University of New South Wales International House Limited (Administrators Appointed) ACN

Transcription

1 University of New South Wales International House Limited (Administrators Appointed) ACN Voluntary Administrator s Report 3 Ferrier Hodgson is an affiliation of independent partnerships/entities Liability limited by a scheme approved under the Professional Standards Legislation Level 25, One International Towers Sydney, 100 Barangaroo Avenue Sydney NSW 2000 GPO Box 4114 Sydney NSW 2001 P F E. sydney@fh.com.au ferrierhodgson.com

2 Contents Section Page Glossary of terms 2 Executive summary 3 Introduction 6 Company information 9 Historical financial position 11 Report as to affairs and director s reasons for failure 13 The Administration to date and sale of business process 16 Statutory investigations 17 Voidable transactions 20 Return to creditors 22 Statement by Administrators 23 Further information and enquiries 24 Annexures 25 A Notice of meeting of creditors 26 B Remuneration approval request 28 C Appointment of proxy 42 D Proof of debt 45 E ARITA creditor information sheet 47 1

3 Glossary of terms Term Description 1962 Trust A trust established on 24 August 1962 for the purposes of The Universities International House Appeal which raised funds to enable UNSW and University of Sydney to erect and establish an International House College on land owned by each of those universities as places of residence for overseas and Australian students of the universities. ACN ACNC Australian Company Number Australian Charities and Not for Profits Commission Act Corporations Act 2001 Administrators ARITA ASIC ATO Code COI COD College Company Costs Order Directors DIRRI DOCA ERV FEG Robyn Duggan and Morgan Kelly Australian Restructuring, Insolvency & Turnaround Association Australian Securities & Investments Commission Australian Taxation Office ARITA Code of Professional Practice Committee of Inspection Cash on Delivery UNSW International House Residential College University of New South Wales International House Limited Court order that both the Company and UNSW pay their own costs in relation to the Proceedings. Vivienne James, Kenneth Buckle, Tom Randall and James Agnew Declaration of Independence, Relevant Relationships and Indemnities, pursuant to s436da of the Act and Code. Deed of Company Arrangement Estimated Realisable Value Fair Entitlements Guarantee First Meeting First meeting of creditors held on 18 September 2017 FY Financial year IPR Insolvency Practice Rules (Corporations) 2016 Master Notice PPSA PPSR Dr Robert Lundy The notice served by UNSW on the Company in April 2016 terminating its management of the College with effect from 6 December Personal Property Securities Act 2009 (Cth) Personal Property Securities Register 2

4 Term Proceedings RATA Report Second Meeting the Court Trust UNSW Description The proceedings commenced by the Company against UNSW in the Supreme Court of New South Wales to challenge the validly of the Notice. Report as to Affairs This report, prepared pursuant to IPR and Section 438A of the Act Second meeting held pursuant to IPR and Section 439A of the Act, where creditors determine the future of the Company. Supreme Court of New South Wales the 1967 Trust, which arose upon the provision of funds to the UNSW pursuant to the terms of the 1962 Trust and on the undertaking that the funds would only be used for the purpose of the erection, establishment and administration of the International House at the university. The University of New South Wales Executive summary This section addresses frequently asked questions relating to the Administration of the Company including a summary of the estimated outcome for creditors. Full details are available throughout this Report. Question What business did the Company conduct? The Company is the manager and operator of University of New South Wales International House Residential College. The College is owned by UNSW in its capacity as Trustee of the Trust. What is the purpose of this Report? The purpose of this Report is to table the findings of our investigations of the Company 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 Company at the Second Meeting. When is the Second Meeting of creditors? The Second Meeting will be held on Thursday, 12 at the offices of Ferrier Hodgson, Level 25, One International Towers Sydney, 100 Barangaroo Avenue, SYDNEY NSW 2000, at 11:00am. What is the current status of the Company? On 6 September 2017, Robyn Duggan and Morgan Kelly, were appointed as joint and several Administrators of the Company by the Directors pursuant to Section 436A of the Act. On appointment, the Administrators assumed control of the Company s operations and notified employees, creditors (including residents) and other stakeholders of their appointment. The Administrators then conducted an urgent financial and commercial review of the Company with the assistance of key personnel and communicated with key stakeholders including creditors and suppliers. 3

5 Question What is the ownership structure of the Company? The Company is registered as a charity with the ACNC. The Directors of the Company have provided us with the following reasons for its failure: Why do the Directors believe the Company became insolvent? Ongoing legal dispute with UNSW in relation to the Notice. Costs Order made by the Supreme Court of NSW that the Company and the UNSW each pay their own legal costs, as a result of that dispute without recourse to the assets of the Trust. Assets held in the name of the Company, including cash at bank, are assets of the Trust. The Company had already paid its legal costs from those assets prior to the Costs Order being made and had no separate assets from which to repay those monies. Why do the Administrators believe the Company became insolvent? The inability to repay the sum of $897, to the Trust in respect of the legal costs paid in successfully defending the Notice issued by UNSW. What is the purpose of the Second Meeting of Creditors? To resolve the future of the Company. The options available include whether: The Company execute a DOCA; The Administration should end; or The Company should be wound up. What is the estimated return to creditors? While there is an estimated surplus in a liquidation scenario for the Trust, the Company does not have recourse to those assets to meet the liabilities it has incurred in its own right in defending the Notice. Trust creditors will continue to be paid in the ordinary course in full. At this stage, we do not anticipate that there will be sufficient funds in the liquidation of the Company to permit the payment of a dividend to its creditors. Please refer to Section 9 for further information. What do the Administrators recommend creditors should do? On the basis that a DOCA proposal has not been received and ending the Administration is not a viable option due to the insolvency of the Company, it is our opinion that the Company should be placed into liquidation. 4

6 Question What claims will a liquidator investigate? At this stage of the Administration, it not does appear that there will be any claims for the Liquidators to investigate. Whilst the Administrators have considered the underlying causes of the Company s failure, our investigations into claims arising from those matters are at an early stage. The preliminary investigations have identified that: there has historically never been a question around the Company s solvency prior to the Costs Order in March 2017 the impact of the Costs Order rendered the Company insolvent as at 31 March 2017, given that it had already paid all legal costs incurred from assets of the Trust These, and other potential claims will require further investigation by a liquidator if appointed. The investigations undertaken to date in the Administration are detailed at Sections 7 and 8 of this report. If you require any further information, please see the Ferrier Hodgson website and/or contact the following: Where can I get more information? Name: Luke Meany Phone: (02) luke.meany@fh.com.au 5

7 Introduction This section provides information on the Company the subject to the Administration process, the objectives of the Administration, the purpose of this Report, details of meetings of creditors and a summary of the Administrators remuneration. Appointment of Voluntary Administrators On 6 September 2017, Robyn Duggan and Morgan Kelly, were appointed as joint and several Administrators of the Company by the Directors under Section 436A of the Act. Objective of voluntary administration In a voluntary administration, Administrators are empowered by the Act to assume control of an insolvent company, superseding the powers of the Directors and Officers, to manage the company s affairs and deal with its assets in the interests of its creditors. The intention of a voluntary administration is to maximise the prospects of a company continuing in existence or, if that is not possible, to achieve better returns to creditors than would be achieved by its immediate liquidation. During a voluntary administration there is a moratorium over most pre-administration creditor claims. Administrators are also required to investigate the Company s affairs and report to creditors on the Administrator s opinion as to which outcome of the voluntary administration process is in the creditors best interest, informing the creditors prior to their voting at the Second Meeting (please see Section 2.7 for further details). Purpose and basis of this report IPR requires a voluntary administrator to provide a report (the Voluntary Administrator s Report or this Report) to all creditors ahead of the Second Meeting, outlining: Details regarding the business, property, affairs and financial circumstances of the entity under administration; The Administrator s opinion and recommendation on each of the options available to creditors; and If a DOCA is proposed, the details of the DOCA. This Report also informs creditors about the preliminary investigations undertaken by the Administrators to date. Accordingly, the views formed in this Report are not final and may be subject to change. Any additional material issues that are identified after this Report may be subject to a further written report and/or tabled at the forthcoming Second Meeting. This Report has been prepared primarily from information obtained from the Company s books and records and discussions with the Directors and Master. Although the Administrators have conducted certain investigations of the affairs of the Company, there may be matters which we are unaware of as an audit of the Company has not been undertaken. In order to complete our Report, we have utilised information from: The ASIC; The ACNC; The PPSR; The Company s book and records; Discussions with the Directors of the Company; Discussions with key employees of the Company; Discussions with creditors of the Company; and Other public databases. 6

