Report to Creditors of the Bocar Group of Companies

Transcription

1 Report to Creditors of the Bocar Group of Companies 23 March 2009 Incorporating:- BOCAR SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN: BOCAR ADMINISTRATION SERVICES PTY LTD (ADMINISTRATORS APPOINTED) ACN: GRAYBOND PTY LTD (ADMINISTRATORS APPOINTED) ACN: BAUMANN DESIGN PTY LTD (ADMINISTRATORS APPOINTED) ACN:

2 Index Annexure 1 Introduction Administrators Executive Summary Statutory Information Group History Conduct of the Administration Bocar Services Pty Ltd Bocar Administration Services Pty Ltd Graybond Pty Ltd Baumann Design Pty Ltd Remuneration Meeting of Creditors...51 A B C D E F G H I J K Statement of Independence Group Structure Comparative Financial Statements Summary of Receipts and Payments IPAA Creditor Information Sheet and Charge Out Rates Bocar Services Pty Ltd Remuneration Reports Bocar Administration Services Pty Ltd Remuneration Reports Graybond Pty Ltd Remuneration Reports Baumann Design Pty Ltd Remuneration Reports Remuneration Reports provided by SV Partners Meeting of Creditors Documentation 2009 Grant Thornton

3 1 Introduction Paul Sweeney and Terry van der Velde of SV Partners Pty Ltd were appointed Voluntary Administrators of the Bocar Group of Companies on 25 February Messrs Sweeney and van der Velde resigned as Voluntary Administrators on 9 March 2009 at the first meeting of creditors. The director of the Companies appointed Michael Gerard McCann and Matthew James Byrnes of Grant Thornton as Voluntary Administrators on 9 March Grant Thornton 27 March

4 Introduction On 9 March 2009, Matthew James Byrnes and I, Michael Gerard McCann, were appointed as Voluntary Administrators of the Bocar Group of Companies pursuant to Section 449C of the Corporations Act 2001 (Cwlth) following the resignation of the former Administrators (Terry Van Der Velde and Paul Sweeney of SV Partners Pty Ltd) at the first meeting of creditors of 9 March First Meeting of Creditors In the administration, there have been two meetings of creditors to date. The first meeting was convened by the former Administrators and held on 9 March This meeting was adjourned by the previous administrators to allow them to resign and for the director of the Companies to appoint Matthew Byrnes and myself as Administrators. At the meeting of creditors convened on 9 March 2009, creditors resolved to appoint a committee of creditors to Bocar Services Pty Ltd. The committee comprises the following creditors: 1. SIA Abrasives Pty Ltd; 2. Rogers Industries Pty Ltd; 3. Almax Aluminium Pty Ltd; 4. G James Australia Pty Ltd; 5. One Steel Pty Ltd; and 6. Superior Pallets Pty Ltd. Another meeting of creditors was held on 16 March As required pursuant to Section 438A of the Act, I have conducted preliminary investigations into the affairs of the Companies and I report hereunder pursuant to Section 439A of the Act. Second Meeting of Creditors The second meeting of creditors of the Companies will be held concurrently on Wednesday, 1 April 2009 at 2.30pm at the offices of Grant Thornton Chartered Accountants, Ground Floor, Grant Thornton House, 102 Adelaide Street, Brisbane, Queensland, The purpose of the second meeting is to consider the Administrators report on the Companies business, property, affairs and financial circumstances and to consider the Administrators statement of opinion in respect of each of the options available to creditors. At the meeting, creditors will be required to determine the future of the Company and to resolve one of the following: That the Company execute a Deed of Company Arrangement ( DOCA ) if proposed; or That the administration end; or That the Company be wound up. For reasons stated in this report it is my opinion that it is in the interests of creditors to vote in favour of the Company being wound up. At the time of writing this report, no DOCA has been proposed in this matter. Creditors should note that in preparing this report I have relied on information that has been provided by the Director of the Companies and the books and records of the Companies. In the event that the Companies proceed into liquidation, this report will form the basis of further investigation. Provided that funding is available, 2009 Grant Thornton 27 March

