CDP Waste2Energy (Brisbane) Pty Ltd (In Liquidation) ACN (CDP Waste2Energy Brisbane) Statutory Report to Creditors

Transcription

1 CDP Waste2Energy (Brisbane) Pty Ltd (In Liquidation) ACN (CDP Waste2Energy Brisbane) Statutory Report to Creditors I refer to my initial information for creditors dated 6 December 2018 in which I advised you of our appointment as Liquidators and your rights as a creditor in the liquidation. I enclose our revised Declaration of Independence, Relevant Relationships and Indemnities (DIRRI). Our independent status and who appointed us is outlined in our DIRRI. The purpose of this report is to: provide you with an update on the progress of the liquidation; and advise you of the likelihood of a dividend being paid in the liquidation. CDP Waste2Energy Brisbane is a subsidiary of CDP Waste2Energy Holdings Pty Ltd (Holdings). A listing of the CDP Group related entities and the organisational structure are enclosed. Please note that the Liquidators are appointed to many, but not all, of the CDP Group companies. EFI s business The CDP Group s core business was research and development into a Catalytic Depolymerisation Process (CDP) technology designed to convert a range of wastes into energy, including renewable fuels and electricity. CDP Waste2Energy Brisbane was established to operate a commercial project of the CDP Group which did not eventuate. On 23 November 2018, the director of CDP Waste2Energy Brisbane passed a resolution that CDP Waste2Energy Brisbane be wound up voluntarily. Asset realisations Set out below is a summary of the company s assets based on the Report on Company Activities and Property (ROCAP) submitted by the director, the Liquidators realisations to date and estimates of total anticipated realisations. Estimated assets Description Note Realised to date ($) Liquidators' estimate ($) ROCAP ($) Cash at bank Total assets Source: ROCAP, liquidation cash receipts, Liquidators analysis All amounts AUD Cash at bank Upon my appointment as Liquidator, CDP Waste2Energy Brisbane s bank account had a debit balance. I do not anticipate any recoveries in relation to cash at bank. 1

2 Estimated liabilities Set out below is a summary of CDP Waste2Energy Brisbane s liabilities, based on the information available to date. Estimated liabilities Proofs of Debt Liquidators' estimate Category Note Value ($) No. Value ($) No. ROCAP ($) Unsecured creditors trade creditors , Unsecured creditor loan from Holdings Unsecured creditor loan from CDP Commercial Properties Unsecured creditor loan from CDP Industries Unsecured creditor loan from CDP Waste2Energy , , , Total , Source: ROCAP, Liquidators analysis All amounts AUD Related entity loans My review of the CDP Group books and records has identified various related entity loans including the following loans to CDP Waste2Energy Brisbane: $2, from Holdings; $ from CDP Commercial Properties Pty Ltd (In Liquidation) (CDP Commercial Properties); $94, from CDP Industries Pty Ltd (In Liquidation) (CDP Industries); and $94, from CDP Waste2Energy Pty Ltd (In Liquidation) (CDP Waste2Energy). Investigations I have commenced investigations into CDP Waste2Energy Brisbane s affairs including potential breaches of the Corporations Act 2001 (Corporations Act). To date, I have not identified any recovery actions, however my investigations into insolvent trading are ongoing. Upon finalisation of my investigations, I will also report my findings to the Australian Securities and Investments Commission (ASIC). Outstanding matters The following matters remain outstanding in the Liquidation: finalisation of investigations; and lodgement of my report pursuant to Section 533 of the Corporations Act, which reports the outcome of my investigations to ASIC. Receipts and payment to date There have been no receipts or payments to date in the liquidation for the period 23 November 2018 to 19 February

