Highrise Concrete Pumping Pty Ltd (In Liquidation) ACN (Highrise or Company) Statutory Report to Creditors

Transcription

1 Highrise Concrete Pumping Pty Ltd (In Liquidation) ACN (Highrise or Company) Statutory Report to Creditors We refer to our initial information for creditors dated 25 October 2018 in which you were advised of the appointment of Rob Kirman and Rob Brauer as liquidators of Highrise and your rights as a creditor in the liquidation. The purpose of this report is to: provide you with an update on the progress of the liquidation; and advise you of the likelihood of a dividend being paid in the liquidation. We will also be requesting that you consider our detailed remuneration report and consider a resolution to approve our remuneration. Update on the progress of the liquidation Background Highrise was incorporated on 16 October 2012 and traded as concrete pumping hire business, predominantly servicing the mining, construction and industrial sectors. Highrise owned and operated significant and specialised plant and equipment, which it almost solely hired related parties. Highrise was initially funded by and operated in conjunction with related entity, Allpumps (WA) Pty Ltd (In Liquidation) (Allpumps). Highrise s assets were generally utilised and held by related entities since incorporation. These related entity arrangements and historical trading and funding transactions between Highrise and various related entities have subsequently become the source of dispute amongst the Directors and related entities, which remain unresolved. The directors (and equal shareholders) of Highrise, Mr Niall Duggan and Mr Christopher Rakich (Directors) are also joint directors of related entities, Allpumps and MCPWA Pty Ltd (MCPWA). Highrise is also a 50% shareholder of MCPWA. On 11 October 2018, the Directors formed the view that the Company was insolvent, or likely to become insolvent, and passed a resolution to appoint Rob Kirman and Rob Brauer as Liquidators of Highrise. Messrs Kirman and Brauer were also concurrently appointed Liquidators of Allpumps. Estimated assets and liabilities In a liquidation, the Directors are required to complete a Report as to Affairs (RATA) setting out a detailed assessment of Highrise s asset and liability position. Immediately on appointment, the Liquidators requested the Directors to complete a (i) RATA, and (ii) director s questionnaire outlining the Director s assessment of the causes of failure for Highrise. Christopher Rakich and Niall Duggan submitted their RATAs separately on 12 November 2018 and 26 November 2018, respectively. Neither Director has submitted their questionnaire detailing the causes for failure. The Directors individual estimates of the assets and liabilities of Highrise varies significantly, particularly in relation to related entity debtor and creditor positions. The Liquidators have obtained company records from the Directors separately, and from Highrise s external accountant, including management accounts and MYOB files, historical financial statements, tax returns and bank statements. 1

2 Based on the books and records of the Company, set out in the table below is a summary Highrise s asset and liability position: Summary of Financial Position $ Section Net Book Value Liquidators' ERV Assets Cash at bank (90) Nil Debtors ,100 Unknown Plant and equipment ,883 Withheld Related party loan ,045 Withheld Shareholdings Unknown Total assets 459,948 Withheld Liabilities Priority employee creditors Nil Nil Secured creditors Nil Nil Unsecured creditors (149,317) (158,667) Total liabilities (149,317) (158,667) Net assets/(liabilities) 310,631 Withheld Note: Net Book Value is based on management accounts as at 11 October Assets Cash at bank As at the date of the appointment of Liquidators, Highrise s ANZ bank account was overdrawn with a debit balance of $ ANZ have not yet submitted a proof of debt for this amount Debtors Highrise s management accounts disclose debtors with a net book value of circa $353,100, comprising 50 invoices issued to a related entity, MCPWA. MCPWA advised the Liquidators that the claim is disputed in full. The Liquidators investigations into this claim and recoverability are ongoing Plant and equipment Highrise s plant and equipment comprises two specialised Zoomlion concrete pump units, one being a concrete line pump truck and the other a trailer pump. These assets were reported in management accounts with a net book value (i.e. after depreciation) of $95,883, and were delivered up to the Liquidators shortly after their appointment. Shortly after their appointment, the Liquidators engaged Tiger Asset Group to secure and value all of the plant and equipment, which has occurred. The Liquidators will not be disclosing the details of the valuation procured due to the ongoing nature of the asset sale process. Following securing of the assets, the Liquidators sought sale proposals from three independent plant and equipment auctioneers to manage the realisation of Highrise s specialist concrete pumping assets. Based on the proposals provided, the relevant experience of the auctioneers and the estimated costs, the Liquidators deemed Gregsons Auctioneers and Valuers (Gregsons) to be best placed to sell the plant and equipment via auction in early February Related party loan Highrise s balance sheet records a loan of $11,045 advanced to related party, Director Niall Duggan. The Liquidators are in dialogue with Mr Duggan in relation to the balance of the loan account outstanding and recoverability. 2

