Director that contributes to Company collapse, sends smiley face text to those affected, then shares in $3.8 million gain
Typically when a Company goes into Voluntary Administration it is considered a catastrophic event for it's Company Directors. However, that didn't seem to be the case for the Director I appointed to Live Board Holdings Limited - a former APN News & Media Director, Mr Pierce Cody.
After Mr Cody and his Co-Directors placed the Company into Voluntary Administration, Mr Cody sent me a private smiley text message to my phone.
How could he be happy after being a Director of a Company that has just gone broke. Did he know what was to follow?
Well, before you read about the new event that started to unravel before my eyes, I’ll give you a background of the events leading up to the Voluntary Administration:
I appointed Mr Pierce Cody as a director of Live Board Holdings Ltd in May 2012, after I had invented the ‘world’s first digital real estate ‘for sale’ sign', called ‘Live Board’.
On September 3rd 2013, Mr Cody, along with his Co-Directors Mr Richard Ochojski and Ms Finola Burke, issued shares without proper authority.
Following their unauthorised share issue, my majority control of Live Board Holdings Limited was diluted, I was fired from the Company, my invention and the business were renamed from ‘Live Board’ to ‘Cody Live’ and Mr Pierce Cody then presented himself as the creator of the 'world’s first digital real estate sign’ to the media, to the public & to the real estate industry. (click here to view Sydney Morning Herald article)
On February 17th 2014, the NSW Supreme Court ruled against Mr Cody and his Co-Directors by refusing an application by Mr Cody, Mr Ochojski & Ms Burke to declare their share issue of September 3rd 2013 valid. (click here to view full decision)
Following the Supreme Court's refusal, Mr Cody and his co-directors were set to face further matters in Court including alleged personal liability for the unauthorised share issue and oppression. On February 18th 2014 however, Live Board Holdings Ltd was placed into Voluntary Administration.
Back to the Smiley Face Text I Received on March 3rd
In a further Court decision on March 3rd 2014, I was unable to block the external Administrators (Holzman Associates) from being appointed as Administrators of Live Board Holdings Limited. The majority of the Company funds derived from the unauthorised share issue ($1 million), had been spent by Mr Cody and his Co-Directors including a significant amount spent between the date of the hearing in December 2013 and the date that the Court handed down its decision regarding the unauthorised share issue on 17 February 2014.
It was immediately after the Court’s decision to allow the appointment of the Administrators on March 3rd 2014 that Mr Cody sent me that smiley face text.
But I still could not confirm what Mr Cody was smiling about.
After all, it was noted on March 3rd 2014 by the NSW Supreme Court that it is possible Mr Cody and his Co-Directors may be personally liable and that the (my) frustration lies in the fact that the Company has indeed gone into administration. (click here to view full decision)
It was also argued by the Administrator to the Court, in their pursuit of being validly appointed “that to return the Company to these Directors (Cody, Ochojski & Burke) would be a disaster”.
The reason why the Company collapsed was due to the unauthorised share issue on September 3rd 2013, that was subsequently refused to be declared valid by the NSW Supreme Court on Feb 17th 2014. (click here to view full Feb 17th decision) I did not see this as a happy position for any Director involved in such an event.
The smiley face text I received from Mr Cody on March 3rd 2014 had me thinking.
However it wasn't long before I started seeing the possible reason for him sending me that smiley face text.
Mr Cody & his Co-Directors buy Company assets at a vastly reduced price and benefit by $3.8 million
On March 17th 2014 & subsequent to that day, I received a creditors report from the Administrator (Holzman Associates) recommending that Live Board Holdings Limited accept a ‘Deed of Company Arrangement’, which includes the sale of all the Company assets for only $305,000, to a new entity, of which the shareholders (directly or indirectly) were Mr Pierce Cody, Mr Richard Ochojski & Ms Finola Burke.
The Live Board Holdings Limited assets had an estimated value over $4.1 million, just prior to the unauthorised share issue by these Directors.
As a result, on my calculations, these Directors benefited by approximately $3.8 million from their unauthorised share issue of September 3rd 2013, which led to the company collapse.
We are still in the process of assessing any benefit to other parties from this transaction.
New Public Events of April and May 2014
These Directors are now promoting ‘Cody Live Pty Ltd’, to the real estate industry, to the media & to the public, using the assets of Live Board Holdings Limited, benefiting by an estimated $3.8 million, obtained as a result of their unauthorised share issue of September 3rd 2013 as Directors of Live Board Holdings Limited.
Back again to that smiley face text of March 3rd
Ok, so what have I discovered since I received that smiley face text after the Company collapsed?
That even though ‘Voluntary Administration’ is typically a catastrophic event for most Directors, that is not always the case.
In this instance, these Directors benefited by a share of approximately $3.8 million.
I have even more reason now, to continue to fight this vigorously for all those affected.
I think it is important that we protect Australian innovation & Corporations from these type of events ever happening again in the future.
For the record, below is that smiley face text I received after the Company collapsed. The case continues.