8 Context of this Report This Report is based upon our preliminary investigations to date. Any additional material issues that are identified subsequent to the issue of this Report may be the subject of a further written report and/or tabled at the Second Meeting. 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. We reserve the right to alter any conclusions reached based on any changed or additional information which may be provided to us between the date of this Report and the date of the Second Meeting (except where otherwise stated). In considering the options available to creditors and formulating our opinion and recommendation, we have necessarily made forecasts of asset realisations and total creditors claims based on our best assessment in the circumstances. These forecasts and estimates may change as asset realisations progress and we receive creditor claims and consequently the outcome for creditors might differ from the information provided in this Report. Creditors should consider seeking their own independent legal advice as to their rights and the options available to them at the Second Meeting. Declaration of independence, relevant relationships and indemnities In accordance with Section 436DA of the Act and the Code, a DIRRI was enclosed with the Administrators first communication to creditors (and tabled at the First Meeting of Creditors). The DIRRI disclosed information regarding the Administrators independence, prior personal or professional relationships with the Company or related parties and any indemnities received in relation to the appointment. This assessment identified no real or potential risks to the Administrators independence. There has been no change in the declaration since that time. First Meeting of Creditors and Committee of Inspection Section 436E of the Act requires the Administrators to convene the first meeting of creditors within eight business days of being appointed. The First Meeting of Creditors of the Company was held on 18 September 2017, at which the Administrators appointment was confirmed. Creditors resolved at the First Meeting of Creditors not to appoint a COI. Second Meeting of Creditors Pursuant to Section 439A of the Act, the Second Meeting is convened for Thursday, 12 at the offices of Ferrier Hodgson, Level 25, One International Towers Sydney, 100 Barangaroo Avenue, SYDNEY NSW 2000 at 11.00am. At the Second Meeting, creditors will decide the Company s future by voting on one of the following options: That the administration should end and control of the Company revert to its directors; or, That the Company should be wound up; or, That the Company execute a DOCA. The Notice of Meeting of Creditors is attached at Annexure A along with an appointment of proxy form (Annexure C) and a proof of debt or claim form (Annexure D) Creditors have the opportunity to adjourn the Second Meeting for up to a period of 45 business days to enable further investigations to be undertaken. Creditors who wish to participate in the Second Meeting must complete and submit the following forms to this office by 4:00pm on Wednesday, 11. 7

9 Form Appointment of proxy (form 532) Proof of debt (form 535) Comments Corporate creditors must appoint an individual to act on its behalf. Individuals voting in person are not required to complete this form but must complete this form if a representative is appointed to vote on their behalf. Please note that proxy forms submitted for the First Meeting are not valid for the Second Meeting. A new proxy form must be submitted. Creditors must submit documentation to support the amount they have claimed (i.e. unpaid invoices, payslips). Creditors who have already submitted a proof of debt are not required to resubmit a proof of debt form unless the amount claimed has changed. Remuneration An Administrator s remuneration can only be fixed by resolution of a COI, the Company s creditors, or by application to the Court. In accordance with IPR and the Code, an Initial Remuneration Notice was provided to creditors with our initial communication and tabled at the First Meeting of Creditors. ARITA has issued an Approving remuneration in external administrations information sheet providing general information for creditors on the approval of an administrator s fees in a liquidation, a voluntary administration or a DOCA. This information sheet is available from the ARITA website ( We will be seeking approval at the Second Meeting of Creditors for our remuneration as follows: Remuneration period Amount ($ ex GST) Remuneration to be approved at Second Meeting of Creditors Voluntary Administration 6 September 2017 to 24 September ,537 Voluntary Administration 25 September 2017 to 12 30,000 Liquidation (if applicable) 12 to completion 40,000 Estimated total remuneration Administration and Liquidation 155,537 Please refer to our Remuneration Approval Request at Annexure B for details of the key tasks undertaken throughout the course of the administration to date. At this stage the UNSW has agreed to meet the remuneration of the Voluntary Administrators from the assets of the Trust, subject to creditor approval. 8

10 Company information This section provides creditors with information on the history of the Company and the circumstances leading up to the appointment of Administrators together with details of related entities including statutory information, and an overview of the operating businesses. Company history and events leading up to the administration In 1962, a group of prominent Sydney business and professional people from the Rotary Club of Australia, decided to raise funds from the public to promote the tertiary education of certain students in New South Wales and for the purpose of constructing International Houses at UNSW and the University of Sydney. They established a committee to launch a public appeal for funds, and established the 1962 Trust to hold the funds raised. Under the terms of the 1962 Trust, each International House was to be managed and controlled by an independent Board of Management constituted by the governing body of the relevant university. In 1967, the UNSW s share of the funds raised by the public appeal were paid to it and, for all intents and purposes, created the Trust. In accepting the money from the 1962 Trust, UNSW provided undertakings that the funds would only be used for the purpose of the erection, establishment and administration of the International House at the university. The Trust was to provide accommodation for international and Australian students of the university. The Company was incorporated in 1964 and has continued to independently manage the College since it opened in The Company did not generate revenue or incur expenses in its own right, nor did it receive any management fees from the UNSW or the Trust to operate the College. The Company is considered to have operated as a special purpose vehicle and simply accounted for the Trust s income and expenses and managed the investment of the funds accumulated from the operation of the College over the years. In February 2016, the UNSW provided a draft management deed to the Company to formalise the management arrangements for the College. The Company did not agree with all the terms contained in that draft deed and executed a deed poll which included terms and conditions acceptable to the Company. UNSW did not agree to the terms of the deed poll and in April 2016 served the Company with the Notice. The Company did not consider that the Notice was valid and commenced the Proceedings challenging the validity of the Notice. On 5 December 2016, the Court determined in the Proceedings that whilst the Trustee understood and accepted that the Company would be the manager, it did not follow that the Trustee required as a term of the Trust that the Company would be the manager of the College, or intended that the Company be the manager in perpetuity. The Court held that although UNSW does have a right to terminate the appointment of the Board of Management of the College from time to time, the UNSW s decision to terminate the appointment of the Company as manager was not justified as being a proper exercise of its power as Trustee of the Trust. On this basis, the Court determined that the Notice was of no effect as it took into account irrelevant matters. The Company incurred significant legal costs ($897,012) during the Proceedings which it paid from the cash accounts it controlled. On 31 March 2017, the Court delivered its judgment on the costs of the Proceedings and ordered that both the Company and UNSW pay their own costs in relation to the Proceedings, and neither party ought to resort to the assets of the Trust for the purpose of paying any costs related to the Proceedings. Given that this decision was several months after the Proceedings had been concluded, and in light of the successful outcome of those Proceedings, the Company had already prior to the Costs Order, paid its legal costs of $897,012 from the Trust s assets. The impact of the Costs Order was that the Company immediately had a liability of $897,012 payable to the Trust. With no income or assets of its own, the Company was unable to repay the debt due to the Trust. The UNSW issued a further notice to terminate the Company s appointment as manager of the College on 9 June 2017 with effect from 4 December

11 As a result of these factors, the Directors sought Ferrier Hodgson s advice as to the Company s financial position over the period from 8 August 2017 to 6 September 2017, when the Directors resolved to appoint Administrators. Business operations The Company managed the College. The Company did not undertake any other activities independent of its role as manager of the College. Statutory information Statutory details for the Company extracted from the ASIC and ACNC national databases at the time of our appointment are summarised below. University of New South Wales International House Limited ACN Incorporation date 26 October 1964 Shareholder Registered address / principal place of business Secretary N/A Gate 2, High St, University of NSW, KENSINGTON NSW 2052 Robert Craig Lundy Source: ASIC and ACNC The Company s officers over the past 3 years were: Name Role Appointment date Resignation date Kenneth Alan Buckle Director 29/06/ James Agnew Director Not disclosed - Thomas Randall Director Not disclosed - Vivienne James Director 26/11/ Source: ASIC and ACNC A search of the National Personal Insolvency Index maintained by the Australian Financial Security Authority shows that the Company s current directors are not bankrupt or subject to a Personal Insolvency Agreement under Part X of the Bankruptcy Act. The ASIC database discloses the Company does not have any shareholders Registered security interests The PPSR discloses that one party holds eight registered security interests on the PPSR which relates to motor vehicles. We contacted the security interest holder to request further details and have been advised that the registration are not valid and have been discharged. Winding up applications At the date of our appointment, there was no outstanding winding up application against the Company. 10