3 Likelihood of a dividend A number of factors will affect the likelihood of a dividend being paid to creditors, including: the size and complexity of the liquidation; the timing and costs of pursuing any viable recovery actions identified; the recovery values of any such actions; the statutory priority of certain claims and costs; the value of various classes of claims including secured, priority and unsecured creditor claims, and the volume of enquiries by creditors and other stakeholders. Based on information available at this time, I consider it unlikely that a dividend may be payable to creditors with admitted claims in the liquidation. If a dividend is going to be paid, you will be contacted before that happens and, if you have not already done so, you will be asked to lodge a proof of debt. This formalises the record of your claim in the liquidation and is used to determine all claims against CDP Waste2Energy Brisbane. Cost of the liquidation As previously advised in my initial information to creditors, I have estimated that our total remuneration for the liquidation will be between $5,000 and $20,000 (GST exclusive). However, if no funds become available in the liquidation, that remuneration will not be paid. What happens next? I will proceed with the liquidation, which will include: completing my investigations into CDP Waste2Energy Brisbane s affairs; if identified, pursuing any viable claims for statutory recovery actions; and completing my reporting to the corporate insolvency regulator, ASIC. I may write to you again with further information on the progress of the liquidation. I expect to have completed this liquidation within 12 months. Where can you get more information? You can access information which may assist you on the following websites: ARITA at ASIC at (search for insolvency information sheets ). If you have any queries, please contact Jacinta Camac on (07) Dated: 20 February 2019 Anthony Connelly Liquidator 3

4 Enclosures: Declaration of Independence, Relevant Relationships and Indemnities CDP Group of companies list of related entities CDP Group of companies organisational structure ARITA Information Sheet Offences, Recoverable Transactions & Insolvent Trading 4

5 Declaration of Independence, Relevant Relationships and Indemnities

6 Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) Version 2 CDP Waste2Energy (Brisbane) Pty Ltd (In Liquidation) ACN (CDP Waste2Energy Brisbane) The Corporations Act and professional standards require the Practitioners appointed to an insolvent entity to make a declaration as to: their independence generally; relationships, including: a) the circumstances of the appointment; b) any relationships with the company and others within the previous 24 months; c) any prior professional services for the company within the previous 24 months; d) that there are no other relationships to declare; and any indemnities given, or up-front payments made, to the Practitioner. This declaration is made in respect of ourselves, our partners, the firm McGrathNicol, which for the purpose of this declaration includes the McGrathNicol Partnership, the McGrathNicol Advisory Partnership and McGrathNicol Services Pty Ltd. Independence We, Anthony Norman Connelly and William James Harris, of the firm McGrathNicol have undertaken a proper assessment of the risks to our independence prior to accepting the appointment as liquidators of CDP Waste2Energy Brisbane 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. Declaration of Relationships Circumstances of appointment On 8 November 2018, Anthony Connelly was approached by a lawyer from Thomson Geer on behalf of the companies within the CDP Group (refer to section D) to consider consenting to act as liquidator of those companies. On 9 November 2018 Anthony Connelly and William Harris were appointed to the five companies within the CDP Group. At the time of these initial appointments a final view had not been reached about the solvency of two other companies within the CDP Group, being CDP Waste2Energy Brisbane and CDP Waste2Energy (Wodonga) Pty Ltd (In Liquidation) (CDP Waste2Energy Wodonga)had not been reached. On 23 November 2018 and 20 December 2018 Anthony Connelly and William Harris were subsequently appointed to act as creditors voluntary liquidators of CDP Waste2Energy Brisbane and CDP Waste2Energy Wodonga, respectively. Thomson Geer provides legal advice from time-to-time to assist McGrathNicol s restructuring and advisory projects and Thomson Geer periodically refers engagements to McGrathNicol. We believe this referral does not result in a conflict of interest or duty because: D WASTBRI01-Revised DIRRI-JC 1