3 2.1.5 Shareholdings Shareholdings disclosed in management accounts with a net book value of $10 relate to Highrise s 50% shareholding interest in related entity MCPWA. The Liquidators understand that MCPWA was conceptually formed to amalgamate the Highrise and Allpumps companies, which ultimately did not occur. However, it was consistent with this concept that Highrise is a 50% shareholder of MCPWA. The ultimate value of Highrise s shareholding interest in MCPWA is at this stage unknown, and subject of continuing investigations. However, it is noted that the Liquidators understand that MCPWA no longer trades or holds assets of value. Liabilities Priority employee creditors The Liquidators are not aware of Highrise ever being an employer Secured creditors The Liquidators search of the Personal Properties Securities Register (PPSR) at the date of appointment did not identify any registrations in relation to Highrise Unsecured creditors Highrise s management accounts disclose unsecured creditors of $149,317, comprising three unsecured creditors. The largest creditor being the Australian Taxation Office (ATO), with an outstanding balance of $111,051 relating to unpaid Income Tax. The ATO has not yet submitted a proof of debt in the Highrise liquidation, accordingly the balance of the ATO debt may be subject to change. To date, the Liquidators have received one proof of debt from a creditor totalling $9,350. If any creditors would like to formally make their claim in the liquidation, please complete the attached proof of debt form and return it to Cecelia Lark Hare at clhare@mcgrathnicol.com. Investigations The Liquidators have obtained books and records in relation to the affairs of Highrise, which has included management accounts, the MYOB file, historical financial statements and tax returns, bank statements and copies of legal proceedings. The Liquidators have also held meetings with the Directors and their legal representatives in relation to the affairs of Highrise, and the reasons for its insolvency. The Liquidators are continuing investigations with the information at hand, and following the completion of asset realisations, will complete their investigations in relation to potential Liquidator recoveries and any antecedent transactions. Receipts and payments to date There have been no receipts or payments in the liquidation to date. Likelihood of a dividend A number of factors will affect the likelihood of a dividend being paid to creditors, including: the size and complexity of the liquidation; the 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, and the volume of enquiries by creditors and other stakeholders. 3

4 Based on the information available to the Liquidators at this time (including asset valuations), we consider absent any unforeseen issues it is likely that a dividend will be payable to priority and unsecured creditors with admitted claims in the liquidation. Where a dividend is to be paid, you will be contacted before that happens and, if you have not already done so, you will be invited to lodge a proof of debt. This formalises the record of your claim in the liquidation and is used to determine all claims against Highrise. Cost of the liquidation We enclose a detailed report on our remuneration, called a Remuneration Report. We propose to have our remuneration approved by a proposal without a meeting. Information about passing resolutions without a meeting and a voting form is enclosed. An information sheet on approving remuneration of an external administrator is provided for your information. What happens next? We will proceed with the liquidation, which will include: realising the plant and equipment; further investigating debtor amounts and loan accounts outstanding from related entities, and recoverability in light of the pre-appointment disputed and legal proceedings; finalising the verification of unpaid superannuation owed to former employees; completing statutory investigations into Highrise s affairs pursuant to the Corporations Act 2001; if identified, pursuing any viable claims for statutory recovery actions; and completing our reporting to the corporate insolvency regulator, the Australian Securities and Investments Commission (ASIC). If we receive a request for a meeting that complies with the guidelines set out in the initial information provided to you, we will hold a meeting of creditors. We may write to you again with further information on the progress of the liquidation. The timing of the completion of the liquidation will be dependent on several factors, including the time that may be required to complete asset realisations, statutory investigations and reporting, and fulfilment of the Liquidators obligations to creditors and statutory authorities. Based on the information available to us at this time, we expect to have completed this liquidation within 6 to 12 months. Where can you get more information? You can access information which may assist you on the following websites: ARITA at ASIC at (search for insolvency information sheets ). 4

5 If you have any queries, please contact Cecelia Lark Hare on (08) For further information about this engagement, please refer to the website Dated: 10 January 2018 Rob Kirman Liquidator Enclosures: Remuneration Report ARITA Information Sheet Approving remuneration of an external administrator Notice of Proposal to Creditors ARITA Proposals Information Sheet Proof of Debt (Form 535) Proof of Debt Guidance Notes ARITA Information Sheet Offences, Recoverable Transactions & Insolvent Trading 5

6 + Remuneration Report Highrise Concrete Pumping Pty Ltd (In Liquidation) ACN (Highrise) 10 January 2019

7 This remuneration report provides you with information to assist you to make an informed decision regarding the approval of our proposed remuneration for undertaking the liquidation of Highrise. The report has the following information: 1 Declaration Executive summary Remuneration Retrospective remuneration Prospective remuneration Estimated future and total remuneration Likely impact on dividends Remuneration recovered from external sources Summary of receipts and payments Queries D HIGHCON01-Remuneration report-clh 1

