanne agreed to buy the Blackwood shares they believed funding would come from the sale of a royalty stream controlled by the Tinkler Group. Ferrier Hodgson later told the court it believed the directors had no reasonable grounds to think Mulsanne could pay the $28.4 million when required.
The Tinkler Group has stated that the directors of Mulsanne strongly deny the allegations of trading while insolvent and that they will strongly defend any legal action instigated by the liquidators.
Investors should watch for updates on the NSW Supreme Court proceedings, any public announcements from Blackwood Corporation about recoverability of the owed monies, filings or statements from Ferrier Hodgson, and official market updates. The article notes Blackwood will keep the market updated on further developments.
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