7 McGrathNicol has not undertaken an engagement for Thomson Geer relating to CDP Group or CDP Waste2Energy Brisbane. Each professional engagement referred by Thomson Geer in relation to a particular entity is conducted on an entirely separate basis which has no bearing on these appointments. The level of professional referrals between McGrathNicol and Thomson Geer are relatively insubstantial, taking place on approximately five occasions in the last 12 months. These engagements are only commenced after full regard is given to potential conflicts of interest in relation to all interested stakeholders. We have had no prior relationship or dealings with, nor have we provided any other information or advice to CDP Waste2Energy Brisbane before our appointment beyond the matters discussed in the meeting described below. Anthony Connelly (McGrathNicol) first met with Philip Major and the CDP Group s legal advisors from Thomson Geer on 9 November 2018 for the purpose of: gaining a high-level understanding of the corporate structure and financial position of CDP Group; providing an overview of the creditors voluntary liquidation process and the general procedures required to initiate the proposed liquidations; and clarifying the meeting and notice requirements as set out in the constitution of each of the CDP Group companies to initiate the liquidation. On 13 November 2018, Phillip Major contacted a member of McGrathNicol s staff to advise that he considers CDP Waste2Energy Brisbane may also be insolvent and should also be placed into liquidation. At the time of the earlier appointments on 9 November 2018, Phillip Mr Major had understood that CDP Waste2Energy Brisbane and CDP Waste2Energy Wodonga were dormant with no external liabilities. There was no further communications with Mr Major beyond this telephone call except to the extent he responded to the liquidators requests for books and records for the five entities as part of the CDP Group. McGrathNicol did not receive any remuneration for our attendance at the meetings set out above. Anthony Connelly and William Harris consented to act as liquidators of CDP Waste2Energy Brisbane on 16 November and Oon 23 November 2018, the director and member of CDP Waste2Energy Brisbane determined to place the company into liquidation and appointthat Anthony Connelly and William Harris be appointedas joint and several liquidators of CDP Waste2Energy Brisbane. In our opinion, these correspondences do not affect our independence for the following reasons: it is recognised by the Courts and Australian Restructuring, Insolvency and Turnaround Association s (ARITA) Code of Professional Practice that pre-appointment advice on the insolvency process and available options is necessary and does not amount to an impediment to accepting an appointment; and the very limited scope and nature of the discussions held covered preparatory matters only and the advice provided was such that it would not be subject to review and challenge during the course of the administration. Nor would the advice influence our ability to be able to fully comply with the statutory and fiduciary obligations associated with the administration in an objective and impartial manner. We have provided no other information or advice to CDP Waste2Energy Brisbane, Philip Major, or his advisors prior to our appointment beyond that outlined in this DIRRI. D WASTBRI01-Revised DIRRI-JC 2

8 Relevant Relationships (excluding professional services to the Insolvent) We or a member of firm, have had within the preceding 24 months, a relationship with: Name Nature of relationship Reasons CDP Group CDP Waste2Energy Wodonga The CDP Group companies and CDP Waste2Energy Brisbane are subsidiaries of CDP Waste2Energy Holdings Pty Ltd. Anthony Connelly and Jamie William Harris were appointed liquidators to the CDP Group on 9 November The liquidations of the CDP Group are continuing. CDP Waste2Energy Wodonga and CDP Waste2Energy Brisbane are subsidiaries of CDP Waste2Energy Holdings Pty Ltd. Anthony Connelly and William Harris were appointed liquidators to CDP Waste2Energy Wodonga on 20 December The liquidation of CDP Waste2Energy Wodonga is continuing. We believe neither of this these relationships does not result in a conflict of interest or duty because: The few intercompany transactions between the CDP Group and CDP Waste2Energy Brisbane do not appear to be disputed or uncertain. The role undertaken by the liquidators of CDP Group and CDP Waste2Energy Wodonga will not influence our ability to be able to fully comply with the statutory and fiduciary obligations associated with the liquidation of CDP Waste2Energy Brisbane in an objective and impartial matter. Refer to additional comments at section D. Prior professional services to the Insolvent Neither we, nor our firm, have provided any professional services to CDP Waste2Energy Brisbane, in the previous 24 months. 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 CDP Waste2Energy Brisbane, an associate of CDP Waste2Energy Brisbane, a former insolvency practitioner appointed to CDP Waste2Energy Brisbane or any person or entity that has security over the whole or substantially the whole of CDP Waste2Energy Brisbane s property that should be disclosed. 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 and we have not received any up-front payments in respect of our remuneration or disbursements. D WASTBRI01-Revised DIRRI-JC 3

