Administrators report

Transcription

1 Administrators report Section 439A of the Corporations Act February 2015 Administrators: Craig Crosbie and David McEvoy Techdrill Civil and Mining Services Pty Ltd ACN Techdrill Mining Services Pty Ltd ACN Techdrill Civil Services Pty Ltd ACN Glown Pty Ltd ACN (All Administrators Appointed) (the Group) PPB Pty Limited trading as PPB Advisory ABN Liability limited by a scheme approved under Professional Standards Legislation PPB Pty Ltd has associated but independent entities and partnerships

2 Table of contents 1. Disclaimer 1 2. Executive summary Appointment background Report s purpose Administrators recommendation Second meeting of creditors Estimated return to creditors Offences and liquidation recoveries Administrators overview Remuneration Enquiries 5 3. Introduction Appointment information Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) Report s purpose Purpose of second meeting Second meeting convening period Second meeting details Meeting registration Committee of Inspection (COI) Further information 8 4. Background information Group structure Group overview Recent events Statutory information Creditors claims Unsecured Creditors Related entities Conduct of administration First meetings of creditors Operations Asset Realisations Actions undertaken since appointment Financial background Group s financial performance / profit & loss Group s financial position / balance sheet Directors Report as to Affairs (RATA) Investigations Directors explanation for the Group s difficulties Administrator s opinion of the reasons for the Group s difficulties Insolvency Review Legal / class actions Outstanding or previous winding up applications Books and records 33 ii

3 Table of contents 8. Offences and liquidation recoveries Voidable transactions Insolvent trading Offences Directors and officers insurance policy Directors personal financial position Public examinations Reporting of offences to ASIC Risk of cost of pursuing recovery actions Litigation funding Estimated return to creditors Administrators recommendation Liquidation Deed Administration to end Enquiries 41 iii

4 Appendix A. Appointment of Proxy, Proof of Debt or Claim Form Form 532 B. Remuneration reports dated 18 February 2015 C. Declaration of Independence, Relevant Relationships and Indemnities D. Notices of meetings of creditors E. ASIC Publication: Insolvency information for directors, employees, creditors and shareholders F. Details of identified secured creditors G. ARITA Publication: Creditor information sheet: Offences, recoverable transactions and insolvent trading iv

5 Glossary The Group (All Administrators Appointed) includes: Abbreviations Company Australian Company Number (ACN) Glown Glown Pty Ltd TCMS Techdrill Civil and Mining Services Pty Ltd TCS Techdrill Civil Services Pty Ltd TMS Techdrill Mining Services Pty Ltd Abbreviations Act Administrators AEDST AEST APAAP ARITA ASIC ASX ATO Definitions Corporations Act 2001 (Cth) Craig Crosbie and David McEvoy of PPB Advisory as joint and several Administrators Australian Eastern Daylight Savings Time Australian Eastern Standard Time All present and after-acquired property, a term associated with security interests under the PPSA Australian Restructuring Insolvency and Turnaround Association. ARITA was formerly the Insolvency Practitioners Association of Australia. Australian Securities and Investments Commission Australian Securities Exchange Australian Taxation Office c. Circa or approximately (e.g. c.$200 means approximately $200) CEO CFO COC Code COI Directors D&O Policy Deed DE DIRRI DTA EBIT EBITDA FEG Chief Executive Officer Chief Financial Officer Committee of Creditors ARITA Code of Professional Practice Committee of Inspection Martin Rowland Jeremy Steele Robert Whitaker Directors and Officers Insurance Policy Deed of Company Arrangement Department of Employment Declaration of Independence, Relevant Relationships and Indemnities, prepared by the Administrators pursuant to s436da of the Act and in accordance with the Code. Deferred Tax Asset Earnings before interest and tax Earnings before interest, tax and depreciation Fair Entitlements Guarantee, a scheme administered by the DE to provide assistance to employees owed outstanding employee entitlements following the insolvency/bankruptcy of an employer v

6 FY Harbert k M Management NAB NBN PMSI PPSA PPSR RATA R&D Report s Second Meeting YTD Financial Year (e.g. the financial year 1 July 2012 to 30 June 2013 would be expressed as FY13) Harbert Fund Advisors (Australia) Pty Ltd Thousand Million Mark Smallman, Group Chief Financial Officer, and Robert Whitaker, director of the Group companies National Australia Bank Limited National Broadband Network is an Australia wide project to upgrade the existing fixed line phone and internet network infrastructure. The NBN project is being rolled out by NBN Co, a wholly owned Commonwealth Government company. Personal Money Security Interest as defined in the PPSA Personal Property Security Act 2009 (Cth) Personal Property Securities Register a register set up under the PPSA for the registration of security interests Report As To Affairs Research and Development This report, prepared pursuant to s439a of the Act about the business, property, affairs and financial circumstances of the Group Section of the Act Meetings held pursuant to s439a of the Act where creditors determine the future of the Group, scheduled for 2 March 2015 at: TCS 1:30pm AEST in Brisbane TCMS, TMS and Glown 10:30am AEDST in Sydney See section 2.4 for more details Year to date, a period starting from the beginning of the current financial year and continuing up to a defined date (e.g. monthly management accounts from 1 July 2013 to 31 January 2014 would be expressed as YTD January 2014 ) vi

7 1. Disclaimer In reviewing this Report, creditors should note: This Report is based upon our preliminary investigations to date. Any additional material issues that are identified subsequent to issuing this Report may be the subject of a further written report and/or tabled at the Second Meeting. The contents of this Report are based on information obtained from the Group s books and records, financial systems, representations from the Directors, key management, and our own enquiries and investigations. The statements and opinions given in this Report are given in good faith and in the belief that such statements and opinions are not false or misleading. Except where otherwise stated, we reserve the right to alter any conclusions reached on the basis of any amended or additional information which may be provided to us between the date of this Report and the date of the Second Meeting. In considering the options available to creditors and formulating our recommendation, the Administrators have necessarily made forecasts of asset realisations and total creditor claims. These forecasts and estimates may change as asset realisations progress and claims are received from creditors. While the forecasts and estimates are based on the Administrators best assessment in the circumstances, creditors should note that the eventual outcome for creditors may differ from that estimated in this Report. Neither the Administrators, PPB Advisory nor any member or employee of the firm is responsible in any way whatsoever to any person in respect of any errors in this Report arising from incorrect information provided to us. The Administrators do not assume or accept any responsibility for any liability or loss sustained by any creditor or any other party as a result of the circulation, publication, reproduction or any use of the information presented in this Report. This Report is not for general circulation, publication, reproduction or any use other than to assist creditors in evaluating their position as creditors of the Group and must not be disclosed without the prior approval of the Administrators. Creditors should consider seeking their own independent legal advice as to their rights and the options available to them at the Second Meeting. PPB Advisory Report to creditors 1

8 2. Executive summary 2.1 Appointment background Craig Crosbie and David McEvoy were appointed joint and several Administrators (Administrators) of the Group on 27 January 2015 by the Directors under s436a of the Act. 2.2 Report s purpose The purpose of this report is to table the findings of our investigations into the Group s business, property, affairs and financial circumstances, as well as our opinion on the three options available to creditors in deciding the future of the Group. 2.3 Administrators recommendation The Group companies are insolvent and we have not received a proposal for a deed of company arrangement (Deed). Accordingly, we recommend that the companies in the Group be wound up, which will allow a liquidator to complete investigations regarding potential claims for insolvent trading and other voidable transactions, as well as concluding a sale of the assets. 2.4 Second meeting of creditors The Second meetings of creditors (Second Meeting) will be held on: Techdrill Civil Services Pty Ltd Date: Monday, 2 March 2015 Registration: 1:30pm AEST Meeting time: 2:00pm AEST Location The Christie Centre 320 Adelaide Street BRISBANE QLD 4000 Techdrill Civil and Mining Services Pty Ltd Techdrill Mining Services Pty Ltd Glown Pty Ltd Date: Monday, 2 March 2015 Registration: 10:30am AEDST Meeting time: 11:00am AEDST Location PPB Advisory Level 7, 8-12 Chifley Square SYDNEY NSW 2000 To register attendance and be entitled to vote at the Second Meeting, creditors must complete and submit the following forms attached at Appendix A: Form 532 Appointment of Proxy Proof of Debt form. Forms must be submitted by no later than 4:00pm AEST on Friday, 27 February 2015 to this office or by to Tina Tran at ttran@ppbadvisory.com. PPB Advisory Report to creditors 2

9 2.5 Estimated return to creditors There will be insufficient funds from the proceeds of asset sales to satisfy secured creditor claims (c.$8.4m) in full. Accordingly, there is little prospect of a return to unsecured creditors of the Group. It is also unlikely there will be a surplus available from circulating assets (debtors) to provide a dividend for priority creditor (employee entitlements) claims. If the Group is placed into liquidation, FEG will be available for eligible former employees for any shortfall owing on their entitlements (excluding unpaid superannuation and capped in certain circumstances). The only opportunity for unsecured creditors to receive a return will be if a liquidator is successful in recovering funds from voidable transactions or claims against the Group officers and/or other parties. 2.6 Offences and liquidation recoveries Whilst the mining services and civil engineering businesses operated separately, the Group companies were financially interdependent. Our preliminary view is that the Group was likely to have been insolvent from July The quantum of a claim for insolvent trading would be based on the amount of debt accrued, but unpaid, post the date of insolvency. We estimate that a prospective claim for insolvent trading may be c.$1.8m before costs. Creditors should note that this is a preliminary estimate. Creditors should also be aware that insolvent trading claims are difficult and costly to pursue, and even if successful may not generate a return for creditors. The Group s major shareholder provided $6.3m of funding in various tranches from April Of this amount, $1.1m was provided in the period where we have assessed that the Group may have traded whilst insolvent. We note that the Directors are firmly of the belief that the shareholder funding provided was sufficient to support the Group s ongoing solvency. We also note that the directors were focused on improving the Group s liquidity by: entering into discussions in November 2014 to finance key items of plant and equipment securing a strong forward order book for NBN work (this work was delayed by the head contractor and largely did not commence) Our preliminary investigations have identified potential voidable transactions totalling approximately $950k. If the Group companies are placed into liquidation, a liquidator will undertake further investigations into offences that may have occurred (including insolvent trading) and potential voidable transactions. 2.7 Administrators overview Conduct of administration Since our appointment we have: undertaken a critical evaluation of the Group s viability and short term cash flow requirements contacted key stakeholders (including major customers) to determine their interest in funding operations for the purpose of conducting a going concern sale campaign ceased operations and terminated the employment of all staff after concluding there were insufficient funds to continue trading engaged a fixed asset specialist (Grays Online) to assist with the recovery of the Group s plant and equipment, in addition to providing a recommended realisation strategy invoiced customers for work completed up to the date of our appointment conducted preliminary investigations into the failure of the Group and any voidable transactions that may be pursued by a liquidator. Further information is provided in Section 5. PPB Advisory Report to creditors 3

10 2.7.2 Group financial background The Group s trading entities are TMS (drilling services) and TCS (civil engineering). Accumulated losses totalled $11.8m for FY13 to YTD FY15. We note that these losses included $1.8m of non-cash accrued interest on the secured convertible notes. Forecast revenue for FY14 and YTD FY15 was c.$24.4m compared to actual revenue for this period of $16.9m (31% reduction). The Group did not achieve forecast revenue over this period primarily due to: - a contraction in the mining sector - NBN work not proceeding as forecast - delays in the commencement of other projects Trading losses have largely been funded by shareholder borrowings ($7.2m between FY13 and YTD FY15) and extending trade creditor terms. Losses in FY14 were also partially funded by fixed asset sales (c.$0.8m net of equipment finance). As at 31 December 2014, the Group reported net assets of $3.2m, which included goodwill of $8.7m. It is likely that goodwill and other intangible assets have been overstated, in which case a net asset deficiency may have existed since 30 June 2014, noting such a deficiency would not exist if the noteholders converted their debt to equity as was apparently intended Reasons for Group s difficulties We have formed a view that the Group s difficulties can be attributed to: significant NBN work not occurring as forecast and the general downturn in the mining sector, resulting in a decreased demand for drilling services the inability to secure alternative work sources to substitute the sudden cessation of NBN work in late January 2015 declining margins due to increased competition, inefficient labour usage and project cost overruns a relatively fixed overhead structure and a failure to implement an effective/timely cost reduction strategy poor working capital, manifesting in significant trade creditor and statutory arrears lack of financial resources to fund continuing operations 2.8 Remuneration We are seeking approval for our remuneration for each company in the Group at the Second Meeting. The total remuneration for the Group is summarised below: Period TCMS TMS TCS Glown Voluntary Administration Resolution 1: 27 January 2015 to 18 February 2015 Resolution 2: 19 February 2015 to Administration completion $22, $113, $133, $9, $6, $40, $42, $1, Liquidation (to completion) $9, $85, $88, $6, Note: the above amounts are exclusive of GST Please refer to our Remuneration Reports at Appendix B for full details of key activities undertaken by us, our partners and staff and the remuneration approval sought. PPB Advisory Report to creditors 4

11 2.9 Enquiries Should you have any enquiries please contact the PPB Advisory Melbourne office on or by at PPB Advisory Report to creditors 5

12 3. Introduction 3.1 Appointment information Craig Crosbie and David McEvoy were appointed as joint and several Administrators of the Group on 27 January 2015 by the Directors under s436a of the Act. 3.2 Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) Our Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) is provided at Appendix C. The DIRRI discloses information regarding any prior personal or professional relationships the Administrators and PPB Advisory had with the Group or related parties, our independence and any indemnities received relating to this appointment. 3.3 Report s purpose An administrator is required to investigate a company s business, property, affairs and financial circumstances and form an opinion on the three options available to creditors in deciding the future of the company. The options are: 1. the company be wound up (liquidation) 2. the company execute a Deed 3. the administration should end (and control reverts to the company director(s)). An administrator reports to creditors about: investigations conducted the administrator s opinion on the options available to creditors 3.4 Purpose of second meeting The Second Meeting will address: the contents of this Report questions from creditors options available to creditors under the Act approval of: - Administrators remuneration - future remuneration of the liquidators or deed administrators (as applicable) - should creditors desire, the formation of a Committee of Inspection (COI) creditors decision on the future of each company within the Group appointment of deed administrators or liquidators (as applicable). The current Administrators automatically become the deed administrators or liquidators unless creditors resolve to replace them whether creditors want to adjourn the Second Meeting to enable further investigations to be conducted and/or to consider their position. If adjourned, the meeting must reconvene within 45 business days. The options available to creditors and the Administrators opinion on each option are set out in detail in Section 10. We recommend that each company in the Group be wound up. PPB Advisory Report to creditors 6

13 3.5 Second meeting convening period The Act stipulates the timing of the second meeting. Generally, the second meeting must be convened between business days (or business days at Christmas and Easter) from the date the administration begins. The Court may extend the convening period if circumstances require. 3.6 Second meeting details The Second Meeting will be held on: Techdrill Civil Services Pty Ltd Date: Monday, 2 March 2015 Registration: 1:30pm AEST Meeting time: 2:00pm AEST Location The Christie Centre 320 Adelaide Street BRISBANE QLD 4000 Techdrill Civil and Mining Services Pty Ltd Techdrill Mining Services Pty Ltd Glown Pty Ltd Date: Monday, 2 March 2015 Registration: 10:30am AEDST Meeting time: 11:00am AEDST Location PPB Advisory Level 7, 8-12 Chifley Square SYDNEY NSW 2000 Formal notification Form 529 Notice of Meeting of Creditors is attached at Appendix D. 3.7 Meeting registration To register attendance and be entitled to vote at the Second Meeting, creditors must complete and submit the following forms attached at Appendix A: Registration forms Form 532 Appointment of Proxy Proof of Debt or Claim Form Information A new proxy form is required to be completed for each creditor s meeting (i.e. previous meeting proxy forms are invalid for the Second Meeting). If a corporate creditor wants to be represented at the Second Meeting, it must appoint an individual to act on its behalf by providing an executed proxy form. Individuals may choose to appoint a representative to vote on their behalf by executing a proxy form. If an individual is attending in person a proxy form is not required. This form is required to be completed to entitle a creditor to vote at the Second Meeting. Documents to support the amount claimed (e.g. unpaid invoices) must also be provided. There is no requirement to resubmit a proof of debt form if previously provided unless the amount claimed has changed. Only creditors of the Group are entitled to vote at the Second Meeting. Creditors are encouraged to arrive as early as possible during the registration time to enable the orderly registration of attendees so that the meeting can commence on time. PPB Advisory Report to creditors 7

14 There will only be access to telephone conference facilities for creditors who cannot attend the Sydney meeting. Should you wish to attend by telephone, a request must be made in writing by 4:00pm, Thursday 26 February Committee of Inspection (COI) For the purpose of advising and assisting the liquidator, a COI for any of the Group companies may be formed at the Second Meeting. A minimum of two members is required to form a COI. A COI may be formed for any Group company placed into liquidation. Creditors should consider whether they are in a position to be a COI member, as membership of a COI requires attendance at meetings (telephone facilities will be made available so members do not have to attend in person). Importantly, for a creditor to be eligible for appointment as a member of a COI, they must either: be in attendance at the Second Meeting appoint a general power of attorney to attend the Second Meeting on their behalf authorise a person in writing to be a member of the COI on their behalf. 3.9 Further information To assist creditors, employees, and shareholders to understand the voluntary administration process, the Australian Securities and Investments Commission (ASIC) has released a package of insolvency information sheets endorsed by ARITA. Enclosed at Appendix E is ASIC s publication Insolvency information for directors, employees, creditors and shareholders, which provides an index of all the information sheets that are available. You can download these information sheets from: PPB Advisory Report to creditors 8

15 4. Background information 4.1 Group structure A diagram of the Group structure is provided below. We are not aware of other related companies. 4.2 Group overview Techdrill Civil and Mining Services Pty Ltd (TCMS) was incorporated in December 2011, when Harbert Australia Private Equity (Harbert) invested in the Group. TCMS is the holding company for the Group. Techdrill Civil Services Pty Ltd (TCS) was established in 2004 as Rock Drilling Australia Pty Ltd and changed its name to TCS in May TCS is a civil engineering consultancy business and derived its revenue from large projects, primarily the rollout of the National Broadband Network (NBN). Techdrill Mining Services Pty Ltd (TMS) was incorporated in May 2012 and provided base metal drilling services for a number of mining clients in regional New South Wales. Glown Pty Ltd was incorporated in October This company is essentially an asset holding company. This company has not traded or employed staff. The Group s head office was originally located in Hawthorn East in Melbourne and moved to the Harbert offices in central Melbourne in early 2014 to reduce costs. TMS operations were conducted from leased premises in Orange, New South Wales. TCS operations were located in leased premises in Upper Coomera, Queensland and Mayfield, New South Wales. Information regarding the Group s financial position is discussed in Section 6. PPB Advisory Report to creditors 9

16 4.3 Recent events Outlined below is a brief timeline of key recent events in the Group s history. Jan 12 - TCMS incorporated post transaction with Harbert in December 2011 Nov 12 - $1m Capital Raising to fund operations over seasonally slower December/ January period May 13 to Jul 13 - TCS - Restructuring of TCS and creation of shared services division between TMS and TCS Sep 13 - TCS - Following Federal election, all NBN work nationally is suddenly halted Mar 14 - TCS - Maxi Rig and related assets sold for $1.8m Apr 14 - TMS - Competitor Tom Browne goes into Administration May14 - $0.3m Capital Raising Aug 14 - $750k Capital Raising Sept 14 - TCS awarded Mayfield 1 NBN project, the first of four projects promised by NBN head contractor running consecutively between September 2014 and February 2016 Nov 14 - Board decides to re-pursue external refinance to improve liquidity and inject $750k-$1m working capital into the business. Dec 14 - TMS competitor Macquarie Drilling goes into Administration Jan-15 - NBN work did not materialise Focus turnsurgently to seeking replacement NBN and non-nbn work DEBT / EQUITY EVENT OPERATIONAL EVENT January Jan 15 Directors appoint Administrators Apr 12 to Sept 12 - TCS - Establishment of Maxi Rig team to target high margin pipeline projects Acquisition of $3m Maxi Rig Mar 13 - $2.5m Capital Raising Jul 13 to Aug 13 - TCS - Engagement of operational consultantsto drive operational improvements in TCS Nov 13 to Jan 14 - $2.4 Capital Raising Mar 14/Apr 14 - Refinancing discussions commenced with a financier. Discussions stalled until late 2014 (once earnings are expected to have improved) Mar 14 to Jun 14 - TCS - NBN work returns however is 'piecemeal'. TCS enters into partnership with NBN head contractor Jul 14 to Sept 14 - TMS - TMS wins 3x medium-term $1m projects Nov 14 - $326k Capital Raising Nov/Dec 14 - TMS - Board decide to divesttms. A member of management granted several weeks exclusivity - unable to complete within timeframe, but remains interested in owning the businessand will participate in the formalprocessto be launched early2015 Jan-15 - As NBN work has not been secured, refinance terms include new onerous terms, and a lower amount of refinancing isoffered. Refinancing unable to be completed. PPB Advisory Report to creditors 10

17 4.4 Statutory information A search of ASIC s database at the date of appointment reveals the following details of the Group and its directors, other officers and shareholders Company details Company ACN Registration date Registered office/principal place of business Techdrill Civil and Mining Services Pty Ltd December 2011 Level 7, 2 Russell Street, Melbourne, Victoria 3000 Level 1, 415 Riversdale Road, Hawthorn East, Victoria 3123 Techdrill Civil Services Pty Ltd Techdrill Mining Services Pty Ltd September 2004 Level 7, 2 Russell Street, Melbourne, Victoria 3000 Unit 2, 7 Northward Street, Upper Coomera, Queensland June 2008 Level 7, 2 Russell Street, Melbourne, Victoria Leewood Drive, Orange, New South Wales 2800 Glown Pty Ltd October 2004 Level 7, 2 Russell Street, Melbourne, Victoria 3000 Level 1, 415 Riversdale Road, Hawthorn East, Victoria Directors details Techdrill Civil and Mining Services Pty Ltd Directors Details Appointment From To Jeremy Steele 30 January 2012 Current Martin Rowland 3 December 2013 Current Robert Whitaker 24 April 2013 Current Previous Directors Details Neil Weber 30 January December 2014 Jason Entwistle 27 January April 2014 Techdrill Civil Services Pty Ltd Directors Details Appointment From To Jeremy Steele 30 January 2012 Current Martin Rowland 3 December 2013 Current Robert Whitaker 24 April 2013 Current Previous Directors Details Neil Weber 20 January December 2014 Jason Entwistle 27 January April 2014 PPB Advisory Report to creditors 11

18 Techdrill Mining Services Pty Ltd Directors Details Appointment From To Jeremy Steele 30 January 2012 Current Martin Rowland 3 December 2013 Current Robert Whitaker 24 April 2013 Current Previous Directors Details N/A Glown Pty Ltd Directors Details Appointment From To Jeremy Steele 30 January 2012 Current Martin Rowland 3 December 2013 Current Robert Whitaker 24 April 2013 Current Previous Directors Details Neil Weber 30 January December 2014 Jason Entwistle 27 January April Secretary details Techdrill Civil and Mining Services Pty Ltd Secretary Details Appointment From To Mark Smallman 24 April 2014 Current Previous Secretary Details Jason Entwistle 20 December April 2014 Techdrill Civil Services Pty Ltd Secretary Details Appointment From To Mark Smallman 24 April 2014 Current Previous Secretary Details Jason Entwistle 27 January April 2014 Techdrill Mining Services Pty Ltd Secretary Details Appointment From To Mark Smallman 24 April 2014 Current Previous Secretary Details N/A Glown Pty Ltd Secretary Details Appointment From To Mark Smallman 24 April 2014 Current Previous Secretary Details Jason Entwistle 27 January April 2014 PPB Advisory Report to creditors 12

