Liquidator s Statutory Report to Creditors

Transcription

1 Quality Concrete Sawing & Drilling (WA) Pty Ltd (In Liquidation) ACN: ( the Company ) Prepared pursuant to section of the Insolvency Practice Rules (Corporations) 2016 Dated 23 October 2017 Liquidator Gary Anderson Appointment Date 22 July 2017 Contact Samantha Morgan Telephone Number ABN Level 3, 35 Outram Street West Perth WA 6005 PO Box 622 West Perth WA 6872 Telephone Fax Website: Liability limited by a scheme approved under Professional Standards Legislation is a member of International. A world-wide network of accounting firms and business advisers.

2 CONTENTS 1. Introduction Update on the Progress of the Liquidation Incorporation Officers, shareholders, registered addresses and security interests Registered security interests Director s Report as to Affairs ( RATA ) and Liquidator s Estimates Liquidator s Comments on the Director s RATA and Assets Investigations Undertaken to Date Explanation of Difficulties and Causes of Demise of the Company Further Investigations to be Undertaken Receipts and Payments Likelihood of a Dividend What Happens Next? Where Can You Get More Information?... 9 Page 2

3 1. Introduction I, Gary John Anderson, was appointed as the Liquidator of the Company pursuant to section 491(1) of the Corporations Act 2001 ( the Act ) on 22 July 2017 by the Members of the Company. The purpose of this report is to comply with the requirements of section of the Insolvency Practice Rules (Corporations) 2016 as follows: provide creditors with a written account of the winding up the estimated amounts of assets and liabilities of the Company inquiries relating to the winding up of the Company that have been undertaken to date further inquiries relating to the winding up of the Company that may need to be undertaken what happened to the business of the Company the likelihood of creditors receiving a dividend before the affairs of the Company are fully wound up possible recovery actions 2. Update on the Progress of the Liquidation I have set out the information set out below in order to provide creditors with an update regarding the conduct of the liquidation Incorporation A search Australian Securities & Investments Commission ( ASIC ) database revealed that the Company was incorporated on 4 May 2005 and commenced business in 2006 in the concrete cutting and drilling services industry in Osborne Park, Western Australia. The Company has not traded during the period since my appointment Officers, shareholders, registered addresses and security interests Director Appointed Status Paul Raymond Shaw 4 May 2005 Current Secretary Appointed Status Paul Raymond Shaw 4 May 2005 Current Shareholder No. of Shares Class Quality Concrete Sawing 1 B Class Ordinary & Drilling (WA) Pty Ltd Paul Paymond Shaw 10 Ordinary Registered office: Principal place of business: Unit 6/172 Main Street Osborne Park WA 6017 Unit 2/90 Distinction Road Wangara WA 6065 Page 3

