Assets of Scott McCorkell, the founder of failed North Sydney advertising agency McCorkell and Associates, including a house in upmarket Mosman, have been frozen by the Federal Court.
Summonses have also been issued for McCorkell and his wife, Georgina, to appear before the court.
The liquidator, Michael Hogan of Hogan Sprowles, is pursuing McCorkell and his actions in what he has told the court appears to have the hallmarks of a “phoenix” transaction.
Phoenixing is where the assets of a company are moved to a clean shell of a company leaving behind debts and liabilities in the old business.
The Federal Court has issued a restraining order against Scott McCorkell, preventing him selling, transferring, charging, mortgaging or otherwise disposing of and/or diminishing in value his interest in 57 Bay Street, Mosman.
He also cannot sell the business, McCorkell Group, the company to which assets from McCorkell and Associates was transferred.
The liquidator is investigating:
(1) Whether the purchase price paid for the business was commercial;
(2) the circumstances surrounding a loan by McCorkell to the agency;
(3) whether McCorkell’s wife was an employee who was paid a salary; and
(4) payments totalling $483,000 to persons and entities associated with the company.
The judge, Justice Lee, says "Hogan submits that that transaction appears to have the hallmarks of a 'phoenix' transaction".
Scott McCorkell was the sole director of the company going into liquidation and the new company, McCorkell Group, also had Scott McCorkell as its sole director.
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 staff finally started to receive some money in May, paid via the Fair Entitlements Guarantee, a federal government backed scheme of last resort.
McCorkell Group, registered November 24 before the company went into administration, with Scott McCorkell its sole director, bought the business of McCorkell and Associates on December 14, 2022, for $29,129.61.
This new company, McCorkell Group, is still trading, using the same website, but with reduced staff.
According to documents lodged with ASIC, the first liquidator, Liam Bailey of insolvency firm O'Brien Palmer, introduced a valuer, Andrew Whittingham of Groves & Partners, to Scott McCorkell to establish a price for the agency.
Bailey was later deposed as liquidator in a narrow vote of creditors, which included the Australian Tax office and SAP Australia, a now former client of McCorkell. This vote was instigated by Karen Powell, the former managing director.
Hogan this week lodged an affidavit in the Federal Court which is currently marked confidential and can’t be reported.
However, the court, on the basis of that affidavit, granted Hogan leave to go ahead with a litigation funding agreement.
Scott McCorkell and the first liquidator, Liam Bailey, have also been summoned to appear in court to have their actions examined by the current liquidator.
McCorkell’s wife, Georgina, former managing director Karen Powell, valuer Andrew Whittingham and others have also been ordered to appear before the court.
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