8 1 Declaration We, Rob Brauer and Rob Kirman of McGrathNicol, have undertaken a proper assessment of this remuneration claim for our appointment as Liquidators of Highrise in accordance with the law 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 this matter. 2 Executive summary To date, no remuneration or internal disbursements have been approved and paid in this liquidation. This remuneration report details approval sought for the following remuneration: Approvals sought Report Reference Amount (ex GST) Remuneration Retrospective 3.1 $23,187 Prospective* 3.2 $35,000 Total remuneration $58,187 * Approval sought for future remuneration is based on an estimate of the work necessary to the completion of the External Administration. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors. Please refer to the report section references detailed in the above table for full details of the calculation and composition of the remuneration for which approval is sought. 3 Remuneration 3.1 Retrospective remuneration We will request that the following resolution be passed to approve our retrospective remuneration. Details to support this resolution are included further below. Retrospective remuneration resolution Appointment Type Amount (ex GST) Resolution 1: 11 October January 2019 Liquidation $23,187 Total retrospective remuneration resolution: $23,187 Resolution 1: 11 October 2018 to 4 January 2019 That the remuneration of the Liquidators for the period 11 October 2018 to 4 January 2019, calculated at hourly rates as detailed in the Initial Remuneration Notice dated 25 October 2018 is determined in the sum of $23,187 exclusive of GST. We will withdraw funds from the liquidation account in respect of the Liquidators remuneration immediately upon approval if funds are available. If funds are not available, we will withdraw funds progressively over time as funds become available. The below table sets out the time charged to each major task area by staff members working on the liquidation for the period 11 October 2018 to 4 January 2019 which is the basis of Resolution 1. More detailed descriptions of the tasks performed within each task area, matching the amounts below, are contained further below. 2. D HIGHCON01-Remuneration report-clh 2

9 Resolution 1: 11 October 2018 to 4 January 2019 Highrise Concrete Pumping Pty Ltd (In Liquidation) - Summary of Liquidators' fees for the period from 11 October 2018 to 4 January 2019 Name Position $/hour Total hours Total $ Asset $ Creditors $ Employees $ Investigations $ Administration $ Rob Kirman Partner ,536 1, , Rob Brauer Partner Mark Knight Senior Manager ,967 3, ,695 2,107 Lauren Burton Manager Cecelia Lark Hare Senior Accountant , , ,964 Chintu Munohur Accountant , ,440 Kate Jumeaux Undergraduate Accountant Andrea Palmer Treasury Staff Joanne Hislop Treasury Staff Rachel Gambold Document Management Assistant Total (excluding GST) ,187 5,218 3,868-5,998 8,027 Total (including GST) 25,506 5,740 4,255-6,598 8, D HIGHCON01-Remuneration report-clh 3

10 The below table sets out a detailed description of work undertaken on the liquidation for the period 11 October 2018 to 4 January 2019 which is the basis of Resolution 1. Resolution 1: 11 October 2018 to 4 January 2019 Task Area General Description Includes Assets 10.2 hours $5,218 Debtors Plant and equipment Extract and review debtors ledger and invoices from MYOB accounting system Liaise with Directors regarding disputed debtor amounts and investigative requirements High level review of relative pre-appointment legal proceedings Write to Department of Transport to ascertain vehicles held under company name Liaise with Directors to provide details of plant and equipment whereabouts and condition Engage valuers to secure and value plant and equipment Liaise with auctioneers to submit sales proposals Review and assess sales proposals Engage chosen auctioneers to sell plant an equipment Liaise with auctioneers in relation to asset sale strategy and execution Liaise with Company Directors in relation to the condition and preparation for sale of assets Creditors 9.9 hours $3,868 Related party loans Creditor Enquiries, Requests & Directions Secured creditor reporting Creditor reports Deal with proofs of debt (POD) Review financial statements in relation to the composition of related party loans Consider recoverability of related party loans, in light of pre-appointment legal proceedings and discussions with Directors Collate, copy and supply Directors with books and records to assist with related party loan account review Receive and respond to creditor enquiries Prepare and issue initial correspondence to creditors and their representatives Prepare and issue Declaration of Independence, Relevant Relationships and Indemnities Review PPSR search results to ascertain if there were any registrations Commence drafting Statutory Report by Liquidator Commence drafting Remuneration Report Receive PODs from claimants Respond to telephone and queries from creditors 2. D HIGHCON01-Remuneration report-clh 4