12 Historical financial position This section provides a summary of the financial performance of the Company during the period of FY15, FY16 and management accounts for FY17 YTD. Preparation of financial statements The Company s financial statements were prepared up to 31 December Pitcher Partners audited the financial statements. The Company s external accountant also prepared monthly trial balances for management purposes. Summary profit and loss A summary of the Company s profit and loss statements is presented below: YTD 2017 Revenue 1,895,776 1,955,099 1,781,607 Other income 386, , ,042 Total Income 2,282,575 2,312,522 1,900,649 Expenses (1,572,527) (2,441,561) (826,504) Net profit / (loss) for the period 710,048 (129,039) 1,074,144 Source: Company Reports Key observations: The Company appears to have a steady increasing revenue stream in line with incremental increases in accommodation fees for residents at the College. Significant increase in legal fees of c. $1 million was the major factor in the operating loss for These legal fees related in the main to the Company s dispute with UNSW. Summary balance sheet A summary of the Company s balance sheet is presented below: Current assets YTD 2017 Cash and cash equivalents 3,082,535 2,873,365 4,364,670 Trade and other receivables 29,583 76,844 8,618 Other financial assets 3,390,254 4,503,455 3,473,455 Other current assets 33,119 39,738 30,325 Total current assets 6,535,491 7,493,402 7,877,068 Non-current assets Plant and equipment 633, , ,667 Other financial assets 4,763,843 4,006,727 4,224,211 Total non-current assets 5,397,842 4,633,489 4,859,878 Total assets 11,933,333 12,126,891 12,736,946 Current liabilities 11

13 YTD 2017 Payables 98, ,603 2,628 Provisions 370, , ,209 Other current liabilities 332, , ,028 Total current liabilities 801,095 1,022, ,565 Total liabilities 801,095 1,022, ,565 Net assets 11,132,238 11,104,383 12,171,381 Source: Company Annual Reports Key observations: The increase between 2015 and 2016 in other financial current assets is the result of a term deposit in the amount of $1,030,000 maturing, which is reflected in the $1,000,000 decrease in other financial non-current assets. Payables in 2016 are predominantly made up of trade creditors of $166,838. This amount increased by $146,911 from The Management accounts for YTD2017 do not include the debt due to the Trust. Provisions reflect accruals for employee leave entitlements. Other current liabilities predominately comprise the bonds to be returned to the College residents on termination of their residency subject to complying with the conditions of their residential agreement. 12

14 Report as to affairs and director s reasons for failure This section provides a summary of the report as to affairs submitted by the directors, together with a detailed explanation of the director s reasons for failure of the Company. Report as to affairs Section 438B of the Act requires the Directors to give an administrator a RATA about the Company s business, property, affairs and financial circumstances. We received the Directors RATA on 13 September In the RATA, the Directors detailed the Company s assets and liabilities at book value and ERV. The Administrators have not audited the Company s records or the book values. The below schedule should not be used to determine the likely return to creditors as a number of realisable values are based on the Company s records and remain subject to the review of the Administrators and, in particular: The value of creditor claims remains subject to change as further claims may be received and require adjudication. The table below does not provide for possible trading losses or professional costs associated with the administration process. Further detail on the estimated return to creditors from the administration is contained in Section 9. The following table summarises the assets and liabilities disclosed in the Directors RATA: Ref Book Value Directors ERV Administrators ERV Assets - Trust Cash on hand Cash at bank ,361,993 4,361,993 4,361,993 Debtors ,618 8,618 8,618 Plant and equipment , , ,917 Other assets ,632,017 7,616,855 7,616,855 Total assets - Trust 12,638,879 12,305,884 12,146,967 Total assets - Company Liabilities - Trust Employees claims TBA TBA 859,193 Unsecured creditors (incl Resident Bonds) , , ,050 Total liabilities - Trust 187, ,714 1,037,243 Liabilities Company Unsecured creditors , , ,095 Total Liabilities - Company 910, , ,095 Estimated surplus - Trust 12,451,165 12,118,170 11,109,724 Estimated deficiency - Company (910,095) (910,095) (910,095) 13

15 Notes Cash The Director s RATA outlined that the Company held cash balances of $4,361,993 at the date of our appointment. In addition, the Company held petty cash of $584. The Company has three cash accounts including its operating account which have been secured by the Administrators. The funds held in the cash accounts are assets of the Trust. Debtors Debtors comprise of outstanding monies owed by three former residents. Our initial enquiries indicate that the debtors are no longer residing in Australia. The prospects of recovering these debts are low. Plant & equipment Plant and equipment consists predominately of furniture and office, kitchen and laundry equipment. The Directors have attributed an ERV of 50% of the book value for these assets to account for a possible forced sale. We have not incurred the expense of having the plant and equipment valued at this stage. For this purpose we have estimated an ERV based on 25 cents in the dollar on the book value of these assets. These are assets of the Trust and will revert to the control of UNSW if creditors resolve to wind up the Company. Other assets Other assets consist of managed investment funds which the Company has accumulated and continued to invest and grow over time from surplus funds from operations of the College. These are assets of the Trust. Employee claims A breakdown of outstanding employee entitlements as at 6 September 2017 is detailed below: Unpaid superannuation Amount outstanding Annual leave/long service leave 394,026 Redundancy / PILN 1 465,167 Total 859,193 1 subject to legal advice on calculation of potential claims. N/A Employee claims are liabilities of the Trust having been incurred in the usual and ordinary operations of the College and will be paid in full from the available assets of the Trust. At this stage, it is not certain whether the employees will be retained by UNSW to assist with the ongoing operations of the College. In the event that the employees are retained, then entitlements to redundancy and PILN will not crystallise. Unsecured creditors In their RATA, the Directors have recorded unsecured creditor claims totalling $1,097,809. A summary of the unsecured creditors is below: Trust Creditors Directors ERV Administrators ERV Resident deposit bonds 178, ,050 Suppliers 9,664 0 Company Creditors UNSW ATF the 1967 Trust 897, ,012 Other creditors 13,083 13,083 Total 1,097,809 1,088,145 14

16 Creditors of the Trust will be paid in full from the Trust assets. Suppliers to date have been paid in the ordinary course from the Trust assets to avoid any disruption to the ordinary operations of the Trust. Residents of the College will have their bonds returned from Trust assets in the ordinary course provided they comply with the terms of their residential agreement. The Company only has two creditors primarily comprised of the debt due to UNSW in its capacity as Trustee of the Trust for the legal fees paid by the Company from the Trust assets during the litigation with UNSW in relation to the first notice to terminate the appointment of the Company as manager of the College. Omissions from RATA We have not identified any material omissions from the Directors RATA. Directors opinions as to the reasons for failure The Directors have provided their views on the affairs of the Company and attribute the following reasons to its failure: Ongoing legal dispute with UNSW in relation to the Notice. Order made by the Supreme Court of NSW that the Company and UNSW each pay their own legal costs, as a result of that dispute, without recourse to the assets of the Trust. Assets held in the name of the Company, including cash at bank, are assets of the Trust. The Company had already paid its legal costs from those assets prior to the Costs Order being made and had no separate assets from which to repay those monies. Administrator s opinions as to the reasons for failure Our preliminary view is that, in addition to the reasons identified by the Directors, the Company failed because of: The absence of separate assets available to the Company in its own right to repay the Trust for the legal fees paid in challenging the Notice. UNSW subsequently issuing another termination notice on 9 June

17 The Administration to date and sale of business process This section provides an overview of the conduct of the Administration, including the trading of the business and the going concern sale process. The business at commencement of the Administration On appointment, the Administrators assumed control of the Company s business. Appropriate controls and systems were put in place with respect to cash / banking, purchase orders, stock control and reporting. Whilst conducting an urgent assessment of the business, we continued to trade in the ordinary course. In particular, we: Opened new accounts with service providers, utilities and other non-stock suppliers; Reviewed contracts and negotiated terms of trade with various suppliers; Continued employment of staff; Conducted meetings with Directors, senior management, staff and residents; Reviewed the procedures for IT services and back up processes for information on site; and Reviewed the adequacy of the insurances policies held by the Company. Key trading issues and trading results During the first three weeks of trading there were a number of issues with key suppliers, particularly with suppliers freezing accounts, delaying the setup of new accounts and not continuing supply. While we could set up new accounts and continue trading with most suppliers, there were significant delays and changes to the Company s terms of trade resulting in online orders being paid on COD terms in some cases. We could find alternate suppliers in the interim to avoid any major disruptions to trading and contractual obligations to the residents. The College continues to operate in the ordinary course of business. The Administrators trading receipts and payments for the period 6 September 2017 to 29 September 2017 is summarised below: Trading receipts 1 $ (excl GST) Cash at Bank operating account 662,722 Other income 2,442 Total trading receipts 665,164 Trading payments Wages and payroll expenses (31,842) Superannuation (11,255) Stock purchases (food & beverages) (24,696) Other trading expenses (33) Total trading payments (67,826) Net realisations from trading 597,338 1 The primary source of revenue (other than income from investments) is the residential fees paid by the students living at the College. These fees are predominately paid at the commencement of the academic year and have already been received into the cash accounts operated by the Company. 16

