The CALDB found Pino Fiorentino dishonestly used his position as the liquidator of ERB International Pty Ltd (ERB), failed to act in good faith in the best interests of the company and its creditors, lacked competence and failed to comply with his legal requirements as a liquidator.
At the time of his conduct, Mr Fiorentino was a partner of Hamiltons Chartered Accountants, Business Advisors.
Mr Fiorentino’s failures arose in circumstances where pre-appointment transactions demanded a full investigation such that ERB's creditors had confidence that he acted solely in their interests in maximising the return to them.
The CALDB found, among other things, that Mr Fiorentino signed a deed of settlement – on behalf of creditors – with ERB and its directors, without adequately and properly assessing necessary information. Also, the CALDB found that Mr Fiorentino procured invalid proxies and voted them in support of a resolution to approve his fees. Significantly, it found that Mr Fiorentino actively sought to undermine a claim by the New South Wales Office of State Revenue, a major creditor, to pursue another entity to recover its debt.
Overall, the CALDB found in favour of 20, out of 25, of ASIC's contentions.
ASIC senior executive leader, insolvency practitioners, Adrian Brown said, "CALDB found that Mr Fiorentino failed to properly investigate ERB’s affairs where CALDB described pre-appointment dealings as a ‘phoenix’ transaction."
"Liquidators are very important gatekeepers in identifying, acting on and reporting pre-appointment transactions which might seek to defeat the creditors' interests. Creditors must have confidence in the fundamental duty of liquidators to act solely in the creditors’ interests. I am also pleased that independent liquidators appointed by the court are now investigating the affairs of ERB," Mr Brown said.
In April 2014, the CALDB, following an ASIC application, suspended William James Hamilton’s registration for six months for his role as joint liquidator of ERB.