Central City - Case Update

The Supreme Court of Western Australia has completed its own assessment of the fees claimed by John Bumbak and Richard Tucker of KordaMentha as administrators of Central City, ultimately approving a higher amount than an agreed to cap negotiated with an opposing creditor.

Central City, a property investment company, owned three substantial Perth-based assets: the Adina Apartment Hotel, the Drunken Elephant Bar & Bistro, and the Akara Hotel. At the time of administration, it had one secured creditor, Westpac, and eight unsecured creditors owed over $4.2 million. The administrators took control in June 2023 and generated $1.7 million in gross rental income during their tenure. Before the second creditors’ meeting, they arranged the sale of the Adina Apartment Hotel and the Drunken Elephant Bar & Bistro. They were subsequently appointed as liquidators in December 2023.

The administrators sought approval for $357,002 in remuneration, based on time-costing. A creditor and shareholder of the company initially opposed, but withdrew her opposition after reaching a settlement with the administrators that they would cap their fees at $310,000. At the request of the Court, the administrators then gave a formal undertaking that they would waive any right to be paid any amount over $310,000 not including GST.

Nonetheless, the Court stated that it was required to undertake its own assessment of the fees claimed. The Court accepted most of the administrators’ claims but found some charges, including administration tasks billed at $395/hour, excessive, and reduced these to $200/hour. The Court also reduced remuneration claimed in relation the sale of the company's properties to account for potential duplication of efforts with agents and solicitors engaged to handle the sales. The Court reduced the amount claimed in respect of dealing with the company's properties by 25 hours, being equivalent to $21,250.

Ironically, taking into account that reduction and the reduction for administrative tasks, the Court approved $333,685 in remuneration — more than the administrators had already agreed to accept.

Read the decision HERE.

Professionals involved: Thomson Geer for the administrators.