5 the investigation will be more extensive than that undertaken to date, particularly due to the time constraints of the voluntary administration process. Further investigation may be supported by public examinations of the Director, officers and others who may be able to provide information about the Companies examinable affairs (as that expression is defined in the Act). It is my view that this report provides sufficient information to creditors to allow them to make an informed decision about the future of the Companies and allows the Voluntary Administrators to make a reasoned and fair recommendation based upon my opinions and the options available to creditors. Compliance with Best Practice I confirm that this report complies with the Code of Professional Practice issued by the Insolvency Practitioners Association of Australia ( IPAA ) with regard to the content of Administrators reports (effective 21 May 2008) and with regard to independence and remuneration (effective 31 December 2007). Abbreviations Used in this Report ACN Australian Company Number Act Corporations Act 2001 ASIC Australian Securities & Investment Commission ATO Australian Taxation Office Baumann Design Baumann Design Pty Ltd Bocar Group of Companies or Companies Bocar Services Pty Ltd, Bocar Administration Services Pty Ltd, Graybond Pty Ltd and Baumann Design Pty Ltd Bocar Services Bocar Services Pty Ltd Bocar Admin Bocar Administration Services Pty Ltd the Company Bocar Services Pty Ltd DOCA Deed of Company Arrangement Director Mr Henri Baumann GEERS General Employee Entitlements Redundancy Scheme IPAA Insolvency Practitioners Association of Australia relation back date the commencement of the winding up date, or the date the Administrators were appointed being 25 February SGC Superannuation Guarantee Charge SOCP Statement of Current Position 2009 Grant Thornton 27 March

6 2 Administrators Executive Summary Production has recommenced and the majority of staff have now returned to work. Key customers and key suppliers have been contacted in order to secure their support. The business has been advertised for sale and discussions held with parties interested in purchasing the business. The continuation of trading relationships with key customers is critical to selling the business. In the event that the support of key customers is not secured beyond the shortterm, a sale of the business is unlikely to occur and a controlled wind-down of operations may follow over the coming months Grant Thornton 27 March

7 Independence Annexure A is a Declaration of Independence, Relevant Relationships and Indemnities. Background The Bocar Automotive Group designs, manufactures and supplies automotive aluminum components and accessories such as bull bars and bumper bars, to the automotive and heavy truck industries. The business has been operating since 1970 and Managing Director, Mr Henri Baumann has been an owner of the business since Sales in the most recent financial year exceeded $43 million to a customer list made up of large automotive manufacturers such as Toyota, Ford, Nissan, Mazda, Volvo, Western Star, Mack and Iveco. The business developed a strong relationship with a number of its key customers and in particular Toyota and sales have grown as the Company continued to design and deliver a range of bull bars that innovatively integrated steel, aluminum and plastics into designs that are aesthetically attractive, robust, safe and efficient to manufacture. The following is a brief summary of the background of each company. Bocar Services Pty Ltd Bocar Services Pty Ltd is the trading entity of the group. Bocar Administration Services Pty Ltd (atf Bocar Administration Trust) Bocar Administration Services Pty Ltd employs the Bocar workforce. Graybond Pty Ltd Owns the property at Sunlight Drive, Burleigh Waters, Qld. This entity traded the Bocar business prior to incorporation of Bocar Services Pty Ltd. Baumann Design Pty Ltd (atf Baumann Family Trust) Creates and owns various items of Bocar s intellectual property and holds shares in Bocar Services Pty Ltd and Graybond Pty Ltd as trustee for the Baumann Family Trust. Reasons for Failure Following my initial investigations and information from the Director, the reasons for the failure of the business are as follows: At the peak of manufacturing output, Bocar employed approximately 370 people at their facilities at Burleigh Waters, Queensland and Condell Park, Sydney. Poor trading performance resulting from historically poor pricing; Inefficiencies within the production process; Expenditure on research and development unable to be recovered through unit sale prices; Recent decline in demand as a result of contracting vehicles sales; and Space and capacity constraints at the group s main premises Grant Thornton 27 March

8 Trading During the Administration Period On my appointment as Administrator I determined it was necessary to continue to trade the business so that any return to creditors could be maximised by selling the business as a going concern. Investigations by the Voluntary Administrators My preliminary investigations have focused on issues such as insolvent trading, preference payments and uncommercial transactions. My investigations and findings on these issues for each of the Companies are detailed in later sections of this report. Return to Creditors Based on my preliminary investigations and the information available, I believe that it is unlikely the unsecured creditors of Bocar Administration Services Pty Ltd and Baumann Design Pty Ltd will receive a dividend. It is possible that a dividend to the unsecured creditors of Graybond Pty Ltd may occur after discharging the claims of secured creditors. In the event that a sale of the Bocar business is achieved, it is possible that a modest distribution to the unsecured creditors of Bocar Services may occur. Estimated outcome statements of the administrations are detailed later in this report. Future of the Companies At the forthcoming meeting, creditors of each Company will be required to resolve one of the following options for the future of each the Companies:- That the Companies execute DOCAs; or That the Administrations end (and the Companies be returned to the Directors control); or That the Companies be wound up. Creditors also have the option to adjourn the meeting for a period of up to 45 business days. A summary of each scenario and my recommendation is provided herein. That the Companies Execute DOCAs At the date of this report a DOCA has not been proposed for any of the Companies and this may not be an option available to creditors to consider at the forthcoming meeting. That the Administration End Should creditors resolve to end the administration, the Companies will be placed in a similar position to that which existed prior to my appointment (i.e. as if the administration did not occur). Creditors would then have the option of pursuing their usual recovery actions against the Companies such as court actions to obtain judgments, warrants of execution or even winding up the Company from whom the debt is outstanding. As each Company is insolvent, I do not believe there would be any benefit to creditors in ending the administrations. Accordingly, it is my opinion that it would not be in creditors best interests for the administration to end Grant Thornton 27 March

