A2Z Property Maintenance Pty Ltd (In Liquidation) ACN (the Company)

Transcription

1 A2Z Property Maintenance Pty Ltd (In Liquidation) ACN (the Company) Liquidators Statutory Report to Creditors 17 October 2017 John McInerney Joint and Several Liquidator T (02) E john.mcinerney@au.gt.com

2 Introduction I refer to my initial correspondence to creditors dated 27 July 2017 in which I advised of the appointment of Said Jahani and I as Joint and Several Liquidators of the Company on 26 July 2017, and of your rights as a creditor in the Liquidation. The purpose of this report is to: Provide an update on the progress of the liquidation; and Advise of the likelihood of a dividend being paid in the liquidation. The Liquidators have relied on information from numerous sources to prepare this report, including: Discussions with the Director of the Company; Information available from public sources, such as, Australian Securities and Investments Commission (ASIC) and the Personal Property Securities Register (PPSR); and A review of the Company's books and records provided to date. Whilst there is no reason to doubt the accuracy of any information, an audit of this information has not been conducted and we reserve the right to alter our conclusions, should the underlying data prove to be inaccurate or change materially from the date of this report. Update on the progress of the liquidation Circumstances leading to winding up The Company was incorporated on 11 April 2013 and provided cleaning services to commercial businesses. The Company s largest cleaning contract was with McDonalds Australia Pty Limited ( McDonalds ). The Company ceased to trade prior to liquidation. Preliminary investigations into the Company s affairs indicate the following reasons for its failure: McDonald s termination of the Company s cleaning contract in around July 2016; The Company having insufficient other contract works or cashflow to support its operations. The Australian Taxation Office serving a Creditor s Statutory Demand on the Company in around June 2017 for the repayment of $183,780 in unpaid tax. Meetings held The first meeting of the Company's creditors was held on 8 August 2017 at the offices of Grant Thornton Australia Limited, Level 17, 383 Kent Street, Sydney NSW. At this meeting, the Liquidators tabled the Report as to Affairs (RATA) completed by the Director, provided an overview of the affairs of the Company and discussed the events leading to the appointment of the Liquidators. At this meeting the following resolutions were passed by creditors of the Company: That a Committee of Inspection not be appointed; That the Joint and Several Liquidators remuneration for the period 26 July 2017 up to the completion of the liquidation be approved and fixed to up to the amount of $50,000 (plus any applicable GST and disbursements) and that the Joint and Several Liquidators be entitled to draw such remuneration and disbursements from funds held as and when required; and

3 That the Liquidators be authorised to destroy the books and records of the Company six months after the date of its deregistration subject to the consent of the Regional Commissioner of the Australian Securities and Investments Commission in accordance with Section 542(3) and (4) of the Corporations Act Assets and Liabilities of the Company The Director of a Company is required to complete and provide to the Liquidator a statement about the Company's business, property, affairs and financial circumstances, also known as the RATA. The RATA is a snapshot in time as at the date of liquidation of the book value and Director s opinion of the estimated realisable value (ERV) of the assets and liabilities of the Company. On 8 August 2017 the Director completed the RATA, a summary of which is below. Assets Book Value Director's Estimated Liquidators' Estimated Interest in Land Debtors 183,000 40,000 Withheld Cash on hand/at bank Stock Plant and Equipment 20,000 15,000 15,000 Contingent Asset 1,500,000 1,500,000 Withheld Total Assets 1,703,000 1,555,000 Withheld Liabilities Secured Creditors Priority Creditors - - 2,000 Unsecured Creditors 230, , ,926 Total Liabilities 230, , ,926 Net Surplus / (Shortfall) 1,472,400 1,324,400 Withheld Based on preliminary investigations, there is no reason to question the reasonableness of the Director s RATA. Actions undertaken to date Trade Debtors Following the liquidation, two separate letters of demand have been sent to the following debtors to recover debts with a book value of $182,950: Debtor Book Value Director's Estimated Liquidators' Estimated BSM Enterprise Group 142, Sydney Strata 39,739 39,739 Withheld Ucer International Withheld Whelan Property Group Total Debtors 182,950 40,550 Withheld Discussions were held with the Director in determining the recoverability of the above debtors and to obtain further information to substantiate the amounts owed.