11 Investigations 11.1 hours $5,998 Administration 21.0 hours $8,027 Proposals to Creditors Conduct investigations Document maintenance/file review/checklist ATO and other statutory reporting Insurance Bank account administration Commence drafting proposal notices and voting forms Send initial request to Director for Report as to Affairs (RATA) and Director s Questionnaire Follow-up Directors for RATAs and Questionnaire Assist Directors with understanding requirements to complete RATA Liaise with pre-appointment accountant to obtain books and records for investigations Review electronic and physical books and records Review MYOB management accounts High level reviews of pre-appointment legal proceedings and liaise with lawyers re the same Meeting with Directors and their legal representatives in relation to the affairs of the Company, reasons for its insolvency and related party transactions and debtor/creditor positions Maintain physical and electronic engagement file Update checklists Prepare mail redirection forms to have mail redirected from pre-appointment address Prepare notices of appointment to the ATO and other government bodies as required Liaise with statutory bodies about Liquidators appointment Correspond with insurer to place insurance cover as necessary Collate information and provide to insurers as necessary Review and consider insurance advice and liaise with insurer to finalise insurance requirements and cover Prepare correspondence to open liquidation bank account Correspond with pre-appointment bank regarding placing the pre-appointment account on hold and dealing with debits/credits accordingly ASIC forms Prepare and lodge ASIC forms (i.e. Form 505 on appointment, Form 205, Form 509 and initial information to creditors) Lodge Directors RATAs with ASIC as required Planning/Review Set down and develop ongoing strategy in relation to asset valuation and investigations 2. D HIGHCON01-Remuneration report-clh 5

12 Discuss status of liquidation and ongoing priorities as required Books and records Review and catalogue company records obtained and arrange storage as necessary Total $23, D HIGHCON01-Remuneration report-clh 6

13 3.2 Prospective remuneration We will request that the following resolution be passed to approve our prospective remuneration. Details to support this resolution are included further below. Prospective remuneration resolution Appointment Type Amount (ex GST) Resolution 2: 5 January completion of the liquidation Liquidation $35,000 Total Prospective remuneration resolution $35,000 Resolution 2: 5 January 2019 to completion That the future remuneration of the Liquidators from 5 January 2019 to completion is determined at a sum equal to the cost of time spent by the Liquidators and their partners and staff, calculated at the hourly rates as detailed in the Initial Remuneration Notice dated 25 October 2018 up to a capped amount of $35,000, exclusive of GST. We will withdraw funds from the administration account in respect of the Liquidators remuneration progressively over time as funds become available and only once it is incurred. The below table sets out the expected costs and a detailed description of the work by task area to be undertaken by the Liquidators for the period 5 January 2019 to completion which is the basis of Resolution 2. Resolution 2: 5 January 2019 to completion Task Area General Description Includes Assets $8,000 Creditors $9,000 Asset realisation Creditor report Creditor Enquiries, Requests & Directions Deal with PODs Proposals to Creditors Sale of plant and equipment and instructing auctioneers as necessary Collection and accounting for asset proceeds and relevant costs of realisation Review and consider collectability of related party loan accounts and accounts receivable, liaise with related entities in relation to same, and consider any recovery actions as necessary Finalise and issue Liquidators report and remuneration report to creditors Receive and respond to creditor enquiries as necessary Receive PODs from claimants Adjudicate on PODs, if required Prepare proposal notices and forward to all known creditors Review votes and determine outcome of proposal Prepare and lodge proposal outcome with ASIC 2. D HIGHCON01-Remuneration report-clh 7

14 Task Area General Description Includes Investigation $10,000 Administration $8,000 Dividend Conduct investigations ASIC reporting Document maintenance/file review/checklist Bank account administration Receive, review and file PODs Liaise with creditors regarding PODs Calculate dividend Issue correspondence to creditors in respect of dividend payment Declare and advertise dividend Prepare dividend payment to creditors Respond to creditor queries in respect of dividend Finalise review of company books and records Prepare comparative financial statements Review specific transactions and liaise with Director/related parties Investigate liquidator recoveries (insolvent trading, preference payments, uncommercial transactions) Prepare report to ASIC under s533 Liaise with ASIC as necessary Conduct six monthly file review Maintain physical and electronic engagement file Update checklists Perform periodic bank account reconciliations Account for receipts and payments as necessary Prepare correspondence to close accounts ASIC forms Prepare and lodge ASIC forms (i.e For 5603, Form 505 and Form 578) Correspond with ASIC regarding statutory forms ATO and other statutory reporting Finalisation Planning/Review Books and records / storage Prepare quarterly BASs and associated reconciliations Follow-up, consider and review Freedom of Information documents requested of ATO Notify ATO and other statutory authorities of ceasing to act Cancel ABN/GST/PAYG registration Complete checklists Discuss status of liquidation and ongoing priorities and completion as necessary Deal with records in storage as necessary Send job files to storage and arrange final destruction in accordance with standard ASIC guidelines Total $35, D HIGHCON01-Remuneration report-clh 8

