Former bankrupt mining tycoon Joseph Gutnick has suffered another setback in his turbulent career after a court tore up a deal to spirit away a mining project worth as much as $174 million from creditors to one of his companies by selling it to his sister for $1.
Liquidators to Legend International chalked up a major win for the mining exploration group against its once mining magnate director Mr Gutnick in the Supreme Court of Victoria late last week.
The corporate regulator is also believed to be reviewing the matter, and it could lead to regulatory action against the former Melbourne Football Club president.
Late last week, Associate Justice Rodney Randall found the sale of Legend International's ownership in a potentially lucrative mining project in North Queensland to a company operated by Mr Gutnick's Sydney-based sister Pnina Feldman and nephew Shalom Feldman "uncommercial", "insolvent" and "voidable".
Mrs Feldman, the wife of Bondi's Yeshiva Centre leader Rabbi Pinchus Feldman, famously took her brother to court in 2003 over a separate loan disagreement.
The recent court case brought by liquidators to Legend was part of a wider complex dispute between Mr Gutnick, Legend and the multi-billion dollar company that signed a deal with Legend, the Indian Farmers Fertiliser Cooperative (IFFCO).
The legal battle sparked Mr Gutnick's shock bankruptcy in June 2016 and led to Mark Korda and Craig Shepherd from KordaMentha acting as liquidators to Legend International that month.
Mr Gutnick was discharged from his bankruptcy in June this year after striking a sweetheart deal with his trustees in bankruptcy to clear his $175 million in debt for less than one cent in the dollar.
Mr Gutnick and Legend's dispute with IFFCO links back 2008 when Legend inked a $103 million contract with IFFCO to supply phosphate to IFFCO.
Under the deal, IFFCO was to invest the $103 million over two years through shares and options in Legend International Holdings.
However, the deal fell apart when Legend failed to deliver any phosphate, a key ingredient in fertiliser.
In 2015, IFFCO later sought to recoup its investments by suing Legend and Mr Gutnick in Singapore and later in Australia.
The legal stoush culminated in the Supreme Court of Victoria finding on December 21, 2015 that IFFCO was owed more than $80 million by Legend and Mr Gutnick.
But four weeks before Supreme Court of Victoria handed down its decision in IFFCO's case, Legend executed a new deal that transferred Legend's main assets - its 100 per cent ownership of one-time ASX hopeful Paradise Phosphate - to entities linked to the Gutnick family. This included a company Queensland Phosphate, that was set up a week earlier.
Queensland Phosphate appointed a receiver over Paradise a few months later when Mr Gutnick lost his appeal. That receiver, Christopher Palmer of O'Brien Palmer, then sold Paradise's assets to Queensland Phosphate for $1.
Associate Justice Randall is expected to hand down orders that the asset be transferred to liquidators acting on behalf of creditors to Legend in early January.
As a result of the Gutnicks losing the case, Australia's largest phosphate deposit is expected to come up for sale early next year. Maverick MP Bob Katter testified during the trial that he planned to assist the funding of the development of the mine in Mount Isa.