Statutory Report to Creditors

Transcription

1 Statutory Report to Creditors Tasman Market Fresh Meats Pty Ltd ACN TMFM Holdings Pty Ltd ACN (both In Liquidation) (collectively referred to as the Group)

2 Contents 1 Summary 1 2 Update on the progress of the liquidation Activities undertaken since the Second Meeting of Creditors Assets and liabilities Receipts and payments Further investigations undertaken 2 3 Likelihood of a dividend 4 4 Cost of the liquidation 4 5 What happens next? 4 6 What to do next? 5 Appendix A Assets and Liabilities per the Directors RATA s 7 1 Assets and Liabilities Tasman RATA TMFMH RATA 10 Appendix B Receipts and payments 11 PwC i

3 1 Summary As you are aware, the appointment of Martin Ford and I on 29 November 2018 was resolved at the Second Meeting of Creditors of the Group and followed our appointment as voluntary administrators on 7 September This report follows our Administrators report dated 20 November 2018 (Administrators Report). 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. PwC 1

4 2 Update on the progress of the liquidation 2.1 Activities undertaken since the Second Meeting of Creditors Following the Second Meeting of Creditors, we have undertaken the following key activities: finalised the payment of trading liabilities following the sale of stores attended to statutory taxation returns and reconciliations prepared and facilitated the payment of employee entitlements for non-transferring employees undertaken additional investigations into the affairs of the Companies, as detailed below dealt with Personal Property and Security Register (PPSR) claims of creditors distributed surplus funds to the secured creditor prepared an estimated outcome statement and final trading accounts for the secured creditor attended to statutory tasks, including preparation and lodgement of ASIC forms. 2.2 Assets and liabilities The directors each completed a Report as to Affairs (RATA) for both Tasman Market Fresh Meats Pty Ltd (in Liquidation) (Tasman) and TMFM Holdings Pty Ltd (in Liquidation) (TMFMH) on 17 September 2018 during the voluntary administration period. Details of the information provided in the RATA s was included in the Administrators Report. We have included this information at Appendix A to this report for completeness. 2.3 Receipts and payments Attached at Appendix B are details of all receipts and payments in the liquidation to date. Note that trading payments represent the finalisation of trading obligations incurred during the voluntary administration period. 2.4 Further investigations undertaken We do not anticipate any recoveries available to the Group in respect of insolvent trading or any other potentially voidable transactions. Set out below are details of the further investigations undertaken into the solvency position of each of the Companies and possible recoverable transactions since our appointment as Liquidators. Such investigations were discussed at the Committee of Inspection (COI) meeting held on 31 January We will shortly finalise these investigations and submit a report to the Australian Securities and Investments Commission (ASIC). In Section 7 of the Administrators Report, we outlined investigations undertaken during the voluntary administration period. PwC 2

5 2.4.1 Insolvent trading investigation It is noted that, whilst the Group is referred to, all trading activities were undertaken in Tasman. In addition to the detailed analysis set out in the Administrators Report, our further investigations identified that for the period April to September 2018: There was an immaterial deterioration in supplier payment terms, with average supplier terms being consistently held at around 33 days The short-term cash flow forecast, which the Group regularly maintained, projected that sufficient cash would be available to meet debts being incurred during August and September, and It is likely that the Directors met the threshold conditions of the Safe Harbour provisions and that the Safe Harbour exception would apply in an insolvent trading claim. In our Administrators Report we expressed the preliminary view that the Group was insolvent, or likely to become insolvent, on or about 5 September Based on the further work that we have undertaken we remain of the view that this is the most likely scenario, however it is arguable that the Safe Harbour exception may not apply from about late August 2018, at which point the directors prospects of sourcing additional equity may not have satisfied a reasonable prospects test. For the reasons outlined in our Administrators Report, we are of the opinion that an insolvent trading claim is unlikely to be successful and that there is no commercial merit to pursuing such a claim Safe Harbour We reiterate our previous advice that it is likely that the Directors would qualify for the Safe Harbour exception from around April Independent advice from an appropriately qualified professional concluded that Group had met the Safe Harbour eligibility criteria in respect of adequate books and records, employee obligations and taxation reporting obligations at all times since entering Safe Harbour up to the date of administration. The independent advisor also reviewed the Group s restructuring plan and concluded that it satisfied the Better Outcome test. The Group s negotiations with the proposed equity contributor broke down in late August 2018, however the Group was still in discussions with other investors at the time. Noting that there was still a prospect of raising the funds necessary to implement the restructure, it is arguable (refer comments above) that the Safe Harbour requirements were not met from late August PwC 3