15 3.3 Estimated future and total remuneration In preparing this report, our prospective remuneration approval is our best estimate of what we believe the liquidation will cost to complete and we do not anticipate that we will have to ask creditors to approve any further remuneration. However, should the liquidation not proceed as expected, we will advise creditors and we may seek approval of further remuneration. Matters that may affect the progress and the cost of the liquidation, include (but are not limited to) (i) delay and inability to reach a fully justified and supported positioned and/or commercial settlement with related entities regarding debtor and/or loan accounts outstanding, and shareholdings, and requirement to consider and/or progress legal recovery, and (ii) discovery of additional Liquidator claims requiring protracted investigations and legal proceedings. These matters should they arise with be considered by the Liquidators from a cost/benefit perspective for creditors, and actioned accordingly. At this point in time we estimate that the total remuneration for the liquidation will be $58,187 (GST exclusive), as shown in the table below. Remuneration type Amount (ex GST) Retrospective remuneration approval (refer to section 3.1) Prospective remuneration approval (refer to section 3.2) Estimated total remuneration $23,187 $35,000 $58,187 This estimate is in accordance with the $50,000 to $75,000 estimate provided in our initial information to creditors on 25 October Likely impact on dividends It is both reasonable and appropriate for a professional service provider to be remunerated for their services. An external administrator is entitled to be remunerated for necessary work that is reasonably performed. That work generates any funds that may be recovered for the benefit of creditors and other stakeholders. The impact of the approval of the external administrator s remuneration is that the remuneration will then be paid if sufficient funds are generated to enable it to be paid. The remuneration will be paid from those funds that are generated prior to the payment of most other stakeholders in the external administration. It is noted that no funds would be available for any stakeholder without the work necessarily undertaken by the external administrator. If a dividend or distribution is to be paid to stakeholders, there is also necessary work that must be undertaken by the external administrator to properly adjudicate on claims and distribute any available funds. At this stage (based on information at hand), it is expected that a dividend will be paid to priority and unsecured creditors of Highrise, however, there is uncertainty as to the level of such dividends as a result of still to be determined asset proceeds and costs of realisation. 3.5 Remuneration recovered from external sources The Liquidators have not recovered any remuneration from external sources or received any indemnities or up-front payments. 4 Summary of receipts and payments There have been no receipts or payments in the liquidation to date. 2. D HIGHCON01-Remuneration report-clh 9

16 5 Queries If you have any queries regarding the information in this report, please contact Cecelia Lark Hare on (08) You can also access information that may assist you on the following websites: ARITA at ASIC at (search for fees of insolvency practitioner ). Dated: 10 January 2019 Rob Kirman Liquidator 2. D HIGHCON01-Remuneration report-clh 10

17 Information sheet: Approving remuneration of an external administrator If you are a creditor in a liquidation, voluntary administration or deed of company arrangement you may be asked to approve the external administrator s remuneration. An external administrator can be a liquidator, voluntary administrator or deed administrator. The process for approving the remuneration for each of these is the same. This information sheet gives general information to help you understand the process of approving an external administrator s remuneration and your rights in this process. The following topics are covered in this information sheet: About external administrations External administrator s remuneration and costs Calculating remuneration Information you will receive Approving remuneration Who may approve remuneration Deciding if remuneration is reasonable What can you do if you decide the remuneration is unreasonable? Reimbursement of out of pocket costs Queries and complaints More information. About external administrations If a company goes into liquidation, voluntary administration or enters into a deed of company arrangement, an independent person is appointed to oversee the administration. They are called an external administrator and include a liquidator, voluntary administrator and deed administrator, depending on the type of administration involved. In this information sheet they are simply referred to as an external administrator. The duties of an external administrator are specified in legislation and they must adhere to certain standards while conducting the administration. All external administrators are required by law to undertake certain tasks which may not benefit creditors directly (e.g. investigating whether any offences have been committed and reporting to the Australian Securities and Investments Commission (ASIC)). External administrator s remuneration and costs External administrators are entitled to be paid for the necessary work they properly perform in the administration. An external administrator is entitled: to be paid reasonable remuneration, for the work they perform, once this remuneration has been approved, to be paid for internal disbursements they incur in performing their role (these costs do need approval), and to be reimbursed for out-of-pocket costs incurred in performing their role (these costs do not need approval). ARITA ACN Level 5, 191 Clarence Street, Sydney NSW 2000 Australia GPO Box 4340, Sydney NSW 2001 t e admin@arita.com.au arita.com.au AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION

18 Common internal disbursements are stationery, photocopying and telephone costs. Commonly reimbursed out-of-pocket costs include: legal fees a valuer s, real administration agent s and auctioneer s fees postage costs retrieval costs for recovering the company s computer records, and storage costs for the company s books and records. Creditors have a direct interest in the amount of an external administrator s remuneration and costs, as these will generally be paid from the administration before any payments are made to creditors. Remuneration and internal disbursements must be approved in accordance with the Corporations Act and Insolvency Practice Rules (Corporations) before it can be paid. If there is a shortfall between the external administrator s remuneration and the assets available from the administration, in certain circumstances the external administrator may arrange for a third party to pay the shortfall. As a creditor, you will be provided details of any such arrangement. If there are not enough assets to pay the external administrator s remuneration and costs, and there is no third party payment arrangement, the external administrator remains unpaid. Calculating remuneration An external administrator may calculate their remuneration using one (or a combination) of a number of methods, such as: on the basis of time spent working on the administration, according to hourly rates a quoted fixed fee, based on an estimate of the costs a percentage (usually of asset realisations), or a contingent basis on a particular outcome being achieved. Charging on the basis of time spent is the most common method used. External administrators have a set of hourly rates that they will seek to charge. These rates are set to reflect the seniority, skills and experience of staff and, where applicable, the complexity and risks of the bankruptcy. They cover staff costs and overheads. If remuneration is being charged on a time basis, the external administrator must keep time sheets noting the number of hours spent on the tasks performed. Creditors have a right to question the external administrator about the remuneration and the rates to be charged. They also have a right to question the external administrator about the fee calculation method used and how the calculation was made. The external administrator must justify why the chosen fee calculation method is appropriate for the administration. Information you will receive There are different types of remuneration reports that you may receive during the course of an external administration. The following table details the reports and when you might receive them. Version: August 2017 INFO remuneration external administrator.docx AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION PAGE 2

19 Document Information it contains When you will receive it Initial Remuneration Notice (IRN) Remuneration Approval Report (RAR) A brief explanation of the types of methods that may be used to calculate fees. The external administrator s chosen fee calculation method(s) and why it is appropriate. Details of the external administrator s rates, including hourly rates if time spent basis is used. An estimate of the external administrator s remuneration. The method that will be used to calculate disbursements. A summary description of the major tasks performed, or likely to be performed. The costs associated with each of those major tasks and the method of calculation. The periods at which the external administrator proposes to withdraw funds from the administration for remuneration. An estimated total amount, or range of total amounts, of the external administrator s remuneration. An explanation of the likely impact of that remuneration on the dividends (if any) to creditors. Where internal disbursements are being claimed, the external administrator will report to creditors on the amount and method of calculation of these disbursements. Voluntary Administration with the notice of first meeting. Creditors voluntary liquidation within 10 business days of appointment. Court liquidation within 20 business days of appointment. Sent at the same time as: the notice to creditors of the meeting at which approval of remuneration will be sought; or the notice to creditors of the proposal without a meeting by which approval of remuneration will be sought If approval of remuneration is not being sought, a RAR will not be provided. Approving remuneration The meeting of creditors (or committee of inspection) gives a chance for those participating to ask questions about the external administrator s remuneration. Fees are then approved by a vote of the creditors. Alternatively, the external administrator may seek approval of remuneration via a proposal without a meeting. Whichever method is used, the external administrator must provide the same report to creditors about their remuneration (Remuneration Approval Report). Creditors may be asked to approve remuneration for work already performed and/or remuneration estimate for work not yet carried out. If the work is yet to be carried out, the external administrator must set a maximum limit (cap) on the future remuneration approval. For example, future remuneration is approved, calculated on hours worked at the rates charged (as set out in the provided rate scale) up to a cap of $X. Version: August 2017 INFO remuneration external administrator.docx AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION PAGE 3

20 If the remuneration for work done then exceeds this figure, the external administrator will have to ask the creditors to approve a further amount of remuneration, after accounting for the amount already incurred. If an external administrator can t get the creditors approval, an application can be made to the Court to determine their remuneration. When there are limited funds available in the administration, or the external administrator s remuneration is below a statutory threshold, an external administrator is entitled to draw a oneoff amount of up to that threshold plus GST, without creditor approval. This amount is currently $5,000 (indexed). Who may approve remuneration? Committee of inspection approval A committee of inspection will generally only be established where there are a large number of creditors and/or complex matters which make having a committee desirable. Committee members are chosen by a vote of all creditors and work with the external administrator to represent the creditors interests. If there is a committee, the external administrator will ask it to approve the remuneration. A committee makes its decision by a majority in number of its members present in person at a meeting, but it can only vote if a majority of its members attend. In approving the remuneration, it is important that committee members understand that they represent all the creditors, not just their own individual interests. Creditors approval Creditors approve remuneration by passing a resolution at a creditors meeting. Creditors may vote according to their individual interests. To approve an external administrator s remuneration, a resolution is put to the meeting to be decided on the voices or by a poll (if requested by the external administrator or a person participating and entitled to vote at the meeting). A poll requires a count of each vote and its value to be taken and recorded for each creditor present and voting. A proxy is a document whereby a creditor appoints someone else to represent them at a creditors meeting and to vote on their behalf. A proxy can be either a general proxy or a special proxy. A general proxy allows the person holding the proxy to vote how they want on a resolution, while a special proxy directs the proxy holder to vote in a particular way. A creditor will sometimes appoint the external administrator as a proxy to vote on the creditor s behalf. An external administrator is only able to vote on remuneration if they hold a special proxy. There are provisions for a resolution to be passed by creditors without a meeting. This still requires a majority in value and number of creditors voting to vote in favour of the resolution. Creditors representing at least 25% in value of those responding to the external administrator s proposal can object to the proposal being resolved without a meeting of creditors. Version: August 2017 INFO remuneration external administrator.docx AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION PAGE 4

