Shield Holdings Australia Pty Ltd - Case Update

A special purpose liquidator (SPL) has been appointed to a company alleged to have been involved in an elaborate tax evasion scheme perpetrated by members of the ultra wealthy Binetter family, but the appointment and the identity of the SPL were not without their own controversy.

Ligon 158 Pty Ltd and various related entities, all members of the Binetter family’s corporate group (the Binetter Group), were placed into administration and then liquidation in 2018. The Binetters are a wealthy Sydney family that ran the Nudie Juice empire. They have recently fallen from grace, having been implicated in a tax evasion scheme worth tens of millions of dollars over a period of several decades. The Binetter Group and individuals in the family are believed to have acted as finance companies in borrowing money from an Israeli bank and claiming the interest on those loans as a deduction in their tax returns, even though the loans were matched by deposits made by Binetter companies with the Israeli bank.

In 2020, a further member of the corporate group, Shield Holdings Australia Pty Ltd, was deregistered as a result of administrative action taken by ASIC. Shield was not wound up under an external administrator, so nothing in the nature of the usual corporate death rites were performed. The Binetter companies and their liquidator, John Sheahan of Sheahan Lock (collectively, the Plaintiffs), sought to have Shield reinstated so that it could be wound up, allowing potential claims be investigated and pursued for the benefit of creditors. The Federal Court ordered that the company be reinstated and wound up, but refused to appoint Mr Sheahan as liquidator of Shield due to a potential conflict of interest arising out of his multifaceted roles in relation to the Binetter Group. Alan Walker of WLP Restructuring was appointed liquidator.

The Plaintiffs then sought Mr Sheahan’s appointment as SPL to leverage his extensive knowledge of the Binetter Group, given his prior investigations and recoveries related to the group’s affairs. Various members of the Binetter family opposed this, arguing that Mr Walker, as general liquidator, was better positioned to investigate potential claims without conflicts.

The Court ultimately determined that Mr Sheahan’s appointment as SPL was justified given the complexity of the Binetter Group’s liquidation, the need for efficient investigations, and the risk of potential claims expiring due to limitation periods. His powers were strictly confined to asset identification and investigative measures, while any substantive litigation will remain under the control of Mr Walker unless further Court approval is obtained. The Court also imposed a requirement for Mr Sheahan to consult with Mr Walker regularly, mitigating concerns about conflicts of interest.

Regarding costs, the Court ruled that the Plaintiffs’ costs and 50% of the interested parties’ (members of the Binetter family) costs would be costs in the liquidation. While the interested parties had successfully prevented Mr Sheahan’s general appointment, they did not fully prevail in blocking his role as SPL. The ruling balanced the necessity of Mr Sheahan’s expertise in investigating Shield’s affairs with safeguards to ensure impartial administration.

Read the decision here.

Professionals involved:

• Counsel for the Plaintiffs (the Binetter Group and John Sheahan): Brendon Roberts KC and Lloyd Wicks, both of Bar Chambers, Adelaide

• Solicitor for the Plaintiffs (the Binetter Group and John Sheahan): Iles Selley Lawyers

• Counsel for the First and Third Defendants (Shield Holdings and Alan Walker): David Raymond Stack, Stephen Puttick of 7 Wentworth Selborne and John Nolan of University Chambers

• Solicitor for the First and Third Defendants (Shield Holdings and Alan Walker): Ashurst

• Counsel for the Interested Party (Andrew Binetter): Steven Golledge SC of 3 St. James' Hall

• Solicitor for the Interested Party (Andrew Binetter): Pitcher Partners

• Counsel for the Interested Party (Michael Binetter): Christopher Freeman of Culwulla Chambers

• Solicitor for the Interested Party (Michael Binetter): Braddon Marx