9 Appointments to Members of a Corporate Group The liquidators were appointed as liquidators of the following related companies on 9 November 2018: CDP Commercial Properties Pty Ltd (In Liquidation); CDP Waste2Energy Pty Ltd (In Liquidation); CDP Innovation Pty Ltd (In Liquidation); CDP Industries Pty Ltd (In Liquidation); and Eco Fuel Innovations Pty Ltd (In Liquidation). (collectively, CDP Group) The liquidators were also appointed as liquidators of CDP Waste2Energy Wodonga on 23 November CDP Group, CDP Waste2Energy Wodonga and CDP Waste2Energy Brisbane share a common ultimate holding company, CDP Waste2Energy Holdings Pty Ltd. The liquidators are of the view that the appointment to the group of companies will have significant benefits to the conduct of the liquidations, particularly in that this will provide for cost-savings and enable an accurate as possible view to be obtained of the activities and financial position of the companies as a whole. The liquidators are aware of various inter-company transactions within the group, which seem to be consistent and undisputed, but at this time are not aware of any potential conflicts of interest arising from the appointments over the various group members. However, to the extent it becomes apparent that pre-appointment dealings between companies in the group may give rise to a conflict which may impact the outcome for creditors of CDP Waste2Energy Brisbane, then the liquidators undertake to disclose any such conflicts to the creditors and as appropriate, seek Court directions as to the means of resolving the potential conflict. Dated: 18 January Anthony Norman Connelly William James Harris Note: 1 If the circumstances change or new information is identified, we are required under the Corporations Act 2001 and the ARITA 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. 2 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. Please note that the presentation of the above information is in accordance with the standard format suggested by ARITA. D WASTBRI01-Revised DIRRI-JC 4

10 CDP Group of companies list of related entities Company Abbreviation ACN CDP Waste2Energy Holdings Pty Ltd Holdings CDP Waste2Energy Pty Ltd (In Liquidation) CDP Waste2Energy CDP Innovations Pty Ltd (In Liquidation) CDP Innovations CDP Industries Pty Ltd (In Liquidation) CDP Industries CDP Commercial Properties (In Liquidation) CDP Commercial Properties Eco Fuel Innovations Pty Ltd (In Liquidation) EFI CDP Waste2Energy (Brisbane) Pty Ltd (In Liquidation) CDP Waste2Energy Brisbane CDP Waste2Energy (Wodonga) Pty Ltd (In Liquidation) CDP Waste2Energy Wodonga

11 CDP Group of companies organisational structure

12 CDP Group of companies Organisation structure CDP Waste2Energy Holdings Pty Ltd ABN Holding company (100% shareholding of all entities shown below) Eco Fuel Innovations Pty Ltd (In Liquidation) ACN Research and development CDP Waste2Energy Pty Ltd (In Liquidation) ACN Employing entity CDP Industries Pty Ltd (In Liquidation) ACN Manufacturing CDP plants CDP Innovations Pty Ltd (In Liquidation) ACN Patent applicant CDP Commercial Properties Pty Ltd (In Liquidation) ACN Property acquisition and facility management CDP Waste2Energy (Wodonga) Pty Ltd (In Liquidation) ACN Special project CDP Waste2Energy (Brisbane) Pty Ltd (In Liquidation) ACN Special project Entities in liquidation CDP Energy Pty Ltd ACN Dormant company CDP Projects Pty Ltd ACN Dormant company CDP Waste2Energy (NZ) Ltd NZBN Possible project company You have received this report because you may be a creditor of this entity Source: adapted from CDP Group s books and records