18 Statutory investigations This section provides creditors with information on the preliminary investigations undertaken by the Administrators to date, and whether there have been any potential actions identified that may be pursued by a liquidator, if appointed. Nature and scope of review The Act requires an administrator to carry out preliminary investigations into a company s business, property, affairs and financial circumstances. To date we have not identified any evidence to suggest any voidable transactions were entered into by the Company. Investigations centre on transactions entered into by the Company that a liquidator might seek to void or otherwise challenge where the Company is wound up. Investigations allow an administrator to advise creditors what funds might become available to a liquidator such that creditors can properly assess whether to accept a DOCA proposal or resolve to wind up the Company. We investigated matters to the extent possible in the time available. A liquidator may recover funds from certain voidable transactions or though other avenues; for example, through action seeking compensation for insolvent trading or breach of director duties. Funds recovered would be available to the general body of unsecured creditors including secured creditors but only to the extent of any shortfall incurred after realising their security. A deed administrator does not have recourse to voidable transactions. The Administrators knowledge of the Company s affairs comes principally from the following sources: Discussions with the Directors, the Master and key staff members. The Directors RATA and questionnaire. Management accounts, books and records, board reports and financial statements. The Company s internal accounting system. The Company s external accountant. Searches obtained from relevant statutory authorities. Records maintained by the ATO. Publicly available information. Director and officers responsibilities Sections 180 to 184 of the Act set out the duties, obligations and responsibilities imposed on Directors which are designed to promote good governance and ensure that Directors act in the interests of the Company. These duties include: Duty of care and diligence; Duty of good faith; Duty not to make improper use of position; and Duty not to make improper use of information. We have considered whether the decision by the Directors to pay the legal costs of the Proceedings constituted a breach of their statutory duties to the Company. The legal costs paid by the Company from the Trust assets were $897, (excluding GST) and included legal fees, Counsel s fees and disbursements. From the information available to us at this stage, we have not identified any basis to support a claim that the Directors of the Company breached their statutory duties. It appears to us that the Directors considered the Notice was invalid and believed they were acting properly at all times in challenging the Notice. 17

19 Notwithstanding that the Company was ultimately successful in the Proceedings, when the Court made its order as to costs, that was the first notification that the Directors had that the legal costs that had been paid by them from the accounts held by the Company (that constituted assets of the Trust) would have to be repaid. It would be necessary for a Liquidator to undertake further enquiries and/or public examinations to confirm whether the Directors had any prior knowledge that should have caused them to consider whether it was appropriate at the time to pay those costs. The Company s solvency In order for a liquidator to recover funds through the voiding of certain transactions or through other legal action, such as seeking compensation from directors for insolvent trading, the Company s insolvency must be established at the relevant time. As previously indicated, the Company was effectively a special purpose vehicle established to manage the College. The assets accumulated and the liabilities incurred in the Company s name in managing the College are assets and liabilities of the Trust. The Company did not receive management fees and had no independent income or assets. For the duration of the Company s term as manager of the College, the Trust has always met any costs incurred by the Company as part of the ordinary operations of the College. From the analysis conducted at section 4, it is evident that the Company, as manager of the College, operated the College very profitably and has accumulated significant assets on behalf of the Trust. Therefore, as far as we understand from discussions with the Directors, the Master and the Company s advisors, there has historically never been a question around the Company s solvency prior to the Costs Order made on 31 March Given that the Costs Order was made several months after the Company had paid its legal costs of the Proceedings, and as the Company has no operating revenue or assets of its own, the Company had no way of repaying the Trust. Having regard to the above, we believe that the Company was not insolvent until 31 March From the information available to us, the only liability out of the ordinary course of operations of the College incurred by the Company after 31 March 2017, related to legal advice obtained from the Company s lawyers ($13,083) to consider the Costs Order and the options available for the Company. Potential liquidator recoveries insolvent trading Directors liability Section 588G of the Act imposes a positive duty upon company directors to prevent insolvent trading. If a director is found guilty of an offence in contravening Section 588G, the Court may order him or her to pay compensation to the company equal to the amount of loss or damage suffered by its creditors. The Court may also impose upon the directors one of two types of civil penalty orders, the first can include a fine or an order prohibiting the directors from participating in the management of a company. The second, where there is criminal intent and conviction, a director could also be imprisoned for up to five years. This action is not a right that is available to an administrator or a deed administrator. Applications for compensation payable to the company are usually made by a liquidator, or in specified circumstances, a creditor. The substantive elements of Section 588G are: A person must be a director of a company at a time when the company incurs a debt; The company must be insolvent at the time or becomes insolvent by incurring the debt; and The director must have reasonable grounds for suspecting that the company is insolvent or would become insolvent. Directors defences The defences available to directors contained in Section 588H are: The directors had reasonable grounds at the time the debt was incurred to expect the company to be solvent and would remain solvent even after the debt was incurred; 18

20 The directors relied on another competent and reliable person to provide information about whether or not the company was insolvent; The directors were ill or for some other good reason did not take part in the management of the company; and The directors took reasonable steps to prevent the incurring of debt. Pursuing an insolvent trading claim A liquidator must form an opinion as to the date of insolvency and determine the debts incurred from that date; thereby quantifying the loss to the company. The costs of proceeding with an insolvent trading action must be considered. We do not believe that there is any commercial basis for pursuing a claim against the Directors for insolvent trading. Adequacy of books and records Section 286 of the Act requires a company to keep written financial records that correctly record and explain the company s transactions, financial position and performance and would enable true and fair financial statements to be prepared. The financial records must be retained for a period of seven years after the transactions covered by the records are completed. The failure to maintain books and records in accordance with Section 286 provides a rebuttable presumption of insolvency which might be relied upon by a liquidator in an application for compensation for insolvent trading. Based on our review of the books and records received, we are of the opinion that the Company s books and records were maintained in accordance with Section 286 of the Act to the date of our appointment. Other matters arising from investigations Falsification of books Pursuant to Section 1307 of the Act, it is an offence for a person to engage in conduct that results in the concealment, destruction, mutilation or falsification of any securities of or belonging to the company or any books affecting or relating to affairs of the company. If a breach is proven, Part 9.4 of the Act provides for criminal penalties only. Therefore, any breaches of Section 1307 will not result in recovery of funds by a liquidator. The Administrators preliminary investigations do not reveal any evidence of falsification of books. False or misleading statements Pursuant to Section 1308 of the Act, a company must not advertise or publish a misleading statement regarding the amount of its capital. It is an offence for a person to make or authorise a statement that, to the person s knowledge is false or misleading in a material particular. The Administrators preliminary investigations do not reveal any evidence of any false or misleading statements. False information Pursuant to Section 1309 of the Act, it is an offence for an officer or employee to make available or give information to a director, auditor, member, debenture holder, or trustee for debenture holders of the company that is to the knowledge of the officer or employee: False or misleading in a particular matter; or Has omitted from it a matter the omission of which renders the information misleading in a material respect. The Administrators preliminary investigations do not reveal any evidence of any false information. 19

21 Voidable transactions This section informs creditors about potential voidable transactions that occurred prior to the appointment of the Administrators, and where the property of the Company was disposed of or dealt with, may be recovered by a liquidator. A liquidator has the power to void certain transactions which are either not beneficial, or are detrimental, to a company. An administrator must identify any transactions that appear to be voidable by a liquidator. Enclosed at Annexure E is a creditor information sheet published by ARITA. This information sheet details the types of transactions which a liquidator can seek to void, which include: Unfair preference payments; Uncommercial transactions; Unfair loans; Unreasonable director related transactions; Inappropriate related party transactions Creation of circulating security interests within 6 months of commencement of Administration; and Transactions for the purpose of defeating creditors For the purposes of examining voidable transactions, the Liquidator would review transactions that occurred during the relevant time period (as prescribed under the Act), taking into consideration the relation back day. The relation back day for the Company is 6 March 2017 being, the date that is six months prior to the date of our appointment as determined by Section 91 of the Act. Unfair preferences An unfair preference payment is a transaction, generally occurring in the six months prior to the relation back day, between the company and a creditor, resulting in the creditor receiving from the company, in relation to an unsecured debt owed to the creditor, a greater amount than it would have received in relation to the debt in a winding up of the company. This period is extended up to four years for transactions entered into with a related entity. A transaction can only be considered an unfair preference if the company was insolvent at the time the transaction took place, or the company became insolvent as a result of the transaction. Based on the books and records in our possession, we have not identified any transactions which would constitute unfair preferences. Uncommercial transactions An uncommercial transaction is a transaction which a reasonable person in the place of the company would not have entered into, taking into account the benefits and the detriment to the company, the respective benefits to the other parties involved and any other related matters. A liquidator must investigate transactions deemed to be uncommercial, in the period two years prior to the date of administration. The UNSW has raised an issue as to whether the funds paid to the Company s former legal representatives in satisfaction of the Company s legal costs of the Proceedings from the funds held on trust, can be recovered by the Administrators as having been paid by the Company and received unknowingly in breach of trust. We have considered this issue on a preliminary basis and have determined that, at this stage, the UNSW in its capacity as Trustee of the Trust has the proprietary right to recover any trust funds and can assert title to those funds. The legal fees paid, by virtue of the Costs Order issued on 31 March 2017, were not paid from monies that belonged to the Company, which property might otherwise be recoverable by a Liquidator under the Act. Based on the books and records in our possession, we have not identified any other transactions which would constitute uncommercial transactions. 20