19 4.4.4 Shareholder details An ASIC search has shown the following shareholder details: Techdrill Civil and Mining Services Pty Ltd Classification No. of shares $ per share Total $ value Fully paid (Yes/No) Preference 975, ,346 Yes Ordinary 537, ,057 Yes 1,512,403 1,512,403 The shareholders of Techdrill Civil and Mining Services Pty Ltd are as follows: Shareholder Class No. of shares % shares JJK Co Pty Ltd Ordinary Shares 23, % Kew Superannuation Fund Pty Ltd Ordinary Shares 4, % Michael and Jennifer Howard Ordinary Shares 25, % Ganymede Investments Pty Ltd Ordinary Shares 15, % Stephen Craig Ordinary Shares % John Murray Ordinary Shares 2, % Hape II Warehouse Investment Holdings LLC Ordinary Shares 119, % Egg.AU Pty Ltd Ordinary Shares 82, % Harbert Australian Private Equity Fund I L.P. Ordinary Shares 124, % GR Pty Ltd Ordinary Shares 94, % Lee-Anne Weber Ordinary Shares 44, % Total 537, % Shareholder Class No. of shares % shares Egg.au Pty Ltd Preference 131, % Kew Superannuation Fund Pty Ltd Preference 8, % Ganymede Investments Pty Ltd Preference 34, % Harbert Australian Private Equity Fund I L.P. Preference 493, % GR Pty Ltd Preference 151, % Michael and Jennifer Howard Preference 57, % Stephen Craig Preference % Lee-Anne Weber Preference 97, % Total 975, % As noted earlier, the three subsidiaries within the Group are 100% owned by Techdrill Civil and Mining Services Pty Ltd. Details of the subsidiaries share structures are as follows: Techdrill Civil Services Pty Ltd Classification No. of shares $ per share Total $ value Fully paid (Yes/No) Ordinary 100, ,000 Yes 100, ,000 Techdrill Mining Services Pty Ltd Classification No. of shares $ per share Total $ value Fully paid (Yes/No) Ordinary 345, ,464 Yes 345,168 3,464 PPB Advisory Report to creditors 13

20 Glown Pty Ltd Classification No. of shares $ per share Total $ value Fully paid (Yes/No) Ordinary 100, ,000 Yes 100, , Creditors claims At our appointment date, the claims of the Group s creditors totalled c.$12.6m. The following table summarises estimated claims by each known class of creditor. Details of creditor claims by company are provided in the sub-sections below. Creditor Class No. of Creditors Amount ($) Total Amount ($) Secured creditors: Circulating and non-circulating 3 8,326,533 Circulating only - - Non-circulating only 32 Unknown 8,326,533+ Employee entitlements: Priority creditors 92 1,611,275 Excluded employee entitlements (unsecured creditors) 2 322,784 1,934,059 Unsecured creditors: Trade/External Creditors 239 2,049,660 Statutory Creditors 2 278,643 2,328,304 Total Creditor Claims ,588,896+ These claims may be subject to change. Creditor amounts have been derived from the: Report as to Affairs (RATA) for each company provided by the Directors (Section 6.4) Group s books and records claims submitted by creditors Secured creditors A secured creditor is a creditor that holds a security interest over some or all of a company s assets. To be valid, the security interest must generally be registered on the Personal Property Securities Register (PPSR) or, in the case of land and buildings, at the relevant Land Titles Office. Security interests can be over: circulating assets (formerly known as floating assets) e.g. debtors, stock and cash non-circulating assets (formerly known as fixed assets) e.g. property, plant and equipment, land, goodwill and rights to dividends. The table below shows a summary of the PPS registrations by company as at 27 January 2015: Entity No of Claims Techdrill Civil and Mining Services Pty Ltd 18 Techdrill Civil Services Pty Ltd 39 Techdrill Mining Services 27 Glown Pty Ltd 17 Total 101 PPB Advisory Report to creditors 14

21 A search of the PPSR revealed the following security interests registered over the Group s assets: Creditor class Number of No. of security creditors interest(s) Amount ($) Mortgage over land APAAP ,000 APAAP with exceptions 1 8 7,714,533 Intangible property Account interests 1 1 Unknown Motor vehicle(s) 9 37 Unknown Other goods Unknown Total creditor claims ,326,533+ All present and after-acquired property (APAAP) registrations comprise the following security interests: NAB for $358k (equipment finance and credit card facilities) which we understand is cross collateralised across the Group FIFO Treasury Australia Pty Ltd for $254k (debtor finance facilities for TCMS and TMS ) The APAAP with exceptions registrations are in favour of Harbert Fund Advisors (Australia) Pty Ltd (Harbert). Various holders of convertible notes have lodged proofs of debt via their security trustee, Harbert, claiming a secured debt of $7.7m owing as at the date of our appointment, on account of loans advanced by them to TCMS. Our investigations regarding this transaction are continuing, however based on the documents provided to date, our preliminary view is that the noteholders are secured creditors of TCMS. Our investigations are ongoing regarding the secured debts allegedly owed to the noteholders by the other companies in the Group, as guarantors of the TCMS debt. We have been in contact with all creditors registered on the PPSR. A number of creditors holding valid security over specific items of plant and equipment have collected their assets. We are continuing to assess the validity of a number of PPSA claims. Full details of the secured creditors are provided at Appendix F Employees Outstanding employee entitlements have a statutory priority for payment over other creditors (except from the proceeds of non-circulating asset realisations). The table below details all known outstanding employee entitlements based on the Group s books and records and the RATA for each Group company provided by the Directors (Section 6.4). Employee entitlements have not been verified by us at this stage. Amount ($) Entitlements Techdrill Civil and Mining Services Pty Ltd Techdrill Mining Services Pty Ltd Techdrill Civil Services Pty Ltd Wages 18,922 99,727 87, ,127 Superannuation 37, , , ,391 Annual Leave 48,865 74,521 78, ,965 Long Service Leave ,649 15,649 Payment In Lieu of Notice 129,775 79, , ,113 Redundancy 79, , , ,030 Total Priority Creditors 314, , ,807 1,611,275 Excluded Employee Entitlements (see 4.5.3) - 322, ,784 Total Entitlements 314,945 1,036, ,807 1,934,059 Total PPB Advisory Report to creditors 15

22 4.5.3 Excluded employees Excluded employees are defined in the Act as directors and their spouses or relatives (s556(2)). Outstanding priority employee entitlements for excluded employees are limited to $2,000 for wages (including superannuation) and $1,500 for unpaid annual leave and long service leave. The balance of their entitlements rank as an unsecured claim (s556(1a) and (1B)) of the Act. Two excluded employees of TMS have been identified to date Fair Entitlements Guarantee (FEG) It is unlikely that sufficient assets will be available to pay outstanding employee entitlements in full. In the event that the Group is placed into liquidation, employees may be eligible for payment of any shortfall in their entitlements (excluding superannuation and capped under certain circumstances) under FEG which is administered by the Department of Employment (DE). Former employees must meet eligibility requirements outlined in the Fair Entitlements Guarantee Act FEG advances are repaid to the Government if and when funds become available, in the same priority as employees claims. Further information can be found on FEG s website at Unsecured Creditors At the date of our appointment, the claims of the Group s unsecured creditors totalled c.$2.3m. These figures are derived from the Group s books and records, RATAs provided by the Directors and claims submitted by creditors. At the date of our appointment there were eight known unsecured creditors of Techdrill Civil and Mining Services Pty Ltd totalling c.$169k as outlined below: Techdrill Civil and Mining Services Pty Ltd Creditor Type No. of Creditors RATA Amount ($) Trade/External Creditors 7 138,632 Statutory Creditors 1 30,152 Total 8 168,784 At the date of our appointment there were 136 known unsecured creditors of Techdrill Civil Services Pty Ltd totalling c.$1.3m as outlined below: Techdrill Civil Services Pty Ltd Creditor Type No. of Creditors RATA Amount ($) Trade/External Creditors 135 1,199,998 Statutory Creditors 1 89,543 Total 136 1,289,541 At the date of our appointment there were 98 known unsecured creditors of Techdrill Mining Pty Ltd totalling c.$821k as outlined below: PPB Advisory Report to creditors 16

23 Techdrill Mining Services Pty Ltd Creditor Type No. of Creditors RATA Amount ($) Trade/External Creditors ,030 Statutory Creditors 1 110,326 Total ,357 At the date of our appointment there was one known unsecured creditor of Glown Pty Ltd totalling c.$49k as outlined below: Glown Pty Ltd Creditor Type No. of Creditors RATA Amount ($) Trade/External Creditors - - Statutory Creditors 1 48,622 Total 1 48,622 The top 10 unsecured creditors (excluding statutory liabilities) of the two trading companies are as follows: Techdrill Civil Services Pty Ltd No. Creditor RATA Amount ($) 1 Q Fibre 262,608 2 We Move Dirt 118,925 3 Worth Recycling Pty Ltd 101,184 4 EDT Global 56,138 5 Herrenknecht AG 36,191 6 Bounce Civil 30,049 7 Global Directional Drilling Services 29,714 8 Pump It Don't Lump It 27,643 9 AA QLD Harrison's Hire Pty Ltd 27, JHA Recruitment & Staff at Work 27,301 Total Of Top 10 Total Trade/External Creditors % Of Total Unsecured 717,054 1,199, % PPB Advisory Report to creditors 17

24 Techdrill Mining Services Pty Ltd No. Creditor RATA Amount ($) 1 DTH Products Pty Ltd 98,655 2 Camteq International 70,881 3 Reflex Instruments 69,660 4 Motorpass 63,047 5 Slade Drilling 60,263 6 Air Drill Hammers & Bits 51,373 7 Australian Mud Company 47,961 8 Australasian Mining Services Pty Ltd 31,217 9 Southern Capital Inv (Sthrn X Tech) 28, Hard Core Diamond Products 25,986 Total Of Top ,918 Total Trade/External Creditors 711,030 % Of Total Unsecured 77.1% 4.7 Related entities The Group s related entities and the quantum of their claims at the date of appointment are summarised below: Company records or Related entity Relationship Details of claim RATA amount ($) Bounce Civil Common Director Unsecured creditor 30,049 MGB Trust Common Director Unsecured creditor 15,953 Neil Weber Former Director Employee entitlements 210,735 Robert Whitaker Director Unsecured creditor 2,718 Harbert Fund Advisors Shareholder Directors fees 48,400 Total related entity claims 307,855 PPB Advisory Report to creditors 18

25 5. Conduct of administration 5.1 First meetings of creditors The first creditor meetings of the Group were held on 6 February 2015, pursuant to s436e of the Act. Creditors did not resolve to appoint a Committee of Creditors (COC) for any Group company at the meetings. A copy of the minutes of the first meetings may be obtained from ASIC s website. 5.2 Operations Upon appointment we conducted a critical evaluation of the Group s viability and short term cash flow requirements. As the Group was without immediate funds, we considered several options to enable trading to continue, such as contacting key stakeholders (including major customers) to determine their interest in funding operations. Unfortunately, we had no option but to cease trading and the majority of the workforce was made redundant on 28 January Asset Realisations Plant and Equipment In light of the Group ceasing to trade, we did not initiate a sale campaign for the business. The Administrators have fixed asset specialists (Grays Online) to assist with the recovery and realisation of the Group s plant and equipment. The plant and equipment will likely be realised by way of public auction in due course. A realisation strategy for the assets will be determined once the retrieval and identification process has been completed. The proceeds from the sale of the plant and equipment will be applied against the secured debts owed to NAB (first ranking security holder) and Harbert. It is evident that Harbert will suffer a significant shortfall on its debt. We are aware of several assets that were reportedly taken from Group sites prior to, or immediately after, our appointment. We have notified the police and our insurers and we will continue our investigations to locate the assets concerned Debtors and WIP We have invoiced all debtors for work performed up to 27 January 2015 and subsequently written to the debtors seeking payment of outstanding amounts. It is too early to establish with any certainty the likely realisable value of the debtor book. Whilst we have been put on notice of counter claims by some customers, we will continue to pursue debtor recoveries vigorously and seek to defend any claims received. PricewaterhouseCoopers and the former Group CFO have been engaged to complete an outstanding Research & Development return for TCMS to be lodged with the ATO. This return may realise approximately $185k, subject to any offsets the ATO may seek to apply. PPB Advisory Report to creditors 19

26 5.4 Actions undertaken since appointment Our key actions to date include: Attending Group sites at Mayfield, New South Wales and Upper Coomera, Queensland and: - addressing the employees - holding discussions with management and staff regarding asset locations - conducting trade on / business viability assessment Advising the workforce that operations had ceased and their employment had been terminated Liaised with the Department of Employment to initiate the employee entitlements FEG process Sought submissions from plant and equipment asset specialists and subsequently engaged Grays Online to assist with the recovery and realisation of plant and equipment Extensive interaction with Grays Online regarding the recovery of assets Conducted a detailed assessment of debtors and WIP and commenced a process to update the accounting records in respect of those assets, as well as implementing a realisation strategy Discussions with debtors regarding amounts outstanding Arranged for bank accounts to be opened and debtor funds to be transferred to the Administrators bank accounts Commenced open cover insurance of Group assets Liaised with landlords and their advisors regarding access to leased premises Wrote to all known lessors and those creditors registered on the Personal Property Securities Register (PPSR), advising them that the Administrators did not intend to exercise property rights in respect of certain assets in order to avoid ongoing liability Liaised with and wrote to landlords at Mayfield and Orange sites confirming ongoing short term use of their properties to store plant and equipment Liaised with our lawyers on various issues such as employment law, PPSR and landlord issues Issued a circular to creditors on 28 January 2015 and prepared for (and held) the first meetings of creditors on 6 February 2015 Dealt with numerous creditor, employee and stakeholder enquires Various discussions with secured creditors Completed statutory lodgements with ASIC Commenced our investigations into the affairs of the Group in order to write this report Issued Directors with a statutory request to complete a RATA for each Group company PPB Advisory Report to creditors 20

27 6. Financial background The Group prepared consolidated, audited, special purpose financial statements on an annual basis and monthly management accounts. The last audited financial statements are for the year ended 30 June The audit opinion for that year was unqualified, although the auditor did note material uncertainty regarding the Group s continuation as a going concern. The accounts for the year ended 30 June 2014 were prepared but not audited at the date of our appointment. The Group used the computer based accounting system Quickbooks. An annual profit forecast was regularly reviewed by management and updated as required. Management informed us that a number of reforecasts were undertaken across FY14 and YTD FY15 in light of adverse trading results. We have completed a preliminary analysis on the following consolidated historical financial results: FY13 audited financial statements FY14 unaudited management accounts year to date (YTD) unaudited management accounts to December Group s financial performance / profit & loss Key Comments Accumulated losses from FY13 total $11.8m, of which $9.4m (80%) was incurred in the 18 months to 31 December We note that these losses included $1.8m of non-cash accrued interest on the secured convertible notes. Actual revenue for FY14 and YTD FY15 was $16.9m against a forecast of c.$24.4m (31% reduction). We understand the Group did not achieve forecast revenue over this period, primarily due to: o a deterioration in the mining sector o the NBN rollout and other projects being delayed Despite the reduction in revenue, fixed costs remained largely static until FY15 when additional staff were employed Trading losses have been largely funded by borrowings from shareholders ($7.2m between FY13 and YTD FY15) and extending trade creditor terms. Losses in FY14 were partially funded by fixed asset sales (c.$0.8m net of equipment finance). The Group s financial performance (Profit and Loss) for the two fiscal years ended 30 June 2014 and the six months to December 2014 is summarised below and reveals a loss over the period of approximately $11.8m: $'000s FY13 FY14 YTD FY15 (audited) (unaudited) (unaudited) Revenue 19,397 10,108 6,782 Cost of goods sold (15,191) (8,301) (6,295) Gross profit 4,206 1, Gross margin 21.7% 17.9% 7.2% Administration costs (2,285) (1,811) (621) Payroll costs (2,599) (2,796) (1,237) Operating leases - (142) (250) Total overheads (4,884) (4,749) (2,108) EBITDA (678) (2,941) (1,621) Other income / (expenses) 115 (496) 246 Depreciation & amortisation (1,466) (1,452) (692) EBIT (2,029) (4,889) (2,067) Interest (410) (1,726) (675) Proft/(loss) before income tax (2,440) (6,615) (2,743) Source: Company records Note: Included in Interest is non-cash accrued interest on the secured convertible notes (FY14: $1.2m, YTD FY15: $630k) PPB Advisory Report to creditors 21

28 Following the EBITDA loss of $0.7m in FY13, the Group had forecast revenue of $16m and EBITDA of $2.7m in FY14. The forecast return to profitability in FY14 was based upon: similar revenue to FY13 being achieved (after excluding abnormal items, notably a R&D refund) higher margins in the TCS business, based on a strong forward order book and work already undertaken on the NBN project the elimination of one-off costs/losses associated with two TCS jobs totalling c.$2m in the previous year (FY13) cost savings in the TMS business (c.$300k), mainly travel and accommodation and shared service costs The Group failed to achieve budget in FY14, with revenue below budget by $5.9m and an EBITDA loss of $2.9m Revenue $'000s FY14 YTD FY15 Total (unaudited) (unaudited) (unaudited) Actual 10,108 6,782 16,891 Forecast 15,986 8,404 24,390 Variance (5,877) (1,622) (7,500) Actual revenue for FY14 and YTD FY15 was $7.5m below forecast. We understand that the key drivers of the variance were: the mining sector deteriorating further than expected ($3.3m adverse impact to forecast) the NBN rollout being delayed (for around 8 months) while the new federal government performed a review ($4.2m adverse impact to forecast) delays in commencement of NBN work for a key customer and a reduction in the scope of work compared to the tender ($1.1m adverse impact to forecast) R&D refund $1.6m greater than anticipated Gross margin $'000s FY13 FY14 YTD FY15 (audited) (unaudited) (unaudited) Actual 21.7% 17.9% 7.2% Forecast 37.9% 23.4% Variance (20.1%) (16.3%) Gross margin declined from c.22% in FY13 to c.18% in FY14. This was significantly lower than the forecast of 39%. Management advise gross margin was impacted by: a decision not to downsize NBN crews for three months (after work ceased nationally in September 2013), based on advice from the client that work was due to resume sooner than actually occurred competitiveness in the mining sector, with pricing c.30% lower than FY13 actual rates achieved for work completed on the NBN project were lower than the rates originally tendered (the cost price for the work undertaken was unable to be offset against more profitable work, due to a reduction in scope) PPB Advisory Report to creditors 22

29 6.1.3 Overhead costs $'000s FY14 YTD FY15 Total (unaudited) (unaudited) (unaudited) Actual (4,749) (2,108) (6,857) Forecast (4,544) (1,664) (6,208) Variance (204) (445) (649) Actual overhead costs for FY14 were largely in line with forecast (unfavourable variance of 4.5%), while the YTD FY15 overhead costs were $0.4m more than forecast. We understand that the key driver of this variance was an investment in staffing to support anticipated NBN work, including a new General Manager for TCS and a restructure of the finance function The Group s trading entities The Group s trading entities TMS (drilling services) and TCS (contracting engineering) have consistently incurred losses totalling $11.3m from FY13 onwards as tabled below: $'000s FY13 FY14 YTD FY15 (audited) (unaudited) (unaudited) Total Techdrill Civil Services (4,048) (2,916) (1,057) (8,021) Techrill Mining Services (271) (2,210) (813) (3,294) Proft/(loss) before income tax (4,319) (5,126) (1,870) (11,315) At the consolidated Group level, the above losses were partially offset by significant R&D refunds from the federal government (c.$5.3m during the above period). Management have provided the following comments in respect of the trading entities financial results: TCS cost overruns on two major projects in FY13 are estimated at $1.9m the change in Queensland government in September 2012 resulted in traditional work with major government customers slowing, as capital projects in the region were put on hold. Such work was traditionally 70% of the TCS business the change in federal government in September 2013 led to the sudden cessation of NBN work nationally for 8 months, while the NBN program was restructured equipment owned by TCS was inappropriate for the NBN work and additional equipment had to be leased at a cost of $142k per annum the loss of revenue was partially offset by lower base costs including payroll (headcount) and insurance the sudden cessation of NBN work which was scheduled to commence in late January TMS the slowdown in demand for mineral resources, particularly from China, resulted in a reduction of drilling work required a number of jobs were delayed which, combined with a relatively high fixed cost base, compounded losses incurred higher payroll costs in FY14 ($230k) were incurred in order to retain key personnel the loss of revenue was partially offset by reducing costs, such as moving towards a casual rather than fulltime workforce PPB Advisory Report to creditors 23

30 6.2 Group s financial position / balance sheet Key Comments The Group balance sheet indicates a net asset position of c.$3.2m as at 31 December 2014, noting that if the secured notes were to convert from debt to equity (as intended) that positon would increase It is likely that goodwill totalling $8.7m has been materially overstated since FY14. Had goodwill been wholly impaired in FY14 as a result of significant and sustained losses, then a significant asset deficiency would have existed as at 30 June Had the note conversion taken place at 30 June 2014, then the Group would have reportedly had a net asset surplus at that time. Plant and equipment comprises mainly trucks and other motor vehicles, drill rigs, drills, trailers and excavators. All plant and equipment is subject to one or more security interests. Losses in the main have been funded by additional borrowings from shareholders ($7.2m), extending trade creditor terms and the sale of fixed assets (total $0.8m over FY14 and YTD FY15 net of equipment finance). The Group s financial position (Balance Sheet) for the two fiscal years ended 30 June 2014 and 31 December 2014 is summarised below: $'000s FY13 (audited) FY14 (unaudited) YTD FY15 (unaudited) Current assets Cash and cash equivalents Trade and other receivables 4,309 2,207 1,180 Inventories/WIP 2, Other current assets Total current assets 7,341 3,506 2,629 Non-current assets Plant & equipment 9,402 5,799 4,863 Deferred tax asset Intangible assets 8,688 8,688 8,688 Total non-current assets 18,426 14,824 13,888 Total assets 25,767 18,330 16,516 Current liabilities Trade and other payables 5,478 3,612 4,551 Borrowings 2,170 1, Other current liabilties Total current liabilities 8,011 5,397 5,208 Non-current liabilities Borrowings 4,589 6,117 7,744 Deferred tax liability Total non-current liabilities 4,967 6,496 8,123 Total liabilities 12,978 11,893 13,331 Net assets 12,789 6,437 3,186 Equity Contributed equity 15,883 16,191 16,191 Retained earnings (accumulated losses) (3,095) (9,754) (13,005) Total equity 12,789 6,437 3, Trade and other receivables Trade debtors at 27 January 2015 were reportedly c.$719k. This figure may be overstated based on claims received to date from customers. Notwithstanding, we will continue to pursue debtor recoveries vigorously and defend unsubstantiated claims. PPB Advisory Report to creditors 24