21 Deciding if remuneration is reasonable If you are asked to approve an external administrator s remuneration, your task is to decide if the amount of remuneration is reasonable, given the work carried out in the administration and the results of that work. You may find the following information from the external administrator useful in deciding if the remuneration claimed is reasonable: the method used to calculate remuneration the major tasks that have been performed, or are likely to be performed, for the remuneration the remuneration/estimated remuneration (as applicable) for each of the major tasks the size and complexity (or otherwise) of the administration the amount of remuneration (if any) that has previously been approved if the remuneration is calculated, in whole or in part, on a time basis: o the period over which the work was, or is likely to be performed o if the remuneration is for work that has already been carried out, the time spent by each level of staff on each of the major tasks o if the remuneration is for work that is yet to be carried out, whether the remuneration is capped. ARITA s Code of Professional Practice ( the Code ) outlines the steps external administrators should take to make sure they fulfil their responsibilities to creditors when asking creditors to approve remuneration, including when those creditors are acting in their capacity as committee members. The Code is available on the ARITA website at If you need more information about remuneration than is provided in the external administrator s report, you should let them know before the meeting at which remuneration will be voted on. What can you do if you think the remuneration is unreasonable? If you think the remuneration being claimed is unreasonable, you should raise your concerns with the external administrator. It is your decision whether to vote in favour of, or against, a resolution to approve remuneration. You may also choose to not vote on the resolution (abstain). You also have the power to put a resolution to the meeting. For example, you could put forward a resolution to change the way the external administrator charges for remuneration, or the periods at which the external administrator may withdraw funds. Any amending resolution must occur before the vote being taken on the resolution to approve remuneration. If the amended proposal is passed, the resolution is binding on the external administrator. However, such an amendment may result in the external administrator seeking to be replaced by another external administrator. If the external administrator is seeking approval of remuneration via a resolution without a meeting and more than 25% in value of the creditors responding object using the form provided by the external administrator, the proposal will not pass. If the external administrator wants the proposal passed, a meeting will need to be convened and any creditor entitled to participate in the meeting has the right, before the vote is taken, to put a resolution to the meeting as mentioned above. Version: August 2017 INFO remuneration external administrator.docx AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION PAGE 5

22 A creditor may apply to Court for a review of an external administrator s remuneration. Creditors also have the power to appoint, by resolution, a reviewing liquidator to review any remuneration approved within the six months and any disbursements incurred in the 12 months before the reviewing liquidator s appointment. The cost of a reviewing liquidator is paid from the assets of the external administration. An individual creditor may also appoint a reviewing liquidator with the external administrator s consent. An individual creditor seeking the appointment of a reviewing liquidator must pay the cost of the reviewing liquidator. Reimbursement of out-of-pocket costs An external administrator should be very careful incurring costs that must be paid from the administration; as careful as if they were incurring the expenses on their own behalf. Their report on remuneration sent to creditors must also include information on the out-of-pocket costs of the administration (disbursements). Where these out-of-pocket costs are internal disbursements paid to the external administrator s firm (for example photocopying and phone calls) the external administrator must request creditor approval of these amounts. The external administrator may also ask for approval of internal disbursements in advance. If they do so, they will set the rates for those disbursements and a cap on the maximum amount that can be drawn. If you have questions about any of these costs, you should ask the external administrator and, if necessary, bring it up at a creditors or committee meeting. If you are still concerned, you have the right to seek the appointment of a reviewing liquidator (refer above). Queries and complaints You should first raise any queries or complaints with the external administrator or their firm. If this fails to resolve your concerns, including any concerns about their conduct, you can lodge a complaint with ARITA at or with ASIC at ARITA is only able to deal with complaints in respect of their members. More information The ARITA website contains the ARITA Code of Professional Practice which is applicable to all its members. ARITA also provides general information to assist creditors at ASIC includes information on its website which may assist creditors. Go to and search for insolvency information sheets. Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances. Version: August 2017 INFO remuneration external administrator.docx AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION PAGE 6