4 2.3. Registered security interests A search of the Personal Property Securities Register ( PPSR ) revealed the following security interests registered against the Company: Secured Party Registration Number Type / PMSI Note Collateral Class Esanda Finance Corporation Limited All PAP Not Provided Toyota Finance Australia Ltd All PAP Not Provided Toyota Finance Australia Ltd All PAP Not Provided Toyota Finance Australia Ltd All PAP Not Provided Toyota Finance Australia Ltd All PAP Not Provided Capital Finance Australia Limited Other Goods No Australia And New Zealand Banking Group Limited All PAP Not Provided Australia And New Zealand Banking Group Limited All PAP Not Provided Kennards Hire Pty Limited Other Goods Yes 2 Nexgen Construction Supplies Australia Pty Ltd Other Goods Yes 2 Tru Blu Hire Australia Pty Ltd Other Goods Yes Tru Blu Hire Australia Pty Ltd Motor Vehicle Yes Australia And New Zealand Banking Group Limited Other Goods Yes 1 Australia And New Zealand Banking Group Limited Motor Vehicle Yes 1 Australia And New Zealand Banking Group Limited Motor Vehicle Yes 1 Australia And New Zealand Banking Group Limited Motor Vehicle Yes 1 Coates Hire Operations Pty Limited Motor Vehicle Yes 2 Coates Hire Operations Pty Limited Other Goods Yes 2 Quality Printer Cartridges Pty Ltd Other Goods Yes Australia And New Zealand Banking Group Limited Other Goods Yes 1 Australia And New Zealand Banking Group Limited Motor Vehicle Yes Australia And New Zealand Banking Group Limited Other Goods Yes 1 Australia And New Zealand Banking Group Limited Other Goods Yes 1 Australia And New Zealand Banking Group Limited Motor Vehicle Yes 1 Australia And New Zealand Banking Group Limited Other Goods Yes 1 Forum Finance Pty Limited Other Goods No Quality Printer Cartridges Pty Ltd Other Goods Yes Quality Printer Cartridges Pty Ltd All PAP Not Provided Royal Wolf Trading Australia Pty Limited Other Goods Yes 2 Australia And New Zealand Banking Group Limited Other Goods No 1 Caps Australia Pty Ltd Other Goods Yes 2 Australia And New Zealand Banking Group Limited Other Goods Yes 1 Access Rentals Australia Pty Ltd Other Goods Yes Access Rentals Australia Pty Ltd Motor Vehicle Yes Australia And New Zealand Banking Group Limited Motor Vehicle Yes Note: 1. These registrations have been disclaimed by the Liquidator. 2. These registrations have since been discharged. Page 4

5 2.4. Director s Report as to Affairs ( RATA ) and Liquidator s Estimates As at 22 July 2017, the assets and liabilities of the Company according to the Director s RATA were estimated to be as follows. I have also included my own initial estimates and details of the assets realised to date. As per Director's RATA Liquidator s Initial Estimated Realisable Values Assets Realised To Date of this Report Notes $ $ $ ASSETS Cash at Bank - 57,000 57,000 Plant and Equipment - 33,025 31,548 Trade Debtors 120,000 80,000 66,080 1 TOTAL ASSETS 120, , ,628 LIABILITIES Priority Creditors Wages 35,000 40,000 Superannuation 0 29,000 Unsecured Creditors Trade Creditors 70,503 90,000 Australian Taxation Office 190, ,826 Finance Shortfalls 3,000 28,000 2 TOTAL LIABILITIES 298, ,826 NET ASSETS/LIABILITIES -178, ,801 Notes: 1. Approximately $14,000 of the debtors are older than 6 months, therefore I have discounted the realisable amount. 2. The shortfall figure has been calculated based on the vehicle finance payout amounts and the valuations provided by an independent valuer Liquidator s Comments on the Director s RATA and Assets It appears the Director s estimate of the financial position is not materially inaccurate. Page 5

