Virgin administrator Deloitte poised to defend role

Virgin signage at Melbourne Airport. Picture: AAP

Three years ago, when broadcaster Network 10 went into administration, Korda Mentha won a Federal Court challenge to remain as administrator.

Today, with Vaughan Strawbridge, John Greig and others from Deloitte named as voluntary administrators of Virgin Australia, that same ruling will come into play.

The appointment could face an early challenge because Deloitte was an adviser to the airline before it went into administration.

Creditors could challenge the appointment by claiming Deloitte is not independent.

This is what happened with Korda Mentha, appointed to Network 10 in 2017.

Korda Mentha had been an adviser to Network 10 and the argument was that to be an administrator, you needed by law to be an independent.

But Korda Mentha lawyer Leon Zwier successfully argued the Korda role was pre-planning and so long as it didn’t involve advising the board, it should be allowed to continue.

Strawbridge and Greig will claim the same level of independence and note they were just doing pre-planning.

Network 10 emerged from administration via the CBS takeover and a similarly successful result is hoped for this time.

Some say that to argue over who is administrator is akin to arguing over which doctor is handling the work in intensive care.

On one side the answer is who will best deliver the outcome desired, and the outgoing Virgin board has made its call.

Whether creditors agree when they first meet next week remains to be seen.