9 That the Companies be Wound Up Should creditors resolve to wind up the Companies, the Companies will be placed into liquidation that day and we will be appointed liquidators. A liquidator is required to realise company property and distribute the proceeds to creditors in accordance with the priorities detailed in the Act. A liquidator is also required to undertake further investigation into the company s prior activities and the conduct of its directors. I have not received any proposal from either the Director or any other party for a DOCA. Further, the Companies are insolvent. In the circumstances, I believe that it is in the best interest of creditors that the following companies be wound up: Bocar Administration Services Pty Ltd Baumann Design Pty Ltd. Given the current position, in seeking a sale of the business I recommend that an adjournment of this next meeting for the following companies: Bocar Services Pty Ltd Graybond Pty Ltd 2009 Grant Thornton 27 March

10 3 Statutory Information The Company s major secured creditors as at the date of appointment were Westpac Banking Corporation Ltd, Challenger Bank Ltd and potentially Almax Aluminium Pty Ltd. Unsecured creditors of the Company consist mainly of employees, trade creditors and any shortfalls that may exist under lease/hire purchase agreements with financiers Grant Thornton 27 March

11 Dates of Incorporation Company Date of Incorporation Bocar Services Pty Ltd 29 May 1992 Bocar Administration Services Pty Ltd 15 December 2004 Baumann Design Pty Ltd 24 October 2002 Graybond Pty Ltd 2 October 1991 Bocar Administration Services Pty Ltd Baumann Design Pty Ltd Graybond Pty Ltd Burleigh Waters Qld Sunlight Drive Burleigh Waters Qld Quambone Street Worongary Qld Sunlight Drive Burleigh Waters Qld 4220 Registered Offices Company Bocar Services Pty Ltd Bocar Administration Services Pty Ltd Baumann Design Pty Ltd Graybond Pty Ltd Principal Places of Business Company Bocar Services Pty Ltd Registered Office Level 11 / 2 Corporate Ct Bundall Qld 4217 Level 11 / 2 Corporate Ct Bundall Qld 4217 Level 11 / 2 Corporate Ct Bundall Qld 4217 Level 11 / 2 Corporate Ct Bundall Qld 4217 Principal Place of Business 1 Sunlight Drive Directors / Secretaries Company Position Name Bocar Services Pty Ltd Director and Secretary Henri Baumann Bocar Administration Services Pty Ltd Bocar Administration Services Pty Ltd Baumann Design Pty Ltd Baumann Design Pty Ltd Director and Secretary Director Director and Secretary Director Henri Baumann Christine Baumann Christine Baumann Henri Baumann Graybond Pty Ltd Director and Secretary Henri Baumann 2009 Grant Thornton 27 March

12 Share Capital Company Paid Up Capital ($) Bocar Services Pty Ltd 4.00 Bocar Administration Services Pty Ltd Baumann Design Pty Ltd Graybond Pty Ltd Secured Creditors ASIC s database details that the following secured creditors: Westpac Banking Corporation Ltd ( WBC ) WBC provided Bocar Services Pty Ltd with a debtor finance facility, overdraft facility and premium funding for their annual workcover premium. WBC holds registered fixed and floating charges over Bocar Administration Services Pty Ltd and Bocar Services Pty Ltd, dated 4 July 2007 and 14 October 2005 respectively. We have held discussions with WBC, advised them of our appointment, and obtained their support for our appointment and for trading the business during the administration. We will continue to liaise with WBC on a regular basis during the administration. Challenger Bank Limited ( Challenger ) Challenger provided Graybond Pty Ltd with a loan facility and is secured by way of the first ranking real property mortgage over the property at Sunlight Drive, Burleigh Waters. We have had discussions with Challenger which has indicated its support for the Voluntary Administration. Orix Australia Corporation Limited ( Orix ) Orix holds a registered fixed and floating charge over Baumann Design, registered on 14 May 2003 and the second ranking real property mortgage over the property at Sunlight Drive, Burleigh Waters. Orix has indicated that it does not have any outstanding amount owed under this security, which I will request be released. Almax Aluminium Pty Ltd ( Almax ) On 17 December 2008, Bocar Services and Graybond Pty Ltd entered into a binding heads of agreement with Almax (the group's largest supplier and trade creditor) to convert $2 million of its then trade debt into a long term loan. The agreement requires of Graybond Pty Ltd to guarantee the debt and provide a fixed and floating charge and a real property mortgage over the Sunlight Drive property to Almax (behind Challenger). Further review of the enforceability of this proposed security will be conducted by the appointed Liquidator. Priority Creditors (Employees) Priority creditor claims consist of casual and permanent employees in respect of unpaid superannuation contributions, unpaid leave entitlements and potentially termination entitlements. All employees who have outstanding entitlements are creditors of Bocar Administration Services Pty Ltd Grant Thornton 27 March