6 2.6. Investigations Undertaken to Date Pursuant to section 533 of the Act, I am required to investigate the past affairs of the Company and report my findings to the Australian Securities & Investments Commission ( ASIC ). I have set out below a summary of the investigations I have undertaken to date. Duty to ensure books and records are maintained in accordance with the Corporations Act 2001 (Section 286) a company must keep written financial records that: a) correctly record and explain its transactions and financial position and performance, and b) would enable true and fair financial statements to be prepared and audited. I advise creditors that I have taken possession of the Company s hard copy and electronic books and records. The Company engaged the services of an internal bookkeeper to maintain a computerised Xero accounting system. Furthermore, the Company utilised the services of an independent, external taxation accountant for the preparation of annual income tax returns and financial statements. This system appears to have enabled the Director to ascertain an accurate perspective of the Company s financial position as required by the Act. Insolvent transactions (Section 588FC) these are unfair preferences or uncommercial transactions entered into when a company was insolvent or became insolvent as a result of entering into the transaction. My investigations into this matter are set out below: Unfair preferences (Section 588FA) these are transactions where a company transacts with a creditor resulting in that creditor receiving more than the creditor would receive if the transaction were set aside and the creditor claimed the same amount in a liquidation. Unfair preferences paid a company within six months of the relation-back day (the day of the liquidator s appointment) are void against the liquidator. This timeframe is extended to four years should a related entity be a party to the transaction (s588fe(4)). My investigations have revealed potential preference payments made to the Australian Taxation Office amounting to $11,000 and I will shortly commence recovery of this amount. I have also identified other payments that may be considered to be preferential in nature and therefore repayable to a Liquidator, however I have concluded that due to the modest amounts in question and after taking into account the potential costs associated with the recovery actions, the payments lack commercial merit in pursuing further. Uncommercial transactions (Section 588FB) these are transactions entered into that a reasonable person would not have entered, having regard to the benefits and detriment to the company and to the other parties involved in the transaction. Uncommercial transactions entered into by a company are voidable against the Liquidator if they were entered into within two years of the relation-back day. My preliminary investigations have indicated the presence of some uncommercial transactions. Having said that, further investigations into this matter are required. Unfair loans to a company (Section 588FD) these are loans made to a company where interest and other charges on the loan are extortionate. These transactions can be recovered regardless of when they were entered into as long as they were entered into on or before the winding up begun. My preliminary investigations have not revealed any unfair loans. investigations into this matter are required. Having said that, further Page 6

7 Unreasonable director-related transactions (Section 588FDA) these are transactions entered into by a company and a director, close associate of a director, or person on behalf of a director, which a reasonable person would not have entered into. The transaction must be a payment by a company, the transfer of property by a company, or the incurrence of an obligation of a director s by a company. These transactions are voidable if they were entered into within four (4) years of the relation-back day. My preliminary investigations have not revealed any related party transactions. Having said that, further investigations into this matter are required. Transactions entered into for the purpose of defrauding Creditors (Section 588FE (5)) these are insolvent transactions entered into for the purpose of defeating, delaying or interfering with the rights of creditors and were entered into within a period of ten (10) years prior to the relation-back day. My preliminary investigations have not revealed any such transactions. Having said that, further investigations into this matter are required. Circulating Security Interest created within six months (Section 588FJ) where a circulating security interest is granted by a company within six months of the relation-back day, the security interest is void against the liquidator unless valuable consideration was given or the company was solvent at the time of granting of the circulating security interest. My search of the PPSR has not revealed any circulating security interests registered against the Company within six months of the relation-back day. Directors duty to prevent insolvent trading (Section 588G) a director of a company has a duty to prevent a company from incurring a debt when the company is insolvent or there are reasonable grounds to suspect that the company is or would become insolvent. A director would fail to fulfil that duty if the director was aware of the grounds for suspecting the company is or would become insolvent or a reasonable person in a like position would be aware of such grounds. The defences available to a director are as follows; (i) (ii) (iii) (iv) The director had reasonable grounds to expect, and did expect, that the company was solvent and would remain so; or The director had reasonable grounds to believe, and did believe, that a competent and reliable person was providing adequate information to the Director and based on that information the director expected the company to be solvent and to remain so; or The director did not take part in the management of the company at the time due to illness or other good reason; or The director took reasonable steps to prevent the company from incurring the debt. I have formed the view that the Director may have traded whilst insolvent because at the time transactions were entered, there were reasonable grounds to believe the Company may not have been able to pay its debts as and when they fell due. My investigations have revealed the following indicators of insolvency: Non-payment of statutory debts (e.g. PAYG-w, Superannuation Guarantee Charge, GST) Poor or deteriorating working capital My initial view is the Director does not have a valid defence to an insolvent trading recovery action, however, my understanding is that the Director is likely to be bankrupted personally in the near future and therefore there is little merit in taking any further action at this point in time. I will report the matter to the Australian Securities & Investments Commission as part of my statutory reporting obligations. If the Director does not end up bankrupt, I will make inquiries into the personal asset positions of the Director in relation to the prospects of an insolvent trading claim recovery. Page 7

