Liquidation of Pan and the Pan Subsidiaries

 

On 23 September 2003, the creditors of Pan rejected a proposal for a Deed of Company Arrangement submitted by Mr Fred Bart and Mr Jim Selim.  Subsequently on the same day, the creditors of Pan and Laboratories resolved that these two companies be wound-up.  On 21 October 2003, the creditors of Services, Exports and Technologies resolved to place these three companies into liquidation.

 

Legal Action Following Creditors' Meeting on 23 September 2003

 

Following the creditors’ meeting held on 23 September 2003, Mr Selim commenced legal action against the Administrators in relation to a number of matters, including:

 

§  the decision of the Chairman of the meetings to reject various Proofs of Debt lodged by consumers that were received by the Administrators some 45 minutes prior to the commencement of the creditors’ meeting on 23 September 2003;

 

§  the adequacy of the Administrators’ notice to creditors of the creditors’ meetings;

 

§  whether the Chairman should have adjourned the meetings on his own motion to make an urgent application to court for directions relating to the admission of certain proofs; and

 

§  the use of the Chairman’s casting vote in favour of the resolution to wind-up Pan.

 

That matter was heard before Justice Barrett in the Supreme Court of New South Wales on 13 and 14 October 2003.  On 17 October 2003, Justice Barrett dismissed the action and ordered Mr Selim to pay the Liquidators’ costs in relation to the proceedings.  The consequence of Justice Barrett’s judgment is that the resolutions passed at the creditors’ meeting on 23 September 2003 remain valid and as such, Pan and Laboratories remain in liquidation. 

 

Sale of Business

 

Since their appointment, the Administrators and the Liquidators have overseen a major upgrade of Pan’s facilities, processes and documentation.  On 1 October 2003, the Therapeutic Goods Administration (“TGA”) advised that it was satisfied that Pan was compliant with the Australian Code of GMP for Medicinal Products with respect to the manufacture of soft gelatine capsules that are required to be listed in the Australian Register of Therapeutic Goods, and that reinstatement of the company’s soft-gel licence could be recommended.  The TGA issued the soft-gel licence on 4 November 2003.

 

Following the reinstatement of the soft-gel licence, the Liquidators recommenced the sale process for the Pan business.  The Liquidators offered the assets as a going concern and accepted an offer of $20 million.  Settlement occurred on 15 December 2003.

 

Claim against Jim Selim

 

On 7 April 2004, the Liquidators of Pan filed an Application in the Federal Court seeking damages against Jim Selim, the former CEO of Pan, for breach of duties under section 180 of the Corporations Act 2001 and for breach of contract of employment.

On 15 April 2008, the parties reached a settlement and the proceedings have now been dismissed.  Under the terms of the settlement, which remain confidential, Mr Selim has agreed to pay a sum of money to the Liquidators and the Liquidators have assigned all Pan's causes of action against the TGA to Mr Selim.  The Liquidators have also agreed to provide reasonable assistance to Mr Selim in respect of those causes of action in connection with any reasonable request for the provision of information.  A copy of the joint announcement in relation to settlement may be viewed by clicking on this link.