Annual Report to Creditors Pursuant to Section 508(1) of the Corporations Act June 2018

Transcription

1 Annual Report to Creditors Pursuant to Section 508(1) of the Corporations Act June 2018 Keystone Australia Holdings Pty Ltd (Receivers & Managers Appointed) (In Liquidation) ACN & 29 Subsidiaries Listed in Annexure A The Keystone Group Meeting of Creditors: 29 June 2018 Sydney Bentleys Corporate Recovery Pty Ltd ABN: Liquidators: Hugh Armenis Katherine Barnet Level 3, 1 Castlereagh Street, Sydney NSW 2000 GPO Box 1466, Sydney NSW

2 FILE INFORMATION Administrators Appointment: 28 June 2016 Liquidators Appointment: Various dates as set out in attached Annexure A ESTIMATED UNSECURED CREDITORS As per attached Annexure B ESTIMATED RETURN TO CREDITORS Contingent on Outcome of Litigation MEETING OF CREDITORS Friday, 29 June 2018 at 10:30 AM (AEST) Bentleys Corporate Recovery Level 3, 1 Castlereagh Street Sydney NSW 2000 CONTACT Contact: Nicholas Gooley Tel: (02) Fax: (02) admin@bcr.bentleys.com.au 2

3 TABLE OF CONTENTS 1 Introduction Purpose of this Report Update on Realisation of Group Assets Update on Creditors Claims in the Estates Update on Liquidators Investigations and Claims Updated Summary of Receipts & Payments Updated Dividend Prospects to Creditors Future Conduct of Liquidation of Group Liquidators Work Undertaken Today and Update on Liquidators Remuneration Annual Meeting of Creditors Further Information

4 ANNEXURES A List of Entities in the Keystone Group B Summary of Unsecured Creditor Claims C ATO Preference Claims in each Estate D Summarised Receipts & Payments E Remuneration Approval Report F Form 529 Notice of Meeting of Creditors G Appointment of Proxy Instruction Sheet H Form 532 Appointment of Proxy I Form 535 Formal Proof of Debt Form 4

5 1. Introduction We refer to our previous reports dated 30 June 2016 and 30 January Hugh Armenis and Katherine Elizabeth Barnet of Bentleys Corporate Recovery Pty Ltd, Level 3, 1 Castlereagh Street, Sydney NSW, were appointed joint and several Liquidators ( the Liquidators ) of Keystone Australia Holdings Pty Ltd and 29 subsidiaries consisting of the Keystone Group as listed in Annexure A. For the purposes of efficiency and in the interests minimising costs, this report has been prepared on a Group basis for each of the entities listed in Annexure A. However, creditors are reminded that recoveries in each individual entity will only be available to creditors of that group entity. Set out below is an update on the Liquidation of the Keystone Estates. 2. Purpose of this Report In accordance with the Section 508(1) of the Corporations Act 2001 ( the Act ) we are required to convene a meeting of creditors or lodge a report with ASIC within 3 months of the anniversary of the winding up of the companies. In this instance we consider that it would be in the interest of the estate to convene a meeting of creditors. The purpose of this report is to prepare and a report to creditors giving: An account of the Liquidators acts and dealing and the general conduct of the winding up; A description of any future work that is to be carried out by the Liquidators in order to complete the winding up; and An estimate of when the winding up is likely to be completed. 3. Update on Realisation of Group Assets As outlined in our previous report to creditors, the Receivers & Managers, Ferrier Hodgson, undertook a sale process for the Keystone Group s businesses. The sales campaign formally commenced on 15 August 2016 and included the following steps: An advertising campaign; An expression of interest process; The Receivers short-listed interested parties who had submitted indicative offers; Final indicative offers were required by 7 October 2016; and The Receivers then reviewed the final offers to determine which were capable of acceptance and would maximise sale proceeds. As previously reported the Receivers have advised the final outcome for each of the business sales were as follows: The Dixon Group acquired Bungalow 8, Cargo Bar, Gazebo Manly, The Rook, The Winery, Kingsleys Woolloomooloo and Kingsleys Brisbane; 5