13 ARITA Information Sheet Offences, Recoverable Transactions & Insolvent Trading

14 Creditor Information Sheet Offences, Recoverable Transactions and Insolvent Trading Offences A summary of offences under the Corporations Act that may be identified by the administrator: 180 Failure by company officers to exercise a reasonable degree of care and diligence in the exercise of their powers and the discharge of their duties. 181 Failure to act in good faith. 182 Making improper use of their position as an officer or employee, to gain, directly or indirectly, an advantage. 183 Making improper use of information acquired by virtue of the officer s position. 184 Reckless or intentional dishonesty in failing to exercise duties in good faith for a proper purpose. Use of position or information dishonestly to gain advantage or cause detriment. This can be a criminal offence. 198G 206A Performing or exercising a function or power as an officer while a company is under administration. Contravening a court order against taking part in the management of a corporation. 206A, B Taking part in the management of corporation while being an insolvent, for example, while bankrupt. 206A, B Acting as a director or promoter or taking part in the management of a company within five years after conviction or imprisonment for various offences. 209(3) Dishonest failure to observe requirements on making loans to directors or related companies. 254T Paying dividends except out of profits. 286 Failure to keep proper accounting records. 312 Obstruction of an auditor Failure to comply with requirements for the preparation of financial statements. 437D(5) 438B(4) 438C(5) Unauthorised dealing with company's property during administration. Failure by directors to assist administrator, deliver records and provide information. Failure to deliver up books and records to the administrator. 590 Failure to disclose property, concealed or removed property, concealed a debt due to the company, altered books of the company, fraudulently obtained credit on behalf of the company, material omission from Report as to Affairs or false representation to creditors. Recoverable Transactions Preferences A preference is a transaction, such as a payment by the company to a creditor, in which the creditor receiving the payment is preferred over the general body of creditors. The relevant period for the payment commences six months before the commencement of the liquidation. The company must have been insolvent at the time of the transaction, or become insolvent because of the transaction. Where a creditor receives a preference, the payment is voidable as against a liquidator and is liable to be paid back to the liquidator subject to the creditor being able to successfully maintain any of the defences available to the creditor under the Corporations Act. Uncommercial Transaction An uncommercial transaction is one that it may be expected that a reasonable person in the company's circumstances would not have entered into, having regard to: the benefit or detriment to the company; the respective benefits to other parties; and, any other relevant matter. AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION

15 To be voidable, an uncommercial transaction must have occurred during the two years before the liquidation. However, if a related entity is a party to the transaction, the period is four years and if the intention of the transaction is to defeat creditors, the period is ten years. The company must have been insolvent at the time of the transaction, or become insolvent because of the transaction. Unfair Loan A loan is unfair if and only if the interest was extortionate when the loan was made or has since become extortionate. There is no time limit on unfair loans they only must be entered into before the winding up began. Arrangements to avoid employee entitlements If an employee suffers loss because a person (including a director) enters into an arrangement or transaction to avoid the payment of employee entitlements, the liquidator or the employee may seek to recover compensation from that person. It will only be necessary to satisfy the court that there was a breach on the balance of probabilities. There is no time limit on when the transaction occurred. Unreasonable payments to directors Liquidators have the power to reclaim unreasonable payments made to directors by companies prior to liquidation. The provision relates to payments made to or on behalf of a director or close associate of a director. The transaction must have been unreasonable, and have been entered into during the 4 years leading up to a company's liquidation, regardless of its solvency at the time the transaction occurred. Voidable charges Certain charges over company property are voidable by a liquidator: circulating security interest created within six months of the liquidation, unless it secures a subsequent advance; unregistered security interests; security interests in favour of related parties who attempt to enforce the security within six months of its creation. Insolvent trading In the following circumstances, directors may be personally liable for insolvent trading by the company: a person is a director at the time a company incurs a debt; the company is insolvent at the time of incurring the debt or becomes insolvent because of incurring the debt; at the time the debt was incurred, there were reasonable grounds to suspect that the company was insolvent; the director was aware such grounds for suspicion existed; and a reasonable person in a like position would have been so aware. The law provides that the liquidator, and in certain circumstances the creditor who suffered the loss, may recover from the director, an amount equal to the loss or damage suffered. Similar provisions exist to pursue holding companies for debts incurred by their subsidiaries. A defence is available under the law where the director can establish: there were reasonable grounds to expect that the company was solvent and they did so expect; they did not take part in management for illness or some other good reason; or they took all reasonable steps to prevent the company incurring the debt. The proceeds of any recovery for insolvent trading by a liquidator are available for distribution to the unsecured creditors before the secured creditors. 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. Version: August (VA) - INFO - Offences recoverable transactions and insolvent trading v1_1.docx1 AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION PAGE 2