31 6.2.2 Inventory/WIP Inventory primarily relates to work in progress and the stock of materials and tools used in the Group s projects. Stock/WIP at 31 December 2014 of c.$955k primarily consists of: TMS (c.$706k) - consumable stock items used in drilling operation such as spares, drill bits, drill rods and drilling fluids. TCS (c.$209k) - tooling and consumable materials Other current assets This asset category comprises contract retentions, security deposits on leased properties and prepaid expenses. Contract retentions are likely to be realisable, subject to receiving any valid claims against those retentions. Security deposits are unlikely to be realised as landlords may suffer loss following the Group s insolvency Plant and equipment Plant and equipment mainly comprises trucks and other motor vehicles, drill rigs, drills, trailers and excavators. All plant and equipment is subject to one or more security interests. The key assets disposed of in the last year were three drilling rigs which were sold for $2.5m ($0.8m, net of equipment finance) Deferred tax asset A deferred tax asset represents the future income tax saving likely to arise as a result of the recoupment of carried forward tax losses when profits are generated. It is arguable that this amount should have been fully impaired in the FY14 financial statements, given the Group s loss making history Goodwill Goodwill of $8.7m was recognised in the Group s accounts following the investment by Harbert in It is likely that goodwill should have been wholly impaired in FY14 as a result of significant and sustained losses. We understand the auditor had highlighted to the Directors the need to write off goodwill as part of finalising the FY14 accounts Trade and other payables Trade and other payables increased by $1.3m from FY14 to YTD FY15 due to creditor payment terms being extended by the Group as a consequence of tight cashflow. We understand that payment arrangements were in place across FY14 and YTD FY15 with several creditors. Other payables mainly relate to ATO liabilities (YTD FY15 c.$337k) and payroll liabilities (YTD FY15 c.$1.8m). Management advises that superannuation has not been paid since 30 June We understand that the Group had payment arrangements in place for overdue tax liabilities with the ATO and the NSW and Queensland Offices of State Revenue. We understand that the funds from the re-finance to be finalised in February 2015 were to be applied to outstanding statutory arrears for ATO, Office of State Revenue (Qld and NSW) and superannuation Borrowings Borrowings increased by a net $1.6m from FY13 to YTD FY15 reflecting: increased shareholder contributions via a convertible note ($5.3m in FY14 and YTD FY15, including capitalised interest) debtor financing through FIFO, which commenced in FY14 (YTD FY15 c.$254k); offset by reduction in equipment financing by $3.8m, due to principal repayments in the ordinary course of business and the sale of financed equipment to repay debt. PPB Advisory Report to creditors 25

32 6.2.9 Equity Contributed equity increased by $308k from FY13 to FY14. No additional shares were issued. Management advises the increase relates to the interest on the preference shares, which had a coupon rate of 18% calculated quarterly. 6.3 Directors Report as to Affairs (RATA) A company director must provide an administrator with a RATA outlining the company s business, property, affairs and financial circumstances at the appointment date (s438b). The RATA should include: net asset book values (based on historical financial records) estimated asset realisable values known liabilities. The directors have provided us with a RATA for each Group company in accordance with their responsibilities under the Act. Detailed below is a summary of the RATAs provided: Techdrill Civil Services Techdrill Mining Services Techdrill Civil and Mining Glown Directors' RATA Directors' RATA Directors' RATA Directors' RATA Book Value Estimated Value Book Value Estimated Value Book Value Estimated Value Book Value Estimated Value $ 000 $'000 $ 000 $'000 $ 000 $'000 $ 000 $'000 Assets subject to specific security interests Relevant secured creditor claims (445) (445) (388) (388) Surplus/(Deficit) on specific security interests (177) (181) Other Assets: Interest in land Sundry debtors ,207 10, Cash on hand Cash at bank Stock Work in progress Plant and equipment ,401 1, Other assets Surplus/(Deficit) on specific security interests (from (177) (181) above) Sub Total 2,111 1,213 4,269 1,978 10,311 10, Less other creditor claims: Employee Entitlements (567) (567) (1,006) (1,006) (315) (315) - - Preferential claims General security interests (8,522) (8,522) (8,134) (8,134) (8,776) (8,776) (8,134) (8,134) Unsecured creditors (10,094) (10,094) (3,583) (3,583) (284) (284) - - Surplus / (Deficiency) to creditors (17,073) (17,971) (8,453) (10,745) (7,411) (7,663) We note that the$10.2m of sundry debtors in the TCMS RATA relates entirely to intercompany loans. Given the Group s insolvency, the realisable value of these loans will be zero, resulting in a deficiency to creditors based upon the directors RATA of c.$9.4m. Creditors should be aware that the RATAs summarised above have not been prepared on a consolidated basis and therefore adding together the estimated surplus / (deficiency) for all companies will not provide an accurate overall position for the Group. The RATAs should be considered on an individual basis. PPB Advisory Report to creditors 26

33 RATA figures may differ from actual realisable values as: net book values are based on historical financial records asset values are not market tested creditor claims are not yet adjudicated upon and quantified. For commercial reasons the Administrators have not disclosed what they believe to be the estimated realisable value of the Group s assets, as to do so may prejudice the realisation process. PPB Advisory Report to creditors 27

34 7. Investigations Key Comments While our investigations are ongoing, we summarise our initial findings below: The Group was likely to have been insolvent from July 2014 when it had insufficient funds to pay debts as and when they fell due. A prospective claim for insolvent trading may be c.$1.8m before costs. Shareholders provided funding of $3.8m between November 2013 and November The Directors are firmly of the belief that the funding provided during that time was sufficient to support the Group s ongoing solvency. Furthermore, the directors assert that the Group was solvent until immediately prior to the appointment of Administrators. Creditors should note that insolvent trading claims are difficult and costly to pursue, and even if successful they may not generate a return to creditors. We have conducted investigations into the reasons for the Group s failure to the extent possible in the available time. Further investigations will be conducted should creditors vote to wind up the companies in the Group at the Second Meeting. A liquidator has greater powers to undertake investigations and pursue recoveries than an administrator or deed administrator. We have based our investigations and opinions on information obtained from: books and records, including management reports and board reports electronic financial systems accounting and database information systems used within the business directors, officers, management and key staff members (where available) external professional reports, including audit reports publicly available information e.g. ASIC 7.1 Directors explanation for the Group s difficulties The Directors attribute the Group s current financial position to: a sudden decline in the NBN work program promised by the NBN head contractor that was forecast to generate substantial revenue to TCS the decline in the mining sector and the resultant impact upon the TMS business the inability to secure alternative work sources to substitute revenue lost the Group s inability to refinance the shareholders unwillingness to provide further funding 7.2 Administrator s opinion of the reasons for the Group s difficulties In addition to the Directors stated reasons for the Group s financial position, we believe the following factors are also relevant: declining margins due to increased competition, inefficient labour usage and project cost overruns a relatively fixed overhead structure and a failure to implement an effective/timely cost reduction strategy shareholding funding, whilst significant, was not sufficient to enable the Group to pay its debts as and when they fell due PPB Advisory Report to creditors 28

35 7.3 Insolvency Review Our preliminary view is that the Group was likely to have been insolvent from July A company is insolvent if it is unable to pay its debts as and when they become due and payable. Liquidators are required to demonstrate that a company is insolvent in order to pursue certain recovery proceedings (Section 8). In the course of our investigations we analysed the following indicators of insolvency: access to alternative sources of finance inadequate or failed equity raisings trade creditors significantly outside terms changing supplier payment terms or special arrangements with selected creditors (demanding special payments before resuming supply) payments to creditors of rounded sums or payments that are not reconcilable to specific invoices working capital deficiency. We have focused our testing on the consolidated position of the Group, as: we understand that the Group s principal secured creditors are cross-guaranteed by the entities in the Group the parent entity may be liable for debts incurred by its subsidiaries in the event of an insolvent trading claim. Where consolidated information is not available, we have analysed the two main trading entities (TCS and TMS) in isolation. The primary methods of testing solvency are the Cash Flow Test and the Balance Sheet Test. Based on these tests, there are indications that the Group was likely to have been insolvent from July Creditors should note that insolvent trading claims are difficult and costly to pursue, and even if successful they may not generate an additional return for creditors Date of insolvency It is very difficult to prove a precise date of insolvency. The board was aware from at least September 2013 that the Group needed to raise additional funding through equity or debt and did so successfully. The shareholders agreed to provide $3.8m of additional funding in eight tranches between November 2013 and November Harbert, as security trustee of various noteholders, contributed secured funds of $3.1m. We note that between September 2013 and June 2014 the TCMS financial position improved markedly, as accounts payable and equipment finance debt were reduced by $2.2m and $2.6m respectively. Whilst the board papers indicate that shareholder funding was sufficient to maintain solvency, there is strong evidence that debts were not being paid as and when due. In our view, the amount of funding provided was insufficient to cover the ongoing trading losses of the Group. The Directors are of the firm view that shareholder funding provided was sufficient to maintain solvency, based on forecasts prepared by management. PPB Advisory Report to creditors 29

36 7.3.2 Cash Flow Test The Cash Flow Test is a measure of a company s ability to pay its liabilities from available resources as and when they fall due. To apply this test we focused on creditor movements and the working capital position of the Group in the period leading up to our appointment. Creditor arrears Liquidity issues are evidenced by the Group seeking arrangements with creditors to defer payments. We understand the Group first entered into a payment arrangement with the ATO in February 2013 for $506k. The Group renegotiated payment arrangements with the ATO on several occasions from February 2013 to December Payment arrangements with the Office of State Revenue in NSW and Queensland totalling $225k were also entered into between September 2014 and January In addition to the payment arrangements entered into with tax authorities, the Group extended payment terms with a number of trade creditors. In the six months leading up to our appointment, the Group had approximately $1.1m of trade creditor debt subject to payment arrangements. Our investigations identified several payment arrangements with creditors dating back to August Trading terms for the majority of creditors are 30 days net or payment on receipt of invoice. The extent of trade creditors outside those terms is depicted in the graph below: Figure 1: Ageing of trade creditors at 27 January $' Current 0-30 days days days 90+ days Source: Company records Working capital and net current assets The Group s working capital (current assets less current liabilities) was negative from FY13 onwards, deteriorating from negative $670k in FY13 to negative $2.6m at December The working capital ratio is an indicator of liquid assets available to pay debts due within 12 months. A value of less than one indicates that a company may not be able to pay its debts as and when they fall due. Our preliminary analysis of the Group s records relating to working capital and net current assets revealed significant liquidity issues from FY14 onwards. PPB Advisory Report to creditors 30

37 Figure 2: Working Capital $ 000s FY13 (Mgmt) FY14 (Mgmt) YTD FY15 (Mgmt) Current Assets 7,196 3,506 2,629 Current Liabilities 7,866 5,397 5,208 Working Capital (Current Assets less Current Liabilities) (670) (1,891) (2,579) Working Capital / Liquidity Ratio (Current Assets/Current Liabilities) The Directors have advised that the proposed refinancing strategy to inject $1.2m - $1.75m in the Group, coupled with expected cashflows from the NBN project, would have significantly improved the working capital position. Figure 3: Liquidity Ratio Short term cash flow forecast We understand cash flow projections were tabled at the monthly board meetings. The Directors were therefore aware of the short-term funding requirements of the Group Balance Sheet Test The Balance Sheet Test assesses the solvency of a business with reference to its net asset position (i.e. the level of total assets relative to total liabilities). The financial records show a positive net asset position throughout the period under review. Certain key assets/liability values may have been materially overstated as commented upon in this report. We have concerns regarding the following account balances which may have overstated the net asset position of the Group: Goodwill potential impairment/write down Deferred Tax Asset (DTA) in light of going concern issues, recoverability of the DTA balance is uncertain. PPB Advisory Report to creditors 31

38 Figure 4: Net Assets $ 000s FY13 (Mgmt) FY14 (Mgmt) YTD FY15 (Mgmt) Total Assets 25,623 18,330 16,516 Total Liabilities 12,834 11,891 13,331 Net Assets (Total Assets less Total Liabilities) 12,789 6,439 3,185 A liquidator will investigate these matters further, should the creditors vote to wind up the Group at the Second Meeting. Had goodwill and the DTA been fully impaired in the FY14 financial statements, there would have been a substantial net asset deficiency from the commencement of FY15 onwards. However, had the convertible notes been converted from debt to equity (as was intended), then a surplus of assets would have been available in FY14, even after asset impairments Other insolvency indicators Determining whether a company is insolvent (and the date at which insolvency occurred) is often difficult and is ultimately a matter for the courts to decide. The courts have identified fourteen general indicators of insolvency that are considered further in ASIC Regulatory Guide 217. Our investigations to date have identified that nine of these indicators apply, or may apply, to the Group, as summarised below: Indicator Present Comment Continuing trading losses Yes Accumulated losses of $11.8m (including non-cash convertible note interest of $1m) have been incurred from FY13 to YTD FY15. Liquidity ratio below one Yes The liquidity ratio has been below 1 since at least FY13. This continued to decline in the months leading up to our appointment. Overdue Commonwealth and state taxes Yes The Group entered into and renegotiated several payment plans with the ATO from February 2013 to December Poor relationship with borrower/financier including inability to borrow additional funds Maybe TMS, TCS and TCMS also had payment plans in place with the QLD and NSW Offices of State Revenue. Whilst the Group was unsuccessful in obtaining a short-term overdraft or debtor finance facility from NAB in April/May 2014, there are examples of ongoing financial support from the bank. No access to alternative finance No The Group secured a debtor finance facility in the period leading up to the Administrators appointment. Inability to raise further equity No From November 2013, the shareholders and certain members of management provided $3.8m in funding in the form of convertible notes. Supplier placing debtor on COD terms, otherwise demanding special payments before resuming supply Yes We have identified that a number of suppliers requested COD terms. We understand from the Directors this was only a temporary measure. The January 2014 board meeting minutes indicate that a resolution was passed that COD terms be put in place with suppliers unless permission was granted from the board to incur credit. We understand additional credit was incurred subsequent to this time. PPB Advisory Report to creditors 32

39 Indicator Present Comment Creditors outside trading terms Yes Upon our appointment, $1.62m in trade creditors was overdue for payment. Of this amount, $490k was up to 30 days overdue and $1.13m was at least 30 days overdue. Some, but not all, of these creditors had agreed extended trading terms. Creditors would appear to have been materially outside terms from July Issuing of post-dated cheques No None identified. Dishonoured cheques/reversed electronic payments Special arrangements with selected creditors Legal action threatened or commenced, or judgements entered against the Group Payments to creditors of rounded figures, which are irreconcilable to specific invoices Inability to produce timely and accurate financial information to display the Group s trading performance and financial position, and make reliable forecasts Yes Yes No Yes No We have identified a number of reversed payments as a result of the Group s bank accounts being overdrawn. Such payments were ultimately made when funds were available. We have identified a number of suppliers who entered into payment arrangements with the Group since August No formal legal action was taken against the Group. We have identified a large number of creditor demands and overdue notices from June We have reviewed the Group s cash books and bank statements and have identified several round sum payments to suppliers. Our investigations indicate the Group was able to produce timely and accurate financial information Proving insolvency Further investigations into the Group s insolvency will be conducted by a liquidator should the companies be wound up. Determining when a company became insolvent can be a costly and complex exercise, involving a detailed review of the company s financial position, cash flow, and other relevant information. 7.4 Legal / class actions We are unaware of any legal proceedings against the Group. 7.5 Outstanding or previous winding up applications We are not aware of any outstanding or previous winding up applications against the Group. 7.6 Books and records Our preliminary view is that the Group maintained adequate books and records. A company must keep written financial records that: correctly record and explain its transactions, financial position and performance would enable true and fair financial statements to be prepared and audited must be kept for seven years after the transactions covered by the records are completed (s286 of the Act). PPB Advisory Report to creditors 33

40 Directors are primarily responsible for ensuring that adequate financial records are maintained. Directors who fail to take all reasonable steps to ensure compliance with this requirement may be subject to a civil penalty order. Failure to maintain books and records may give rise to a presumption of insolvency (pursuant to s588e of the Act) (discussed above at Section 7.3) A liquidator (if appointed) will continue investigations into whether any breaches of the Act have occurred in relation to the maintenance of proper books and records, including: failure to keep proper financial records (s286 of the Act) failure to take all reasonable steps to comply with financial records reporting requirements (s344 of the Act) requiring officers to exercise a reasonable degree of care and diligence in the exercise of their powers and discharge of their duties (s180 of the Act). PPB Advisory Report to creditors 34

41 8. Offences and liquidation recoveries Key Comments While our investigations are ongoing, we summarise our preliminary findings below: We have identified a number of payments to creditors that appear preferential in nature totalling approximately $950k. We have not conclusively identified any contraventions by the Directors or others (excluding possible insolvent trading), but consider that further investigations are warranted in the event of liquidation. A liquidator has the ability to pursue certain claims that may result in recoveries for creditors. Importantly, these claims are not available to a deed administrator should creditors vote to execute a Deed proposal. We note that a Deed has not been proposed for any of the Group companies. To compare a Deed to liquidation, administrators identify claims that a liquidator could pursue, including: voidable transactions recoveries against past or present directors, secretaries, other officers and company advisors. Enclosed at Appendix G is a Creditor Information Sheet: Offences, Recoverable Transactions and Insolvent Trading published by ARITA, which provides general information for creditors on the types of claims that a liquidator can pursue. 8.1 Voidable transactions The Act requires an administrator to specify whether there are any transactions that appear to the administrator to be voidable transactions in respect of which money, property or other benefits may be recoverable by a liquidator under the Act. Our preliminary investigations have identified potential voidable transaction recoveries, summarised below. Voidable transactions No of transactions Amount identified Recovery probability Unfair Preferences 36 creditors $950k Medium Uncommercial Transactions Unfair Loan* Arrangements to avoid employee entitlements Unreasonable director related transactions* Voidable Security(ies) Total potential recoveries 36 $950k Medium * Note insolvency is not required to be proved to set these transactions aside. PPB Advisory Report to creditors 35

42 8.2 Insolvent trading Based on our investigations as detailed in Section 7.3, we have concluded that the Group was likely to have been insolvent from July We note that shareholders provided funding of $3.8m between November 2013 and November The Directors are firmly of the belief that the funding provided during that time was sufficient to support the Group s ongoing solvency. Furthermore, the directors assert that the Group was solvent until immediately prior to the appointment of Administrators. Our investigations into whether the Group may have traded whilst it was insolvent are ongoing. A liquidator (if appointed) will conduct more thorough investigations in this regard. Insolvent trading is when a company incurs a debt at a time when: the company was insolvent or became insolvent by incurring the debt there were reasonable grounds to suspect the company was insolvent or would become so as a result of incurring the debt. Company directors have a duty to prevent insolvent trading by not incurring debt when there are reasonable grounds for suspecting that the company is, or will be unable, to pay its debts as and when they fall due. The objective test or standard of measure in deciding whether insolvent trading has occurred is whether a director can demonstrate that their actions are at the same degree and level that would be required of an ordinary reasonable person holding a similar position and responsibility in the same circumstances. A director who fails to prevent a company from incurring a debt at a time when there are reasonable grounds for suspecting that the company is insolvent, or will become insolvent by incurring that debt, contravenes s588g of the Act. Creditors should note that only a liquidator or an individual creditor with the liquidator s permission can bring an action against a director for breach of s588g of the Act. An administrator or deed administrator can not pursue a director for recoveries from contraventions of s588g of the Act. A liquidator may recover from a director the amount of loss or damages suffered by a creditor (s588m of the Act) Director defences Defences available to directors under the Act in regard to allegations of insolvent trading are: the director had reasonable grounds to expect, and did expect, that the company was solvent at that time and would continue to be solvent if it incurred the debt. the director had reasonable grounds to believe that a competent and reliable person was responsible for providing adequate information about whether the company was solvent and that person was fulfilling the responsibility and it was expected, that on the basis of the information provided, that the company was solvent and would continue to be solvent when the debt was incurred. at the time the debt was incurred the director, due to illness or other good reason, did not take part in the management of the company. the director took all reasonable steps to prevent the company from incurring the debt. We are yet to form a view on whether these defences would be available to the Directors. However, we note that during 2014, the Directors sought legal and financial advice on their duties and the financial performance of the Group. From a review of the Group s board minutes for this period, it would appear that the Directors were given advice that the Group was solvent and that the directors were not in breach of their duties. PPB Advisory Report to creditors 36

43 8.3 Offences Directors and others have duties, obligations and responsibilities in relation to common law and statute Corporations Act 2001 Our preliminary investigations have not identified any offences committed by the Directors or others (excluding possible insolent trading). However, if a liquidator is appointed, we consider that further investigations are warranted. A liquidator can conduct more thorough investigations and identify potential offences and recoveries (if any). If a director breaches any duties, obligations and responsibilities, they may be subject to civil and criminal penalties including: compensation to the company for damages resulting from the contravention fines (up to $200,000) imprisonment (up to 5 years) disqualification from managing corporations Other Legislation In addition to offences under the Act, directors and others may commit offences in respect of the Group under other legislation, for example: Taxation laws Trade Practices Act Fair Trading Act. Our preliminary investigations have not identified any such breaches. 8.4 Directors and officers insurance policy A Directors and Officers insurance policy (D&O Policy) offers liability cover for company officers to protect them from claims which may arise from the decisions and actions taken within the scope of their regular duties. Such policies cover the personal liability of company directors and officers. We understand that prior to the appointment of Administrators, the Directors had a D&O Policy in place. This policy expired prior to our appointment. 8.5 Directors personal financial position When a liquidator assesses the commercial merit of pursuing a claim, a key consideration is the capacity of the defending party to satisfy that claim. We have completed an initial search of publicly available records for assets held in the Directors names. At this time, we do not intend to disclose the details of these searches, however we understand that certain directors do own assets against which recoveries could be made. We are unsure to what extent these assets are encumbered. Should creditors resolve to place the companies in the Group into liquidation at the Second Meeting, a liquidator would continue investigating the Directors personal financial positions. PPB Advisory Report to creditors 37

44 8.6 Public examinations The Act provides that an eligible applicant, such as a liquidator, may examine officers of a company about its examinable affairs and any other person who may be able to provide information relating to such affairs. Examinable affairs is a comprehensive term with wide ranging application and includes: the promotion, formation, management, administration or winding up of the company other affairs of the company the business affairs of a connected company of the company insofar as they appear to be relevant to the company or its affairs. If the Court is satisfied that a summons for examination should be issued, the examinee is usually required to produce at the examination any specified books that are in the person s possession and relate to the corporation. We do not believe there would be any material benefit to creditors in examining the Directors or other possible persons of interest at this stage. Public examinations are expensive, involving a detailed review of a company s books and records, which necessarily involves time and expense plus significant legal costs. 8.7 Reporting of offences to ASIC Administrators are required to complete and lodge a report with ASIC pursuant to s438d of the Act where it appears that: a past or present officer of a company may have committed an offence money or property has been misapplied or retained a party is guilty of negligence, default, breach of duty or breach of trust in relation to a company. A liquidator is required to lodge a report of his findings with ASIC, pursuant to s533 of the Act. Creditors should also be aware that any report lodged pursuant to s438d (or an investigative report lodged by a liquidator pursuant to s533 of the Act) is not available to the public. We have not identified any offences at this stage which would require the Administrators to report to ASIC. 8.8 Risk of cost of pursuing recovery actions Creditors should note that recovery actions: are usually expensive, lengthy and have unpredictable outcomes should not be commenced unless defendants have the financial resources to satisfy any judgement (this is often difficult to establish) must be funded by existing assets, creditor funding or external litigation funders. Litigation funders are likely to require a significant share of the proceeds of any judgement as a condition of funding the litigation). 8.9 Litigation funding Should creditors resolve that the Group be wound up and a liquidator appointed, it is likely the liquidator will be substantially without funds to meet the costs of any recovery actions that may be available to pursue. In these circumstances, the liquidator may invite creditors to consider providing funding to conduct further investigations of potential insolvent trading claims or voidable transactions. Alternatively, a liquidator may seek external funding from a litigation funder in exchange for a share of any recovered proceeds. PPB Advisory Report to creditors 38