6 Solotel Group acquired the Chophouse Sydney; Jamie s Italian Group acquired the Jamie s Italian businesses; Gazebo Garden and the Sugar Mill had been realised through private sales; and Chophouse Perth was closed and the premises vacated by the Group with the venue returned to the landlord. The proceeds realised by the sale of the groups businesses resulted in a significant shortfall to the secured creditors. The balance of their debt, estimated to be approximately $63,357,762 will now rank along with other creditors as unsecured claims in the estate. As each of the companies are joint and severally liable for the debt owed to the secured creditor, there will be a claim of approximately $63,357,762 in each company within the group. We have not identified any other significant assets other than those outlined above. The Receivers and Managers have now resigned from all but two entities within the Group being Keystone Australia Holdings Pty Ltd and Keystone Group Holdings Pty Ltd. 4. Update on Creditors Claims in the Estates 4.1 Employee Priority Creditors Keystone Group Holdings Pty Ltd As mentioned in previous reports, pursuant to Section 556 of the Act, employee claims for outstanding entitlements are granted a priority over unsecured creditor claims. All employees within the group were employed by Keystone Group Holdings Pty Ltd (KGH). We have assisted employees that had been made redundant in order to ensure all claims for outstanding entitlements were submitted and processed through the Government funded Fair Entitlements Guarantee Scheme ( FEG ). 115 claims were submitted by employees to FEG. Of these 115 claims, FEG deemed 101 were eligible for an advance. Accordingly, FEG has paid the following amounts to employees of the employing entity with the Keystone Group, Keystone Group Holdings Pty Ltd: Entitlement Amount ($) Wages 5,429 Annual Leave 417,166 Long Service Leave 102,836 Pay In Lieu of Notice 151,303 Redundancy 285,219 Total 961,953 We are aware of the following priority creditor claims: Proof of debt from the ATO including a superannuation guarantee charge of $708,032. Proof of debt from the Department of Jobs and Small Business ( DOJ ) of $961,953 for the payment of employee claims processed through FEG for outstanding entitlements. Ten Proofs of debt received from employees who were deemed ineligible by FEG for various reasons totalling $68,613. These proofs of debt will still rank as priority claims. 6

7 Under section 560 of the Act, any funds paid by the DOJ for unpaid employees entitlements will be entitled to subrogate their claims, that is will be repaid before ordinary unsecured creditors, should sufficient funds become available. 4.2 Unsecured Creditors To date we have received 834 informal and formal proofs of debt for the Group from unsecured creditors in various companies in the Group with claims totalling approximately $31 million. Additionally, the Receivers & Managers, Ferrier Hodgson, have submitted 245 proofs of debt relating the intercompany loans. These proofs of debt total approximately $97 million. As at the date of this report we have not received updated proofs of debt from the senior or junior lenders. However, as mentioned in Section 3, we have been provided an estimated figure as at 30 April 2018 for the balance outstanding to the senior and junior lenders. We estimate this shortfall to be in the vicinity of $63,357,762. In the event we are in a position to pay a dividend we will give all creditors the opportunity to lodge a proof of debt or an updated proof of debt in respect to their claim. We have not yet adjudicated these claims, and will not do so, unless a dividend is to be paid. A summary of the unsecured creditor claims in each individual company in the Group is attached at Annexure B. 5. Update on Liquidators Investigations and Claims Our investigations identified unfair preference payments made by various entities within the group to the Australian Taxation Office ( ATO ) totalling $9,439,731. A schedule setting out the amount of each company claim is set out in Annexure C. In late 2017 we issued demands for the repayment for each preference claim and also commenced proceedings for each company against the ATO in the Supreme Court of New South Wales to recover the payments. The Court has set out a timetable for the progression of the litigation and we will continue to update creditors as the matter progresses. We are seeking to press the claim against the ATO as quickly as possible. 6. Updated Summary of Receipts & Payments A summary of the receipts and payments in the Liquidation from 11 April 2017 to 14 June 2018 is enclosed with this report at Annexure D. 7. Updated Dividend Prospects to Creditors Any priority or unsecured dividend will be contingent on the final value of creditors claims in each estate in the group and the outcome of the Liquidators claims as outlined in this report. Given the status of legal proceedings we are unable to provide a meaningful estimate at this juncture. We will report to creditors further should the dividend prospects change. 8. Future Conduct of Liquidation of Group The remaining foreseeable issues that are required to be resolved prior to the conclusion of the liquidations include, but are not limited to the following: Litigation in relation to the recovery of the Unfair Preference Claims received by the ATO; 7

8 Liaising with our legal advisors; Overseeing the litigation process; Adjudication of creditors proofs of debt in each estate; Payment of dividend to employees, ATO (superannuation) and FEG; Payment of dividend to unsecured creditors; Ongoing administration of each estate; Attending to adhoc creditors queries; and Attending to statutory duties such as annual reports and annual meetings (if required). The estimated date of completion of the liquidation will be wholly dependent on the conduct of the litigation. Creditors should be aware that litigation can sometimes take many years to reach a final outcome. The timing and resolution of legal outcomes is often outside our control. 9. Liquidators work undertaken today and Update on Liquidators Remuneration Since our last report we have undertaken the following: Assisted with the sale of assets within the Keystone Group; Completed investigations regarding insolvent trading claims and assignment of claims identified for consideration; Completed our detailed investigations in respect to the voidable transaction claims against the ATO; Commenced recovery proceedings in respect to the voidable transactions against the ATO; Completed other investigations required in respect to our reporting requirements to ASIC; and Attended to the adjudication of employee claims and distributions of those claims through FEG. A comprehensive analysis of the work done by the Liquidators and our staff is contained in the Remuneration Approval Report at Annexure E. At the forthcoming meeting of creditors we will be seeking approval from creditors for our outstanding remuneration in each entity within the group. Creditors should note that, as we have previously done in the Liquidation of this group, we have applied a 10% discount to our general Liquidation rates. 8

