Abate, in the matter of Rajii v Rajii

YATES J: 1 The applicant seeks directions under r 14.03(3) of the Federal Court (Bankruptcy) Rules 2016 (Cth) (the FC(B)R) in respect of the service of an application for recognition of a foreign main proceeding (the recognition proceeding) under the Cross-Border Insolvency Act 2008 (Cth) and article 15 of the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law (the Model Law). 2 The applicant is the liquidator of the respondent's estate. The respondent was placed in compulsory liquidation by an order of the 15th Civil Court of Santiago, Chile on 23 May 2017. 3 Rule 14.03 of the FC(B)R provides: (1) An application by a foreign representative for recognition of a foreign proceeding under article 15 of the Model Law must be made by filing an application in accordance with Form B2. (2) The application must: (a) be accompanied by the statements mentioned in article 15 of the Model Law and in section 13 of the Cross‑Border Insolvency Act; and (b) name the foreign representative as the applicant and the debtor as the respondent; and (c) be accompanied by an affidavit verifying the matters mentioned in paragraphs 2 and 3 of article 15 of the Model Law and in section 13 of the Cross‑Border Insolvency Act. (3) When filing the application, the foreign representative must file, but need not serve, an interim application seeking directions as to service, and the Court may give any directions about service, and make any incidental orders, that it thinks just. (4) The applicant must serve a copy of the application and the other documents mentioned in subrule (2): (a) unless the Court otherwise orders - on each respondent (if any) to the proceeding as soon as practicable after filing an application and, in any case, at least 5 days before the date fixed for hearing; and (b) on any other persons the Court may direct at the hearing of the interim application. (5) A person who intends to appear before the Court at the hearing of an application for recognition must file and serve the documents mentioned in rule 2.04. 4 Rule 14.06 provides: (1) Unless the Court otherwise orders, the applicant in a proceeding mentioned in rule 14.03 must: (a) send a notice of the filing of the application in accordance with Form B20 to each person whose claim to be a creditor of the respondent is known to the applicant; and (b) publish a notice of the filing of the application: (i) in accordance with Form B20; and (ii) once in a daily newspaper circulating generally in the State or Territory where the respondent has his or her principal, or last known, place of residence. (2) The Court may direct the applicant to publish a notice in accordance with Form B20 in a daily newspaper circulating generally in any State or Territory not described in subparagraph (1)(b)(ii). 5 The present application is supported by the following affidavits: Carlos Antonio Parada Abate, sworn 14 November 2017; and John Mitchell, affirmed 5 December 2017. 6 The respondent is a national of Chile. He is described in the evidence as the author of Chile's largest Ponzi scheme. Funds invested in the scheme were captured by a company called Onix Capital SA (Onix). The respondent was the founder and principal shareholder of Onix. The funds taken from investors were subsequently funnelled to other companies controlled by the respondent. It seems that some of these funds were used by the respondent for his own purposes. The respondent fled to Malta in about April 2016, as the fraud began to come to light. I was informed that the respondent's present whereabouts in Malta are not known. 7 On 29 June 2016, the respondent was appointed as liquidator of Onix by the 30th Civil Court of Santiago. An order recognising the Onix liquidation as a foreign main proceeding in Australia was made by this Court in accordance with the Model Law on 21 June 2017: Abate, in his capacity as Liquidator of Onix Capital SA [2017] FCA 751 (the Onix proceeding). 8 I am satisfied that it is appropriate to make the directions and orders sought by the applicant. It is only necessary for me to record the following matters. 9 The applicant proposes to serve the respondent through two lawyers in Chile. These lawyers acted for the respondent in May 2017 when he made a proposal to creditors for the reorganisation of his affairs. The email addresses which the applicant proposes to use for this purpose appear to be addresses known to the respondent and through which he can be contacted. I note that a similar direction for service was made in the Onix proceeding. 10 The evidence also reveals a personal email address for the respondent. The applicant proposes to serve the respondent through this email address as well. 11 Given that the respondent's present whereabouts in Malta are not known, I am satisfied that it is appropriate to give directions that the respondent be served in the manner proposed. 12 Rule 14.06 provides for the notification of creditors. The evidence reveals that, at present, there are around 314 claims against the respondent's estate. Most of these creditors appear to be domiciled in Chile. There is one known creditor in Australia. 13 The applicant proposes to notify creditors by publishing a notice in the Boletin Concursal or Bankruptcy Bulletin. This is an electronic platform maintained by the Superintendent of Insolvency and Reorganisation (the Superintendent) in Chile. It is accessible to the public, free of charge. The evidence before me is that all resolutions issued, and actions taken, in Chile in insolvency proceedings are published through this site, save where another form of notice is provided by Chilean law. The applicant also proposes to give notice of the proceeding to the Superintendent. I note that similar notification orders were made in the Onix proceeding. 14 Further, the applicant proposes to send the relevant documents to the solicitors acting for the known Australian creditor. He also proposes to publish notification of the proceeding in The Australian newspaper. 15 I am satisfied that, for the purposes of r 14.06, these proposals will provide appropriate notification to creditors of the recognition proceeding. 16 I also record that the applicant proposes to give notice of the recognition proceeding to the Chilean criminal authorities by emailing the relevant documents to the Head Prosecutor at the Public Prosecutor's Office for Highly Complex Matters. He also proposes to give notice to Australia and New Zealand Banking Group Limited (the Bank), which maintains accounts in the respondent's name. 17 I note in this connection that, on 29 September 2016, the 4th Criminal Court of Santiago made an order freezing all deposits held by the respondent in Australian financial institutions. The evidence records that the respondent has two accounts with the Bank in his name. Companies apparently related to the respondent hold four accounts with the Bank. 18 Further, the evidence records that the respondent is the registered proprietor of a property known as 401/141-143 Elizabeth Street Sydney NSW 2000. It is not known whether the respondent occupies this property, but the applicant proposes to send the relevant documents to this address by mail. The applicant proposes to send the relevant documents to the solicitors who apparently acted for the respondent in the purchase of this property. 19 I am satisfied that it is appropriate that directions be made informing these interests of the recognition proceeding. 20 Finally, the applicant brought to my attention the requirements of r 14.08 FC(B)R in relation to relief sought under paragraph 1 of article 21 of the Model Law. This appears to require the filing of a separate and further interim application for this relief once a recognition order is made, although its interpretation may be open to question. The applicant proposes to seek such relief in the recognition proceeding and may seek to agitate its correct interpretation and/or seek dispensation from or a variation of its requirements. This is not a matter that arises for determination at the present time. In the circumstances, I am content for the present orders to refer to r 14.08. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.