45 9. Estimated return to creditors The only likely source of recovery available to unsecured creditors will be if a liquidator is successful in recovering funds from voidable transactions or an insolvent trading claim. There will not be sufficient funds realised from the sale of the Group s plant and equipment to pay secured creditor claims in full. The Group s records show significant circulating assets (debtors and stock) on the date of our appointment. The quantum of circulating assets that may be realised is uncertain due to potential counterclaims from customers. In accordance with the priorities defined in s556 of the Act, funds realised from circulating assets will be applied to costs incurred by the Administrators in realising these assets. If there are insufficient funds from the proceeds of circulating assets to pay the outstanding employee entitlements in full, employees will have to rely on the Federal Government s FEG for payment of those entitlements (noting unpaid superannuation contributions are excluded). PPB Advisory Report to creditors 39

46 10. Administrators recommendation Key Comment We have not received a proposal for a Deed and the companies in the Group are insolvent. Accordingly, we recommend that it is in the creditors best interests that each company in the Group be wound up (i.e. placed into liquidation). Pursuant to s439a(4)(b) of the Act, an administrator is required to provide an opinion and make a recommendation on the options available to creditors. Our opinion of each option available to creditors is discussed below Liquidation A liquidator would be in a position to conduct detailed investigations into the conduct of the Directors and financial affairs of the Group, to determine the merits of pursuing a claim for insolvent trading. A liquidator will be empowered to: assist employees in applying for FEG for the payment of certain employee entitlements that cannot otherwise be funded by the Group (Section 4.5.4) pursue various potential recoveries under the Act, such as voidable transactions (Section 8) distribute recoveries made in accordance with the priority provisions of the Act complete thorough investigations into: - the Group s dealings and affairs - actions of the Directors report findings to ASIC pursuant to the Act We recommend that each of the companies in the Group be wound up, to allow a liquidator to complete investigations regarding the merits of a claim for insolvent trading and other potentially voidable transactions Deed This option is unavailable to creditors as we have not received any Deed proposals for the Group. We will table any Deed proposals received after this Report at the Second Meeting. Creditors may decide to adjourn the Second Meeting to further consider any Deed proposals received. Any adjournment of the Second Meeting must reconvene within 45 business days Administration to end It is evident that the companies in the Group are insolvent and unable to pay their debts as and when they fall due (Section 7.3). Accordingly, returning control of the Group to the directors would be inappropriate in the present circumstances. PPB Advisory Report to creditors 40

47 11. Enquiries Should you have any enquiries please contact the PPB Advisory Melbourne office on or by at DATED this 19 th day of February 2015 Craig Crosbie and David McEvoy Administrators PPB Advisory Report to creditors 41

48 A. Appointment of Proxy, Proof of Debt or Claim Form Form 532

49 FORM 532 Corporations Act 2001 APPOINTMENT OF PROXY Techdrill Civil Services Pty Ltd (Administrators Appointed) (the Company) ACN Subregulation A. Appointment of a proxy I/We,.. (If a company, strike out I and set out full name of the company) of (address) a creditor of the Company appoint as my/our proxy, or in his/her absence, to vote at the meeting of creditors to be held on 2 March 2015 at The Christie Centre, 320 Adelaide Street, Brisbane, Queensland at 2:00pm or at any adjournment of that meeting. B. Voting directions Option 1: and/or Option 2: If appointed as a general proxy, as he/she determines on my/our behalf (Please proceed to section C ie do not complete the table below) If appointed as a special proxy in the manner set out below: (Please complete the table below before proceeding to section C) No Resolution $ For Against Abstain 1 To approve the Administrators remuneration for the period 27 January 2015 to 18 February 2015 of $133, plus GST, as set out in the Remuneration Report dated 19 February 2015 $133, (plus GST) 2 To approve the Administrators remuneration for the period 19 February 2015 to the conclusion of the Administration up to a maximum of $42, plus GST, as set out in the Remuneration Report dated 19 February 2015 $42, (plus GST) 3 To approve the Liquidators remuneration for the period 2 March 2015 to the conclusion of the Liquidation up to a maximum of$88, plus GST, as set out in the Remuneration Report dated 19 February 2015 $88, (plus GST) 4 The Administration should end (and control revert back to the Company directors 5 The Company be wound up 6 (if applicable) If the Company is wound up, that a Committee of Inspection be formed comprising representatives as nominated at the meeting of creditors

50 C. Signature (in accordance with Sections 127 or 250D of the Corporations Act 2001) If the creditor is an individual If the creditor is a Company. Director/Company Secretary. Print name Dated this day of 20. CERTIFICATE OF WITNESS Please Note: This certificate is to be completed only where the person giving the proxy is blind or incapable of writing. The signature of the creditor is not to be attested by the person nominated as proxy. I, of certify that the Above instrument appointing a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him before he attached his signature or mark to the instrument. Signature of witness:

51 FORM 532 Corporations Act 2001 APPOINTMENT OF PROXY Techdrill Mining Services Pty Ltd (Administrators Appointed) (the Company) ACN Subregulation A. Appointment of a proxy I/We,.. (If a company, strike out I and set out full name of the company) of (address) a creditor of the Company appoint as my/our proxy, or in his/her absence, to vote at the meeting of creditors to be held on 2 March 2015 at PPB Advisory, Level 7, 8-12 Chifley Square, Sydney, New South Wales at 11.00am or at any adjournment of that meeting. B. Voting directions Option 1: and/or Option 2: If appointed as a general proxy, as he/she determines on my/our behalf (Please proceed to section C ie do not complete the table below) If appointed as a special proxy in the manner set out below: (Please complete the table below before proceeding to section C) No Resolution $ For Against Abstain 1 To approve the Administrators remuneration for the period 27 January 2015 to 18 February 2015 of $113, plus GST, as set out in the Remuneration Report dated 19 February 2015 $113, (plus GST) 2 To approve the Administrators remuneration for the period 19 February 2015 to the conclusion of the Administration up to a maximum of $40, plus GST, as set out in the Remuneration Report dated 19 February 2015 $40, (plus GST) 3 To approve the Liquidators remuneration for the period 2 March 2015 to the conclusion of the Liquidation up to a maximum of $85, plus GST, as set out in the Remuneration Report dated 19 February 2015 $85, (plus GST) 4 The Administration should end (and control revert back to the Company directors 5 The Company be wound up 6 (if applicable) If the Company is wound up, that a Committee of Inspection be formed comprising representatives as nominated at the meeting of creditors

52 C. Signature (in accordance with Sections 127 or 250D of the Corporations Act 2001) If the creditor is an individual If the creditor is a Company. Director/Company Secretary. Print name Dated this day of 20. CERTIFICATE OF WITNESS Please Note: This certificate is to be completed only where the person giving the proxy is blind or incapable of writing. The signature of the creditor is not to be attested by the person nominated as proxy. I, of certify that the Above instrument appointing a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him before he attached his signature or mark to the instrument. Signature of witness:

53 FORM 532 Corporations Act 2001 APPOINTMENT OF PROXY Techdrill Civil and Mining Services Pty Ltd (Administrators Appointed) (the Company) ACN Subregulation A. Appointment of a proxy I/We,.. (If a company, strike out I and set out full name of the company) of (address) a creditor of the Company appoint as my/our proxy, or in his/her absence, to vote at the meeting of creditors to be held on 2 March 2015 at PPB Advisory, Level 7, 8-12 Chifley Square, Sydney, New South Wales at 11.00am or at any adjournment of that meeting. B. Voting directions Option 1: and/or Option 2: If appointed as a general proxy, as he/she determines on my/our behalf (Please proceed to section C ie do not complete the table below) If appointed as a special proxy in the manner set out below: (Please complete the table below before proceeding to section C) No Resolution $ For Against Abstain 1 To approve the Administrators remuneration for the period 27 January 2015 to 18 February 2015 of $22, plus GST, as set out in the Remuneration Report dated 19 February 2015 $22, (plus GST) 2 To approve the Administrators remuneration for the period 19 February 2015 to the conclusion of the Administration up to a maximum of $6, plus GST, as set out in the Remuneration Report dated19 February 2015 $6, (plus GST) 3 To approve the Liquidators remuneration for the period 2 March 2015 to the conclusion of the Liquidation up to a maximum of $9, plus GST, as set out in the Remuneration Report dated 19 February 2015 $9, (plus GST) 4 The Administration should end (and control revert back to the Company directors 5 The Company be wound up 6 (if applicable) If the Company is wound up, that a Committee of Inspection be formed comprising representatives as nominated at the meeting of creditors

54 C. Signature (in accordance with Sections 127 or 250D of the Corporations Act 2001) If the creditor is an individual If the creditor is a Company. Director/Company Secretary. Print name Dated this day of 20. CERTIFICATE OF WITNESS Please Note: This certificate is to be completed only where the person giving the proxy is blind or incapable of writing. The signature of the creditor is not to be attested by the person nominated as proxy. I, of certify that the Above instrument appointing a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him before he attached his signature or mark to the instrument. Signature of witness:

55 FORM 532 Corporations Act 2001 APPOINTMENT OF PROXY Glown Pty Ltd (Administrators Appointed) (the Company) ACN Subregulation A. Appointment of a proxy I/We,.. (If a company, strike out I and set out full name of the company) of (address) a creditor of the Company appoint as my/our proxy, or in his/her absence, to vote at the meeting of creditors to be held on 2 March 2015 at PPB Advisory, Level 7, 8-12 Chifley Square, Sydney, New South Wales at 11.00am or at any adjournment of that meeting. B. Voting directions Option 1: and/or Option 2: If appointed as a general proxy, as he/she determines on my/our behalf (Please proceed to section C ie do not complete the table below) If appointed as a special proxy in the manner set out below: (Please complete the table below before proceeding to section C) No Resolution $ For Against Abstain 1 To approve the Administrators remuneration for the period 27 January 2015 to 18 February 2015 of $9, plus GST, as set out in the Remuneration Report dated 19 February 2015 $9, (plus GST) 2 To approve the Administrators remuneration for the period 19 February 2015 to the conclusion of the Administration up to a maximum of $1, plus GST, as set out in the Remuneration Report dated 19 February 2015 $1, (plus GST) 3 To approve the Liquidators remuneration for the period 2 March 2015 to the conclusion of the Liquidation up to a maximum of $6, plus GST, as set out in the Remuneration Report dated 19 February 2015 $6, (plus GST) 4 The Administration should end (and control revert back to the Company directors 5 The Company be wound up 6 (if applicable) If the Company is wound up, that a Committee of Inspection be formed comprising representatives as nominated at the meeting of creditors

56 C. Signature (in accordance with Sections 127 or 250D of the Corporations Act 2001) If the creditor is an individual If the creditor is a Company. Director/Company Secretary. Print name Dated this day of 20. CERTIFICATE OF WITNESS Please Note: This certificate is to be completed only where the person giving the proxy is blind or incapable of writing. The signature of the creditor is not to be attested by the person nominated as proxy. I, of certify that the Above instrument appointing a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him before he attached his signature or mark to the instrument. Signature of witness:

57 To the Administrators of: INFORMAL PROOF OF DEBT FORM FOR THE PURPOSE OF VOTING AT A MEETING OF CREDITORS IN A VOLUNTARY ADMINISTRATION NO. COMPANY NAME ACN CREDITOR OF COMPANY 1 TECHDRILL CIVIL SERVICES PTY LTD TECHDRILL CIVIL AND MINING SERVICES PTY LTD TECHDRILL MINING SERVICES PTY LTD GLOWN PTY LTD Name of Creditor... Amount of debt claimed (see Note1 below) Consideration for debt... Whether debt secured or unsecured... If secured, give details of security including dates, etc... Pursuant to Regulation A and Section 600G of the Corporations Act 2001, I give the Administrator/Liquidator authorisation to give or send a notice, or other document, to me via or facsimile at the following (.).. Contact Name. Contact Name... CREDITOR (or person authorised by creditor) (i) NOTE 1 A creditor may not vote on any contingent debt, an unliquidated claim or a debt the value of which is not ascertained unless a just estimate of its value has been made. (ii) NOTE 2 A secured creditor who votes in favour of a Deed of Company Arrangement may affect its right to act under that security. Legal advice should be sought if you are unsure in this regard. (iii) NOTE 3 This Proof should be signed by a creditor or a person in the employ of the creditor duly authorised by that creditor to sign. If a creditor is a company, it should be signed by a person authorised under the Seal of the Company, to make a Proof of Debt on its behalf. The Chairman of the Meeting may admit or reject a Proof of Debt for the purpose of voting at the meeting.

58 B. Remuneration reports dated 19 February 2015

59 Remuneration report Techdrill Civil Services Pty Ltd (Administrators Appointed) (the Company) ACN Remuneration declaration 2. Executive summary 3. Description of work completed / to be completed 4. Calculation of remuneration 5. Statement of remuneration claim 6. Remuneration recoverable from external sources 7. Disbursements 8. Summary of receipts and payments 9. Queries 10. Information sheets

60 1. Remuneration declaration We, Craig Crosbie and David McEvoy of PPB Advisory, have undertaken a proper assessment of this remuneration claim for our appointment as joint and several Administrators of Techdrill Civil Services Pty Ltd in accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed is in respect of necessary work, properly performed, or to be properly performed, in the conduct of the administration. Dated this 19 th day of February 2015 Craig Crosbie and David McEvoy Administrators Techdrill Civil Services Pty Ltd 2. Executive summary To date, no remuneration has been approved and paid in this administration. This remuneration report details approval sought for the following fees: Period Current remuneration approval sought: Voluntary Administration Report Reference Amount (ex GST) Resolution 1: 27 January 2015 to 18 February 2015 Appendix 1 $133, Resolution 2: 19 February 2015 to 2 March 2015 Appendix 1 $42, Liquidation Resolution 3: 3 March 2015 to completion of Liquidation Appendix 1 $88, * Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of the administration and liquidation. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors. Please refer to Appendix 1 for full details of the calculation and composition of the remuneration approval sought. The remuneration for the Company up to the second creditors meeting is $175, (excluding GST). This is $15, higher than the estimate of costs provided in our initial advice to creditors dated 28 January 2015, which estimated costs of $160,000 (excluding GST) for the voluntary administration period. The cost estimate overrun can largely be attributed to: a more involved and prolonged asset recovery process than envisaged (e.g. parties denying access to assets, unauthorised removal of assets etc) 2

61 a more challenging and involved debtor recovery process (e.g. a large number of counter claims have been received, and we continue to work through these). 3. Description of work completed / to be completed Resolution 1 Remuneration for the Voluntary Administration Summary of work undertaken by Craig Crosbie and David McEvoy, Administrators of the Company and their staff for the period 27 January 2015 to 18 February 2015 Task Area General Description Includes Assets 99.9 hours $47, Plant and equipment Debtors Sale of business Leasing Review the Company s fixed asset listing and plant and equipment valuation Request submissions from plant and equipment specialists and subsequently appoint a fixed asset agent Extensive interactions with our fixed asset agent to coordinate the retrieval and identification of assets from various sites across New South Wales, Queensland and Victoria Extensive dealings with casual employees assisting with the asset recovery process Preparing and maintaining an asset retrieval status and issues matrix Dealing with instances of misappropriation of Company assets including reports to the local authorities Receiving interests from various parties to acquire certain assets and passing these enquiries onto our fixed asset agent Dealings with landlords to obtain access to Company assets located on third party sites Dealing with customers in respect of gaining access to sites to retrieve assets Review debtors ledger and assess its completeness and the recoverability of debts Coordinate with Company staff regarding the invoicing of all contract works performed between 1 January 2015 and 27 January 2015 Issued correspondence to all debtors regarding outstanding debts Liaising with debtors regarding payment of outstanding debts Commenced compiling information to evidence that contract works were performed in respect to outstanding debtors Review debtors ledger and assess recoverability of debts Dealings with Bounce Civil in respect of completing a partly completed project Discussions with interested parties regarding the sale of the business and assets of the Company Review of the Company s leased asset listing Review lease documents and liaising with lessors 3

62 Task Area General Description Includes Creditors 98.1 hours $41, Employees 17.5 hours $6, Assets subject to specific charges Secured creditor reporting Creditor enquiries Creditor reports Dealing with proofs of debt Meeting of creditors Employees enquiries regarding validity of security and asset removal requests (e.g. where no PPSR registration exists) Commence and maintain a leased asset schedule Prepare and send notices to all known lessors and those creditors registered on the PPSR regarding the Administrators intention not to exercise property rights Liaising with lessors in relation to enquiries regarding the above notices issued Search the PPSR register and notify creditors identified from PPSR register Prepare listing of assets subject to PPSR claims Receiving and reviewing PPSR claims and corresponding with creditors accordingly (to collect assets or reject claims) Notify secured creditors of the appointment of Administrators Prepare and issue updates to secured creditors Respond to secured creditors queries Various discussions with secured creditors regarding matters including the fixed asset realisation strategy Receive and follow up numerous creditor enquiries via telephone and Review and prepare correspondence to creditors and their representatives via and post Preparing the Administrators DIRRI and initial creditors circular (calling the first meeting of creditors) Dispatch initial creditors circular Preparing section 439A report to creditors Receipting, entering and filing PODs for the first creditors meeting (not related to a dividend) Preparation of meeting notices, proxies and advertisements for both the first and second meetings of creditors Forwarding notice of first meeting of creditors to all known creditors Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting for the first meeting of creditors Conducting the first meeting of creditors Preparation and lodgement of minutes of first meeting of creditors with ASIC Attending the Company s Mayfield site to address employees Write to all employees advising of the appointment of Administrators Terminate the Company s workforce (most of which on 28 January 2015) Receive and follow up numerous employee enquiries via telephone and Review and prepare correspondence to employees and 4

63 Task Area General Description Includes Trade On 15.6 hours $7, Investigation 38.6 hours $16, Administration 37.0 hours $14, FEG Calculation of entitlements Other employee issues Trade on management Conducting investigation Document maintenance/file review/checklist Insurance Bank account administration their representatives via and post Correspondence with FEG regarding appointment of administrators Review the Company s employee records Review the Company s preliminary employee entitlements calculation Instruct Company staff to update the pre-appointment payroll records Review and process of payroll in respect of critical exemployees retained on a casual basis Complete employment separation certificates for terminated employees Prepare an employee FAQ sheet Conducting trade-on / business viability assessment including: - discussions with Company management - preliminary assessment of debtors, WIP and contracts (including discussions with the Company s customers) - discussions with the Company s critical creditors - review of trade on cash flow forecasts Review of the Company s books and records Review Company history and events leading to insolvency Conducting and summarising statutory searches Preparation of comparative financial statements Various discussions with Company management to assist with our investigations Investigations to identify indicators of insolvency and possible claims for insolvent trading and voidable transactions Preparation of investigation file Download imaged forensic data to assist with investigations Filing of documents Updating checklists Review and confirm adequacy of insurance cover Correspondence with insurer regarding initial and ongoing insurance requirements Preparing and issuing correspondence relating to opening and closing accounts Bank account reconciliations Correspondence with bank regarding specific transfers from the Company s pre-appointment bank account to the Administrators account Processing receipts and payments ASIC and other forms Preparing and lodging ASIC forms including form 505 Preparing Directors RATA pack 5

64 Task Area General Description Includes ATO and other statutory reporting Books and records Planning / Review Notification of appointment Preparing correspondence to the ATO to register the Company for PAYG and GST Obtain certain Company books and records Numerous discussions and meetings with the administration engagement team regarding the status of the administration and review of outstanding tasks Resolution 2 Prospective remuneration for the Voluntary Administration Summary of work to be undertaken by Craig Crosbie and David McEvoy, Administrators of the Company and their staff for the period 19 February 2015 to 2 March 2015 Task Area General Description Includes Assets 35 hours $17, Creditors 27 hours $10, Plant and Equipment Debtors Leasing Assets subject to specific charges Secured creditor reporting Creditor Enquiries Dealing with proofs of debt Meeting of Creditors Ongoing liaison with our fixed asset agents Finalising the asset retrieval process Agree and manage the realisation strategy for the sale of the Company s plant and equipment Liaise with the Police regarding missing assets Follow up payment of outstanding debts Provide customers with any evidence required to support services rendered Liaise with solicitors regarding recovery action for outstanding debts (where applicable) Liaise with remaining lessors regarding validity of security and asset removal requests Continue to maintain leased asset schedule Continue review of claims and corresponding with creditors accordingly (to collect goods or reject claims) Updates to secured creditors Meeting with secured creditors regarding the asset realisation plan Respond to secured creditors queries Receive and follow up creditor enquiries via telephone and Review and prepare correspondence to creditors and their representatives via and post Receipting and filing PODs for the purposes of the second creditors meeting Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting for the second meeting of creditors Dispatch second report to creditors (i.e. 439A report) Planning for and holding the second meeting of creditors Employees Employees enquiries Receive and follow up employee enquiries via telephone 6

65 Task Area General Description Includes 30 hours $10, Administration 10 hours $3, FEG Document maintenance/file review/checklist Insurance Bank account administration Planning / Review Preparation of letters to employees advising of their entitlements Correspondence with FEG Filing of documents Updating checklists Provision of information to insurance brokers to assess ongoing insurance requirements Processing insurance claims in respect of missing assets Bank account reconciliations Process receipts and payments Discussions and meetings with the engagement team regarding the status of the administration and review of outstanding tasks Resolution 3 Prospective remuneration to the Liquidation Summary of work to be undertaken by Craig Crosbie and David McEvoy, Liquidators of the Company and their staff for the period 3 March 2015 to completion of Liquidation Task Area General Description Includes Assets 30 hours $13, Creditors 28 hours $12, Employees 42 hours $13, Investigation 80 hours $31, Plant and equipment Debtors Secured creditor reporting Creditor enquiries Meeting of creditors Employees enquiries FEG Conducting investigation Continuing to manage the asset realisation strategy Ongoing liaison with our fixed asset agents regarding plant and equipment Complete the debtor recovery process Updates to secured creditors Respond to secured creditors queries Making any distributions to secured creditors Receive and follow up creditor enquiries via telephone and Review and prepare correspondence to creditors and their representatives via and post Preparation and lodgement of minutes of second meeting of creditors with ASIC Respond to stakeholder questions following the second meeting of creditors Receive and follow up employee enquiries via telephone and Receive and prepare correspondence in response to employees objections to calculation of leave entitlements Correspondence with FEG Preparing and submitting notification spreadsheet Preparing and submitting FEG quotations Preparing and processing FEG distributions Review of the Company s books and records Finalising investigations to identify indicators of insolvency and possible claims for insolvent trading or voidable transactions 7

66 Task Area General Description Includes Administration 50 hours $16, Examinations (if required) Litigation / Recoveries ASIC reporting Document maintenance/file review/checklist Bank account administration ASIC Form 524 and other forms ATO and other statutory reporting Finalisation Planning / Review Finalise investigation file Preparing brief to solicitors Liaise with solicitors regarding examinations Attendance at examination Review examination transcripts Liaise with solicitors regarding outcome of examinations and further actions available Prepare brief to solicitors Liaise with solicitors regarding recovery actions Attend to negotiations Attend to settlement matters Preparing statutory investigation reports Liaising with ASIC Filing of documents File reviews Updating checklists Prepare correspondence to close accounts Bank account reconciliations Correspondence with bank regarding specific transfers Process receipts and payments Prepare and lodge ASIC forms including 505, 524 and 533 Correspondence with ASIC regarding statutory forms Prepare BAS Pursue refunds Complete group certificates Notify ATO of finalisation Cancel ABN / GST / PAYG registration Complete checklists Finalise WIP Discussions/meetings with engagement team to monitor status of the liquidation 4. Calculation of remuneration The calculation of remuneration schedules are attached as Appendix 1. 8