13 Preliminary calculations of employee entitlements are shown on the following page:- Entitlement ($) Unpaid Wages 2,504 Annual Leave 471,024 Long Service Leave 271,084 Payment in Lieu of Notice 742,494 Redundancy 1,195,557 Unpaid Superannuation 135,673 less Reduction for Excluded Employees (256,620) Total $2,561,716 Please note these are the outstanding entitlements incurred by Bocar Admin to date. These are the amounts that would be outstanding should the employment of every employee be terminated. Employees who are uncertain of what they can claim are welcome to contact Mr Andrew Lowe of this office on (07) for further details. IMPORTANT READING FOR PRIORITY (EMPLOYEE) CREDITORS Pursuant to Section 556 of the Act, claims of excluded employees (directors and related individuals) are limited in their priority over unsecured creditors of upto $2,000 in respect of wages and superannuation and up to $1,500 for leave entitlements. Pursuant to section 556 of the Act, employee entitlements are afforded priority over non priority unsecured creditors (such as trade creditors) and secured creditors in respect to floating assets. Claims by employees would receive payment from funds realised from the realisation of the assets such as stock (after the payment of the costs of the administration), before the claims of secured creditors and non priority unsecured creditors are paid. In the event that there are insufficient assets to satisfy the payment of all eligible employee entitlements, employees may be able to benefit from the provisions of the General Employee Entitlements Redundancy Scheme, which is administered by the Department of Employment, Workplace Relations and Small Business. The scheme is designed as a safety net to protect employee entitlements. The scheme applies to employees who were dismissed as the result of their employer s insolvency on or since 12 September Under the scheme, employees are able to claim unpaid wages, annual leave, long service leave, payment in lieu of notice, and up to 16 weeks redundancy pay, subject to the scheme s limitations. The scheme specifically excludes unpaid superannuation and is only payable once a company is placed into liquidation. As I may not be in possession of sufficient funds to extinguish the balance of all employee claims in the short term, I recommend employees utilise the GEERS scheme which will facilitate a more timely payment of employee claims, excluding superannuation. Further information will be forthcoming to employees in due course. In the interim, information on the GEERS scheme can be located at Grant Thornton 27 March

14 4 Group History Bocar Group commenced business in The business produces automotive accessories such as bull bars, bumper bars, sports bars and aluminium trays for Customers such as Toyota, Ford, Nissan, Mazda, Volvo, Western Star, Mack and Iveco. The business s main manufacturing plant is at Sunlight Drive, Burleigh Waters. An additional facility at Condell Park, Sydney is used to produce aluminium trays for utility vehicles. The business had sales revenue of over $43m in FY Grant Thornton 27 March

