Luke Saraceni's Westgem Investments has been placed into liquidation, following a heated creditors meeting in Perth this morning in which leading insolvency experts argued over who should be appointed to the role of liquidator.
A majority of creditors voted to have Westgem wound up, but rejected a bid by receivers KordaMentha to have Grant Thornton partner Matthew Donnelly appointed as liquidator.
Instead, Pitcher Partners Bryan Hughes, who was appointed administrator of Westgem last year, was appointed to the role.
The decision comes in the wake of Mr Saraceni launching a $200 million damages claim against Bankwest, the financier and major tenant of the Raine Square project, in the Supreme Court yesterday for an alleged breach of obligations of his financing agreement.
Raine Square was Mr Saraceni's largest project but it led to a number of operational and financial issues.
Mr Hughes described Mr Donnelly as a "favoured practitioner" of the financiers, arguing that the bid to appoint him as liquidator was motivated by self-interest on the part of the receivers.
Exchanges between Mr Hughes and Norton Rose partner David Porter, who was acting for KordaMentha, were often acrimonious, with the pair exchanging barbs throughout the meeting.
Mr Hughes accused KordaMentha of seeking to boost its voting power in the attempted election of an alternative liquidator by accruing Westgem debt.
An administrator's report distributed at the meeting stated that KordaMentha provided notice of the assignment of 14 debts to itself, totalling $680,000.
"It is extremely unusual, uncommercial, it smells of a sham and it requires additional investigation," Mr Hughes said.
While stopping short of describing KordaMentha's actions as unlawful, Mr Hughes said he had serious concerns about their conduct.
KordaMentha partner Mark Mentha disputed any wrongdoing and claimed the debt had been assigned in order to speed up the liquidation process.
Allegations of misconduct were also levelled at Mr Hughes, with Mr Porter claiming the administrator had favoured Mr Saraceni over creditors and deliberately omitted information from his report.
"Your analysis is insufficient and at its worst, deeply flawed," Mr Porter said.
Mr Saraceni expressed disapproval with the proceedings, asking rhetorically if a creditors meeting was "allowed to be a pseudo-trial".
Bankwest appointed KordaMentha as receivers in January 2011, seeking to recover debts of more than $400 million.
KordaMentha sought to have a special purpose administrator appointed in the Supreme Court in November 2011 on the basis that Mr Hughes had a conflict of interest as a result of his extensive dealings with Mr Saraceni.
The court ruled in favour of Mr Hughes earlier this month.