67 5. Statement of remuneration claim At the second meeting of creditors to be held on 2 March 2015, creditors will be asked to consider the following resolutions: Resolution 1 To approve the Administrators remuneration for the period 27 January 2015 to 18 February 2015 of $133, plus GST, as set out in the Remuneration Report dated 19 February 2015 Resolution 2 To approve the Administrators remuneration for the period 19 February 2015 to the conclusion of the Administration up to a maximum of $42, plus GST, as set out in the Remuneration Report dated 19 February 2015 Resolution 3 To approve the Liquidators remuneration for the period 3 March 2015 to the conclusion of the Liquidation up to a maximum of $88, plus GST, as set out in the Remuneration Report dated 19 February Future remuneration is approved subject to a maximum or cap. Sometimes the actual cost of the administration will exceed the maximum which has been approved, in which case, we may seek another resolution for additional remuneration. We will not pay any amount exceeding the maximum without this approval. Where funds are available, we will usually pay approved remuneration at intervals not less than one month. Where funds are not available, remuneration will not be paid. 6. Remuneration recoverable from external sources The Administrators have not received any funding from external sources for the Administrators remuneration. 7. Disbursements Disbursements are divided into three types: Externally provided professional services these are recovered at cost. An example of an externally provided professional service disbursement is legal fees. Externally provided non-professional costs such as travel, accommodation and search fees these are recovered at cost. Internal disbursements such as photocopying, printing and postage. These disbursements, if charged to the administration, would generally be charged at cost; though some expenses such as telephone calls, photocopying and printing may be charged at a rate which recoups both variable and fixed costs. The recovery of these costs must be on a reasonable commercial basis. We are not required to seek creditor approval for disbursements, but must account to creditors. There were no disbursements claimed for the Company, in accordance with the law and applicable professional standards. 9

68 8. Summary of receipts and payments The summary of receipts and payments for the period from 27 January 2015 to 18 February 2015 is attached as Appendix Queries Please contact Tina Tran on or by on ttran@ppbadvisory.com should you have any queries or require any further information. 10. Information sheets Enclosed for your attention as Appendix 3 is the ASIC publication Insolvency Information for directors, employees, creditors and shareholders, which provides an index of all the information sheets that are available including information on Approving fees. You can download these forms from 10

69 Appendix 1

70 TECHDRILL CIVIL SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Voluntary Administration process for the period 27 January 2015 to 18 February 2015 Position Hourly Task Area Rate Total Administration Assets Creditors Employees Investigation Trade-on (Ex GST) Hours $ Hours $ Hours $ Hours $ Hours $ Hours $ Hours $ Appointees Crosbie, Craig , , , , , McEvoy, David , , , Partner , , Director , , , , , Senior Manager , , , , , , , Manager , , , , Assistant Manager Senior Analyst , , , , Senior Analyst , , , , Analyst , , Analyst , , , , , Graduate Undergraduate Senior Bookkeeper Bookkeeper EA Administration TOTAL GST TOTAL (including GST) Average hourly rate (excluding GST) , , , , , , , , ,

71 TECHDRILL CIVIL SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Voluntary Administration process for the period 19 February 2015 to 2 March 2015 Position Hourly Rate Task Area (Ex GST) Total Administration Assets Creditors Employees Hours $ Hours $ Hours $ Hours $ Hours $ Appointees Crosbie, Craig , , , , McEvoy, David Partner Director/Principal , , , Senior Manager , , , , Manager Assistant Manager Senior Analyst , , , , Senior Analyst Analyst Analyst , , , , Graduate Undergraduate Bookkeeper Executive Assistant Administration TOTAL GST TOTAL (including GST) Average hourly rate (excluding GST) , , , , , , ,

72 TECHDRILL CIVIL SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Liquidation process. Position Hourly Rate Task Area (Ex GST) Total Administration Assets Creditors Employees Investigation Hours $ Hours $ Hours $ Hours $ Hours $ Hours $ Appointees Crosbie, Craig , , , , , , McEvoy, David , , Partner Director/Principal , , , , , Senior Manager , , , , , , Manager Assistant Manager Senior Analyst , , , , Senior Analyst Analyst Analyst , , , , , , Graduate Undergraduate Bookkeeper , , Executive Assistant Administration TOTAL GST TOTAL (including GST) Average hourly rate (excluding GST) , , , , , , , ,

73 Appendix 2

74 Tecdrill Civil Services Pty Ltd Summary of receipts and payments for the period 27 January 2015 to 18 February 2015 Receipts Total ($) Receipts from customers 28, Payments Wages 9, Net Receipts (Payments) 19,083.94

75 Appendix 3

76 INFORMATION SHEET 85 Approving fees: a guide for creditors If a company is in financial difficulty, it can be put under the control of an independent external administrator. This information sheet gives general information for creditors on the approval of an external administrator s fees in a liquidation of an insolvent company, voluntary administration or deed of company arrangement (other forms of external administration are not discussed in this information sheet). It outlines the rights that creditors have in the approval process. Entitlement to fees and costs A liquidator, voluntary administrator or deed administrator (i.e. an external administrator ) is entitled to be: paid reasonable fees, or remuneration, for the work they perform, once these fees have been approved by a creditors committee, creditors or a court, and reimbursed for out-of-pocket costs incurred in performing their role (these costs do not need creditors committee, creditor or court approval). External administrators are only entitled to an amount of fees that is reasonable for the work that they and their staff properly perform in the external administration. What is reasonable will depend on the type of external administration and the issues that need to be resolved. Some are straightforward, while others are more complex. External administrators must undertake some tasks that may not directly benefit creditors. These include reporting potential breaches of the law and lodging a detailed listing of receipts and payments with ASIC every six months. The external administrator is entitled to be paid for completing these statutory tasks. For more on the tasks involved, see ASIC s information sheets INFO 45 Liquidation: a guide for creditors and INFO 74 Voluntary administration: a guide for creditors. Out-of-pocket costs that are commonly reimbursed include: Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances. You will need a qualified professional adviser to take into account your particular circumstances and to tell you how the law applies to you. Australian Securities & Investments Commission, December 2008 Page 1 of 5

77 APPROVING FEES: A GUIDE FOR CREDITORS legal fees valuer s, real estate agent s and auctioneer s fees stationery, photocopying, telephone and postage costs retrieval costs for recovering the company s computer records, and storage costs for the company s books and records. Creditors have a direct interest in the level of fees and costs, as the external administrator will, generally, be paid from the company s available assets before any payments to creditors. If there are not enough assets, the external administrator may have arranged for a third party to pay any shortfall. As a creditor, you should receive details of such an arrangement. If there are not enough assets to pay the fees and costs, and there is no third party payment arrangement, any shortfall is not paid. Who may approve fees Who may approve fees depends on the type of external administration: see Table 1. The external administrator must provide sufficient information to enable the relevant decision-making body to assess whether the fees are reasonable. Table 1: Who may approve fees Creditors committee Creditors Court Administrator in a voluntary administration Administrator of a deed of company arrangement Creditors voluntary liquidator r 3 Court-appointed liquidator 1 4, If there is one. If there is no approval by the committee or the creditors. Unless an application is made for a fee review. If there is no creditors committee or the committee fails to approve the fees. If insufficient creditors turn up to the meeting called by the liquidator to approve fees, the liquidator is entitled to be paid up to a maximum of $5000, or more if specified in the Corporations Regulations Creditors committee approval If there is a creditors committee, members are chosen by a vote of creditors as a whole. In approving the fees, the members represent the interests of all the creditors, not just their own individual interests. There is not a creditors committee in every external administration. A creditors committee makes its decision by a majority in number of its members present at a meeting, but it can only act if a majority of its members attend. To find out more about creditors committees and how they are formed, see ASIC s information sheets INFO 45 Liquidation: a guide for creditors, INFO 74 Voluntary administration: a guide for creditors and INFO 41 Insolvency: a glossary of terms. Creditors approval Creditors approve fees by passing a resolution at a creditors meeting. Unless creditors call for a poll, the resolution is passed if a simple majority of creditors present and voting, in person or by proxy, Australian Securities & Investments Commission, December 2008 Visit our website: Page 2 of 5

78 APPROVING FEES: A GUIDE FOR CREDITORS indicate that they agree to the resolution. Unlike where acting as committee members, creditors may vote according to their individual interests. If a poll is taken, rather than a vote being decided on the voices or by a show of hands, a majority in number and value of creditors present and voting must agree. A poll requires the votes of each creditor to be recorded. A separate resolution of creditors is required for approving fees for an administrator in a voluntary administration and an administrator of a deed of company arrangement, even if the administrator is the same person in both administrations. A proxy is where a creditor appoints someone else to represent them at a creditors meeting and to vote on their behalf. A proxy can be either a general proxy or a special proxy. A general proxy allows the person holding the proxy to vote as they wish on a resolution, while a special proxy directs the proxy holder to vote in a particular way. A creditor will sometimes appoint the external administrator as a proxy to vote on the creditor s behalf. An external administrator, their partners or staff must not use a general proxy to vote on approval of their fees; they must hold a special proxy in order to do this. They must vote all special proxies as directed, even those against approval of their fees. Calculation of fees Fees may be calculated using one of a number of different methods, such as: on the basis of time spent by the external administrator and their staff a quoted fixed fee, based on an upfront estimate, or a percentage of asset realisations. Charging on a time basis is the most common method. External administrators have a scale of hourly rates, with different rates for each category of staff working on the external administration, including the external administrator. If the external administrator intends to charge on a time basis, you should receive a copy of these hourly rates soon after their appointment and before you are asked to approve the fees. The external administrator and their staff will record the time taken for the various tasks involved, and a record will be kept of the nature of the work performed. It is important to note that the hourly rates do not represent an hourly wage for the external administrator and their staff. The external administrator is running a business an insolvency practice and the hourly rates will be based on the cost of running the business, including overheads such as rent for business premises, utilities, wages and superannuation for staff who are not charged out at an hourly rate (such as personal assistants), information technology support, office equipment and supplies, insurances, taxes, and a profit. External administrators are professionals who are required to have qualifications and experience, be independent and maintain up-to-date skills. Many of the costs of running an insolvency practice are fixed costs that must be paid, even if there are insufficient assets available to pay the external administrator for their services. External administrators compete for work and their rates should reflect this. These are all matters that committee members or creditors should be aware of when considering the fees presented. However, regardless of these matters, creditors have a right to question the external administrator about the fees and whether the rates are negotiable. It is up to the external administrator to justify why the method chosen for calculating fees is an appropriate method for the particular external administration. As a creditor, you also have a right to question the external administrator about the calculation method used and how the calculation was made. Australian Securities & Investments Commission, December 2008 Visit our website: Page 3 of 5

79 APPROVING FEES: A GUIDE FOR CREDITORS Report on proposed fees When seeking approval of fees, the external administrator must send committee members/creditors a report with the notice of meeting setting out: information that will enable the committee members/creditors to make an informed assessment of whether the proposed fees are reasonable a summary description of the major tasks performed, or to be performed, and the costs associated with each of these tasks. Committee members/creditors may be asked to approve fees for work already performed or based on an estimate of work yet to be carried out. If the work is yet to be carried out, it is advisable to set a maximum limit ( cap ) on the amount that the external administrator may receive. For example, future fees calculated according to time spent may be approved on the basis of the number of hours worked at the rates charged (as set out in the provided rate scale) up to a cap of $X. If the work involved then exceeds this figure, the external administrator will have to ask the creditors committee/creditors to approve a further amount of fees, after accounting for the fees already incurred. Deciding if fees are reasonable If asked to approve an amount of fees either as a committee member or by resolution at a creditors meeting, your task is to decide if that amount of fees is reasonable, given the work carried out in the external administration and the results of that work. You may find the following information from the external administrator useful in deciding if the fees claimed are reasonable: the method used to calculate fees the major tasks that have been performed, or are likely to be performed, for the fees the fees/estimated fees (as applicable) for each of the major tasks the size and complexity (or otherwise) of the external administration the amount of fees (if any) that have previously been approved if the fees are calculated, in whole or in part, on a time basis: o the period over which the work was, or is likely to be performed o if the fees are for work that has already been carried out, the time spent by each level of staff on each of the major tasks o if the fees are for work that is yet to be carried out, whether the fees are capped. If you need more information about fees than is provided in the external administrator s report, you should let them know before the meeting at which fees will be voted on. What can you do if you think the fees are not reasonable? If you do not think the fees being claimed are reasonable, you should raise your concerns with the external administrator. It is your decision whether to vote in favour of, or against, a resolution to approve fees. Generally, if fees are approved by a creditors committee/creditors and you wish to challenge this decision, you may apply to the court and ask the court to review the fees. Special rules apply to court liquidations. You may wish to seek your own legal advice if you are considering applying for a court review of the fees. Australian Securities & Investments Commission, December 2008 Visit our website: Page 4 of 5

80 APPROVING FEES: A GUIDE FOR CREDITORS Reimbursement of out-of-pocket costs An external administrator should be very careful incurring costs that must be paid from the external administration as careful as if they were dealing with their own money. Their report on fees should also include information on the out-of-pocket costs of the external administration. If you have questions about any of these costs, you should ask the external administrator and, if necessary, bring it up at a creditors committee/creditors meeting. If you are still concerned, you have the right to ask the court to review the costs. Queries and complaints You should first raise any queries or complaints with the external administrator. If this fails to resolve your concerns, including any concerns about their conduct, you can lodge a complaint with ASIC at or write to: ASIC Complaints PO Box 9149 TRARALGON VIC 3844 ASIC will usually not become involved in matters of commercial judgement by an external administrator. Complaints against companies and their officers can also be made to ASIC. For other enquiries, ASIC through infoline@asic.gov.au, or call ASIC s Infoline on for the cost of a local call. To find out more For an explanation of terms used in this information sheet, see ASIC s information sheet INFO 41 Insolvency: a glossary of terms. For more on external administration, see ASIC s related information sheets at INFO 74 Voluntary administration: a guide for creditors INFO 75 Voluntary administration: a guide for employees INFO 45 Liquidation: a guide for creditors INFO 46 Liquidation: a guide for employees INFO 54 Receivership: a guide for creditors INFO 55 Receivership: a guide for employees INFO 43 Insolvency: a guide for shareholders INFO 42 Insolvency: a guide for directors INFO 84 Independence of external administrators: a guide for creditors These are also available from the Insolvency Practitioners Association (IPA) website at The IPA website also contains the IPA s Code of Professional Practice for Insolvency Professionals, which applies to IPA members. Australian Securities & Investments Commission, December 2008 Visit our website: Page 5 of 5

81 Remuneration report Techdrill Mining Services Pty Ltd (Administrators Appointed) (the Company) ACN Remuneration declaration 2. Executive summary 3. Description of work completed / to be completed 4. Calculation of remuneration 5. Statement of remuneration claim 6. Remuneration recoverable from external sources 7. Disbursements 8. Summary of receipts and payments 9. Queries 10. Information sheets

82 1. Remuneration declaration We, Craig Crosbie and David McEvoy of PPB Advisory, have undertaken a proper assessment of this remuneration claim for our appointment as joint and several Administrators of Techdrill Mining Services Pty Ltd in accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed is in respect of necessary work, properly performed, or to be properly performed, in the conduct of the administration. Dated this 19 th day of February 2015 Craig Crosbie and David McEvoy Administrators Techdrill Mining Services Pty Ltd 2. Executive summary To date, no remuneration has been approved and paid in this administration. This remuneration report details approval sought for the following fees: Period Current remuneration approval sought: Voluntary Administration Report Reference Amount (ex GST) Resolution 1: 27 January 2015 to 18 February 2015 Appendix 1 $113, Resolution 2: 19 February 2015 to 2 March 2015 Appendix 1 $40, Liquidation Resolution 3: 3 March 2015 to completion of Liquidation Appendix 1 $85, * Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of the administration and liquidation. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors. Please refer to Appendix 1 for full details of the calculation and composition of the remuneration approval sought. The remuneration for the Company up to the second creditors meeting is $154, (excluding GST). This is consistent with the estimate of costs provided in our initial advice to creditors dated 28 January 2015, which estimated costs of $160,000 (excluding GST) for the voluntary administration period. 2

83 3. Description of work completed / to be completed Resolution 1 Remuneration for the Voluntary Administration Summary of work undertaken by Craig Crosbie and David McEvoy, Administrators of the Company and their staff for the period 27 January 2015 to 18 February 2015 Task Area General Description Includes Assets 74.5 hours $36, Plant and equipment Debtors Sale of business Leasing Review the Company s fixed asset listing and plant and equipment valuation Request submissions from plant and equipment specialists and subsequently appoint a fixed asset agent Extensive interactions with our fixed asset agent to coordinate the retrieval and identification of assets from various sites across New South Wales, Queensland and Victoria Extensive dealings with casual employees assisting with the asset recovery process Preparing and maintaining an asset retrieval status and issues matrix Dealing with instances of misappropriation of Company assets including reports to the local authorities Receiving interests from various parties to acquire certain assets and passing these enquiries onto our fixed asset agent Dealings with landlords to obtain access to Company assets located on third party sites Dealing with mining entities (or their lawyers) in respect of gaining access to sites to retrieve assets Review debtors ledger and assess its completeness and the recoverability of debts Coordinate with Company staff regarding the invoicing of all mining services performed between 1 January 2015 and 27 January 2015 Issued correspondence to all debtors regarding outstanding debts Liaising with debtors regarding payment of outstanding debts Commenced compiling information to evidence that mining services were performed in respect to outstanding debtors Discussions with interested parties regarding the sale of the business and assets of the Company Review of the Company s leased asset listing Review lease documents and liaising with lessors regarding validity of security and asset removal requests (e.g. where no PPSR registration exists) Commence and maintain a leased asset schedule Prepare and send notices to all known lessors and 3

84 Task Area General Description Includes Creditors 92.8 hours $40, Employees 17.0 hours $5, Assets subject to specific charges Secured creditor reporting Creditor enquiries Creditor reports Dealing with proofs of debt Meeting of creditors Employees enquiries FEG those creditors registered on the PPSR regarding the Administrators intention not to exercise property rights Liaising with lessors in relation to enquiries regarding the above notices issued Search the PPSR register and notify creditors identified from PPSR register Prepare listing of assets subject to PPSR claims Receiving and reviewing PPSR claims and corresponding with creditors accordingly (to collect assets or reject claims) Notify secured creditors of the appointment of Administrators Prepare and issue updates to secured creditors Respond to secured creditors queries Various discussions with secured creditors regarding matters including the asset realisation strategy Receive and follow up numerous creditor enquiries via telephone and Review and prepare correspondence to creditors and their representatives via and post Preparing the Administrators DIRRI and initial creditors circular (calling the first meeting of creditors) Dispatch initial creditors circular Preparing section 439A report to creditors Receipting, entering and filing PODs for first creditors meeting (not related to a dividend) Preparation of meeting notices, proxies and advertisements for both the first and second meetings of creditors Forwarding notice of first meeting of creditors to all known creditors Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting for the first meeting of creditors Conducting the first meeting of creditors Preparation and lodgement of minutes of first meeting of creditors with ASIC Attending the Company s Orange site to address employees Write to all employees advising of the appointment of Administrators Terminate the Company s workforce (most of which on 28 January 2015) Receive and follow up numerous employee enquiries via telephone and Review and prepare correspondence to employees and their representatives via and post Correspondence with FEG regarding appointment of administrators 4

85 Task Area General Description Includes Trade On 6.2 hours $3, Investigation 40.7 hours $16, Administration 34.8 hours $11, Calculation of entitlements Other employee issues Trade on management Conducting investigation Document maintenance/file review/checklist Insurance Bank account administration Review the Company s employee records Review the Company s preliminary employee entitlements calculation Instruct Company staff to update the pre-appointment payroll records Review and process of payroll in respect of critical exemployees retained on a casual basis Complete employment separation certificates for terminated employees Prepare employee FAQ sheet Conducting trade-on / business viability assessment including: - discussions with Company management - preliminary assessment of debtors, WIP and contracts (including discussions with the Company s customers) - discussions with the Company s critical creditors - review of trade on cash flow forecasts Review of the Company s books and records Review Company history and events leading to insolvency Conducting and summarising statutory searches Preparation of comparative financial statements Various discussions with Company management to assist with our investigations Investigations to identify indicators of insolvency and possible claims for insolvent trading and voidable transactions Preparation of investigation file Download imaged forensic data to assist with investigations Filing of documents Updating checklists Review and confirm adequacy of insurance cover Correspondence with insurer regarding initial and ongoing insurance requirements Preparing and issuing correspondence relating to opening and closing accounts Bank account reconciliations Processing receipts and payments ASIC and other forms Preparing and lodging ASIC forms including form 505 ATO and other statutory reporting Books and records Planning / Review Preparing Directors RATA pack Notification of appointment Preparing correspondence to the ATO to register the Company for PAYG and GST Obtain certain Company books and records Numerous discussions and meetings with the administration engagement team regarding the status of the administration and review of outstanding tasks 5

86 Resolution 2 Prospective remuneration for the Voluntary Administration Summary of work to be undertaken by Craig Crosbie and David McEvoy, Administrators of the Company and their staff for the period 19 February 2015 to 2 March 2015 Task Area General Description Includes Assets 35.0 hours $17, Creditors 27.0 hours $10, Employees 27.0 hours $9, Administration 10.0 hours Plant and equipment Debtors Leasing Assets subject to specific charges Secured creditor reporting Creditor enquiries Dealing with proofs of debt Meeting of Creditors Employees enquiries FEG Document maintenance/file review/checklist Ongoing liaison with our fixed asset agent Finalising the asset retrieval process Agree and manage the realisation strategy for the sale of the Company s plant and equipment Negotiate additional premises in Orange to store plant and equipment Liaise with the Police regarding missing assets Follow up payment of outstanding debts Provide customers with any evidence required to support services rendered Liaise with solicitors regarding recovery action for outstanding debts (where applicable) Liaise with remaining lessors regarding validity of security and asset removal requests Continue to maintain leased asset schedule Manage the ongoing lease(s) of the Orange site Continue review of claims and corresponding with creditors accordingly (to collect goods or reject claims) Updates to secured creditors Meeting with secured creditors regarding the asset realisation plan Respond to secured creditors queries Receive and follow up creditor enquiries via telephone and Review and prepare correspondence to creditors and their representatives via and post Receipting and filing PODs for the purposes of the second creditors meeting Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting for the second meeting of creditors Dispatch second report to creditors (i.e. 439A report) Planning for and holding the second meeting of creditors Receive and respond to employee enquiries via telephone and Preparation of letters to employees advising of their entitlements Correspondence with FEG Filing of documents Updating checklists 6