22 Unfair loans A liquidator must investigate loans to the company which may be considered unfair due to extortionate interest rates or charges. Based on the books and records in our possession, we have not identified any transactions which would constitute unfair loans. Unreasonable director-related transactions Section 588FDA of the Act refers to unreasonable director-related transactions and requires the liquidator to investigate such transactions, having regard to the detriment to the Company (if any) suffered as a consequence of the transaction. The transaction must have been unreasonable, and entered into during the four years prior to the relation back day, regardless of the solvency at the time the transaction occurred. These can include remuneration, bonuses, loans, loan forgiveness and asset transfers to company officers with the four-year period ending on the relation-back date Based on the books and records in our possession, we have not identified any transactions which would constitute unreasonable director-related transactions. Arrangements to avoid employee entitlements Part 5.8A of the Act aims to protect the entitlements of a company s employees from agreements that deliberately defeat the recovery of those entitlements upon insolvency. Under Section 596AB(1) of the Act, it is an offence for a person to enter into a transaction or relevant agreement with the intention of, or with intentions that include: Preventing recovery of employee entitlements; or Significantly reducing the amount of employee entitlements recoverable. Based on the books and records in our possession, we have not identified any evidence to suggest that the entitlement of employees have been compromised. Summary of potential liquidator recoveries At this stage, the Administrators do not consider that there will be any potential recoveries by a liquidator in the event that the Company is wound up. Directors ability to pay a liquidator s claims Given the Administrators do not consider there will be any potential recoveries from the Directors by a liquidator, they have not made any assessment as to the financial capacity of the Directors to meet any potential liquidator action. Reports to the ASIC We have not identified any offences that require reporting to the ASIC pursuant to Section 438D of the Act. 21

23 Return to creditors This section provides creditors with information on the estimated financial outcome to creditors together with the anticipated timing of any dividend. Return to creditors The table below outlines an estimated Low and High return for each class of creditor in a Liquidation scenario. $000s Liquidation ERV Low Liquidation ERV High Assets - Trust Plant & equipment and motor vehicles 158, ,834 Cash 4,362,577 4,362,577 Debtors 8,618 8,618 Other assets 7,616,855 7,616,855 Total assets - Trust 12,146,967 12,305,884 Less: Administrators fees and disbursements (140,000) (120,000) Less: Liquidators fees and disbursements (40,000) (25,000) Less: Legal fees and other professional costs (50,000) (35,000) Funds available to creditors - Trust 11,916,967 12,125,884 Employee entitlements 1 (859,193) (859,193) Unsecured creditors (resident bonds) (178,050) (178,050) Estimated surplus - Trust 10,879,724 11,088,641 Assets - Company 0 0 Funds available to unsecured creditors Company 0 0 Unsecured creditors (910,095) (910,095) Estimated deficiency - Company 910, ,095 Estimated dividend (cents in $) - Trust Employee entitlements Unsecured creditors (resident bonds) Estimated dividend (cents in $) - Company Unsecured creditors Subject to legal advice and final calculation While there is an estimated surplus in a liquidation scenario for the Trust, the Company does not have recourse to those assets to meet the liabilities it has incurred in its own right in defending the notice of termination served on it by the UNSW in April Timing of dividend Trust creditors will continue to be paid in the ordinary course. At this stage, we do not anticipate that there will be sufficient funds in the liquidation of the Company to permit the payment of a dividend to its creditors. 22

24 Statement by Administrators Pursuant to IPR (3)(b), we are required to provide creditors with a statement setting out our opinion on whether it is in creditors interests for the: Administration to end; Company to be wound up; and Company to execute a DOCA. Each of these options is considered below. In forming our opinion, it is necessary to consider an estimate of the dividend creditors might expect and the likely costs under each option. Administration to end The Company is insolvent and unable to pay its debts as and when they fall due. Accordingly, returning control of the Company to its Directors would be inappropriate and is not recommended. DOCA As no DOCA has been proposed at this point in time, this option is not available to creditors. Winding up of the Company In the absence of a DOCA proposal, it is our opinion that the Company should be placed into liquidation. A liquidator would be in a position to conduct detailed investigations into the conduct of directors and the financial affairs of the Company. A liquidator will also be empowered to: Complete the transfer of Trust assets and the operations of the College to UNSW in an orderly manner. Undertake further investigations and pursue potential recoveries. Distribute any recoveries made in accordance with the priority provisions of the Act. Report to the ASIC on the results of investigations into the Company s affairs. 23

25 Further information and enquiries The ASIC has released several insolvency information sheets to assist creditors, employees and shareholders with their understanding of the insolvency process. You can access the relevant ASIC information sheets at We will advise creditors in writing of any additional matter that comes to our attention after the release of this Report, which in our view is material to creditors consideration. Should you have any enquiries, please contact Luke Meany on (02) or by at Dated this 3 rd day of R L Duggan Administrator 24

26 Annexures 25

27 A Notice of meeting of creditors Notice of meeting of creditors Insolvency Practice Rules (Corporations) 2016, Section University of New South Wales International House Limited (Administrators Appointed) (the Company) ACN NOTICE is given that a meeting of creditors of the Company will be held on 12 at 11:00am at the offices of Ferrier Hodgson, Level 25, One International Towers Sydney, 100 Barangaroo Avenue, SYDNEY NSW Teleconference details: Number: Access code: Agenda 1. To consider a statement by the Directors about the Company s business, property, affairs and financial circumstances. 2. To consider the circumstances leading to the appointment of the Administrators to the Company, details of the proposed Deed of Company Arrangement (if any) and the various options available to creditors. 3. To consider the report of the Administrators. 4. To resolve that: The Company execute a Deed of Company Arrangement; or The Administration should end; or The Company be wound up. 5. If it is resolved that the Company be wound up, and an alternate Liquidator is proposed, consider whether creditors wish to appoint the alternate Liquidator. 6. If it is resolved that the Company be wound up, consider whether a Committee of Inspection is to be appointed, and if so, the members of that Committee. 7. If it is resolved that the Company be wound up, consider whether, pursuant to Section 477(2A) of the Corporations Act 2001 (the Act), creditors authorise the Liquidators to compromise a debt owed to the Company up to a maximum limit of $100, If it is resolved that the Company be wound up, consider whether, pursuant to Section 477(2B) of the Corporations Act 2001, creditors authorise the Liquidators to enter into any agreement on the Company s behalf where: the term of the agreement may end; or obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance; more than three months after the agreement is entered into. 9. If it is resolved that the Company be wound up, consider whether, subject to obtaining the approval of the Australian Securities & Investments Commission (ASIC) pursuant to Section of Schedule 2 to the Act, the books and records of the Company and of the Liquidators may be disposed of by the Liquidators 12 months after the dissolution of the Company or earlier at the discretion of ASIC. 10. To fix the remuneration of the Administrators. 11. If it is resolved that the Company execute a Deed of Company Arrangement, to fix the remuneration of the Deed Administrators. 12. If it is resolved that the Company be wound up, to fix the remuneration of the Liquidators. 13. Any other business that may be lawfully brought forward. 26

28 For a person to be eligible to attend and vote at the meeting on your behalf, a Form 532, Appointment of Proxy, is to be completed and submitted by no later than 4:00PM on 11, to: University of New South Wales International House Limited (Administrators Appointed) c/- Ferrier Hodgson GPO Box 4114, SYDNEY NSW 2001 Tel: Fax: luke.meany@fh.com.au Note: A company may only be represented by proxy or by an attorney appointed pursuant to Insolvency Practice Rules (Corporations) 2016 (IPR) and or, by a representative appointed under Section 250D of the Act. In accordance with IPR 75-85, creditors will not be entitled to vote at the meeting unless they have previously lodged particulars of their claim against the Company in accordance with the Corporations Regulations and that claim has been admitted, for voting purposes, wholly or in part. Dated this 3 rd day of R L Duggan Administrator 27

