ASIC has successfully sought sequestration orders in the Federal Court of Australia against the estates of Mr William Forge, Mr Joszef Endresz, Ms Dawn Endresz and Mr Allan Endresz (the respondents).

The respondents had failed to pay costs ordered by the Local Court of NSW in 2011 following ASIC's successful civil penalty proceedings against the respondents.

The effect of the orders is to make the respondents bankrupt.

ASIC has applied to the Australian Financial Security Authority to have trustees appointed over the estates of the respondents.

Background

In December 2007, the NSW Supreme Court made orders banning each of the respondents from managing corporations, and ordered them to pay civil penalties totalling $631,000 after finding they had contravened their directors’ duties and the related party provisions of the Corporations Act 2001 (Corporations Act) as directors of CTC Resources NL, an Albury-based public company (refer: 07-341).

The respondents were banned from managing corporations and fined as follows:

• Mr William Forge was banned until 2014 and fined $140,000
• Mr Joszef Endresz was banned until 2016 and fined $201,000
• Ms Dawn Endresz was banned until 2012 and fined $134,000, and
• Mr Allan Endresz was banned until 2021 and fined $156,000.

The respondents were also required to pay ASIC's costs of the proceedings against them, which included appeals to the NSW Court of Appeal and the High Court of Australia.

The sequestration orders were made by the Federal Court on 29 July 2014.

Under the Corporations Act, a person who is an undischarged bankrupt must not:

• manage a corporation (without leave of the court)
• act as an administrator of a company or of a deed of company arrangement
• act as a liquidator of a company, or
• be involved with a clearing and settlement facility licensee, market licensee or derivative trade repository licensee.

Where a person becomes bankrupt, ASIC may also:

• cancel or suspend the person's Australian financial services license,
• make a banning order prohibiting the person from providing financial services, and
• cancel the person's registration as a liquidator.   

Editor's note 1:

In a judgment delivered on 19 February 2015, an appeal by Mr William Forge, Mr Joszef Endresz, Ms Dawn Endresz and Mr Allan Endresz to set aside the sequestration orders made by His Honour Justice Pagone on 29 July 2015 was allowed, and the sequestration orders were set aside. Upon undertakings given to the Court by Mr Forge, Mr Jozsef Endresz, Mrs Dawn Endresz and Mr Allan Endresz to prosecute "with all due expedition" their appeal in the ACT Supreme Court (ACTCA 67 of 2014) (the ACT Supreme Court Appeal), the hearing of ASIC's creditor's petitions has been adjourned pending the outcome of the ACT Supreme Court Appeal or until further order of the Court.  ASIC's creditor's petitions were extended for a further 12 months until 20 and 21 February 2016.  The matter has been stood over pending publication of the Court's reasons for judgment.

Editor's note 2:

The Court's Reasons for Decision were published on 13 March 2015 on the Federal Court's website.