87 Task Area General Description Includes $3, Insurance Provision of information to insurance brokers to assess ongoing insurance requirements Bank account administration Planning / Review Processing insurance claims in respect of missing assets Bank account reconciliations Process receipts and payments Discussions and meetings with engagement team regarding the status of the administration and review of outstanding tasks Resolution 3 Prospective remuneration to the Liquidation Summary of work to be undertaken by Craig Crosbie and David McEvoy, Liquidators of the Company and their staff for the period 3 March 2015 to completion of Liquidation Task Area General Description Includes Assets 30.0 hours $13, Creditors 28.0 hours $12, Employees 35.0 hours $11, Investigation 80.0 hours $31, Plant and equipment Debtors Secured creditor reporting Creditor enquiries Meeting of creditors Employees enquiries FEG Conducting investigation Examinations (if required) Continuing to manage the asset realisation strategy Ongoing liaison with our fixed asset agent regarding plant and equipment issues Complete the debtor recovery process Updates to secured creditors Respond to secured creditors queries Making any distributions to secured creditors Receive and follow up creditor enquiries via telephone and Review and prepare correspondence to creditors and their representatives via and post Preparation and lodgement of minutes of second meeting of creditors with ASIC Respond to stakeholder questions following the second meeting of creditors Receive and follow up employee enquiries via telephone and Receive and prepare correspondence in response to employees objections to calculation of leave entitlements Correspondence with FEG Preparing and submitting notification spreadsheet Preparing and submitting FEG quotations Preparing and processing FEG distributions Review of the Company s books and records Finalising investigations to identify indicators of insolvency and possible claims for insolvent trading or voidable transactions Finalise investigation file Preparing brief to solicitors Liaise with solicitors regarding examinations Attendance at examination Review examination transcripts 7

88 Task Area General Description Includes Administration 50.0 hours $16, Litigation / Recoveries ASIC reporting Document maintenance/file review/checklist Bank account administration ASIC Form 524 and other forms ATO and other statutory reporting Finalisation Planning / Review Liaise with solicitors regarding outcome of examinations and further actions available Prepare brief to solicitors Liaise with solicitors regarding recovery actions Attend to negotiations Attend to settlement matters Preparing statutory investigation reports Liaising with ASIC Filing of documents File reviews Updating checklists Prepare correspondence to close accounts Bank account reconciliations Correspondence with bank regarding specific transfers Process receipts and payments Prepare and lodge ASIC forms including 505, 524 and 533 Correspondence with ASIC regarding statutory forms Prepare BAS Pursue refunds Complete group certificates Notify ATO of finalisation Cancel ABN / GST / PAYG registration Complete checklists Finalise WIP Ongoing discussions/meetings with engagement team to monitor status of liquidation 4. Calculation of remuneration The calculation of remuneration schedules are attached as Appendix Statement of remuneration claim At the second meeting of creditors to be held on 2 March 2015, creditors will be asked to consider the following resolutions: Resolution 1 To approve the Administrators remuneration for the period 27 January 2015 to 18 February 2015 of $113, plus GST as set out in the Remuneration Report dated 19 February Resolution 2 To approve the Administrators remuneration for the period 19 February 2015 to the conclusion of the Administration up to a maximum of $40, plus GST, as set out in the Remuneration Report dated 19 February 2015 Resolution 3 To approve the Liquidators remuneration for the period 3 March 2015 to the conclusion of the Liquidation up to a maximum of $85, plus GST, as set out in the Remuneration Report dated 19 February

89 Future remuneration is approved subject to a maximum or cap. Sometimes the actual cost of the administration will exceed the maximum which has been approved, in which case, we may seek another resolution for additional remuneration. We will not pay any amount exceeding the maximum without this approval. Where funds are available, we will usually pay approved remuneration at intervals not less than one month. Where funds are not available, remuneration will not be paid. 6. Remuneration recoverable from external sources The Administrators have not received any funding from external sources for the Administrators remuneration. 7. Disbursements Disbursements are divided into three types: Externally provided professional services these are recovered at cost. An example of an externally provided professional service disbursement is legal fees. Externally provided non-professional costs such as travel, accommodation and search fees these are recovered at cost. Internal disbursements such as photocopying, printing and postage. These disbursements, if charged to the administration, would generally be charged at cost; though some expenses such as telephone calls, photocopying and printing may be charged at a rate which recoups both variable and fixed costs. The recovery of these costs must be on a reasonable commercial basis. We are not required to seek creditor approval for disbursements, but must account to creditors. There were no disbursements claimed for the Company, in accordance with the law and applicable professional standards. 8. Summary of receipts and payments The summary of receipts and payments for the period from 27 January 2015 to 18 February 2015 is attached as Appendix Queries Please contact Tina Tran on or by on ttran@ppbadvisory.com should you have any queries or require any further information. 10. Information sheets Enclosed for your attention as Appendix 3 is the ASIC publication Insolvency Information for directors, employees, creditors and shareholders, which provides an index of all the information sheets that are available including information on Approving fees. You can download these forms from 9

90 Appendix 1

91 TECHDRILL MINING SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Voluntary Administration process for the period 27 January 2015 to 18 February 2015 Position Hourly Task Area Rate Total Administration Assets Creditors Employees Investigation Trade-on (Ex GST) Hours $ Hours $ Hours $ Hours $ Hours $ Hours $ Hours $ Appointees Crosbie, Craig , , , , , McEvoy, David , , , Partner Director , , , , Senior Manager , , , , , , , Manager Assistant Manager Senior Analyst , , , , Senior Analyst , , Analyst Analyst , , , , Graduate Undergraduate Senior Bookkeeper Bookkeeper EA Administration TOTAL GST TOTAL (including GST) Average hourly rate (excluding GST) , , , , , , , , ,

92 TECHDRILL MINING SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Voluntary Administration process for the period 19 February 2015 to 2 March 2015 Position Hourly Rate Task Area (Ex GST) Total Administration Assets Creditors Employees Hours $ Hours $ Hours $ Hours $ Hours $ Appointees Crosbie, Craig , , , , McEvoy, David Partner Director/Principal , , , Senior Manager , , , , Manager Assistant Manager Senior Analyst , , , Senior Analyst Analyst Analyst , , , , Graduate Undergraduate Bookkeeper Executive Assistant Administration TOTAL GST TOTAL (including GST) Average hourly rate (excluding GST) , , , , , , ,

93 TECHDRILL MINING SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Liquidation process. Position Hourly Rate Task Area (Ex GST) Total Administration Assets Creditors Employees Investigation Hours $ Hours $ Hours $ Hours $ Hours $ Hours $ Appointees Crosbie, Craig , , , , , , McEvoy, David , , Partner Director/Principal , , , , , Senior Manager , , , , , , Manager Assistant Manager Senior Analyst , , , , Senior Analyst Analyst Analyst , , , , , , Graduate Undergraduate Bookkeeper , , Executive Assistant Administration TOTAL GST TOTAL (including GST) Average hourly rate (excluding GST) , , , , , , , ,

94 Appendix 2

95 Tecdrill Mining Services Pty Ltd Summary of receipts and payments for the period 27 January 2015 to 18 February 2015 Receipts Total ($) Funding from fixed asset agent 20, Payments Wages 19, Repairs and maintenance , Net Receipts (Payments)

96 Appendix 3

97 INFORMATION SHEET 85 Approving fees: a guide for creditors If a company is in financial difficulty, it can be put under the control of an independent external administrator. This information sheet gives general information for creditors on the approval of an external administrator s fees in a liquidation of an insolvent company, voluntary administration or deed of company arrangement (other forms of external administration are not discussed in this information sheet). It outlines the rights that creditors have in the approval process. Entitlement to fees and costs A liquidator, voluntary administrator or deed administrator (i.e. an external administrator ) is entitled to be: paid reasonable fees, or remuneration, for the work they perform, once these fees have been approved by a creditors committee, creditors or a court, and reimbursed for out-of-pocket costs incurred in performing their role (these costs do not need creditors committee, creditor or court approval). External administrators are only entitled to an amount of fees that is reasonable for the work that they and their staff properly perform in the external administration. What is reasonable will depend on the type of external administration and the issues that need to be resolved. Some are straightforward, while others are more complex. External administrators must undertake some tasks that may not directly benefit creditors. These include reporting potential breaches of the law and lodging a detailed listing of receipts and payments with ASIC every six months. The external administrator is entitled to be paid for completing these statutory tasks. For more on the tasks involved, see ASIC s information sheets INFO 45 Liquidation: a guide for creditors and INFO 74 Voluntary administration: a guide for creditors. Out-of-pocket costs that are commonly reimbursed include: Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances. You will need a qualified professional adviser to take into account your particular circumstances and to tell you how the law applies to you. Australian Securities & Investments Commission, December 2008 Page 1 of 5

98 APPROVING FEES: A GUIDE FOR CREDITORS legal fees valuer s, real estate agent s and auctioneer s fees stationery, photocopying, telephone and postage costs retrieval costs for recovering the company s computer records, and storage costs for the company s books and records. Creditors have a direct interest in the level of fees and costs, as the external administrator will, generally, be paid from the company s available assets before any payments to creditors. If there are not enough assets, the external administrator may have arranged for a third party to pay any shortfall. As a creditor, you should receive details of such an arrangement. If there are not enough assets to pay the fees and costs, and there is no third party payment arrangement, any shortfall is not paid. Who may approve fees Who may approve fees depends on the type of external administration: see Table 1. The external administrator must provide sufficient information to enable the relevant decision-making body to assess whether the fees are reasonable. Table 1: Who may approve fees Creditors committee Creditors Court Administrator in a voluntary administration Administrator of a deed of company arrangement Creditors voluntary liquidator r 3 Court-appointed liquidator 1 4, If there is one. If there is no approval by the committee or the creditors. Unless an application is made for a fee review. If there is no creditors committee or the committee fails to approve the fees. If insufficient creditors turn up to the meeting called by the liquidator to approve fees, the liquidator is entitled to be paid up to a maximum of $5000, or more if specified in the Corporations Regulations Creditors committee approval If there is a creditors committee, members are chosen by a vote of creditors as a whole. In approving the fees, the members represent the interests of all the creditors, not just their own individual interests. There is not a creditors committee in every external administration. A creditors committee makes its decision by a majority in number of its members present at a meeting, but it can only act if a majority of its members attend. To find out more about creditors committees and how they are formed, see ASIC s information sheets INFO 45 Liquidation: a guide for creditors, INFO 74 Voluntary administration: a guide for creditors and INFO 41 Insolvency: a glossary of terms. Creditors approval Creditors approve fees by passing a resolution at a creditors meeting. Unless creditors call for a poll, the resolution is passed if a simple majority of creditors present and voting, in person or by proxy, Australian Securities & Investments Commission, December 2008 Visit our website: Page 2 of 5

99 APPROVING FEES: A GUIDE FOR CREDITORS indicate that they agree to the resolution. Unlike where acting as committee members, creditors may vote according to their individual interests. If a poll is taken, rather than a vote being decided on the voices or by a show of hands, a majority in number and value of creditors present and voting must agree. A poll requires the votes of each creditor to be recorded. A separate resolution of creditors is required for approving fees for an administrator in a voluntary administration and an administrator of a deed of company arrangement, even if the administrator is the same person in both administrations. A proxy is where a creditor appoints someone else to represent them at a creditors meeting and to vote on their behalf. A proxy can be either a general proxy or a special proxy. A general proxy allows the person holding the proxy to vote as they wish on a resolution, while a special proxy directs the proxy holder to vote in a particular way. A creditor will sometimes appoint the external administrator as a proxy to vote on the creditor s behalf. An external administrator, their partners or staff must not use a general proxy to vote on approval of their fees; they must hold a special proxy in order to do this. They must vote all special proxies as directed, even those against approval of their fees. Calculation of fees Fees may be calculated using one of a number of different methods, such as: on the basis of time spent by the external administrator and their staff a quoted fixed fee, based on an upfront estimate, or a percentage of asset realisations. Charging on a time basis is the most common method. External administrators have a scale of hourly rates, with different rates for each category of staff working on the external administration, including the external administrator. If the external administrator intends to charge on a time basis, you should receive a copy of these hourly rates soon after their appointment and before you are asked to approve the fees. The external administrator and their staff will record the time taken for the various tasks involved, and a record will be kept of the nature of the work performed. It is important to note that the hourly rates do not represent an hourly wage for the external administrator and their staff. The external administrator is running a business an insolvency practice and the hourly rates will be based on the cost of running the business, including overheads such as rent for business premises, utilities, wages and superannuation for staff who are not charged out at an hourly rate (such as personal assistants), information technology support, office equipment and supplies, insurances, taxes, and a profit. External administrators are professionals who are required to have qualifications and experience, be independent and maintain up-to-date skills. Many of the costs of running an insolvency practice are fixed costs that must be paid, even if there are insufficient assets available to pay the external administrator for their services. External administrators compete for work and their rates should reflect this. These are all matters that committee members or creditors should be aware of when considering the fees presented. However, regardless of these matters, creditors have a right to question the external administrator about the fees and whether the rates are negotiable. It is up to the external administrator to justify why the method chosen for calculating fees is an appropriate method for the particular external administration. As a creditor, you also have a right to question the external administrator about the calculation method used and how the calculation was made. Australian Securities & Investments Commission, December 2008 Visit our website: Page 3 of 5

100 APPROVING FEES: A GUIDE FOR CREDITORS Report on proposed fees When seeking approval of fees, the external administrator must send committee members/creditors a report with the notice of meeting setting out: information that will enable the committee members/creditors to make an informed assessment of whether the proposed fees are reasonable a summary description of the major tasks performed, or to be performed, and the costs associated with each of these tasks. Committee members/creditors may be asked to approve fees for work already performed or based on an estimate of work yet to be carried out. If the work is yet to be carried out, it is advisable to set a maximum limit ( cap ) on the amount that the external administrator may receive. For example, future fees calculated according to time spent may be approved on the basis of the number of hours worked at the rates charged (as set out in the provided rate scale) up to a cap of $X. If the work involved then exceeds this figure, the external administrator will have to ask the creditors committee/creditors to approve a further amount of fees, after accounting for the fees already incurred. Deciding if fees are reasonable If asked to approve an amount of fees either as a committee member or by resolution at a creditors meeting, your task is to decide if that amount of fees is reasonable, given the work carried out in the external administration and the results of that work. You may find the following information from the external administrator useful in deciding if the fees claimed are reasonable: the method used to calculate fees the major tasks that have been performed, or are likely to be performed, for the fees the fees/estimated fees (as applicable) for each of the major tasks the size and complexity (or otherwise) of the external administration the amount of fees (if any) that have previously been approved if the fees are calculated, in whole or in part, on a time basis: o the period over which the work was, or is likely to be performed o if the fees are for work that has already been carried out, the time spent by each level of staff on each of the major tasks o if the fees are for work that is yet to be carried out, whether the fees are capped. If you need more information about fees than is provided in the external administrator s report, you should let them know before the meeting at which fees will be voted on. What can you do if you think the fees are not reasonable? If you do not think the fees being claimed are reasonable, you should raise your concerns with the external administrator. It is your decision whether to vote in favour of, or against, a resolution to approve fees. Generally, if fees are approved by a creditors committee/creditors and you wish to challenge this decision, you may apply to the court and ask the court to review the fees. Special rules apply to court liquidations. You may wish to seek your own legal advice if you are considering applying for a court review of the fees. Australian Securities & Investments Commission, December 2008 Visit our website: Page 4 of 5

101 APPROVING FEES: A GUIDE FOR CREDITORS Reimbursement of out-of-pocket costs An external administrator should be very careful incurring costs that must be paid from the external administration as careful as if they were dealing with their own money. Their report on fees should also include information on the out-of-pocket costs of the external administration. If you have questions about any of these costs, you should ask the external administrator and, if necessary, bring it up at a creditors committee/creditors meeting. If you are still concerned, you have the right to ask the court to review the costs. Queries and complaints You should first raise any queries or complaints with the external administrator. If this fails to resolve your concerns, including any concerns about their conduct, you can lodge a complaint with ASIC at or write to: ASIC Complaints PO Box 9149 TRARALGON VIC 3844 ASIC will usually not become involved in matters of commercial judgement by an external administrator. Complaints against companies and their officers can also be made to ASIC. For other enquiries, ASIC through infoline@asic.gov.au, or call ASIC s Infoline on for the cost of a local call. To find out more For an explanation of terms used in this information sheet, see ASIC s information sheet INFO 41 Insolvency: a glossary of terms. For more on external administration, see ASIC s related information sheets at INFO 74 Voluntary administration: a guide for creditors INFO 75 Voluntary administration: a guide for employees INFO 45 Liquidation: a guide for creditors INFO 46 Liquidation: a guide for employees INFO 54 Receivership: a guide for creditors INFO 55 Receivership: a guide for employees INFO 43 Insolvency: a guide for shareholders INFO 42 Insolvency: a guide for directors INFO 84 Independence of external administrators: a guide for creditors These are also available from the Insolvency Practitioners Association (IPA) website at The IPA website also contains the IPA s Code of Professional Practice for Insolvency Professionals, which applies to IPA members. Australian Securities & Investments Commission, December 2008 Visit our website: Page 5 of 5

102 Remuneration report Techdrill Civil and Mining Services Pty Ltd (Administrators Appointed) (the Company) ACN Remuneration declaration 2. Executive summary 3. Description of work completed / to be completed 4. Calculation of remuneration 5. Statement of remuneration claim 6. Remuneration recoverable from external sources 7. Disbursements 8. Summary of receipts and payments 9. Queries 10. Information sheets

103 1. Remuneration declaration We, Craig Crosbie and David McEvoy of PPB Advisory, have undertaken a proper assessment of this remuneration claim for our appointment as joint and several Administrators of Techdrill Civil and Mining Services Pty Ltd in accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed is in respect of necessary work, properly performed, or to be properly performed, in the conduct of the administration. Dated this 19 th day of February 2015 Craig Crosbie and David McEvoy Administrators Techdrill Civil and Mining Services Pty Ltd 2. Executive summary To date, no remuneration has been approved and paid in this administration. This remuneration report details approval sought for the following fees: Period Current remuneration approval sought: Voluntary Administration Report Reference Amount (ex GST) Resolution 1: 27 January 2015 to 18 February 2015 Appendix 1 $22, Resolution 2: 19 February 2015 to 2 March 2015 Appendix 1 $6, Liquidation Resolution 3: 3 March 2015 to completion of Liquidation Appendix 1 $9, * Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of the administration and liquidation. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors. Please refer to Appendix 1 for full details of the calculation and composition of the remuneration approval sought. The remuneration in respect of the Company up to the second creditors meeting on 2 March 2015 is $28, (excluding GST). This is $8, higher than the estimate of costs provided in our initial advice to creditors dated 28 January 2015, which estimated costs of $20,000 (excluding GST) for the voluntary administration period. The cost estimate overrun can largely be attributed to: the requirement to perform a detailed review to validate a secured creditor s security and guarantees 2

104 liaising with various parties to understand and process a Research and Development grant return for the December 2014 quarter noting the extent of these tasks were not originally envisaged. 3. Description of work completed / to be completed Resolution 1 Remuneration for the Voluntary Administration Summary of work undertaken by Craig Crosbie and David McEvoy, Administrators of the Company and their staff for the period 27 January 2015 to 18 February 2015 Task Area General Description Includes Assets 3.4 hours $1, Creditors 33.6 hours $12, Assets subject to specific charges Other assets Secured creditor reporting Creditor enquiries Creditor reports Dealing with proofs of debt Meeting of creditors Search the PPSR register and notify creditors identified from PPSR register Prepare listing of assets subject to PPSR claims Receiving and reviewing PPSR claims and corresponding with creditors accordingly (to collect assets or reject claims) Discussions with Company management and external accountants regarding a Research and Development grant and agreeing the process to lodge a resturn for the December 2014 quarter Notify secured creditors of the appointment of Administrators Prepare and issue updates to secured creditors Respond to secured creditors queries Various discussions with secured creditors regarding matters including the asset realisation strategy Receive and follow up creditor enquiries via telephone and Review and prepare correspondence to creditors and their representatives via and post Preparing the Administrators DIRRI and initial creditors circular (calling the first meeting of creditors) Dispatch initial creditors circular Preparing section 439A report to creditors Receipting, entering and filing PODs for the first creditors meeting (not related to a dividend) Assessing the proof of debt lodged by a secured creditor with respect to its security and guarantees Preparation of meeting notices, proxies and advertisements for both the first and second meetings of creditors Forwarding notice of first meeting of creditors to all known creditors Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting for the first meeting of creditors Conducting the first meeting of creditors Preparation and lodgement of minutes of first meeting of creditors with ASIC 3

105 Task Area General Description Includes Employees 3.7 hours $1, Trade On 1.2 hours $ Investigation 7.6 hours $3, Administration 9.7 hours $3, Employees enquiries FEG Calculation of entitlements Other employee issues Trade on management Conducting investigation Document maintenance/file review/checklist Insurance Attending the Company s head office to address employees Write to all employees advising of the appointment of Administrators Terminate the Company s workforce (most of which on 28 January 2015) Receive and follow up employee enquiries via telephone and Review and prepare correspondence to employees and their representatives via and post Correspondence with FEG regarding appointment of administrators Review the Company s employee records Review the Company s preliminary employee entitlements calculation Instruct Company staff to update the pre-appointment payroll records Review and process of payroll in respect of critical exemployees retained on a casual basis Complete employment separation certificates for terminated employees Prepare employee FAQ sheet Conducting trade-on / business viability assessment including: - discussions with Company management - preliminary assessment of debtors, WIP and contracts (including discussions with the Company s customers) - discussions with the Company s critical creditors - review of trade on cash flow forecasts Review of the Company s books and records Review Company history and events leading to insolvency Conducting and summarising statutory searches Preparation of comparative financial statements Various discussions with Company management to assist with our investigations Investigations to identify indicators of insolvency and possible claims for insolvent trading and voidable transactions Preparation of investigation file Download imaged forensic data to assist with investigations Filing of documents Updating checklists Review and confirmation of adequacy of insurance cover Correspondence with insurer regarding initial and ongoing insurance requirements 4

106 Task Area General Description Includes Bank account administration Preparing and issuing correspondence relating to opening and closing accounts Bank account reconciliations Processing receipts and payments ASIC and other forms Preparing and lodging ASIC forms including form 505 ATO and other statutory reporting Books and records Planning / Review Preparing Directors RATA pack Notification of appointment Preparing correspondence to the ATO to register the Company for PAYG and GST Obtain certain Company books and records Numerous discussions and meetings with the administration engagement team regarding the status of the administration and review of outstanding tasks Resolution 2 Prospective remuneration for the Voluntary Administration Summary of work to be undertaken by Craig Crosbie and David McEvoy, Administrators of the Company and their staff for the period 19 February 2015 to 2 March 2015 Task Area General Description Includes Assets 3.0 hours $1, Creditors 3.0 hours $1, Employees 8.0 hours $2, Administration 3.0 hours Assets subject to specific charges Other assets Secured creditor reporting Creditor enquiries Dealing with proofs of debt Meeting of creditors Employees enquiries FEG Document maintenance/file review/checklist Continue review of claims and corresponding with creditors accordingly (to collect goods or reject claims) Progression of the Research and Development grant with the ATO Updates to secured creditors Meeting with secured creditors regarding the asset realisation plan Respond to secured creditors queries Receive and follow up creditor enquiries via telephone and Review and prepare correspondence to creditors and their representatives via and post Receipting and filing PODs for the purposes of the second creditors meeting Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting for the second meeting of creditors Dispatch second report to creditors (i.e. 439A report) Planning for and holding the second meeting of creditors Receive and follow up employee enquiries via telephone Preparation of letters to employees advising of their entitlements Correspondence with FEG Filing of documents Updating checklists 5

