FNG Exclusive…. FNG has learned more details of the lead-up to the bankruptcy of Union Standard International Group Pty Ltd, which operated the USGFX Retail FX brokerage brand in Australia.

New disclosures made in Australia by the company’s administrators-turned-liquidators BRI Ferrier shed more light on what happened in the days leading up to July 8, when Union Standard filed for voluntary administration.

The disclosures also give some more color to the problems which BRI Ferrier has faced in trying to deal with the company’s shareholder Soe Hein Minn. Mr. Soe and his representatives also requested to have BRI Ferrier removed as administrator / liquidator in favor of their own choice, however that request was turned down by the Australian courts.

Due to the problems that BRI Ferrier and its lead people on the file, Peter Krejci and Andrew Cummins, were having in carrying out their duties, they requested (and received) permission from the Australia courts to turn the case into one of immediate liquidation of Union Standard, as was exclusively reported last week by FNG.

The following summarizes the chronological disclosure made by BRI Ferrier. The disclosure was made in the context of disavowing any conflict of interest that BRI Ferrier might have with the file:

Our appointment as Voluntary Administrators, was referred to us by Mr Andrew Jeffers from Shuriken Consulting, the Company’s external accountants. Shuriken Consulting is an accounting firm who we have dealt with from time to time.

Our firm has been referred other matters from Shuriken Consulting, however these matters were referred to us on an irregular basis. Further, we have not received or paid any benefit to Shuriken Consulting with respect to these referrals. Therefore, we are of the view that the referral source will not give rise to a conflict of interest.

Detailed below is a summary of the communication leading to our appointment as Voluntary Administrators:

 On 29 June 2020, Mr Krejci received a telephone call from Mr Andrew Jeffers of Shuriken Consulting regarding his client USG. Mr Jeffers provided some background information on the Company’s affairs referring to ASIC proceedings and the directors concerns around USG’s solvency. In this telephone conversation, Mr Krejci explained the various options available to the Company and the nature and consequences of an insolvency appointment. Mr Jeffers referred Mr Krejci to the various judgments handed down by the Court in respect of the ASIC proceedings to obtain further background information on the Company.

 On 30 June 2020, Mr Krejci sent Mr Jeffers an email with commentary questioning the Company’s Net Tangible Asset position and suggesting that the appointment of a Voluntary Administrator could be warranted if the Company was insolvent or about to become insolvent.

 On Thursday 2 July 2020, Mr Krejci received a phone call from Mr Andrew Jeffers asking him to meet with the director Mr John Martin and CEO Mr Shay Zakhaim on Friday 3 July 2020.

 On Friday 3 July 2020, Mr Krejci met with Mr Andrew Jeffers, Mr John Martin and Mr Zakhaim the purpose of this meeting was to:

o Physically meet with Mr John Martin and confirm his identity;

o Obtain sufficient information about the financial position of the Company and to advise the Company, its officers and its advisors on the Company’s solvency; and

o Discuss the potential appointment of an Administrator.

 On Monday 6 July 2020, Mr Krejci received a phone call from Mr Jeffers requesting a further meeting with Mr John Martin and Mr Zakhaim. On the same day, Mr Krejci met with Mr Jeffers, Mr Martin and Mr Zakhaim to discuss the appointment of a Voluntary Administrator and the process generally. I advised Mr Martin that I was prepared to Consent to Act as Administrator.

 On Tuesday, 7 July 2020, Mr Krejci received a phone call from Mr Jeffers requesting that he participate in a teleconference with Mr John Martin, Mr Darren Burns, Mr Zakhaim and the representatives of the Taiwanese shareholders. Mr Krejci participated in the teleconference with the these parties at 12pm that day. Included in this teleconference was Ms Joyce Shen (Company operations manager and translator) and Ms Queena as representative of the Company’s shareholders. The purpose of the teleconference was to discuss the appointment of a Voluntary Administrator to the Company and the practicalities of such an appointment for the Company’s business.

On Tuesday, 7 July 2020, Mr Krejci received a phone call from Mr Jeffers requesting that he forward appointment documents for the appointment of a Voluntary Administrator to Mr John Martin.

 On Tuesday, 7 July 2020, Mr Krejci sent an email to Mr John Martin and Mr Zakhaim attaching appointment documents for a Voluntary Administrator.

Neither of us, nor our firm have received any remuneration for the abovementioned correspondence and advice.

Following our appointment as Administrators, we encountered substantial difficulties in dealing with the Company’s affairs and conducting investigations due to the conduct of the shareholder, Union Standard Group International Holdings Limited and Mr Soe Hein Minn, one of the Directors of the Company and the major beneficial owner of the shareholder. The difficulties were such that the objects of the Act could not be met and the Voluntary Administration should not continue, in our view.

Accordingly, we filed an application in the Federal Court of Australia, seeking orders that the Voluntary Administration end and the Company be wound up on just and equitable grounds. On 3 September 2020, Justice Yates of the Federal Court of Australia made Orders granting our application.

We note that Justice Yates also considered an application from the Shareholder, who was seeking to have an alternate Liquidator appointed to the Company, instead of ourselves. It was, and still remains, our view that there is no conflict for us being appointed Liquidators of the Company. Justice Yates made Orders that day, 3 September 2020, that our appointment as Voluntary Administrators would end, and that we would be appointed Joint and Several Liquidators of the Company.