29 B Remuneration approval request Schedule 2 to the Corporations Act 2001, Section Insolvency Practice Rules (Corporations) 2016, Section University of New South Wales International House Limited (Administrators Appointed) (the Company) ACN Remuneration Approval Request This report contains the following information: Part 1: Declaration Part 2: Executive summary Part 3: Remuneration Part 4: Disbursements Part 5: Report on progress of the administration Part 6: Summary of receipts and payments Part 7: Questions Part 8: Approval of remuneration and internal disbursements Schedule A: Resolution 1 details Schedule B: Resolution 2 details Schedule C: Resolution 3 details Next steps for creditors: Please review the contents of this report, which sets out the resolutions to be approved by creditors at the meeting of creditors on 12. Refer to section 2.7 of the Voluntary Administrator s Report dated 3, for details as to how you can attend the meeting of creditors in person or by proxy in order to vote on the resolutions contained in this report. Declaration We, Robyn Duggan and Morgan Kelly of Ferrier Hodgson, have undertaken a proper assessment of this remuneration claim for our appointment as Administrators of the Company in accordance with the Corporations Act 2001 (Cth) (the Act), the Australian Restructuring Insolvency & Turnaround Association (ARITA) Code of Professional Practice (the Code) 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. Executive summary Summary of remuneration approval sought for the Company To date, no remuneration has been approved and paid in the administration of the Company. This report details approval sought for the following remuneration: Period Amount (ex GST) $ Current remuneration approval sought: Voluntary administration Resolution 1: 85, Commencement of administration to 24 September 2017 Resolution 2: 30, September 2017 to 12 Total approval sought voluntary administration* 115,

30 Period Amount (ex GST) $ Liquidation Resolution 3: 40, to completion of liquidation Total approval sought liquidation 40, * Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of the administration. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors. Please refer to section 3 for full details of the calculation and composition of the remuneration approval being sought. Comparison to estimate of costs provided to creditors in the Initial Remuneration Notice The remuneration approval sought differs to the estimate of costs provided to creditors in the Initial Remuneration Notice included in our report dated 6 September 2017 for the following reasons: Unexpected issues with suppliers and setting up new accounts Additional communications with the Company s bank to set up authorisation and processes for Administrators Attending to communications with UNSW and its advisors including planning for transition The appointment and briefing of new legal representation at the request of UNSW Remuneration Remuneration claim resolutions We will be seeking approval of the following resolutions with respect to remuneration. Details to support these resolutions are included in section 3.2. Resolution 1: "That the remuneration of the Administrators, as set out in the Remuneration Approval Request dated 3, for the period from 6 September 2017 to 24 September 2017 be fixed in the amount of $85,536.50, plus any applicable GST, and may be paid." Resolution 2: "That the remuneration of the Administrators, as set out in the Remuneration Approval Request dated 3, for the period from 25 September 2017 to 12 be fixed up to a maximum amount of $30,000, plus any applicable GST, but subject to upward revision by resolution of creditors, and that the Administrators be authorised to make periodic payments on account of such accruing remuneration as incurred." Resolution 3: "That the remuneration of the Liquidators, as set out in the Remuneration Approval Request dated 3, for the period from 12 to completion of liquidation be fixed up to a maximum amount of $40,000, plus any applicable GST, but subject to upward revision by resolution of creditors, and that the Liquidators be authorised to make periodic payments on account of such accruing remuneration as incurred." Details of remuneration The basis of calculating the remuneration claims are set out below, including the details of the major tasks performed and the costs associated with each of those major tasks. 29

31 Resolution 1: 6 September 2017 to 24 September 2017 The below table sets out time charged to each major task area performed by the Administrators and their staff for the period 6 September 2017 to 24 September 2017, which is the basis of the Resolution 1 claim. Please refer to Schedule A for further details with respect to the tasks performed. ` Position Rate Total Task Area (ex GST) Assets Creditors Employees Trade On Investigation Administration $/Hr Hrs $ Hrs $ Hrs $ Hrs $ Hrs $ Hrs $ Hrs $ Kelly, M Partner / Appointee , Duggan, R Partner / Appointee , , , , Saini, A Senior Manager , , , , Grouhel, M Assistant Manager , , , , Meany, L Senior Analyst , , , , Total (excluding GST) , , , , , , , GST 8, Total (including GST) 94, Average hourly rate

32 Resolution 2: 25 September 2017 to 12 The below table sets out the expected costs for the major tasks likely to be performed by the Administrators and their staff for the period 25 September 2017 to 12, which is the basis of the Resolution 2 claim. Please refer to Schedule B for further details with respect to the tasks likely to be performed. Task Amount Hours $ Creditors 45 20,000 Employees 9 4,000 Trade on 9 4,000 Administration 4.5 2,000 Total ,000 Resolution 3: 12 to completion of liquidation The below table sets out the expected costs for the major tasks likely to be performed by the Administrators and their staff for the period 12 to completion of liquidation, which is the basis of the Resolution 2 claim. Please refer to Schedule B for further details with respect to the tasks likely to be performed. Task Amount Hours $ Creditors 18 8,000 Employees 9 4,000 Trade on 27 12,000 Investigation 9 4,000 Administration 27 12,000 Total 90 40,000 Total remuneration reconciliation Comparison between current total and previous estimates At this point in time we estimate that the total remuneration for this administration will be $115, (excluding GST). This includes the current approval amount being sought of $115, (excluding GST). The above estimate differs to the estimate of costs provided to creditors in the Initial Remuneration Notice included in our letter/report dated 6 September 2017 for the following reasons: Unexpected issues with suppliers and setting up new accounts Additional communications with the Company s bank to set up authorisation and processes for Administrators Attending to communications with UNSW and its advisors and preparations for transition The appointment of new legal representation at the request of UNSW Future remuneration requests In preparing this report, we have made our best estimate at what we believe the administration will cost to complete and we do not anticipate that we will have to ask creditors to approve any further remuneration. However, should the administration not proceed as expected, we will advise creditors and we may seek approval of further remuneration and provide details on why the remuneration has changed. Matters that may affect the progress and the cost of the administration, include: Transition of College operations to UNSW; Liquidation and investigation. 31

33 Likely impact on dividends The Administrators and Liquidators remuneration and disbursements are a priority expense that ranks ahead of the payment of creditors. The work undertaken and to be undertaken is necessary for the orderly conduct of the administration/liquidation. Any dividend will ultimately be impacted by the realisations achieved and the value of creditor claims. At this stage the UNSW has agreed to meet the remuneration of the Voluntary Administrators from the assets of the Trust, subject to creditor approval. Disbursements Types of disbursements Disbursements are divided into three types: Externally provided professional services. These are recovered at cost. An example is legal fees. Externally provided non-professional costs such as travel, accommodation and search fees. These disbursements 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; although if a data room is utilised, the fee will comprise an initial setup fee and then a fee based on the duration and size of the data room. Certain services provided by Ferrier Hodgson may require the processing of electronically stored information into specialist review platforms. Where these specialist resources are utilised, the fee will be based on units (e.g. number of computers), size (e.g. per gigabyte) and/or period of time (e.g. period of hosting). The relevant rates for internal disbursements are set out below: Disbursement type Advertising Couriers Data room hosting ediscovery services Mileage reimbursement Photocopying Photocopying (outsourced) Printing Printing (outsourced) Postage Searches Storage and storage transit Telephone calls Note: Above rates are applicable for the financial year ending 30 June 2018 Charges (excl GST) At cost At cost Variable see separate table below Variable $0.66 per kilometre At cost At cost At cost At cost At cost At cost At cost At cost Data room hosting fees by size (MB) Charges per month (excl GST) $ $950 + $2.50/MB $2,500 + $1.25/MB $7,500 + $0.60/MB Disbursements paid from the administration to Ferrier Hodgson to date There have been no disbursements paid from the administration to Ferrier Hodgson to date. Future disbursements provided by Ferrier Hodgson will be charged to the administration on the same basis as the table in Part

34 Report on progress of the administration The Remuneration Approval Request must be read in conjunction with the Voluntary Administrators Report to creditors dated 3 which outlines the progress of the administration. Summary of receipts and payments A summary of receipts and payments for the period 6 September 2017 to 24 September 2017 is set out in Section 6.2 of the Voluntary Administrators Report to creditors dated 3. Approval of remuneration For information about how approval of the resolutions for remuneration will be sought, refer to Section 2.8 of the Voluntary Administrators Report to creditors dated 3. Questions If you require further information in respect of the above, or have other questions, please contact Luke Meany of this office on The partners of Ferrier Hodgson are members of ARITA. Ferrier Hodgson follows the Code. A copy of the Code may be found on the ARITA website at An information sheet concerning approval of remuneration in external administrations can also be obtained from the Australian Securities & Investments Commission website at Dated this 3 rd day of R L Duggan Administrator 33