15 Overview The Bocar Group commenced business in the early 1970 s as a manufacturer of automotive accessories for motor vehicles, four-wheel drive vehicles and heavy trucks such as bull bars, bumper bars, sports bars, nudge bars, sidesteps and alloy trays. The Bocar Group s investment in and use of innovative design techniques as well as the implementation of advanced manufacturing processes have enabled the business to develop a strong relationship with a number of key customers such as Toyota, Ford, Nissan, Mazda, Volvo, Western Star, Mack and Iveco. Graybond Pty Ltd is the former trading entity of the Group and owns the property located at 1 Sunlight Drive, Burleigh Heads which is the main trading premises of the Group. Graybond Pty Ltd also provided guarantees to a number of key suppliers to Bocar Services Pty Ltd; Baumann Design Pty Ltd owns a 50% shareholding in both Bocar Services Pty Ltd and Graybond Pty Ltd in its capacity as trustee for the Baumann Family Trust. These shareholdings arised from a buyout of a previous shareholder. Baumann Design Pty Ltd is also said to hold some of the intellectual property developed as part of the Group s research and development programs. Toyota is the company's largest customer in terms of revenue accounting for over 50% of sales in the last two years. The table below shows the sale figures group by major customer for the FY07 and FY08. Product family Group Structure The Group consists of four (4) companies and a family trust:- FY 07 units sales Growth FY 08 unit sales FY 07 revenue Bocar Services Pty Ltd is the trading entity of the Group. The Company took over responsibility for trading the business of the Group from Graybond Pty Ltd; Bocar Administration Services Pty Ltd employs the workforce of the Group; Growth FY 08 revenue Toyota 37,292 11% 41,464 $18,016,490 27% $22,946,575 Nissan 2,403 92% 4,614 $1,830,966 70% $3,118,488 Mazda 1, % 4,161 $1,679, % $3,459,123 Ford 2,403 55% 3,732 $984, % $2,741,188 Other 4WD 4,496 13% 5,074 $1,511,032 25% $1,895,382 Trucks 8,398-3% 8,149 $5,887,683 0% $5,874,916 Trays 9,363-12% 8,236 $3,661,435-6% $3,454,868 66,049 14% 75,430 $33,571,636 30% $43,490,540 Annexure B is a diagram showing the structure of the group. Historical Financial Position and Performance I have received the financial statements prepared for each of the Companies by the Group s external accountant. Annexure C is a set of comparative financial statements for the Bocar Group of Companies. Reasons for Failure Following my preliminary investigations into the Group and discussions with the director of the Companies and key staff, I have identified the following reasons for the failure of the business of the Group:- Poor trading performance resulting from historically poor pricing; Inefficiencies within the production process; Expenditure on research and development unable to be recovered through unit sale prices; Recent decline in demand as a result of contracting vehicles sales; and Space and capacity constraints at the group s main premises Grant Thornton 27 March

16 5 Conduct of the Administration Following my appointment I have met with key stakeholders (management, staff, key customers and suppliers) and developed a strategy to re-establish production. Part of this strategy involved customers agreeing to material price increases and guaranteed forward order levels. The business have been advertised for sale. We have prepared an Information Memorandum for the sale of the business and liaised with potential purchasers Grant Thornton 27 March

17 Replacement of Previous Administrators Mr Paul Sweeney and Mr Terry van der Velde of SV Partners Pty Ltd were appointed Voluntary Administrators by the director of the Companies pursuant to Section 436A of the Act. During their period of their appointment, the previous administrators continued to trade the business but only in a very limited capacity. The majority of the production staff were stood down and a skeleton workforce remained in order to complete and invoice the work in-progress that existed at the time of their appointment. The previous administrators identified that additional funding was required in order for the business to continue long enough for a sale of the business to be completed. The previous administrators sought this additional funding from key customers and after some negotiations, were unable to reach agreement with those customers for such funding. A major creditor sought my consent to act as a replacement administrator of the Companies at the first meeting of creditors on 9 March As a result of the lack of support from key customers and a key supplier, at the meeting of creditors on 9 March 2009, the previous administrators asked creditors to resolve for an adjournment of the meeting so that they could resign as administrators of the Companies and the director could appoint Mr Matthew Byrnes and I as administrators. This change of administrators was affected on the same date. Cost Description Amount ($) Voluntary Administrators Fees 118,688 Voluntary Administrators Outlays 3,087 Trading expenses (including provision for ROT settlements) 183,987 Wages/ Subcontractors paid 155,746 Total $461,508 I understand invoices totalling approximately $497,000 (ex GST ) were issued by Bocar Services Pty Ltd during the administration conducted by SV Partners. It is therefore possible that only a small surplus of funds will available to the current administration from invoices raised during SV Partner s administration. I have yet to receive any report or update from the previous administrators on the collection of those debtors for which they are claiming a lien. Trading During the Administration The decision to continue trading the business during the administration was made in order to facilitate either a restructure of the business or a sale of the business as a going concern. Lien Claimed by Previous Administrators SV Partners have asserted a statutory and equitable lien over the company s property (including debtors) to cover their professional fees and costs incurred between 25 February 2009 and 9 March 2009 which are summarised in the table opposite: I held a meeting with all of the key customers and agreed with them material price increases that allowed me to continue trading the business in the short term. Additionally, in co-operation with the senior production staff of the business, I have developed a production schedule which has seen the majority of previously stood down staff return to work Grant Thornton 27 March

