No appeal from Ken Rosewall as saga of BBY collapse nears end

Tennis great Ken Rosewall will not appeal a NSW Supreme Court judgment against him relating to the demise of stockbroker BBY.

Ken Rosewall – who has been embroiled in the BBY collapse – presenting Angelique Kerber the winner's trophy at the Sydney International Tennis Tournament in 2018. Picture: Dan Himbrechts

Tennis great Ken Rosewall will not appeal a NSW Supreme Court judgment against him relating to the demise of stockbroker BBY, as customers of the failed firm await their final distribution after a seven-year saga.

In January, Mr Rosewall lost a Supreme Court case over BBY’s collapse that saw him ordered to pay liquidators KPMG $3.3m plus interest. The judgment found BBY was insolvent when amounts were repaid to Ficema, an entity associated with Mr Rosewall, ahead of the 2015 collapse of BBY.

KPMG argued the payments to Mr Rosewall’s entity were preferential in nature and given BBY was insolvent, should be voided.

BBY – which was run by Mr Rosewall’s son Glenn – was placed into administration in 2015 when it was unable to repay a loan to St George bank and had been caught up in questionable transactions.

Ken Rosewall was a BBY board director alongside Glenn who was executive chairman, and lawyer David Perkins.

The latest creditor’s report released by KPMG on the BBY matter said: “Ficema Pty Ltd did not challenge the (Supreme Court) decision. The liquidators are in discussions with Ficema Pty Ltd regarding payment of the judgment debt.”

When BBY failed it threw 6000 customer accounts into disarray, and there was a shortfall in accounts of about $20.6m before recovery costs.

Client claims amounted to about $65m with a shortfall in their trading accounts of about $35m, after costs were taken into account. The issue in customer accounts arose, according to KPMG, as funds were mixed with the firm’s money to keep the broker afloat and meet costs and trading obligations.

The collapse of BBY – which is still the subject of a probe by the corporate regulator – has uncovered startling information since 2015. That included Glenn Rosewall seeking advice on running the company from a psychic and vibrational healer spanning business decisions, corporate deals, hiring and employee budgets and forecasts.

The latest KPMG report noted the BBY liquidation was among the most complex in the domestic financial services industry since the collapse of MF Global and Lehman Brothers in 2011 and 2008 respectively.

After another delay, long-suffering BBY customers are now due to receive their final distribution from KPMG this month.

The liquidator said the delay was linked to recoveries from two counterparties.

“We received final remittances from Saxo in February and from IB (Interactive Brokers) in March 2022. The distribution is now expected to be paid in late April 2022,” it said.

KPMG has also been able to recover some funds in the liquidation process in financial settlements with insurers and BBY’s auditor BDO East Coast Partnership. The report noted there was $5m in unclaimed BBY customer money, which would be sent to the Australian Securities and Investments Commission.

The majority of BBY’s customers are, however, only receiving a proportion of what they entrusted to the firm. Share trading customers are expected to have received 76c in the dollar after the final distribution this month, exchange traded options clients 68c, and customers linked to Interactive Brokers 51c. Customer classes including foreign exchange and futures will receive just 30c.

The amounts for those categories are slightly up on amounts estimated in 2020, given “some higher recoveries and lower costs”, KPMG said.

The report also showed the courts had approved pay for the liquidator amounting to $5.3m plus GST over the period. It noted fees for KPMG relating to the general estate were separately approved at $5.1m, with further time costs of more than $1m incurred.

The liquidator drew $3.4m of approved fees from recoveries but admitted there were “insufficient recoveries” to meet all of its time costs.