ASIC inquiry into Wily and Hurst branded “Kafkaesque”

ASIC inquiryASIC has issued 70 notices to produce as part of its inquiry into liquidators Andrew Wily and David Hurst.
Liquidator Andrew Wily

Liquidator Andrew Wily has engaged barrister Farid Assif to defend him from allegations that could see Wily stripped of his liquidator’s registration.

Subversive utterances were overheard in the corridors of law yesterday, after ASIC’s application for an inquiring into the conduct of liquidators Andrew Wily and David Hurst ran into resistance at the first directions.

The moment he was able, Wily’s barrister Farid Assif leapt to his feet and attacked the form and process of ASIC’s application, demanding it be simplified and insisting that no order could at this stage be made requiring his client to put on evidence in response to the allegations contained in ASIC’s 54 page affidavit.

“The conduct ASIC seeks to rely on dates back to 2008 and even 2007,” Assif told Equity and Corporations list Registrar Leonie Walton, adding that given ASIC’s position in the proceedings was akin to that of a prosecutor, there was an obligation for it act as a model litigant.

“ASIC has issued no less than 70 notices to produce under section 33 of the ASIC Act. We should not be pressured to have to respond at this point to the reams of documents ASIC has assembled in putting together this application,” Assif thundered.

Assif told the court ASIC was seeking ” … the deregistration of my client as a liquidator and the destruction of his livelihood”, and that the regulator had to present its allegations in a form more concise than that in which they had been lodged.

Outside the court SiN overheard the voidable transactions guru express exasperation with how ASIC  was conducting the case, describing it as “Kafkaesque”. ASIC declined to acknowledge it existed when approached for comment.

The regulator flagged in January that it had made application for the court to inquire into Wily and Hurst’s conduct whilst they acted as creditors voluntary liquidators of 12 companies connected to Crystal Carwash Cafe.  The companies are:

Stone Cliff Pty Ltd ACN 098 024 714 (Deregistered)
Sjain Pty Ltd ACN 127 505 720 (Deregistered)
Htbong Pty Ltd ACN 127 505 873 (Deregistered)
Mboa Pty Ltd ACN 128 067 489 (Deregistered)
Vbrkic Pty Ltd ACN 127 507 564 (Deregistered)
Kgifford Pty Ltd ACN 127 506 129 (Deregistered)
Msrour Pty Ltd ACN 127 505 579 (Deregistered)
Schauhan Pty Ltd ACN 127 508 034 (Deregistered)
Rgoel Pty Ltd ACN 127 508 221 (Deregistered)
Mhaigh Pty Ltd ACN 127 508 365 (Deregistered)
Pkhouri Pty Ltd ACN 127 505 908 (Deregistered)
Psingh Pty Ltd ACN 127 507 813 (Deregistered)

Prior to their liquidation, the companies provided either administrative, carwash and/or café staff exclusively to Crystal Carwash Café Pty Limited (Crystal Carwash). Wily had previously conducted the liquidation of 7 other companies that had also provided carwash and/or café staff exclusively to Crystal Carwash.

In a statement issued on January 24, 2017 ASIC said it had concerns around:

  • a lack of independence and a failure to disclose potential conflicts;
  • the failure to report to ASIC suspected shadow directors and offences underlying suspected illegal phoenix activity; and
  • a failure to undertake basic investigations into the companies’ affairs.

After hearing the parties Registrar Walton ordered that ASIC file and serve a list identifying tab and volume numbers of the documents supporting the affidavit of ASIC officer Virginia Plowman by February 23 and: “The issues and questions concerning the conduct of each of the Defendants in relation to the liquidation of each of the companies specified in Schedule B to the Originating Process that ASIC will contend at the Interlocutory Hearing ought to be inquired into by the Court pursuant to section 536 of the Corporations Act.”

Hurst, who was a salaried partner at ArmstrongWily, left in 2012 to form Hosking Hurst. He declined to comment when contacted and his solicitor, Philip Beazley also refused to comment. The matter will return before a judge on Monday, March 27, 2017.

About the Author

Peter Gosnell
Sydney Insolvency News illuminates the practice of insolvency in Australia's largest city, highlighting the triumphs and failures of Sydney's registered practitioners and the accounting and legal professionals who work with them. SiN is produced by Peter Gosnell, former business editor and senior business reporter at The Daily Telegraph newspaper. During a decade-long career, your correspondent reported on such notable corporate collapses as HIH, One.Tel, Westpoint and Fincorp as well as some of the nation's highest profile bankruptcies and the investigations and prosecutions arising from Australia's most notorious instances of white collar crime.

1 Comment on "ASIC inquiry into Wily and Hurst branded “Kafkaesque”"

  1. It is always a worry when a regulator – who may not be able to be sued, uses the media to condemn a professional where there has been not hearing on the merits. The conduct of ASIC in recent years – see recent judgment of Justice Edelman in Queensland itself seems to fall below that which ought be expected of a regulator.

    Neither Mr Wily or Mr Hurst have had a hearing on the merits of the application – the details of which remain confidential until read in Court – that is unless the regulator choses to make further disclosure.

    The regulator of course has a history of snail like process in investigations – eg Ariff

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