18 Retention of Title Creditors holding retention of title claims were invited to contact the administrators and perform stocktakes. I have received notice from sixteen (16) creditors wishing to claim retention of title, twelve (12) of which have either attended the premises to perform stocktakes or have agreed to accept the stocktake performed by the administrators and the purchasing staff at the business. The invoice value of the stock claimed by creditors is $187,679. As at the date of this report, I am yet to formally determine any of the retention of title claims. Standing Down of Employees prior to my Appointment There are a small number of employees stood down by the previous Administrators that are not required for the business continuing operations. The employment contracts of these staff have now been formally terminated. Staff who have had their contracts of employment terminated during the administration will be able to claim for their outstanding entitlements (including redundancy but excluding superannuation) through the General Employee Entitlement and Redundancy Scheme ( GEERS ) when Administration Services is placed in Liquidation. A separate letter explaining the GEERS claim process will be forwarded to employees. Limits on the claims of employees related to the company s Directors ( excluded employees ) are imposed by the Corporations Act Further information regarding the operation of these limitations is provided in Section 7 of this report. Committee of Creditors At the meeting of creditors convened on 9 March 2009, creditors of Bocar Services Pty Ltd elected to appoint a committee of creditors. The nominated members of the committee are:- SIA Abrasives Pty Ltd; Rogers Industries Pty Ltd; Almax Aluminium Pty Ltd; G James Australia Pty Ltd; One Steel Pty Ltd; and Superior Pallets Pty Ltd Due to the convening of two first meetings of the full body of creditors and the abbreviated timeframe of my period as administrator, there has not been any requirement for a meeting of the committee of creditors. Should the Companies be placed into liquidation, creditors will have the opportunity to appoint committees of inspection. Sale of Business The initial strategy of the voluntary administration was to recommence production of the Group s core products whilst seeking a sale of the business. In furtherance of this strategy advertisements for the sale of the business were placed in the Australian Financial Review, the Melbourne Age and the Sydney Morning Herald. I also prepared an Information Memorandum and have liaised with a number of interested parties regarding the sale of the business(s). These discussions are continuing. The continued support of the Group s major customers is critical to achieving a sale of business. Discussions are continuing with customers including Toyota to determine their long term commitment as customers of the business. Sales to Toyota in particular comprise over 50% of the sales revenue of the business. In the event that Toyota is unable to provide a commitment beyond the short term, it is unlikely that I will be able to secure a sale of the business Grant Thornton 27 March

19 A sale of business campaign for the alloy tray business in Sydney is being undertaken separately. Interested parties have been issued with an information flyer on the business and indicative offers sought Grant Thornton 27 March

20 6 Bocar Services Pty Ltd (Administrators Appointed) - Report as to Affairs and Financial Position - Antecedent Transactions - Estimated Outcome Statement - Administrators Statement The director of the Bocar Services is yet to complete a Report as to Affairs; The Company may have been insolvent at least as far back as 30 June 2008; I have identified a number of potential antecedent transactions that may be recoverable should Bocar Services be placed into liquidation; In the absence of a substantial recovery of antecedent transactions and a sale of the business, it is estimated that unsecured creditors will not receive any dividend in the liquidation; It is my recommendation to the creditors of Bocar Services Pty Ltd that the 2009 Grant Thornton 27 March forthcoming meeting of creditors be adjourned for a period of up to 45 days.

21 Report as to Affairs ( RATA ) The director of Bocar Services is yet to complete an ASIC Form 507 Report as to Affairs. Financial Position of Bocar Services In the absence of a completed Report as to Affairs, I have compiled the schedule of assets and liabilities opposite for Bocar Services based on the books and records of the Company as at 25 February 2009 and information provided to me by the previous administrators. Please note the figures in this table are prepared using the best information available to me at this time. Notes to this financial position summary are located on the next page of this report. Bocar Services Pty Ltd Book Value ($) Estimated Realisable Value ($) Note Description Assets Cash at Bank 3,673 3,673 1 Trade Debtors 2,279,303 2,279,303 2 Other Debtors 2,296, ,718 3 Stock Unknown Unknown 4 Plant and Equipment 4,613,323 Withheld 5 Total Assets 9,192,719 Withheld Amounts owing to Secured Creditors Westpac Banking Corporation (2,211,510) (2,211,510) 6 Amounts owed to Partly Secured Creditors (5,390,129) 7 Bank of Queensland Unknown Unknown Capital Finance Australia Limited Unknown Unknown Suncorp Metway Limited Unknown Unknown CBFC Limited Unknown Unknown St George Finance Unknown Unknown Amounts Owing to Unsecured Creditors Australian Taxation Office Unknown Unknown 8 Office of State Revenue Unknown Unknown 9 Trade Creditors (4,046,505) (4,046,505) 10 Related Party Loans (3,460,801) (3,460,801) Liability under Cliplyn Lease Unknown Unknown 11 Total Liabilities (15,108,945) (9,718,816) Surplus of Assets to Liabilties (5,916,226) Unknown 2009 Grant Thornton 27 March