23 Highrise Concrete Pumping Pty Ltd (In Liquidation) ACN (Highrise) Notice of Proposal to Creditors Proposal for creditor approval That the future remuneration of the Liquidators from 5 January 2019 to completion is determined at a sum equal to the cost of time spent by the Liquidators, partners and staff, calculated at the hourly rates as detailed in the Initial Remuneration Notice dated 25 October 2018 up to a capped amount of $35,000 (exclusive of GST) and the Liquidators can draw the remuneration on a monthly basis or as otherwise determined by the Liquidators. Reasons for the proposal and the likely impact it will have on creditors if it is passed Remuneration: The Liquidators are entitled to be remunerated for the work undertaken by us, our partners and our staff. We consider that the method of this approval by a proposal, rather than incurring the costs of convening a meeting of creditors will achieve the dual aims of: allowing creditors to properly consider detailed information regarding the remuneration that we request they approve; and minimise the costs of the consideration and approval process, with the aim of maximising the potential return to creditors from the Liquidation. If the resolution is passed, the Liquidators will rely on the resolution to pay the approved remuneration (or a lesser amount if there are insufficient funds available) from the bank account maintained by the Liquidators. Vote on proposal Creditors have the option of approving, not approving or objecting to the proposal being resolved without a meeting of creditors. If more than 25% of responding creditors object to the proposal being resolved without a meeting of creditors, a meeting of creditors would be required to be convened to pass the resolution. Please select the appropriate Yes, No or Object box referred to below: Yes I approve the proposal. No I do not approve the proposal. Object I object to the proposal being resolved without a meeting of creditors. Your claim against Highrise must be admitted for the purposes of voting by the Liquidators for your vote to count. Please select the option that applies: I have previously submitted a proof of debt form and supporting documents. I have enclosed a proof of debt form and supporting documents with this proposal form. Creditor details Name of creditor: ACN/ABN (if applicable): I am not a related creditor of Highrise. I am a related creditor of Highrise, relationship:. 1

24 Address: Name of creditor/authorised person: Signature: Date: Please complete this document and return it with any supporting documents by no later than 4 February 2019 for your vote to be counted, by to clhare@mcgrathnicol.com. Completed forms may also be sent by mail to GPO Box 9986, Perth WA 6848, although you should ensure this is sent with sufficient time to arrive by the date the vote closes. If you have any queries, please contact Cecelia Lark Hare on (08) Dated: 10 January

25 Highrise Concrete Pumping Pty Ltd (In Liquidation) ACN (Highrise) Notice of Proposal to Creditors Proposal for creditor approval That the books and records of Highrise may be destroyed following the deregistration of Highrise, subject to the consent of the Australian Securities & Investments Commission being obtained. Reasons for the proposal and the likely impact it will have on creditors if it is passed Destruction of records: In the absence of a resolution of the type proposed, the Liquidators would be required to retain and store the records of Highrise for 5 years. There are material costs associated with this storage. It is the view of the Liquidators that incurrence of these costs is not in the best interests of creditors as it will diminish the available funds. If the resolution is passed, the Liquidators will rely on the resolution in support of an application to ASIC for the destruction of the records of Highrise. If that approval is granted by ASIC, the Liquidators would then be entitled to destroy the records of Highrise within the period allowed by ASIC. Vote on proposal Creditors have the option of approving, not approving or objecting to the proposal being resolved without a meeting of creditors. If more than 25% of responding creditors object to the proposal being resolved without a meeting of creditors, a meeting of creditors would be required to be convened to pass the resolution. Please select the appropriate Yes, No or Object box referred to below: Yes I approve the proposal. No I do not approve the proposal. Object I object to the proposal being resolved without a meeting of creditors. Your claim against Highrise must be admitted for the purposes of voting by the Liquidators for your vote to count. Please select the option that applies: I have previously submitted a proof of debt form and supporting documents. I have enclosed a proof of debt form and supporting documents with this proposal form. Creditor details Name of creditor: ACN/ABN (if applicable): I am not a related creditor of Highrise. I am a related creditor of Highrise, relationship:. 1

26 Address: Name of creditor/authorised person: Signature: Date: Please complete this document and return it with any supporting documents by no later than 4 February 2019 for your vote to be counted, by to clhare@mcgrathnicol.com. Completed forms may also be sent by mail to GPO Box 9986, Perth WA 6848, although you should ensure this is sent with sufficient time to arrive by the date the vote closes. If you have any queries, please contact Cecelia Lark Hare on (08) Dated: 10 January