6 3 Likelihood of a dividend As advised in the Administrators Report, we do not expect a dividend to be paid to unsecured creditors. To date, we have paid the following dividends: Creditor class Amount ($) Secured creditor 2,500, Priority creditors: employees 1,091, Priority creditors: superannuation guarantee charge 236, Total dividends paid to date 3,827, Priority employee creditors have been paid in full in respect of entitlements outstanding. The ATO was also paid in full in respect of superannuation for the period 1 July to 6 September 2018, plus associated administration charges. The secured creditor has been paid 20.22c/$ to date. We anticipate that the secured creditor may receive up to a further $300,000 from the remaining assets available in the liquidation. 4 Cost of the liquidation The following fees were approved at the second meeting of creditors held on 29 November 2018, for the period 29 November 2018 to the conclusion of the respective liquidations: Entity Amount (excluding GST) ($) Tasman Market Fresh Meats Pty Ltd (In Liquidation) 90, TMFM Holdings Pty Ltd (In Liquidation) 10, Total fee approval 100, Details of the approved remuneration is outlined in our Remuneration Approval Report dated 20 November 2018 (Annexure B of the Administrators Report). We will write to creditors should further remuneration approval be sought. 5 What happens next? The following matters will need to be undertaken before the Liquidations can be finalised: finalise one outstanding PPSR claim pay final dividend to the secured creditor commission legal opinion on our insolvent trading analysis convene and hold COI meetings (if required) report to creditors and the COI (if required) prepare for and hold meetings of creditors as required (including in circumstances where creditors request a meeting in a manner that complies with the guidelines set out in the initial information provided) attend to all statutory lodgements, including final report to ASIC PwC 4

7 We expect to finalise the liquidations by June What to do next? You can access information which may assist you on the following websites: Australian Restructuring Insolvency and Turnaround Association (ARITA) at ASIC at If you have any queries in relation to the contents of this report, please contact Jacob Curtis on (03) Dated this 26th day of February 2019 David McEvoy Joint and several Liquidator PwC 5

8 Appendices Appendix A Assets and Liabilities per the Directors RATA s 7 Appendix B Receipts and payments 11 PwC 6

9 Appendix A Assets and Liabilities per the Directors RATA s PwC 7

10 1 Assets and Liabilities The figures presented below are per the RATA s submitted by the directors, and have not been updated post liquidation. Details on our comments to their book and estimated values are in Section 6.3 of the Administrators report. The Liquidators estimate is based on information available to us at the time of writing this report. 1.1 Tasman RATA $ 000 Notes Director s Book value Director s Estimated value Liquidators Estimate Assets Sundry debtors Nil Cash on hand Nil Cash at bank Stock 2,120 2,000 Nil Plant and equipment 14,534 1,000 Nil Other 888 Nil Nil Total Assets 2 18,186 3, Liabilities Secured creditors Employee entitlements Trade and other creditors Related party creditors 3 Nil Nil (10,216) 4 (1,522) (1,522) Nil (9,504) (8,385) (7,236) Nil Nil (1,793) Total Liabilities (11,026) (9,907) (19,245) Surplus / (deficiency) subject to liquidation costs 7,160 (6,469) (18,985) Notes 1. Refer to Annexure B for our receipts and payments which confirms the current cash at bank figure. 2. For the majority of outlined assets, the figure designated as our estimated value is nil. This is due to the assets (where applicable) having been accounted for in the 14 store sales completed during the voluntary administration period, or in the separate sale of PP&E. Accordingly, aside from the cash at bank available to us, we do not expect there will be further assets available to us to recover or realise. PwC 8

11 Assets and Liabilities per the Directors RATA s 3. The Directors RATA did not disclose the amount due to the secured creditor under the cross-collateralised security agreement, which at 7 September 2018 was $12.36m. Our estimated liability is net of $2.5m in dividend distributions made to the secured creditor and includes $320k of bank guarantees which crystallised and were called upon after the vacation of leased premises for stores which were not sold. There was a contingency of $1.7m for bank guarantees across the 16 stores, however the majority of this contingency did not materialise as the underlying guarantees were replaced as part of the sale process for each store. Further, one remaining potential retention of title claim which has been received in respect of a PPSR claim, but not yet finalised, is included here 4. The following pre-tax employee entitlements were paid from the assets of Tasman on 5 December 2018: Terminated employees Amount paid ($) Wages Annual leave 208, Leave loading 12, Long service leave 156, Payment in lieu of notice 286, Redundancy 426, Total entitlements paid 1,091, Superannuation for the period 1 July to 6 September , Total employee entitlements paid 1,327, It is noted that outstanding superannuation payable for the period 1 July to 6 September 2018 did not form part of the sale of business agreements. Therefore, the amount paid to the Australian Taxation Office (ATO) represented entitlements for terminated and transferred employees. In addition, $47, superannuation on redundancy payments was also paid. The following entitlements were transferred to the respective purchasing parties: Transferred employees Amount paid ($) Annual leave 311, Leave loading 26, Long service leave 512, Personal leave 345, Total transferred employee entitlements (excl. super) 1,194, PwC 9

12 Assets and Liabilities per the Directors RATA s 1.2 TMFMH RATA $ 000 Notes Director s Book value Director s Estimated value Liquidators Estimate Assets Sundry debtors 94 Nil Nil Cash at bank 1 1 Nil Other 1 11,882 Nil Nil Total Assets 11,977 1 Nil Liabilities Secured creditors Trade and other creditors 2 (10,817) (10,817) (9,860) Nil Nil (5) Total Liabilities (10,817) (10,817) (9,865) Surplus / (deficiency) subject to liquidation costs 1,160 (10,816) (9,865) Notes 1. Other assets comprised goodwill and formation costs, with any applicable value realised in the sale of business process. 2. The secured creditor, to date, has received $2.5m in dividend distributions from the assets of Tasman. The balance of its security is included here, as it is in Tasman, given the debt is cross-collateralised. PwC 10

13 Appendix B Receipts and payments PwC 11

14 Presented below is a summary of receipts and payments in relation to Tasman, for the period 29 November 2018 to the date of this report. Note that there have been no receipts or payments in TMFMH. PwC 12

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