8 2.7. Explanation of Difficulties and Causes of Demise of the Company As outlined in his Director s questionnaire, the Director first realised the Company may have had to be placed into external administration in July 2017 upon the realisation that sales were declining. As a result of this, the Director sought advice from his accountant and was directed to seek advice from an insolvency practitioner. Below is an extract from the Director s questionnaire outlining what were, in his opinion, the causes of the demise of the Company: - Increase in Rent on factory unit - Increase in workers compensation premiums - Down turn in sales - Unable to meet all expenses. July 2017 with drastic reduction in sales. It appears the Director s reasons for the cause of failure of the Company are accurate Further Investigations to be Undertaken The below listed investigations remain outstanding as at the date of this report: Finalisation of preference claim recovery actions Finalisation of uncommercial transaction investigations Finalisation of insolvent trading recovery action options 3. Receipts and Payments Attached at Appendix A are details of all receipts and payments in the liquidation to date. 4. Likelihood of a Dividend The Act specifies that if there are funds left over after the payment of the costs of the liquidation, the Liquidator will pay these to creditors as a dividend. Generally, the order in which funds are distributed are as follows: 1. Costs and expenses of the liquidation, including Liquidator s approved fees; 2. Outstanding employee wages and superannuation (equal ranking); 3. Outstanding employee leave of absence payments including annual leave, sick leave (if applicable) and long service leave; 4. Employee retrenchment pay (redundancy payments or pay in lieu of notice as the case may be); and 5. Ordinary unsecured creditors. Each category is paid in full before the next category is paid. If there are insufficient funds to pay a category in full, the available funds are paid on a pro-rata basis. The next category or categories will not receive a dividend. Page 8

9 The likelihood of a dividend being paid to creditors will be affected by a number of factors including: the size and complexity of the liquidation the amount of assets realisable and the costs of realising those assets the statutory priority of certain claims and costs the value of various classes of claims including secured, priority and unsecured creditor claims the volume of enquiries by creditors and other stakeholders Accordingly, given the asset position of the Company and the costs involved with the liquidation, I anticipate that there will be a modest dividend to priority creditors (primarily unpaid superannuation and unpaid wages). As priority creditors will not be paid in full, I anticipate there will be no return to unsecured creditor of the Company. If this position changes, I will advise creditors via future circulars. To the extent there are any outstanding priority employee entitlements (not including superannuation) these may be satisfied under FEG. 5. What Happens Next? I will proceed with the liquidation, including: Realising the remaining assets Completing my investigations into the Company s affairs Completing my reporting to the corporate insolvency regulator, ASIC Prepare superannuation guarantee statements (if required) Calculate and distribute a dividend to the priority creditors If I receive a request for a meeting that complies with the guidelines set out in the initial information provided to you, I will hold a meeting of creditors. I may write to you again with further information on the progress of the liquidation. I expect to have completed this liquidation within 6 months. 6. Where Can You Get More Information? You can access information which may assist you on the following websites: ARITA at ASIC at (search for insolvency information sheets ) You can contact my office and speak with Samantha Morgan on 08) or via on smorgan@hlbinsol.com.au. There is also information about this liquidation on my firm s website: Yours faithfully, Gary Anderson Liquidator of Quality Concrete Sawing & Drilling (WA) Pty Ltd (In Liquidation) ACN Page 9

10 Appendix A Quality Concrete Sawing & Drilling (WA) Pty Ltd (In Liquidation) ACN Formerly trading as Fleet Management Solutions ( the Company ) Liquidator s Account of Receipts and Payments 22 July 2017 to 22 October 2017 Receipts $ Cash at bank recovered 57,000 Sale of assets 31,548 Pre-appointment debtor 66,080 Total Receipts 154,628 Payments Liquidator s remuneration 38,956 Auctioneers costs 5,680 Insurance costs 3,242 Liquidator s disbursements 1,972 Bank charges 10 Total Payments 49,860 Balance of Funds Held 104,768