35 Schedule A Resolution 1 The below table contains more detailed descriptions of the tasks performed within each task area performed by the Administrators and their staff for the period commencement of administration to 24 September 2017, which is the basis of the Resolution 1 claim in section Task area General description Includes Assets Plant and equipment Reviewing asset listings 3.20 hours $1, (excl GST) Debtors Reviewing and assessing debtors ledgers Creditor enquiries, requests and directions Receive and respond to creditor enquiries Maintaining creditor request log Review and prepare initial correspondence to creditors and their representatives Considering reasonableness of creditor requests Compiling information requested by creditors Retention of title claims Search to the PPSR register Notify PMSI creditors identified from PPSR register Creditors hours $23, (excl GST) Creditor reports Dealing with proofs of debt Preparing reports on results of investigation (including statutory reports) and convening meetings General reports to creditors Receipting and filing proofs of debt when not related to a dividend Corresponding with OSR and ATO regarding proofs of debt when not related to a dividend Meeting of creditors Preparation of meeting notices, proxies and advertisements Forward notice of meeting 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. Preparation and lodgement of minutes of meetings with ASIC Respond to stakeholder queries and questions immediately following meeting Employees 2.20 hours Employee enquiries Receive and follow up employee enquiries via telephone 34

36 Task area General description Includes $1, Maintain employee enquiry register (excl GST) Review and prepare correspondence to creditors and their representatives via facsimile, and post Trade on hours $17, (excl GST) Trade-on management Processing receipts and payments Liaising with suppliers Liaising with management and staff Attendance on site Preparing and authorising receipt vouchers Preparing and authorising payment vouchers Liaising with OSR regarding payroll tax issues Entering receipts and payments into accounting system Investigation 4.30 hours $2, (excl GST) Conducting investigation Collection of Company books and records Reviewing Company s books and records Review and preparation of Company nature and history Conducting and summarising statutory searches Preparation of comparative financial statements Preparation of deficiency statement Review of specific transactions and liaising with directors regarding certain transactions Correspondence General correspondence Document maintenance / file review / checklist Filing of documents Updating checklists Administration hours $39, (excl GST) Insurance Identification of potential issues requiring attention of insurance specialists Correspondence with insurer regarding initial and ongoing insurance requirements Reviewing insurance policies Correspondence with previous brokers Bank account administration Preparing correspondence opening and closing accounts Requesting bank statements Bank account reconciliations Correspondence with bank regarding specific transfers ASIC forms Preparing and lodging ASIC forms 35

37 Task area General description Includes Correspondence with ASIC regarding statutory forms ATO and other statutory reporting Notification of appointment Planning / review Discussions regarding status / strategy of administration 36

38 Schedule B Resolution 2 The below table contains more detailed descriptions of the tasks performed within each task area likely to be performed by the Administrators and their staff for the period 25 September 2017 to 12, which is the basis of the Resolution 2 claim in section 3.2.2: Task area General description Includes Creditor enquiries, requests and directions Receive and respond to creditor enquiries Maintaining creditor request log Review and prepare initial correspondence to creditors and their representatives Considering reasonableness of creditor requests Compiling information requested by creditors Creditor reports Preparing reports on results of investigation (including statutory reports) and convening meetings General reports to creditors Creditors hours $20, (excl GST) Dealing with proofs of debt Meeting of creditors Receipting and filing proofs of debt when not related to a dividend Preparation of meeting notices, proxies and advertisements Forward notice of meeting 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. Preparation and lodgement of minutes of meetings with ASIC Respond to stakeholder queries and questions immediately following meeting Proposals to creditors Receipting and filing proofs of debt when not related to a dividend Corresponding with OSR and ATO regarding proofs of debt when not related to a dividend Employees 9.00 hours $4, (excl GST) Calculation of entitlements Calculating employee entitlements Reviewing employee files and Company s books and records Reconciling superannuation accounts Reviewing awards 37

39 Task area General description Includes Liaising with solicitors regarding entitlements Trade on 9.00 hours $4, (excl GST) Trade-on management Liaising with suppliers Liaising with management and staff Attendance on site Authorising purchase orders Maintaining purchase order registry Preparing and authorising receipt vouchers Preparing and authorising payment vouchers Liaising with superannuation funds regarding contributions, termination of employees employment Transitional matters Processing receipts and payments Entering receipts and payments into accounting system Correspondence General correspondence Document maintenance / file review / checklist First month, then ongoing administration reviews Filing of documents File reviews Updating checklists Administration 4.50 hours $2, (excl GST) Insurance Bank account administration Identification of potential issues requiring attention of insurance specialists Correspondence with insurer regarding initial and ongoing insurance requirements Reviewing insurance policies Correspondence with previous brokers Preparing correspondence opening and closing accounts Requesting bank statements Bank account reconciliations ASIC forms Preparing and lodging ASIC forms Correspondence with ASIC regarding statutory forms Finalisation Preparation and lodgement of Administration documentation Finalise Administration related tasks Planning / review Discussions regarding status / strategy of administration 38

40 Schedule C - Resolution 3 The below table contains more detailed descriptions of the tasks performed within each task area likely to be performed by the Liquidators and their staff for the period 12 to finalisation of liquidation which is the basis of the Resolution 3 claim in section 3.2.2: Task area General description Includes Creditor enquiries, requests and directions Receive and respond to creditor enquiries Maintaining creditor request log Review and prepare initial correspondence to creditors and their representatives Considering reasonableness of creditor requests Documenting reasons for complying or not complying with requests or directions Compiling information requested by creditors Creditor reports Preparing reports on results of investigation (including statutory reports) and convening meetings General reports to creditors Creditors hours $8, (excl GST) Dealing with proofs of debt Meeting of creditors Receipting and filing proofs of debt when not related to a dividend Preparation of meeting notices, proxies and advertisements Forward notice of meeting 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. Preparation and lodgement of minutes of meetings with ASIC Respond to stakeholder queries and questions immediately following meeting Proposals to creditors Preparing proposal notices and voting forms Employees 9.00 hours $4, (excl GST) Calculation of entitlements Calculating employee entitlements Reviewing employee files and Company s books and records Reconciling superannuation accounts Reviewing awards Liaising with solicitors regarding entitlements 39

41 Task area General description Includes Employee dividend Correspondence with employees regarding dividend Correspondence with ATO regarding SGC proof of debt Calculating dividend rate Preparing dividend file Advertising dividend notice Preparing distribution Receipting proofs of debt Adjudicating proofs of debt Ensuring PAYG is remitted to ATO Trade on hours $12, (excl GST) Trade-on management Liaising with suppliers Liaising with management and staff Attendance on site Transitional matters Preparing and authorising receipt vouchers Preparing and authorising payment vouchers Liaising with superannuation funds regarding contributions, termination of employees employment Processing receipts and payments Entering receipts and payments into accounting system Conducting investigation Review of specific transactions and liaising with lawyers regarding certain transactions Preparation of investigation file Lodgement of investigation with ASIC Preparation and lodgement of supplementary report if required Investigation 9.00 hours $4, (excl GST) Examinations Preparing brief to solicitor Liaising with solicitor(s) regarding examinations Attendance at examination Reviewing examination transcripts Liaising with solicitor(s) regarding outcome of examinations and further actions available Litigation / recoveries Internal meetings to discuss status of litigation Preparing brief to solicitors Liaising with solicitors regarding recovery actions Attending to negotiations 40

42 Task area General description Includes Attending to settlement matters ASIC reporting Preparing statutory investigation reports Liaising with ASIC Document maintenance / file review / checklist First month, then ongoing administration reviews Filing of documents File reviews Updating checklists Administration hours $12, (excl GST) Bank account administration ASIC forms Finalisation Preparing correspondence opening and closing accounts Requesting bank statements Bank account reconciliations Preparing and lodging ASIC forms Correspondence with ASIC regarding statutory forms Preparation and lodgement of Administration documentation Finalise Administration related tasks Planning / review Discussions regarding status / strategy of administration 41

43 C Appointment of proxy Form Appointment of Proxy Insolvency Practice Rules (Corporations) 2016, Section Return to no later than 4:00pm, 11 to: Ferrier Hodgson GPO Box 4114, SYDNEY NSW 2001 Tel: Fax: luke.meany@fh.com.au Indebted Company: University of New South Wales International House Limited (Administrators Appointed) ACN Date of Appointment: 6/09/2017 A. Name and Contact Details of Person or Entity Entitled to Attend Meeting 1 (if entitled in a personal capacity, given name and surname; if a corporate entity, full name of company, etc) 2 of (address) 3 Tel: 4 B. Appointment of Person to Act as Proxy Note: You may nominate the Chairperson of the meeting as your proxy (or your alternate proxy in the event that the first-named proxy is not in attendance). 1 I/We, as named in Section A above, a creditor/employee/contributory/member of the Company, appoint 2 (name of person appointed as proxy) 3 4 or in his / her absence (address of person appointed as proxy) 5 (name of person appointed as alternate proxy) 6 7 as *my / *our proxy (address of person appointed as alternate proxy) to vote at the meeting of creditors to be held on 12 at 11:00am at the offices of Ferrier Hodgson, Level 25, One International Towers Sydney, 100 Barangaroo Avenue, SYDNEY NSW 2000, or at any adjournment of that meeting in accordance with the instructions in Section C below. C. Voting Instructions 1 *My / *Our proxy, as named in Section B above, is entitled to act as *my / *our : 2 general proxy, to vote on *my / *our behalf and / or 3 special proxy, to vote on *my / *our behalf specifically as follows: Resolution For Against Abstain 1. That, pursuant to Section 439C of the Corporations Act 2001 (the Act), the Company execute a Deed of Company Arrangement, under Part 5.3A of the Act, in the same form as the proposal statement presented to the meeting (even if it differs from the proposed Deed (if any) details of which accompanied the notice of meeting). 2. That the Administration should end. 3. That the Company be wound up. 4. That in the event that the Company is wound up and an alternate Liquidator is proposed, that the existing Liquidators be replaced and (Alternative Appointee) be appointed in their stead. 42