107 Task Area General Description Includes $ Insurance Provision of information to brokers to assess ongoing insurance requirements Planning / Review Processing insurance claims in respect of missing assets Discussions and meetings with engagement team regarding the status of the administration and review of outstanding tasks Resolution 3 Prospective remuneration to the Liquidation Summary of work to be undertaken by Craig Crosbie and David McEvoy, Liquidators of the Company and their staff for the period 3 March 2015 to completion of Liquidation Task Area General Description Includes Assets 3.0 hours $1, Creditors 5.0 hours $1, Employees 8.0 hours $2, Investigation 4.0 hours $1, Administration 8.0 hours $2, Other assets Secured creditor reporting Meeting of Creditors Employees enquiries FEG Conducting investigation ASIC reporting Document maintenance/file review/checklist ASIC Form 524 and other forms Finalise Research and Development grant claim and lodge with the ATO Updates to secured creditors Respond to secured creditors queries Making any distributions to secured creditors Undertake a review of a secured creditor s security and guarantee Preparation and lodgement of minutes of second meeting of creditors with ASIC Responding to stakeholder questions following the second meeting of creditors Receive and follow up employee enquiries via telephone Receive and prepare correspondence in response to employees objections to calculation of leave entitlements Correspondence with FEG Preparing notification spreadsheet Preparing and submitting FEG quotations Preparing and lodging FEG distributions Review of the Company s books and records Finalising investigations to identify indicators of insolvency and possible claims for insolvent trading or voidable transactions Finalise investigation file Preparing statutory investigation reports Liaising with ASIC Filing of documents File reviews Updating checklists Prepare and lodge ASIC forms including 505, 524 and 533 Correspondence with ASIC regarding statutory forms 6

108 Task Area General Description Includes ATO and other statutory reporting Finalisation Planning / Review Prepare BAS Pursue refunds Complete group certificates Notify ATO of finalisation Cancel ABN / GST / PAYG registration Complete checklists Finalise WIP Ongoing discussions/meetings with engagement team to monitor status of liquidation 4. Calculation of remuneration The calculation of remuneration schedules are attached as Appendix Statement of remuneration claim At the second meeting of creditors to be held on 2 March 2015, creditors will be asked to consider the following resolutions: Resolution 1 To approve the Administrators remuneration for the period 27 January 2015 to 18 February 2015 of $22, plus GST, as set out in the Remuneration Report dated 19 February 2015 Resolution 2 To approve the Administrators remuneration for the period 19 February 2015 to the conclusion of the Administration up to a maximum of $6, plus GST, as set out in the Remuneration Report dated 19 February 2015 Resolution 3 To approve the Liquidators remuneration for the period 3 March 2015 to the conclusion of the Liquidation up to a maximum of $9, plus GST, as set out in the Remuneration Report dated 19 February Future remuneration is approved subject to a maximum or cap. Sometimes the actual cost of the administration will exceed the maximum which has been approved, in which case, we may seek another resolution for additional remuneration. We will not pay any amount exceeding the maximum without this approval. Where funds are available, we will usually pay approved remuneration at intervals not less than one month. Where funds are not available, remuneration will not be paid. 6. Remuneration recoverable from external sources The Administrators have not received any funding from external sources for the Administrators remuneration. 7

109 7. Disbursements Disbursements are divided into three types: Externally provided professional services these are recovered at cost. An example of an externally provided professional service disbursement is legal fees. Externally provided non-professional costs such as travel, accommodation and search fees these are recovered at cost. Internal disbursements such as photocopying, printing and postage. These disbursements, if charged to the administration, would generally be charged at cost; though some expenses such as telephone calls, photocopying and printing may be charged at a rate which recoups both variable and fixed costs. The recovery of these costs must be on a reasonable commercial basis. We are not required to seek creditor approval for disbursements, but must account to creditors. There were no disbursements claimed for the Company, in accordance with the law and applicable professional standards. 8. Summary of receipts and payments There were no receipts and payments for the period from 27 January 2015 to 18 February Queries Please contact Tina Tran on or by on ttran@ppbadvisory.com should you have any queries or require any further information. 10. Information sheets Enclosed for your attention as Appendix 2 is the ASIC publication Insolvency Information for directors, employees, creditors and shareholders, which provides an index of all the information sheets that are available including information on Approving fees. You can download these forms from 8

110 Appendix 1

111 TECHDRILL CIVIL AND MINING SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Voluntary Administration process for the period 27 January 2015 to 18 February 2015 Position Hourly Task Area Rate Total Administration Assets Creditors Employees Investigation Trade-on (Ex GST) Hours $ Hours $ Hours $ Hours $ Hours $ Hours $ Hours $ Appointees Crosbie, Craig , , , McEvoy, David Other Staff - - Partner Director Senior Manager , , , Manager Assistant Manager Senior Analyst , , , Senior Analyst , , Analyst Analyst , , , Graduate Undergraduate Senior Bookkeeper Bookkeeper EA Administration TOTAL , , , , , , GST TOTAL (including GST) 2, , Average hourly rate (excluding GST)

112 TECHDRILL CIVIL AND MINING SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Voluntary Administration process for the period 19 February 2015 to 2 March 2015 Position Hourly Rate Task Area (Ex GST) Total Administration Assets Creditors Employees Hours $ Hours $ Hours $ Hours $ $ Appointees Crosbie, Craig , McEvoy, David Partner Director/Principal Senior Manager , Manager Assistant Manager Senior Analyst Senior Analyst Analyst Analyst , , Graduate Undergraduate Bookkeeper Executive Assistant Administration TOTAL , , , , GST TOTAL (including GST) , Average hourly rate (excluding GST)

113 TECHDRILL CIVIL AND MINING SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Liquidation process. Position Hourly Rate Task Area (Ex GST) Total Administration Assets Creditors Employees Investigation Hours $ Hours $ Hours $ Hours $ Hours $ Hours $ Appointees Crosbie, Craig McEvoy, David Partner Director/Principal Senior Manager , , Manager Assistant Manager Senior Analyst , , Senior Analyst Analyst Analyst , , Graduate Undergraduate Bookkeeper Executive Assistant Administration TOTAL GST TOTAL (including GST) Average hourly rate (excluding GST) , , , , , , ,

114 Appendix 2

115 INFORMATION SHEET 85 Approving fees: a guide for creditors If a company is in financial difficulty, it can be put under the control of an independent external administrator. This information sheet gives general information for creditors on the approval of an external administrator s fees in a liquidation of an insolvent company, voluntary administration or deed of company arrangement (other forms of external administration are not discussed in this information sheet). It outlines the rights that creditors have in the approval process. Entitlement to fees and costs A liquidator, voluntary administrator or deed administrator (i.e. an external administrator ) is entitled to be: paid reasonable fees, or remuneration, for the work they perform, once these fees have been approved by a creditors committee, creditors or a court, and reimbursed for out-of-pocket costs incurred in performing their role (these costs do not need creditors committee, creditor or court approval). External administrators are only entitled to an amount of fees that is reasonable for the work that they and their staff properly perform in the external administration. What is reasonable will depend on the type of external administration and the issues that need to be resolved. Some are straightforward, while others are more complex. External administrators must undertake some tasks that may not directly benefit creditors. These include reporting potential breaches of the law and lodging a detailed listing of receipts and payments with ASIC every six months. The external administrator is entitled to be paid for completing these statutory tasks. For more on the tasks involved, see ASIC s information sheets INFO 45 Liquidation: a guide for creditors and INFO 74 Voluntary administration: a guide for creditors. Out-of-pocket costs that are commonly reimbursed include: Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances. You will need a qualified professional adviser to take into account your particular circumstances and to tell you how the law applies to you. Australian Securities & Investments Commission, December 2008 Page 1 of 5

116 APPROVING FEES: A GUIDE FOR CREDITORS legal fees valuer s, real estate agent s and auctioneer s fees stationery, photocopying, telephone and postage costs retrieval costs for recovering the company s computer records, and storage costs for the company s books and records. Creditors have a direct interest in the level of fees and costs, as the external administrator will, generally, be paid from the company s available assets before any payments to creditors. If there are not enough assets, the external administrator may have arranged for a third party to pay any shortfall. As a creditor, you should receive details of such an arrangement. If there are not enough assets to pay the fees and costs, and there is no third party payment arrangement, any shortfall is not paid. Who may approve fees Who may approve fees depends on the type of external administration: see Table 1. The external administrator must provide sufficient information to enable the relevant decision-making body to assess whether the fees are reasonable. Table 1: Who may approve fees Creditors committee Creditors Court Administrator in a voluntary administration Administrator of a deed of company arrangement Creditors voluntary liquidator r 3 Court-appointed liquidator 1 4, If there is one. If there is no approval by the committee or the creditors. Unless an application is made for a fee review. If there is no creditors committee or the committee fails to approve the fees. If insufficient creditors turn up to the meeting called by the liquidator to approve fees, the liquidator is entitled to be paid up to a maximum of $5000, or more if specified in the Corporations Regulations Creditors committee approval If there is a creditors committee, members are chosen by a vote of creditors as a whole. In approving the fees, the members represent the interests of all the creditors, not just their own individual interests. There is not a creditors committee in every external administration. A creditors committee makes its decision by a majority in number of its members present at a meeting, but it can only act if a majority of its members attend. To find out more about creditors committees and how they are formed, see ASIC s information sheets INFO 45 Liquidation: a guide for creditors, INFO 74 Voluntary administration: a guide for creditors and INFO 41 Insolvency: a glossary of terms. Creditors approval Creditors approve fees by passing a resolution at a creditors meeting. Unless creditors call for a poll, the resolution is passed if a simple majority of creditors present and voting, in person or by proxy, Australian Securities & Investments Commission, December 2008 Visit our website: Page 2 of 5

117 APPROVING FEES: A GUIDE FOR CREDITORS indicate that they agree to the resolution. Unlike where acting as committee members, creditors may vote according to their individual interests. If a poll is taken, rather than a vote being decided on the voices or by a show of hands, a majority in number and value of creditors present and voting must agree. A poll requires the votes of each creditor to be recorded. A separate resolution of creditors is required for approving fees for an administrator in a voluntary administration and an administrator of a deed of company arrangement, even if the administrator is the same person in both administrations. A proxy is where a creditor appoints someone else to represent them at a creditors meeting and to vote on their behalf. A proxy can be either a general proxy or a special proxy. A general proxy allows the person holding the proxy to vote as they wish on a resolution, while a special proxy directs the proxy holder to vote in a particular way. A creditor will sometimes appoint the external administrator as a proxy to vote on the creditor s behalf. An external administrator, their partners or staff must not use a general proxy to vote on approval of their fees; they must hold a special proxy in order to do this. They must vote all special proxies as directed, even those against approval of their fees. Calculation of fees Fees may be calculated using one of a number of different methods, such as: on the basis of time spent by the external administrator and their staff a quoted fixed fee, based on an upfront estimate, or a percentage of asset realisations. Charging on a time basis is the most common method. External administrators have a scale of hourly rates, with different rates for each category of staff working on the external administration, including the external administrator. If the external administrator intends to charge on a time basis, you should receive a copy of these hourly rates soon after their appointment and before you are asked to approve the fees. The external administrator and their staff will record the time taken for the various tasks involved, and a record will be kept of the nature of the work performed. It is important to note that the hourly rates do not represent an hourly wage for the external administrator and their staff. The external administrator is running a business an insolvency practice and the hourly rates will be based on the cost of running the business, including overheads such as rent for business premises, utilities, wages and superannuation for staff who are not charged out at an hourly rate (such as personal assistants), information technology support, office equipment and supplies, insurances, taxes, and a profit. External administrators are professionals who are required to have qualifications and experience, be independent and maintain up-to-date skills. Many of the costs of running an insolvency practice are fixed costs that must be paid, even if there are insufficient assets available to pay the external administrator for their services. External administrators compete for work and their rates should reflect this. These are all matters that committee members or creditors should be aware of when considering the fees presented. However, regardless of these matters, creditors have a right to question the external administrator about the fees and whether the rates are negotiable. It is up to the external administrator to justify why the method chosen for calculating fees is an appropriate method for the particular external administration. As a creditor, you also have a right to question the external administrator about the calculation method used and how the calculation was made. Australian Securities & Investments Commission, December 2008 Visit our website: Page 3 of 5

118 APPROVING FEES: A GUIDE FOR CREDITORS Report on proposed fees When seeking approval of fees, the external administrator must send committee members/creditors a report with the notice of meeting setting out: information that will enable the committee members/creditors to make an informed assessment of whether the proposed fees are reasonable a summary description of the major tasks performed, or to be performed, and the costs associated with each of these tasks. Committee members/creditors may be asked to approve fees for work already performed or based on an estimate of work yet to be carried out. If the work is yet to be carried out, it is advisable to set a maximum limit ( cap ) on the amount that the external administrator may receive. For example, future fees calculated according to time spent may be approved on the basis of the number of hours worked at the rates charged (as set out in the provided rate scale) up to a cap of $X. If the work involved then exceeds this figure, the external administrator will have to ask the creditors committee/creditors to approve a further amount of fees, after accounting for the fees already incurred. Deciding if fees are reasonable If asked to approve an amount of fees either as a committee member or by resolution at a creditors meeting, your task is to decide if that amount of fees is reasonable, given the work carried out in the external administration and the results of that work. You may find the following information from the external administrator useful in deciding if the fees claimed are reasonable: the method used to calculate fees the major tasks that have been performed, or are likely to be performed, for the fees the fees/estimated fees (as applicable) for each of the major tasks the size and complexity (or otherwise) of the external administration the amount of fees (if any) that have previously been approved if the fees are calculated, in whole or in part, on a time basis: o the period over which the work was, or is likely to be performed o if the fees are for work that has already been carried out, the time spent by each level of staff on each of the major tasks o if the fees are for work that is yet to be carried out, whether the fees are capped. If you need more information about fees than is provided in the external administrator s report, you should let them know before the meeting at which fees will be voted on. What can you do if you think the fees are not reasonable? If you do not think the fees being claimed are reasonable, you should raise your concerns with the external administrator. It is your decision whether to vote in favour of, or against, a resolution to approve fees. Generally, if fees are approved by a creditors committee/creditors and you wish to challenge this decision, you may apply to the court and ask the court to review the fees. Special rules apply to court liquidations. You may wish to seek your own legal advice if you are considering applying for a court review of the fees. Australian Securities & Investments Commission, December 2008 Visit our website: Page 4 of 5

119 APPROVING FEES: A GUIDE FOR CREDITORS Reimbursement of out-of-pocket costs An external administrator should be very careful incurring costs that must be paid from the external administration as careful as if they were dealing with their own money. Their report on fees should also include information on the out-of-pocket costs of the external administration. If you have questions about any of these costs, you should ask the external administrator and, if necessary, bring it up at a creditors committee/creditors meeting. If you are still concerned, you have the right to ask the court to review the costs. Queries and complaints You should first raise any queries or complaints with the external administrator. If this fails to resolve your concerns, including any concerns about their conduct, you can lodge a complaint with ASIC at or write to: ASIC Complaints PO Box 9149 TRARALGON VIC 3844 ASIC will usually not become involved in matters of commercial judgement by an external administrator. Complaints against companies and their officers can also be made to ASIC. For other enquiries, ASIC through infoline@asic.gov.au, or call ASIC s Infoline on for the cost of a local call. To find out more For an explanation of terms used in this information sheet, see ASIC s information sheet INFO 41 Insolvency: a glossary of terms. For more on external administration, see ASIC s related information sheets at INFO 74 Voluntary administration: a guide for creditors INFO 75 Voluntary administration: a guide for employees INFO 45 Liquidation: a guide for creditors INFO 46 Liquidation: a guide for employees INFO 54 Receivership: a guide for creditors INFO 55 Receivership: a guide for employees INFO 43 Insolvency: a guide for shareholders INFO 42 Insolvency: a guide for directors INFO 84 Independence of external administrators: a guide for creditors These are also available from the Insolvency Practitioners Association (IPA) website at The IPA website also contains the IPA s Code of Professional Practice for Insolvency Professionals, which applies to IPA members. Australian Securities & Investments Commission, December 2008 Visit our website: Page 5 of 5

120 Remuneration report Glown Pty Ltd (Administrators Appointed) (the Company) ACN Remuneration declaration 2. Executive summary 3. Description of work completed / to be completed 4. Calculation of remuneration 5. Statement of remuneration claim 6. Remuneration recoverable from external sources 7. Disbursements 8. Summary of receipts and payments 9. Queries 10. Information sheets

121 1. Remuneration declaration We, Craig Crosbie and David McEvoy of PPB Advisory, have undertaken a proper assessment of this remuneration claim for our appointment as joint and several Administrators of Glown Pty Ltd in accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed is in respect of necessary work, properly performed, or to be properly performed, in the conduct of the administration. Dated this 19 th day of February 2015 Craig Crosbie and David McEvoy Administrators Glown Pty Ltd 2. Executive summary To date, no remuneration has been approved and paid in this administration. This remuneration report details approval sought for the following fees: Period Current remuneration approval sought: Voluntary Administration Report Reference Amount (ex GST) Resolution 1: 27 January 2015 to 18 February 2015 Appendix 1 $9, Resolution 2: 19 February 2015 to 2 March 2015 Appendix 1 $1, Liquidation Resolution 3: 3 March 2015 to completion of Liquidation Appendix 1 $6, * Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of the administration and liquidation. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors. Please refer to Appendix 1 for full details of the calculation and composition of the remuneration approval sought. The remuneration in respect of the Company up to the second creditors meeting on 2 March 2015 is $10, (excluding GST). This is consistent with the estimate of costs provided in our initial advice to creditors dated 28 January 2015, which estimated costs of $10,000 (excluding GST) for the voluntary administration period. 2

122 3. Description of work completed / to be completed Resolution 1 Remuneration for the Voluntary Administration Summary of work undertaken by Craig Crosbie and David McEvoy, Administrators of the Company and their staff for the period 27 January 2015 to 18 February 2015 Task Area General Description Includes Assets 0.9 hours $ Creditors 15.0 hours $6, Investigation 3.0 hours $1, Assets subject to specific charges Secured creditor reporting Creditor reports Dealing with proofs of debt Meeting of creditors Conducting investigation Search the PPSR register and notify creditors identified from PPSR register Prepare listing of assets subject to PPSR claims Receiving and reviewing PPSR claims and corresponding with creditors accordingly (to collect assets or reject claims) Notify secured creditors of the appointment of Administrators Prepare and issue updates to secured creditors Respond to secured creditors queries Various discussions with secured creditors regarding matters including the asset realisation strategy Preparing the Administrators DIRRI and initial creditors circular (calling the first meeting of creditors) Dispatch initial creditors circular Preparing section 439A report to creditors Receipting, entering and filing PODs for creditors meetings (not related to a dividend) Preparation of meeting notices, proxies and advertisements for both the first and second meetings of creditors Forwarding notice of first meeting of creditors to all known creditors Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting for the first meeting of creditors Conducting the first meeting of creditors Preparation and lodgement of minutes of first meeting of creditors with ASIC Review of the Company s books and records Review Company history and events leading to insolvency Conducting and summarising statutory searches Preparation of comparative financial statements Various discussions with Company management to assist with our investigations Investigations to identify indicators of insolvency and possible claims for insolvent trading and voidable transactions Preparation of investigation file 3

123 Task Area General Description Includes Administration 4.3 hours $1, Document maintenance/file review/checklist Insurance Download imaged forensic data to assist with investigations Filing of documents Updating checklists Review and confirmation of adequacy of insurance cover Correspondence with insurer regarding initial and ongoing insurance requirements ASIC and other forms Preparing and lodging ASIC forms including form 505 ATO and other statutory reporting Books and records Planning / Review Preparing Directors RATA pack Notification of appointment Preparing correspondence to the ATO to register the Company for PAYG and GST Obtain certain Company books and records Numerous discussions and meetings with the administration engagement team regarding the status of the administration and review of outstanding tasks Resolution 2 Prospective remuneration for the Voluntary Administration Summary of work to be undertaken by Craig Crosbie and David McEvoy, Administrators of the Company and their staff for the period 19 February 2015 to 2 March 2015 Task Area General Description Includes Assets 1 hour $ Creditors 1 hours $ Administration 2 hours $ Assets subject to specific charges Secured creditor reporting Dealing with proofs of debt Meeting of creditors Document maintenance/file review/checklist Insurance Planning / Review Continue review of claims and corresponding with creditors accordingly (to collect goods or reject claims) Updates to secured creditors Meeting with secured creditors regarding the asset realisation plan Respond to secured creditors queries Receipting and filing PODs for the purposes of the second creditors meeting Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting for the second meeting of creditors Dispatch second report to creditors (i.e. 439A report) Planning for and holding the second meeting of creditors Filing of documents Updating checklists Provision of information to brokers to assess ongoing insurance requirements Processing insurance claims in respect of missing assets Discussions and meetings with engagement team regarding the status of the administration and review of outstanding tasks 4

124 Resolution 3 Prospective remuneration to the Liquidation Summary of work to be undertaken by Craig Crosbie and David McEvoy, Liquidators of the Company and their staff for the period 3 March 2015 to completion of Liquidation Task Area General Description Includes Assets 3 hours $1, Creditors 3.5 hours $1, Investigation 4 hours $1, Administration 9 hours $2, Assets subject to specific charges Secured creditor reporting Meeting of creditors Conducting investigation ASIC reporting Document maintenance/file review/checklist ASIC Form 524 and other forms ATO and other statutory reporting Finalisation Planning / Review Managing the asset realisation strategy Liaising with our fixed asset agent regarding plant and equipment issues Updates to secured creditors Respond to secured creditors queries Making any distributions to secured creditors Preparation and lodgement of minutes of second meeting of creditors with ASIC Respond to stakeholder questions following the second meeting of creditors Review of the Company s books and records Finalising investigations to identify indicators of insolvency and possible claims for insolvent trading or voidable transactions Finalise investigation file Preparing statutory investigation reports Liaising with ASIC Filing of documents File reviews Updating checklists Prepare and lodge ASIC forms including 505, 524 and 533 Correspondence with ASIC regarding statutory forms Prepare BAS Pursue refunds Notify ATO of finalisation Cancel ABN / GST / PAYG registration Complete checklists Finalise WIP Ongoing discussions/meetings with engagement team to monitor status of the liquidation 4. Calculation of remuneration The calculation of remuneration schedules are attached as Appendix Statement of remuneration claim At the second meeting of creditors to be held on 2 March 2015, creditors will be asked to consider the following resolutions: 5

125 Resolution 1 To approve the Administrators remuneration for the period 27 January 2015 to 18 February 2015 of $9, plus GST, as set out in the Remuneration Report dated 19 February 2015 Resolution 2 To approve the Administrators remuneration for the period 19 February 2015 to the conclusion of the Administration up to a maximum of $1, plus GST, as set out in the Remuneration Report dated 19 February 2015 Resolution 3 To approve the Liquidators remuneration for the period 3 March 2015 to the conclusion of the Liquidation up to a maximum of $6, plus GST, as set out in the Remuneration Report dated 19 February Future remuneration is approved subject to a maximum or cap. Sometimes the actual cost of the administration will exceed the maximum which has been approved, in which case, we may seek another resolution for additional remuneration. We will not pay any amount exceeding the maximum without this approval. Where funds are available, we will usually pay approved remuneration at intervals not less than one month. Where funds are not available, remuneration will not be paid. 6. Remuneration recoverable from external sources The Administrators have not received any funding from external sources for the Administrators remuneration. 7. Disbursements Disbursements are divided into three types: Externally provided professional services these are recovered at cost. An example of an externally provided professional service disbursement is legal fees. Externally provided non-professional costs such as travel, accommodation and search fees these are recovered at cost. Internal disbursements such as photocopying, printing and postage. These disbursements, if charged to the administration, would generally be charged at cost; though some expenses such as telephone calls, photocopying and printing may be charged at a rate which recoups both variable and fixed costs. The recovery of these costs must be on a reasonable commercial basis. We are not required to seek creditor approval for disbursements, but must account to creditors. There were no disbursements claimed for the Company, in accordance with the law and applicable professional standards. 8. Summary of receipts and payments There were no receipts and payments for the period from 27 January 2015 to 18 February Queries Please contact Tina Tran on or by on ttran@ppbadvisory.com should you have any queries or require any further information. 6