22 Notes to the Financial Position 1 - Cash at Bank Bocar Services maintained the following two bank accounts with the following balance at the time of the previous Administrators appointment. Bank Account Balance ($) WBC General Trading with $500,000 (452,877) overdraft limit Bank of Queensland Savings Account 3,673 2 Trade Debtors Bocar Services operated an invoice finance facility with Westpac Banking Corporation ( WBC ). By virtue of this facility, the Bocar debtors are owned by WBC. The balance of any recoveries from such debtors is returnable to Bocar Services following repayment of the WBC debt due under this facility. WBC has advised that as at 19 March 2009, they are owed the sum of $1,247,074 in relation to the invoice finance facility. The debtor balance recorded as at this date is $1,583, Other Debtors The other debtors of Bocar Services are:- Toyota owed the Company $258,718 for research and development costs. This amount was received on 11 March 2009; and The following intercompany loan accounts:- Baumann Design Pty Ltd for $1,711,421; Bocar Administration Services Pty Ltd for $326,281. Both of these related companies are subject to voluntary administration and it is unlikely that any significant realisations of these debts will occur. 4 - Stock I have not yet been provided a copy of the stock that was on hand at the time of the appointment of the previous administrators. At the time of my appointment there was minimal stock on hand. Bocar Services has four separate categories of stock:- Raw materials which includes stores and consumables; Work-in-progress; and Finished goods. It is difficult to report a realisable value for the stock on hand. Some of the raw material stock is subject to retention of title claims and if those claims are valid, that stock will either by paid for by the administrators (if used) or returned to the supplier. The work-in-progress stock was converted into trade debtors by the previous administrators but required significant realisation costs to be incurred for that to happen. 5 Plant and Equipment Plant and equipment was carried in the 31 December 2008 Company records at $4,613,323. Most of the large production equipment is subject to finance contracts with various financiers. As such, only any equity in these assets will be available to the administrators. I am presently investigating the records relating to the ownership of certain equipment to determine whether all of the listed equipment is owned by Bocar Services. Graybond Pty Ltd was the previous trading 2009 Grant Thornton 27 March

23 entity and it is possible some of the earlier equipment is owned by this Company. It has also been claimed that a number of items are owned by third parties. The previous administrators had engaged a valuation agent to prepare a listing of the assets and assign market values to the assets. I have withheld the results of the valuation from this report so as to not prejudice any sale. 6 Westpac Banking Corporation WBC have a registered fixed and floating charge over Bocar Services as security for the following facilities:- Facility Amount Outstanding as at 19 March 2009 Invoice Financing $1,247,073 Overdraft $454,744 Asset Finance Contracts $22,067 Total $1,723,884 As per the invoice financing agreement, WBC were assigned the company s pre-administration trade debtors. The book value of debts assigned to WBC under the invoice finance facility was $1,583,518 as at 19 March It is expected that pursuant to its floating charge, WBC s claim for its overdraft and asset finance facilities will rank ahead of unsecured creditors against any surplus debtor collections. In addition to the above, WBC provided Services with a banker s undertaking valued at $60,454 which is secured by a cash deposit. I am also aware that WBC provided premium funding valued at $317,016 to Administration Services for its workcover premium. As far as I am aware this liability is not guaranteed by or secured against the assets of Services. 7 Partly Secured Creditors Bocar Services has a number of lease/hire purchase agreements with several financiers. The following is a summary of those agreements:- Financier Number of Agreements Suncorp 6 Capital Finance 3 Westpac 2 BOQ Equipment 3 CBFC Ltd 9 St George 3 All Leasing 1 I have obtained a valuation of all assets covered by the above agreements and am currently in the process of obtaining payout figures from all the respective financiers. I have also written to all of the financiers requesting an extension to the statutory rent-free for administrators. I have requested this of financiers so as to provide the business with as much cash flow to continue trading whilst a sale of the business or a restructure of the business is sought. A majority of the financiers listed above are likely to suffer shortfalls should the business cease to trade. This is due to a combination of factors including the specialised nature of some of the machinery, the relocation costs likely to be incurred by any purchasers, the wear and tear 2009 Grant Thornton 27 March