44 Resolution For Against Abstain 5. That a Committee of Inspection be appointed, the members of which are to be determined by the meeting. 6. That, pursuant to Section 477(2A) of the Corporations Act 2001, creditors authorise the Liquidators to compromise a debt owed to the Company up to a maximum limit of $100, That, pursuant to Section 477(2B) of the Corporations Act 2001, creditors authorise the Liquidators to enter into any agreement on the Company s behalf where: a) the term of the agreement may end; or b) obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance; more than three months after the agreement is entered into. 8. That, subject to obtaining the approval of the Australian Securities & Investments Commission (ASIC) pursuant to Section of Schedule 2 to the Act, the books and records of the Company and of the Liquidators be disposed of by the Liquidators 12 months after the dissolution of the Company or earlier at the discretion of ASIC. 9. That the remuneration of the Administrators, as set out in the Remuneration Approval Request dated 3, for the period from 6 September 2017 to 24 September 2017 be fixed in the amount of $85,536.50, plus any applicable GST, and may be paid. 10. That the remuneration of the Administrators, as set out in the Remuneration Approval Request dated 3, for the period from 25 September 2017 to 12 be fixed up to a maximum amount of $30,000.00, plus any applicable GST, but subject to upward revision by resolution of creditors, and that the Administrators be authorised to make periodic payments on account of such accruing remuneration as incurred. 11. That the remuneration of the Liquidators, as set out in the Remuneration Approval Request dated 3, for the period from 12 to completion be fixed up to a maximum amount of $40,000.00, plus any applicable GST, but subject to upward revision by resolution of creditors, or the Committee of Inspection should one be appointed, and that the Liquidators be authorised to make periodic payments on account of such accruing remuneration as incurred. D. Signature 1 Dated: 2 Signature: 3 Name / Capacity: 43

45 Creditor Assistance Sheet: Completing a Proxy Form Section A Name and Contact Details of Person or Entity Entitled to Attend Meeting 1. Insert the full name of the employee, individual, sole trader, partnership or company that the debt is owed to. 2. Insert the address of the employee, individual, sole trader, partnership or company that the debt is owed to. 3. Insert the telephone number of the employee, individual, sole trader, partnership or company that the debt is owed to. 4. Insert the address of the employee, individual, sole trader, partnership or company that the debt is owed to. Section B Appointment of Person to Act as Proxy 1. Cross out any wording that is not applicable. For example, if the employee/individual/sole trader/partnership/company is a creditor, cross out *eligible employee creditor, *contributory, *debenture holder and *member. 2. Insert the name of the person who will be exercising the creditor s vote at the meeting. If someone is attending the meeting in person, that person s name should be inserted. Alternatively, if someone is unable to attend, but you still want to cast a vote at the meeting, then you can appoint the Chairperson of the meeting to vote on your behalf by inserting the words the Chairperson here. 3. Insert the address of the person nominated at (2) that will be attending the meeting as proxy. If you have elected the Chairperson because no one is attending in person, leave this row blank. 4. Cross out any wording that is not applicable. 5. If the person you have elected to attend is unavailable on the day, you may nominate a second person to attend in their absence. Alternatively, you can appoint the Chairperson of the meeting to vote on your behalf by inserting the Chairperson. 6. Insert the address of the second person here. If you have elected the Chairperson, leave this row blank. 7. Cross out any wording that is not applicable. Section C Voting Instructions 1. Cross out any wording that is not applicable. 2. Insert an X in this box if you want the person who is attending the meeting to vote as they see fit on each of the resolutions in the Resolution table. If you select this option, proceed to Section D, unless you wish to vote specifically on certain resolutions, in which case you also insert an X in the special proxy box and select For, Against or Abstain on the resolutions. The person voting at the meeting will have discretion to vote as they see fit on any resolutions where you have not selected For, Against or Abstain. 3. Insert an X in this box if you want the person who is attending the meeting, to vote exactly in accordance with your instructions. If you select this option, you must select For, Against or Abstain for each of the resolutions in the Resolution table. Do not tick more than one box for each resolution. Section D Signature Instructions 1. Insert the date that the proxy form is being signed. 2. The form should be signed by one of the following persons: If the debt is owed to an employee/individual, then the individual that the debt is owed to; or If the debt is owed to a sole trader, then the sole trader that the debt is owed to; or If the debt is owed to a partnership, then one of the partners of the partnership; or If the debt is owed to a company, then a duly authorised office of the company (normally a director or secretary of the company). 3. Insert the name of the person signing the form, and note their capacity (that is, their role): If the debt is owed to a sole trader, note their capacity as proprietor, eg: [Full name], proprietor ; or If the debt is owed to a partnership, note their capacity as partner, eg: [Full name], partner of the firm named in Section A above ; or If the debt is owed to a company, note their capacity as director or secretary, eg: [Full name], director/secretary of the company named in Section A above ] 44

46 D Proof of debt Form 535 Formal Proof of Debt or Claim Form Corporations Act 2001, Regulation (2) Return to: Ferrier Hodgson GPO Box 4114, SYDNEY NSW 2001 Tel: Fax: Indebted Company: University of New South Wales International House Limited (Administrators Appointed) ACN Date of Appointment: 6/09/2017 A. Name and Contact Details of Creditor 1 (the Creditor) (if in a personal capacity, given name and surname; if a corporate entity, full name of company, etc) 2 of (insert address) 3 Tel: 4 Tick this box to elect to receive electronic notification of notices or documents, in accordance with Section 600G of the Corporations Act 2001, at the address specified above. B. Details of Debt or Claim 1 Amount owing: (insert dollars and cents, inclusive of GST if applicable) 2 Nature of Debt or Claim: (insert description of debt and/or reference any supporting documentation) 3 Select one of the following options: The Creditor is an unsecured creditor of the indebted Company The Creditor is a secured creditor of the indebted Company The Creditor is an employee / former employee of the indebted Company For all claims: 4 I have attached supporting documentation to substantiate the Creditor s claim (secured creditors must attach evidence of security) 5 To my knowledge or belief the creditor has not, nor has any person by the creditor's order had or received any satisfaction or security for the sum or any part of it except for the following: (insert details and value of security where relevant) C. Signature 1 Dated: 2 Signature: 3 Name / Capacity 45

47 Creditor Assistance Sheet: Completing a Proof of Debt Form Section A Name and Contact Details of Creditor 1. Insert the full name of the employee, individual, sole trader, partnership or company that the debt is owed to. 2. Insert the address of the employee, individual, sole trader, partnership or company that the debt is owed to. 3. Insert the telephone number of the employee, individual, sole trader, partnership or company that the debt is owed to. 4. Insert the address of the employee, individual, sole trader, partnership or company that the debt is owed to. Section B Details of Debt or Claim 1. The amount owing should only include debts or claims which arose prior to the date of appointment. 2. Insert the currency if not Australian dollars. 3. Type of creditor: tick one of the options only. 4. For all claims, ensure supporting documentation is attached, such as invoices, statements, agreements. 5. For secured creditors, insert particulars of all securities held. If the securities are on the property of the company, assess the value of those securities. If any bills or other negotiable securities are held, indicate refer attached above and show them in a schedule in the following form: Date Drawer Acceptor Amount ($) Due Date Section C Signature Instructions 1. Insert the date that the proof of debt form is being signed. 2. The form should be signed by one of the following persons: If the debt is owed to an employee/individual, then the individual that the debt is owed to; or If the debt is owed to a sole trader, then the sole trader that the debt is owed to; or If the debt is owed to a partnership, then one of the partners of the partnership; or If the debt is owed to a company, then a duly authorised office of the company (normally a director or secretary of the company). 3. Insert the name of the person signing the form, and note their capacity (that is, their role): If the debt is owed to a sole trader, note their capacity as proprietor, eg: [Full name], proprietor ; or If the debt is owed to a partnership, note their capacity as partner, eg: [Full name], partner of the firm named in Section A above ; or If the debt is owed to a company, note their capacity as director or secretary, eg: [Full name], director/secretary of the company named in Section A above ] 46

48 E ARITA creditor information sheet 47