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Scott McCorkell, the founder of the failed North Sydney advertising agency that bears his name, and his advisors face fresh legal action in the Federal Court.
The current liquidator of McCorkell and Associates, Michael Hogan, is taking action against McCorkell and those who advised him in a process described in previous court hearings as phoenixing.
Phoenixing is where assets are moved to a new company leaving behind debts and liabilities in the old business.
McCorkell, and accountant Andrew Fraser of BDJ Partners and business valuer Andrew Whittingham of Groves & Partners, face allegations that they broke a long list of sections of the Corporations Act.
Liam Bailey, the original liquidator who was deposed in a vote by creditors, is also named in the federal Court case.
The court action seeks the return of the transferred assets or that the defendants themselves pay compensation or damages.
The circumstances of the liquidation of McCorkell have also been referred to the ATO and the corporate regulator ASIC.
The agency went into liquidation the week before Christmas 2022, putting 18 out of work without pay, redundancy or superannuation payments, and leaving a long list of trade creditors.
The liquidator has estimated the company owed more than $6 million, with $4.2 million of that employee entitlements, including superannuation payments, plus $1.3 million to trade creditors and $562,399 to the Australian Tax Office.
The Federal Court has issued a restraining order against McCorkell, preventing him from selling his business or his interest in the family home at 57 Bay Street, Mosman.
According to documents lodged with the court, Hogan alleges McCorkell breached legal and fiduciary duties when he sold assets to a new company, McCorkell Group, in December 2022.
McCorkell Group, registered November 24 before the original company went into administration, with Scott McCorkell its sole director, bought the business of McCorkell and Associates on December 14, 2022, for $29,129.61.
This new company, McCorkell Group, is still trading.
The new action alleges this was an "uncommercial" and "insolvent" transaction and that was done to "avoid the payment of employee entitlements".
The liquidator is seeking an order that McCorkell, or his company McCorkell Group, transfer all assets, property, plant and equipment back to the original company, McCorkell and Associates.
The court had been previously told that dentsu in 2019 had offered $12 million to $14 million to buy McCorkell and Associates before the deal collapsed with management changes at the Japan-based global advertising agency.
McCorkell and his wife, Georgina, were sole shareholders in the failed agency
During questioning in a previous hearing, McCorkell said he had in 2022 spent six weeks in Greece.
“It was leave but I was working … every day I am on the mobile phone,” he said.
On return to the North Sydney business, McCorkell said he found the agency in trouble, with no sales over two months.
After what he called “angst” and a “discussion”, the company went into voluntary liquidation.
He had been told, he said, that the then advisor, and subsequent first liquidator, Liam Bailey, that staff not transferred to the new company would be looked after.
The current liquidator has a confidential funding agreement with the federal Department of Employment and Workplace Relations to carry out ongoing investigations.
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