126 10. Information sheets Enclosed for your attention as Appendix 2 is the ASIC publication Insolvency Information for directors, employees, creditors and shareholders, which provides an index of all the information sheets that are available including information on Approving fees. You can download these forms from 7

127 Appendix 1

128 GLOWN PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Voluntary Administration process for the period 27 January 2015 to 18 February 2015 Position Hourly Task Area Rate Total Administration Creditors Investigation Assets (Ex GST) Hours $ Hours $ Hours $ Hours $ Hours $ Appointees Crosbie, Craig , , McEvoy, David Partner Director Senior Manager , , Manager Assistant Manager Senior Analyst , , Senior Analyst , , Analyst Analyst , Graduate Undergraduate Bookkeeper EA Administration TOTAL GST TOTAL (including GST) Average hourly rate (excluding GST) , , , , ,

129 GLOWN PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Voluntary Administration process for the period 19 February 2015 to 2 March 2015 Position Hourly Rate Task Area (Ex GST) Total Administration Assets Creditors Hours $ Hours $ Hours $ Hours $ Appointees Crosbie, Craig McEvoy, David Partner Director/Principal Senior Manager Manager Assistant Manager Senior Analyst Senior Analyst Analyst Analyst Graduate Undergraduate Bookkeeper Executive Assistant Administration TOTAL GST TOTAL (including GST) Average hourly rate (excluding GST) , ,

130 GLOWN PTY LTD (ADMINISTRATORS APPOINTED) ACN: CALCULATION OF REMUNERATION Professional fees for work undertaken by Craig Crosbie, David McEvoy, their partners and staff during the Liquidation process. Position Hourly Rate Task Area (Ex GST) Total Administration Assets Creditors Investigation Hours $ Hours $ Hours $ Hours $ Hours $ Appointees Crosbie, Craig McEvoy, David Partner Director/Principal Senior Manager , Manager Assistant Manager Senior Analyst , , Senior Analyst Analyst Analyst , Graduate Undergraduate Bookkeeper Executive Assistant Administration TOTAL GST TOTAL (including GST) Average hourly rate (excluding GST) , , , , , ,

131 Appendix 2

132 INFORMATION SHEET 85 Approving fees: a guide for creditors If a company is in financial difficulty, it can be put under the control of an independent external administrator. This information sheet gives general information for creditors on the approval of an external administrator s fees in a liquidation of an insolvent company, voluntary administration or deed of company arrangement (other forms of external administration are not discussed in this information sheet). It outlines the rights that creditors have in the approval process. Entitlement to fees and costs A liquidator, voluntary administrator or deed administrator (i.e. an external administrator ) is entitled to be: paid reasonable fees, or remuneration, for the work they perform, once these fees have been approved by a creditors committee, creditors or a court, and reimbursed for out-of-pocket costs incurred in performing their role (these costs do not need creditors committee, creditor or court approval). External administrators are only entitled to an amount of fees that is reasonable for the work that they and their staff properly perform in the external administration. What is reasonable will depend on the type of external administration and the issues that need to be resolved. Some are straightforward, while others are more complex. External administrators must undertake some tasks that may not directly benefit creditors. These include reporting potential breaches of the law and lodging a detailed listing of receipts and payments with ASIC every six months. The external administrator is entitled to be paid for completing these statutory tasks. For more on the tasks involved, see ASIC s information sheets INFO 45 Liquidation: a guide for creditors and INFO 74 Voluntary administration: a guide for creditors. Out-of-pocket costs that are commonly reimbursed include: Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances. You will need a qualified professional adviser to take into account your particular circumstances and to tell you how the law applies to you. Australian Securities & Investments Commission, December 2008 Page 1 of 5

133 APPROVING FEES: A GUIDE FOR CREDITORS legal fees valuer s, real estate agent s and auctioneer s fees stationery, photocopying, telephone and postage costs retrieval costs for recovering the company s computer records, and storage costs for the company s books and records. Creditors have a direct interest in the level of fees and costs, as the external administrator will, generally, be paid from the company s available assets before any payments to creditors. If there are not enough assets, the external administrator may have arranged for a third party to pay any shortfall. As a creditor, you should receive details of such an arrangement. If there are not enough assets to pay the fees and costs, and there is no third party payment arrangement, any shortfall is not paid. Who may approve fees Who may approve fees depends on the type of external administration: see Table 1. The external administrator must provide sufficient information to enable the relevant decision-making body to assess whether the fees are reasonable. Table 1: Who may approve fees Creditors committee Creditors Court Administrator in a voluntary administration Administrator of a deed of company arrangement Creditors voluntary liquidator r 3 Court-appointed liquidator 1 4, If there is one. If there is no approval by the committee or the creditors. Unless an application is made for a fee review. If there is no creditors committee or the committee fails to approve the fees. If insufficient creditors turn up to the meeting called by the liquidator to approve fees, the liquidator is entitled to be paid up to a maximum of $5000, or more if specified in the Corporations Regulations Creditors committee approval If there is a creditors committee, members are chosen by a vote of creditors as a whole. In approving the fees, the members represent the interests of all the creditors, not just their own individual interests. There is not a creditors committee in every external administration. A creditors committee makes its decision by a majority in number of its members present at a meeting, but it can only act if a majority of its members attend. To find out more about creditors committees and how they are formed, see ASIC s information sheets INFO 45 Liquidation: a guide for creditors, INFO 74 Voluntary administration: a guide for creditors and INFO 41 Insolvency: a glossary of terms. Creditors approval Creditors approve fees by passing a resolution at a creditors meeting. Unless creditors call for a poll, the resolution is passed if a simple majority of creditors present and voting, in person or by proxy, Australian Securities & Investments Commission, December 2008 Visit our website: Page 2 of 5

134 APPROVING FEES: A GUIDE FOR CREDITORS indicate that they agree to the resolution. Unlike where acting as committee members, creditors may vote according to their individual interests. If a poll is taken, rather than a vote being decided on the voices or by a show of hands, a majority in number and value of creditors present and voting must agree. A poll requires the votes of each creditor to be recorded. A separate resolution of creditors is required for approving fees for an administrator in a voluntary administration and an administrator of a deed of company arrangement, even if the administrator is the same person in both administrations. A proxy is where a creditor appoints someone else to represent them at a creditors meeting and to vote on their behalf. A proxy can be either a general proxy or a special proxy. A general proxy allows the person holding the proxy to vote as they wish on a resolution, while a special proxy directs the proxy holder to vote in a particular way. A creditor will sometimes appoint the external administrator as a proxy to vote on the creditor s behalf. An external administrator, their partners or staff must not use a general proxy to vote on approval of their fees; they must hold a special proxy in order to do this. They must vote all special proxies as directed, even those against approval of their fees. Calculation of fees Fees may be calculated using one of a number of different methods, such as: on the basis of time spent by the external administrator and their staff a quoted fixed fee, based on an upfront estimate, or a percentage of asset realisations. Charging on a time basis is the most common method. External administrators have a scale of hourly rates, with different rates for each category of staff working on the external administration, including the external administrator. If the external administrator intends to charge on a time basis, you should receive a copy of these hourly rates soon after their appointment and before you are asked to approve the fees. The external administrator and their staff will record the time taken for the various tasks involved, and a record will be kept of the nature of the work performed. It is important to note that the hourly rates do not represent an hourly wage for the external administrator and their staff. The external administrator is running a business an insolvency practice and the hourly rates will be based on the cost of running the business, including overheads such as rent for business premises, utilities, wages and superannuation for staff who are not charged out at an hourly rate (such as personal assistants), information technology support, office equipment and supplies, insurances, taxes, and a profit. External administrators are professionals who are required to have qualifications and experience, be independent and maintain up-to-date skills. Many of the costs of running an insolvency practice are fixed costs that must be paid, even if there are insufficient assets available to pay the external administrator for their services. External administrators compete for work and their rates should reflect this. These are all matters that committee members or creditors should be aware of when considering the fees presented. However, regardless of these matters, creditors have a right to question the external administrator about the fees and whether the rates are negotiable. It is up to the external administrator to justify why the method chosen for calculating fees is an appropriate method for the particular external administration. As a creditor, you also have a right to question the external administrator about the calculation method used and how the calculation was made. Australian Securities & Investments Commission, December 2008 Visit our website: Page 3 of 5

135 APPROVING FEES: A GUIDE FOR CREDITORS Report on proposed fees When seeking approval of fees, the external administrator must send committee members/creditors a report with the notice of meeting setting out: information that will enable the committee members/creditors to make an informed assessment of whether the proposed fees are reasonable a summary description of the major tasks performed, or to be performed, and the costs associated with each of these tasks. Committee members/creditors may be asked to approve fees for work already performed or based on an estimate of work yet to be carried out. If the work is yet to be carried out, it is advisable to set a maximum limit ( cap ) on the amount that the external administrator may receive. For example, future fees calculated according to time spent may be approved on the basis of the number of hours worked at the rates charged (as set out in the provided rate scale) up to a cap of $X. If the work involved then exceeds this figure, the external administrator will have to ask the creditors committee/creditors to approve a further amount of fees, after accounting for the fees already incurred. Deciding if fees are reasonable If asked to approve an amount of fees either as a committee member or by resolution at a creditors meeting, your task is to decide if that amount of fees is reasonable, given the work carried out in the external administration and the results of that work. You may find the following information from the external administrator useful in deciding if the fees claimed are reasonable: the method used to calculate fees the major tasks that have been performed, or are likely to be performed, for the fees the fees/estimated fees (as applicable) for each of the major tasks the size and complexity (or otherwise) of the external administration the amount of fees (if any) that have previously been approved if the fees are calculated, in whole or in part, on a time basis: o the period over which the work was, or is likely to be performed o if the fees are for work that has already been carried out, the time spent by each level of staff on each of the major tasks o if the fees are for work that is yet to be carried out, whether the fees are capped. If you need more information about fees than is provided in the external administrator s report, you should let them know before the meeting at which fees will be voted on. What can you do if you think the fees are not reasonable? If you do not think the fees being claimed are reasonable, you should raise your concerns with the external administrator. It is your decision whether to vote in favour of, or against, a resolution to approve fees. Generally, if fees are approved by a creditors committee/creditors and you wish to challenge this decision, you may apply to the court and ask the court to review the fees. Special rules apply to court liquidations. You may wish to seek your own legal advice if you are considering applying for a court review of the fees. Australian Securities & Investments Commission, December 2008 Visit our website: Page 4 of 5

136 APPROVING FEES: A GUIDE FOR CREDITORS Reimbursement of out-of-pocket costs An external administrator should be very careful incurring costs that must be paid from the external administration as careful as if they were dealing with their own money. Their report on fees should also include information on the out-of-pocket costs of the external administration. If you have questions about any of these costs, you should ask the external administrator and, if necessary, bring it up at a creditors committee/creditors meeting. If you are still concerned, you have the right to ask the court to review the costs. Queries and complaints You should first raise any queries or complaints with the external administrator. If this fails to resolve your concerns, including any concerns about their conduct, you can lodge a complaint with ASIC at or write to: ASIC Complaints PO Box 9149 TRARALGON VIC 3844 ASIC will usually not become involved in matters of commercial judgement by an external administrator. Complaints against companies and their officers can also be made to ASIC. For other enquiries, ASIC through infoline@asic.gov.au, or call ASIC s Infoline on for the cost of a local call. To find out more For an explanation of terms used in this information sheet, see ASIC s information sheet INFO 41 Insolvency: a glossary of terms. For more on external administration, see ASIC s related information sheets at INFO 74 Voluntary administration: a guide for creditors INFO 75 Voluntary administration: a guide for employees INFO 45 Liquidation: a guide for creditors INFO 46 Liquidation: a guide for employees INFO 54 Receivership: a guide for creditors INFO 55 Receivership: a guide for employees INFO 43 Insolvency: a guide for shareholders INFO 42 Insolvency: a guide for directors INFO 84 Independence of external administrators: a guide for creditors These are also available from the Insolvency Practitioners Association (IPA) website at The IPA website also contains the IPA s Code of Professional Practice for Insolvency Professionals, which applies to IPA members. Australian Securities & Investments Commission, December 2008 Visit our website: Page 5 of 5

137 C. Declaration of Independence, Relevant Relationships and Indemnities

138 Declaration of Independence, Relevant Relationships and Indemnities Techdrill Civil and Mining Services Pty Ltd ACN Techdrill Mining Services Pty Ltd ACN Techdrill Civil Services Pty Ltd ACN Glown Pty Ltd ACN (Administrators Appointed) (the Group) A Practitioner appointed to an insolvent entity is required to make declarations as to: A. their independence generally B. relevant relationships, including: i. the circumstances of the appointment ii. any relationships with the Group and others within the previous 24 months iii. any prior professional services for the Group within the previous 24 months iv. any other relationships to declare and C. any indemnities given, or up-front payments made, to the Practitioner. This declaration is made in respect of us, our partners, PPB Advisory and the related entities of PPB Advisory. A. Independence We, Craig David Crosbie and David Laurence McEvoy of PPB Advisory, Level 21, 181 William Street, Melbourne, Victoria, have undertaken a proper assessment of the risks to our independence prior to accepting the appointment as Joint and Several Administrators of the Group in accordance with the law and applicable professional standards. This assessment identified no real or potential risks to our independence. We are not aware of any reasons that would prevent us from accepting this appointment. B. Declaration of Relationships i. Circumstances of appointment This appointment was referred to us by Joshua Casey of Harbert Australia Private Equity (Harbert), via a telephone call on 22 January Harbert are the major shareholder of Techdrill Civil and Mining Services Pty Ltd (TCMS). The other companies that comprise the Group are wholly owned subsidiaries of TCMS. We have had the following contact with relevant parties to discuss the Group's affairs prior to our appointment as Administrators on 27 January 2015: On 23 January 2015, David McEvoy met with Jeremy Steele, Robert Whitaker and Joshua Casey of Harbert. Messrs Steele and Whitaker are also directors of the Group. David McEvoy had telephone discussions with Mr Steele on 23 January 2015 and 27 January The purpose of the meeting and subsequent discussions was to understand the financial situation of the Group, explain the consequences of insolvency and clarify the alternative courses of action available to the Group in the case of insolvency.

139 In our opinion, the meeting and discussions do not affect our independence, as the advice was given to the Group and not to the directors personally. Further, the advice was restricted to the limitations imposed by Principle 2 of the Code of Professional Practice in relation to preappointment advice. Further, the advice provided is unlikely to be subject to review during the administration and would not impact on compliance with our statutory and fiduciary duties. It is for these reasons that the advice does not, in our opinion, give rise to a conflict of interest or duty. We did not receive any remuneration for this advice. We have not provided other information or advice to the Group, its directors and advisors prior to our appointment, beyond that outlined in this Declaration of Independence, Relevant Relationships and Indemnities (DIRRI). ii. Relevant relationships (excluding professional services to the insolvent) We, or a member of our firm, have, or have had within the preceding 24 months, a relationship with: National Australia Bank Limited (the Security Holder) Nature of relationship The Security Holder holds security interests over the Group's property. We have professional relationships with the majority of the major banks and lenders in Australia and with a number of staff within the Security Holders' organisations, particularly in the credit and workout areas. We have previously undertaken formal and informal assignments on behalf of the Security Holder for a number of years. Reasons why no conflict of interest or duty We believe that this relationship does not result in a conflict of interest or duty because our previous relationships with the Security Holder were not in relation to the Group's and/or the directors' affairs, or related parties of the Group and/or the directors. Sumo Group Holdings Pty Ltd and its subsidiaries common directors and common shareholders Nature of relationship Sumo Group Holdings Pty Ltd and its subsidiaries, Sumo Visual Solutions Pty Ltd, Sumo Vision Pty Ltd and Sumo Signage & Displays Pty Ltd were placed into administration on 28 October We were the Administrators and subsequently appointed the Liquidators at the Second Meeting of Creditors. This appointment is still continuing. Reasons why no conflict of interest or duty We believe that this relationship does not result in a conflict of interest or duty because: Sumo Group Holdings Pty Ltd and its subsidiaries had no dealings with, and are unrelated to, the Group. The financial statements of Sumo Group Holdings Pty Ltd and its subsidiaries and the Group do not indicate any intercompany transactions or loans. Our preliminary inquiries to date, based on limited information provided, do not highlight transactions which would indicate the transferring of assets from Sumo Group Holdings Pty Ltd and its subsidiaries to the Group.

140 Harbert Australia Private Equity (Harbert) Nature of relationship Harbert Australia Private Equity is a major shareholder of the Group and referred the Group to us for professional advice. We have had a previous professional relationship with Harbert. We have previously undertaken a formal assignment on a group of companies, where Harbert was the major shareholder and shares common directors with the Group. Reasons why no conflict of interest or duty We believe that this relationship does not result in a conflict of interest or duty because: Our previous relationship with Harbert was not in relation to the Group and/or the directors' affairs, or related parties of the Group and/or the directors. We have a wide referral base and Harbert is one of our many referrers of work in the past 24 months. Australian Taxation Office and Workcover (unsecured creditors) Nature of relationship Various Practitioners within PPB Advisory are members of panels for appointments as liquidators and bankruptcy trustees. Reasons why no conflict of interest or duty We believe that these relationships do not result in a conflict of interest or duty. Our previous relationship with unsecured creditors has not been and is not in relation to the Group's affairs and/or the Group's Director or related parties of the Group. iii. Prior professional services to the insolvent Neither we, nor our firm, have provided any professional services to the Group in the previous 24 months. iv. No other relevant relationships to disclose There are no other known relevant relationships, including personal, business and professional relationships, from the previous 24 months with the Group, an associate of the Group, a former insolvency practitioner appointed to the Group or any person or entity that has security over the whole or substantially the whole of the Group's property that should be disclosed. C. Indemnities and up-front payments We have not been indemnified in relation to this administration, other than any indemnities that we may be entitled to under statute. We have not received any upfront payments in respect of our remuneration or disbursements. Dated this 27 th day of January 2015 Craig Crosbie Administrator David McEvoy Administrator

141 Note: If circumstances change, or new information is identified, we are required under the Corporations Act 2001 and the Australian Restructuring Insolvency & Turnaround Association (AR/TA) Code of Professional Practice to update this Declaration and provide a copy to creditors with our next communication as well as table a copy of any replacement declaration at the next meeting of the insolvent's creditors. Any relationships, indemnities or up-front payments disclosed in the DIRRI must not be such that the Practitioner is no longer independent. The purpose of components B and C of the DIRRI is to disclose relationships that, while they do not result in the Practitioner having a conflict of interest or duty, ensure that creditors are aware of those relationships and understand why the Practitioner nevertheless remains independent.

142 D. Notices of meetings of creditors

143 FORM 529 Corporations Act 2001 NOTICE OF MEETING OF CREDITORS Subregulation (6) Techdrill Civil Services Pty Ltd ACN (Administrators Appointed) (the Company) Notice is given that a meeting of the creditors of the Company will be held at the The Christie Centre, 320 Adelaide Street, Brisbane, Queensland on Monday, 2 March 2015 at 2:00pm. AGENDA 1. To review the joint and several Administrators report concerning the Company s business, property, affairs and financial circumstances pursuant to Section 439A of the Corporations Act For creditors to consider the options available and to resolve either; (a) (b) (c) that the Company execute a Deed of Company Arrangement: or that the Administration should end; or that the Company be wound up 3. To approve: (a) (b) (c) the Voluntary Administrators remuneration and the remuneration of the Deed Administrators, if appointed or the remuneration of the Liquidators, if appointed. 4. If the Company is wound up, to consider (a) the appointment of a Committee of Inspection 5. At the meeting, creditors may also, by resolution, vote to appoint someone else as Liquidator(s) / Deed Administrator(s) of the Company. Dated this 19 th day of February 2015 Craig Crosbie and David McEvoy Administrators Techdrill Civil Services Pty Ltd PPB Advisory Level 21, 181 William Street, Melbourne VIC 3000

144 FORM 529 Corporations Act 2001 NOTICE OF CONCURRENT MEETINGS OF CREDITORS Subregulation (6) Techdrill Mining Services Pty Ltd ACN Techdrill Civil and Mining Services Pty Ltd ACN Glown Pty Ltd ACN (All Administrators Appointed) (the Companies) Notice is given that concurrent meetings of the creditors of the Companies will be held at PPB Advisory, Level 7, 8-12 Chifley Square, Sydney, New South Wales on Monday, 2 March 2015 at 11:00am. AGENDA 1. To review the joint and several Administrators report concerning the Companies business, property, affairs and financial circumstances pursuant to Section 439A of the Corporations Act For creditors to consider the options available and to resolve either; (a) (b) (c) that the Companies execute a Deed of Company Arrangement: or that the Administrations should end; or that the Companies be wound up 3. To approve: (a) (b) (c) the Voluntary Administrators remuneration and the remuneration of the Deed Administrators, if appointed or the remuneration of the Liquidators, if appointed. 4. If the Companies are wound up, to consider (a) the appointment of a Committee of Inspection 5. At the meetings, creditors may also, by resolution, vote to appoint someone else as Liquidator(s) / Deed Administrator(s) of any of the Companies. Dated this 19 th day of February 2015 Craig Crosbie and David McEvoy Administrators Techdrill Mining Services Pty Ltd Techdrill Civil and Mining Services Pty Ltd Glown Pty Ltd PPB Advisory Level 21, 181 William Street, Melbourne VIC 3000

145 E. ASIC Publication: Insolvency information for directors, employees, creditors and shareholders

146 Insolvency information for directors, employees, creditors and shareholders ASIC has 11 insolvency information sheets to assist you if you re affected by a company s insolvency and have little or no knowledge of what s involved. These plain language information sheets give directors, employees, creditors and shareholders a basic understanding of the three most common company insolvency procedures liquidation, voluntary administration and receivership. There is an information sheet on the independence of external administrators and one that explains the process for approving the fees of external administrators. A glossary of commonly used insolvency terms is also provided. The Insolvency Practitioners Association (IPA), the leading professional organisation in Australia for insolvency practitioners, endorses these publications and encourages its members to make their availability known to affected people. List of information sheets INFO 41 Insolvency: a glossary of terms INFO 74 Voluntary administration: a guide for creditors INFO 75 Voluntary administration: a guide for employees INFO 45 Liquidation: a guide for creditors INFO 46 Liquidation: a guide for employees INFO 54 Receivership: a guide for creditors INFO 55 Receivership: a guide for employees INFO 43 Insolvency: a guide for shareholders INFO 42 Insolvency: a guide for directors INFO 84 Independence of external administrators: a guide for creditors INFO 85 Approving fees: a guide for creditors Getting copies of the information sheets To get copies of the information sheets, visit ASIC s website at The information sheets are also available from the IPA website at The IPA website also contains the IPA s Code of Professional Practice for Insolvency Professionals, which applies to IPA members. Important note: The information sheets contain a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. These documents may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances. You will need a qualified professional adviser to take into account your particular circumstances and to tell you how the law applies to you. Australian Securities & Investments Commission, December 2008 Page 1 of 1

147 F. Details of identified secured creditors