The liquidator of failed ad agency McCorkell & Associates is seeking permission from creditors to be paid for his work so he can continue his investigation into the shifting of assets.
Michael Hogan of Hogan Sprowles is pursuing Scott McCorkell, the founder of the North Sydney agency, in what he has told the Federal Court appears to have the hallmarks of a “phoenix” transaction.
Phoenixing is where assets are moved to a new company leaving behind debts and liabilities in the old business.
The agency went into liquidation the week before Christmas 2022, putting 18 out of work without pay, redundancy or superannuation payments, and leaving a long list of trade creditors.
The Federal Court has issued a restraining order against Scott McCorkell, preventing him from selling his business or his interest in the family home, 57 Bay Street, Mosman.
The liquidator now estimates that the company owes more than $6 million, with $4.2 million of that employee entitlements, including superannuation payments, plus $1.3 million to trade creditors and $562,399 to the Australian Tax Office.
Hogan has already taken evidence in court from Scott McCorkell, his wife Georgina, the failed agency’s first liquidator, Liam Bailey of insolvency firm O'Brien Palmer, and a string of other players in the case.
“We note Mr Bailey conceded during the course of his public examination (in the Federal Court) that a ‘pre-pack sale’ is colloquially referred to as a ‘Phoenix’ in the insolvency industry,” Hogan says in his report to creditors.
“The resulting effect of the Phoenix Option being implemented would be that any ‘unwanted liabilities’ (including with respect to unpaid and accrued employee entitlements and tax liabilities) would remain with the company in liquidation, but that all of the available assets of the company would be transferred to a new company owned and controlled by the director.”
Scott McCorkell is currently running the advertising and marketing services business via a new entity, McCorkell Group, which was registered November 24, 2022, before the company went into administration. Scott McCorkell, its sole director, bought the business of McCorkell and Associates on December 14, 2022, for $29,129.61.
The court was told that dentsu in 2019 had offered $12 million to $14 million to buy McCorkell and Associates before the deal collapsed with management changes at the Japan-based global advertising agency.
The liquidator has a confidential funding agreement with the federal Department of Employment and Workplace Relations to carry out ongoing investigations.
Hogan has now asked creditors to approve payment of $251,405.29 in remuneration and $1,610.94 in costs.
A table from the latest liquidator report:
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