Parwan Valley Mushrooms - Case Update

An arrest warrant has been issued for an individual who was formally appointed as a director of a company just a few months before its liquidation.

Parwan Valley Mushrooms was established in 2010 to conduct a business of growing and harvesting mushrooms from a purpose-built mushroom farming facility in Parwan, Victoria. Sha Wang was appointed a director of the company in August 2022 but had been involved in the company’s operations prior to that date.

David Vasudevan of Pitcher Partners and Innis Cull (then at Pitcher Partners and now at PKF Melbourne) were appointed administrators of the company in November 2022 and subsequently liquidators in December 2022.

In late February 2023, the liquidators sent a letter of demand to Mr Wang’s then solicitors raising claims of insolvent trading and demanding payment of $1,789,521. The liquidators then obtained a summons to examine Mr Wang under s 596A of the Corporations Act 2001 but had difficulty serving the summons on him after his solicitors ceased acting.

The liquidators then obtained orders for substituted service and sent copies of the summons and orders to multiple email and mailing addresses. Mr Wang still did not contact the liquidators, so they sought an arrest warrant to bring him before the Court to be examined under s 596A of the Act.

The Court granted the order, inferring from the evidence that the summons had come to his attention and that he had nevertheless failed to attend the examination. There was no evidence that Mr Wang had failed to attend the examination with reasonable cause. The Court did not rule on whether the onus lies on the liquidator to show that Mr Wang failed to attend without reasonable cause, or if the onus lies on Mr Wang to show reasonable cause. However, the Court found that if the onus lies on Mr Wang to show reasonable cause, he had failed to do so. If the onus lies on the liquidator to show that Mr Wang failed to attend without reasonable cause, the Court drew that inference from the evidence.

The Court also noted the strong discretionary factors weighing in favour of issuing the warrant, including that non-compliance with the Court’s orders to attend an examination undermines the effective administration of justice.

Read the decision HERE.

Counsel for the liquidators: Adam Segal of List G Barristers

Solicitors for the liquidators: Frenkel Partners