4 The Director advised there was a tax invoice in the amount $142,400 inadvertently created in the Company s management accounts by a former internal accountant for training purposes which was not reversed, hence is not collectible. Nonetheless, demand letters have been sent to this debtor. To date no response has been received. To date, $308 has been collected from Whelan Property Group. Efforts to recover the remaining balance of debtors are continuing. This will likely involve the appointment of a debt collector. Motor Vehicles A search of the Roads and Maritime Services ( RMS ) database disclosed that at the date of liquidation the Company was the registered owner of the following motor vehicles/ trailer: 2015 Nissan Navara; 2013 Narara Box Trailer; 2006 Hyundai Getz; and 2002 Nissan N16 Pulsar. After obtaining a red-book valuation of the Company s 2015 Nissan Navara and 2013 Narara Box Trailer, and taking considerations of the costs of realisation, offer from the Director to purchase same for $15,000 was accepted. This amount has been collected in full. The RMS disclosed that the registration on the 2006 Hyundai Getz and 2002 Nissan N16 Pulsar have expired. The Director advised that these vehicles are currently located at a farm in Llandilo, are not functional and are of scrap value. A red-book value appraisal indicates that these vehicles may be valued at $1,000 to $10,000 in total, before selling costs. The large range reflects to condition of the vehicle at the time of sale. An independent valuer has been approached to determine the realisation value of these two motor vehicles. An update will be provided to creditors in due course. Contingent Assets (legal proceedings) In around April 2017, the Company commenced legal proceedings against McDonalds for $1.5M in relation to the termination of eight (8) cleaning contracts it had with McDonalds. The Company asserts that as a consequence of McDonalds terminating the contracts, McDonalds is obliged to pay the Company 24 months of contract income. One contract where this clause exists has been sighted. The Company s director asserts that the 7 other cleaning contracts the Company had with McDonalds were verbal contracts and were on the same terms as the written contract and that he has sufficient evidence to support the Company s claim. The solicitor engaged by the Company prior to the liquidation asserts the Company s claim has merit. The solicitor acting for McDonalds denies the validity of the signed contract and any subsequent verbal contract in so far as it relates to a termination payment and that his client will continue to defend any claim brought by the Company or its liquidators. I am currently liaising with the Company s Director and solicitor engaged by the Company to gather sufficient evidence to substantiate the Company s claim. The Company s Director has advised that he is willing to fund me to conduct a Public Examination of key McDonalds staff to gather further evidence to support the Company s claim. Due to the complexity of this matter, I am not presently able to provide commentary on the merits or otherwise of this potential claim nor details of any potential estimated of return to creditors. An update to creditors will be provided in due course.

5 Possible recovery actions The findings from my preliminary investigations into the affairs of the Company and potential recovery actions that may be available to me as Liquidator to pursue are detailed below. Given the limited time that has passed in the liquidation, and that further investigations may be undertaken, the below findings are preliminary and may be subject to change. Insolvent trading Any potential insolvent trading claim against the Company s Director personally in this liquidation is contingent on the outcome of the potential claim against McDonalds for $1.5M. If successful for the full amount of its claim, the Company would likely be returned to solvency and creditors repaid in full. If not successful, any insolvent trading investigation would take into consideration the cash flow and balance sheet tests of insolvency as well as other key insolvency indicators. These investigations would also focus on who the directors were at the time of any insolvency and their ability to satisfy any potential Court judgement in my favour for the amount of any insolvent trading claim. An update to creditors will be provided in due course. Voidable transactions The voidable transaction investigations have identified three payments to the ATO in the amount of $7,541 in the 6 months prior to the liquidation of the Company which could be considered preferential payments. It would appear that at the time the ATO received each payment it knew or ought to have known the Company was insolvent or likely to become insolvent and hence the ATO may not likely be able to rely on the good faith defence. I will shortly issue a demand for payment on the ATO for the recovery of the $7,541. I have not identified any other voidable transactions: uncommercial transactions, unfair loans or unreasonable director-related transactions. An update to creditors will be provide in due course. Further enquiries to be undertaken Should creditors have additional information they believe may assist the Liquidators with their investigations or wish to fund any potential recovery actions, please advise this office in writing within 14 days. Receipts and Payments to date Tabled below is a summary of the Liquidators receipts and payments for the period 5 June 017 to 17 October $ Receipts Sale of Motor Vehicle and Trailer 15, Account Receivables (Pre-appointment debtors) Total Receipts 15, Payments Bank Charges 5.30 Total Payments 5.30 Net Receipts/(Payment) 15,302.70

6 Likelihood of a dividend A dividend to creditors is contingent on any successful recovery from the Company s claim against McDonalds for $1.5M. If successful for the full amount of the claim, the Company would likely be returned to solvency and creditors repaid in full. What happens next? I will proceed with the liquidation, including: Realising the remaining assets (i.e. pre-appointment debtors and motor vehicles); Further investigating and potentially pursue a claim against McDonalds. This includes conducting a public examination of key McDonalds staff; Completing my investigations into the company s affairs and insolvent trading; Completing my reporting to the corporate insolvency regulator, the Australian Securities and Investments Commission (ASIC); Commence unfair preference recovery against the ATO; and Finalising the liquidation once the above matters have been resolved. Compliance with best practice I confirm that this report complies with the requirements in the Insolvency Practice Rules (IPR), specifically IPR 70-40, as well as the statements of best practice issued by the Australian Restructuring Insolvency and Turnaround Association (ARITA) with regard to content of the Statutory Report by Liquidator. Where can you get more information? ARITA provides information to assist creditors with understanding liquidations and insolvency. This information, including details of your rights as a creditor, is available from ARITA s website at arita.com.au. ASIC provides information sheets on a range of insolvency topics. These information sheets can be accessed on ASIC s website at Should you have any queries with respect to the above, you may also contact Emily Cramp of my office on (02) or via on emily.cramp@au.gt.com. Dated: 17 October 2017 John McInerney Joint and Several Liquidator