21. On 4 January 2016, the Plaintiff received a response from the Defendant to its letter of 24 December 2015 signed by three of the directors and confirming that they are satisfied that CCC as at that date is able to pay all its debts as and when they fall due and attaching a Circular Resolution of Directors in which it was stated
taking into consideration certain arrangements with creditors and potential transaction as represented by the executive team with Ivory Mint and its investment network, the directors are able to issue the letter.
Annexed hereto and marked ‘RMH-43’ is a copy of a letter from the Defendant addressed to the Plaintiff signed by Mr Schernikau, Mr Landau and Mr Buthelezi.
23. On 4 January 2016, I also received an email from Mr D’Sylva in which he stated ‘As per today’s ASX announcement (attached below), I am no longer a director of Continental Coal. As such, I will not be party to any declaration of solvency at this time.
Q. Did you speak to Mr D’Sylva about the solvency of the company before he resigned?
A. Privilege. There are two - Paul, as you or may not know, has been involved in I think it’s now three companies that have gone into administration. His view was he was very supportive of me but in the event - he said in the event that it doesn’t - he obviously had been speaking to Bryan - in the event that this does not transpire, he doesn’t want to be involved in a fourth one from a - you know, it’s not a good look to be on your fourth one that’s gone into administration.
Interview on Trading insolvent
A … if we haven’t got it done by – what’s today, the 15th – the 20th , by next Friday, I think we lose out basis for having a rational belief that we can square this away.
Q … So your position at this moment is that you anticipate the short-term funding coming by the 20th of –
A January. 2016
A Privilege. I don’t see any other choice but we’d have to appoint an administrator.
27. By close of business on Friday 22 January 2016:
27.1. Fanchel Pty Ltd had not been repaid (see paragraph 18.4); and
27.2. CCC had not been put into administration.
28. On 28 January 2016, the Plaintiff sent a letter to the directors of the Defendant regarding the solvency of CCC
29. In its letter to the Defendant dated 28 January 2016, the Plaintiff again requested that the directors of CCC confirm by 5pm on 2 February 2016 that they are satisfied that the Company is currently able to pay all of its debts as and when they fall due
30. On 2 February 2016, I received from Mr Landau a letter of that date in response to the Plaintiff’s letter of 28 January 2016 stating that ‘as a Director of Continental Coal Limited’ he was satisfied that CCC is currently able to pay all of its debts as and when they fall due and that:
An updated announcement will made on or before Friday 5 February 2016 with completion of a key refinancing initiative
38.1. the appointment of the BRP to the assets held through CCLSA was material given that these were the Defendant’s cores assets ;
38.3. the Defendant failed to release any supplementary prospectus for the CCC Rights Issue regarding the appointment of the BRP to CCLSA, or to release this information on MAP until 2 February 2015, approximately 10 weeks later, despite:
40. I have formed the view that the Defendant may have failed to disclose that despite 400m shares being issued to Ivory Mint the Defendant has not yet received payment of $2 million dollars owing to it as consideration for those shares.
CTR
16. In the course of the CCC Investigation, the Plaintiff traced the funds used by the Defendant to repay Applicants who exercised their Withdrawal Rights (the Tracing Evidence).
17. Based on the Tracing Evidence, the Plaintiff believes that some of the monies used to repay Applicants may have originated from Citation Resources Limited (ACN 118 710 508) (CTR). Mr Landau was director of CTR.
18. The Tracing Evidence shows that between 1 June 2015 to 7 August 2015:
18.1. CTR transferred $1,577,855.17 to Mr Landau’s private company, OKAP Ventures Pty Ltd (ACN 131 358 266) (OKAP) (out of a total of $2,140,202,09 received by OKAP from various sources);
18.2. OKAP transferred $486,800.00 to the Defendant; and
18.3. the Defendant transferred $468,969.73 to applicants who had exercised their Withdrawal Rights.
19. Of the $1,577,855.17 which OKAP received from CTR, $1,329,304 of those monies came from CTR’s Westpac Account (036406 230644) (the CTR Westpac Account).
20. Mr Vitorio Vincenzo Turco, CTR director, has advised the Plaintiff that:
20.1. there are no accounting records held by CTR for the transactions in the CTR Westpac Account; and
20.2. he was not made aware of the $1,329,304 in transfers from CTR to OKAP, despite having undertaken due diligence in relation to CTR on behalf of an acquiring entity in September 2015, nor was he made aware of them on 1 December 2015, following completion of the acquisition and his appointment to the board of CTR.
21. Mr Turco has sworn an affidavit dated 12 April 2016 in the related proceedings, WAD717 of 2015, in which he alleges that monies may have been misappropriated from the CTR Westpac Account (the Turco Affidavit).
22. Based on the Tracing Evidence and the Turco Affidavit, the Plaintiff suspects that the $468,969.73 which the Defendant paid to Applicants who had exercised their Withdrawal Rights may be funds misappropriated from CTR by OKAP and/or Mr Landau. Further, the Plaintiff suspects that these funds are owed to CTR.
23. The descriptions contained in the bank account statements for the CTR Westpac Account record $440,000 of the $486,800.00 which OKAP paid to the Defendant as a ‘loan’, and hence the Plaintiff suspects, at a minimum, that the Defendant owes these funds to OKAP
Oh he is in deep deep sh#t!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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