9 A summary of the remuneration sought for approval is provided in the below tables: Retrospective Remuneration - Period 12 April 2017 to 11 June 2018 Entities - all (In Liquidation) $ Excl. GST $ Less 10% Discount $ Incl. GST Gazebo Group Pty Limited 11, , , Gazebo Manly Pty Ltd 12, , , Gazebo Surry Hills Pty Limited 14, , , Newtown Hotel Holdings Pty Limited 9, , , Keystone SM Management OldCo Pty Ltd 13, , , Keystone (Australia) Pty Limited 8, , , The Beverage Boys Pty Limited 14, , , Green Slip Pty Ltd 13, , , ACN Pty Ltd 8, , , Chop 1 Pty Ltd 13, , , Chop 2 Pty Ltd 12, , , Chop Brands Pty Ltd 8, , , Investment Brands Pty Ltd 8, , , Italian 1 Pty Ltd 14, , , Italian 2 Pty Ltd 14, , , Italian 3 Pty Ltd 13, , , Italian 4 Pty Ltd 14, , , Italian 5 Pty Ltd 14, , , Steak 1 Pty Ltd 14, , , Steak 2 Pty Ltd 12, , , Steak 3 Pty Ltd 8, , , Steak 4 Pty Ltd 8, , , Steak Brands Pty Ltd 8, , , Trattoria 1 Pty Ltd 12, , , Website Brands Pty Ltd 8, , , Italian Brands Pty Ltd 8, , , Keystone Australia Holdings Pty Limited 8, , , Neild Holdings Pty Limited 8, , , Keystone Group Holdings Pty Ltd 93, , , York Rooftop Pty Limited 11, , , Total 428, , ,

10 Prospective Remuneration - Period 12 June 2018 onwards Entities - all (In Liquidation) $ Excl. GST $ Incl. GST Gazebo Group Pty Limited 10, , Gazebo Manly Pty Ltd 10, , Gazebo Surry Hills Pty Limited 10, , Newtown Hotel Holdings Pty Limited 10, , Keystone SM Management OldCo Pty Ltd 10, , Keystone (Australia) Pty Limited 10, , The Beverage Boys Pty Limited 10, , Green Slip Pty Ltd 10, , ACN Pty Ltd 10, , Chop 1 Pty Ltd 10, , Chop 2 Pty Ltd 10, , Chop Brands Pty Ltd 10, , Investment Brands Pty Ltd 10, , Italian 1 Pty Ltd 10, , Italian 2 Pty Ltd 10, , Italian 3 Pty Ltd 10, , Italian 4 Pty Ltd 10, , Italian 5 Pty Ltd 10, , Steak 1 Pty Ltd 10, , Steak 2 Pty Ltd 10, , Steak 3 Pty Ltd 10, , Steak 4 Pty Ltd 10, , Steak Brands Pty Ltd 10, , Trattoria 1 Pty Ltd 10, , Website Brands Pty Ltd 10, , Italian Brands Pty Ltd 10, , Keystone Australia Holdings Pty Limited 10, , Neild Holdings Pty Limited 10, , Keystone Group Holdings Pty Limited 100, , York Rooftop Pty Limited 10, , TOTAL 390, , Annual Meeting of Creditors Pursuant to s508(1)(b) of the Corporations Act 2001, an Annual General Meeting ( AGM ) is to be held concurrently for each of the entities within the Keystone Group at 10:30 AM AEST on Friday, 29 June 2018 at the offices of Bentleys Corporate Recovery, Level 3, 1 Castlereagh Street, Sydney NSW A Notice of Meeting is enclosed at Annexure F of this report. Attendance at this meeting is not compulsory and will not impact your ability to participate in any possible future dividends paid in the liquidation. Creditors may attend and vote in person, by proxy or by attorney. 10

11 Creditors who wish for a proxy to attend the meeting in their stead must complete and submit the Appointment of Proxy form enclosed at Annexure H. An instruction sheet is enclosed at Annexure G to assist in the completion of this form. Teleconference facilities are available. We request that you contact this office to obtain the relevant details. Proxy forms must be lodged with our office prior to the commencement of the meeting. Where a copy of a proxy is sent by for fax, the original must be lodged with our office within 72 hours after the receipt of the / fax. An attorney of the creditor must show the instrument by which he or she is appointed to the Chairman of the meeting prior to the commencement of the meeting. If you wish to vote at the meeting, you must be owed a debt by the Company and have submitted a Form 535 Formal Proof of Debt (Annexure I). If you have already submitted this form previously, then you do not need to submit the form again. 11. Further Information We encourage creditors to contact us should they require any further information or assistance with completing forms. In the first instance please contact Nicholas Gooley of this office on (02) or admin@bcr.bentleys.com.au. Dated this 15 th day of June 2018 Katherine Barnet Joint & Several Liquidator 11

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