24 on the machines caused by constant use, the depressed demand for manufacturing machinery and the fact that usually irrecoverable installation costs were financed in the contracts. With the exception of WBC (who hold a fixed and floating charge over Bocar Services), any shortfall resulting to partly secured creditors will form part of their unsecured claim against Bocar Services. 8 Australian Taxation Office Bocar Services has outstanding Business Activity Statement returns for the months of December 2008, January 2009 and February The completion and filing of these returns may have crystalised a GST liability for Bocar Services. Additionally, in the weeks leading up to the administration, the Bocar Group had been selected for a technical review by the Australian Taxation Office. The purpose of this review was to investigate whether the correct taxation treatment had been applied to certain extraordinary transactions, such as the transfer of trading responsibility from Graybond Pty Ltd to Bocar Services and the exit of a previous owner of the business. It is not known whether this review will lead to any additional taxation liability. 9 Office of State Revenue It is possible that under the grouping provisions for Payroll Tax, Bocar Services, as the active trading entity of the group, may be liable for payroll tax incurred by Bocar Admin in region of $890, Trade Creditors The following is a summary of the aged creditors ledger as at 25 February 2009 for Bocar Services (updated for the removal of prepayments):- Current 30 days 60 days 90 days 120 days Total 1,597,990 1,018, , , ,713 4,046,505 At the time of the voluntary administration, the records of the Company had not been entirely updated with all suppliers invoices outstanding. It is therefore likely that the amounts outstanding to trade creditors are materially greater than recorded in the records of Bocar Services. 11 Liability under Cliplyn Lease On or around 1 October 2008, Bocar Services Pty Ltd signed a lease for a larger premises in Yatala owned by Cliplyn Pty Ltd. The rent payable under this agreement was $1.32m per annum. I am advised by Cliplyn that Bocar Services failed to pay the full monthly instalments for January and February The lease was part of a larger agreement that included an option for Cliplyn to put the sale of the property to Graybond Pty Ltd for $20m. Due to the current circumstances, this relocation will not occur. Accordingly, Bocar Services may be liable for any damages suffered by Cliplyn as a result of this non-performance and such damages could potentially be very significant. It may be some time before the extent of any damages are quantified Grant Thornton 27 March

25 Antecedent Transactions Recoverable by a Liquidator In accordance with Regulation 5.3.A.02, the administrator of a company under administration, in setting out his or her opinions in a statement mentioned in paragraph 439A (4)(b) of the Act, must specify whether there are any transactions that appear to the administrator to be voidable transactions in respect of which money, property or other benefits may be recoverable by a liquidator under Part 5.7B of the Act. The administration process set down in Part 5.3A of the Act, provides a very short time within which to conduct investigations into potential recoveries from voidable transactions, even shorter in this case due to the change of administrators. At this stage, due to the short time frame allowed, it is difficult to definitively identify the likely causes of action and / or recoveries that may be available to a liquidator. Such conclusions would usually be made after more detailed investigations have been undertaken. Such investigations may include: Antecedent transactions generally fall into two categories: (i) Insolvent trading; and (ii) Voidable transactions (comprising unfair preferences, uncommercial transactions and unfair loans). Date of Insolvency In order to ascertain if these transactions, and any others, were uncommercial a Liquidator must determine whether the Company was insolvent at the date of the transaction, or became insolvent as a result of the transaction. My preliminary investigations into the solvency of the Bocar Services Pty Ltd indicate the Company appears to have been insolvent from at least as far back as 30 June 2008 ( suspected date of insolvency ). The graph below shows the results of my preliminary investigations into the deficiency between the resources available to Bocar Services and the due and payable debts that Bocar Services had in the months leading up to the voluntary administration. Detailed review of documentation produced by relevant parties upon enquiry by a Liquidator. Comparison of Available Resources to Due and Payable Debts Public examination under oath, of relevant parties regarding the transactions concerned. Whilst I have conducted the necessary enquiries required of an Administrator, the conclusions drawn herein with respect to my investigations into the company s affairs should be viewed as preliminary and may be confirmed, or otherwise, by way of other sources of investigation should the company proceed to liquidation. ($000's) 4,000 3,500 3,000 2,500 2,000 1,500 1, Due and Payable Debts Available Resources Month 2009 Grant Thornton 27 March

26 I make the following observations based on my preliminary solvency analysis:- Bocar Services recorded material trading losses for FY06, FY07 and FY08 (once product development costs are expensed rather than capitalised). Bocar Services appears to have a history of extending payments well beyond contracted credit terms with a number of their large suppliers; The Group s external accountant raised serious going concern issues in the financial statements for the period ending 31 December These statements are signed off as January Bocar Services solvency position appears to improve (but not enough to suggest solvency) in December 2008 as a result of two particular and one-off transactions:- An agreement reached with major supplier, Almax Aluminium Pty Ltd to convert $2,000,000 of trade debt into a long term loan in return for guarantees from Graybond Pty Ltd and Henri Baumann and security over Graybond Pty Ltd and the real property at Sunlight Drive; and An injection of $1,500,000 cash into the business resulting from the sale to Toyota of the intellectual property and tooling required for the production of their products. Should Bocar Services be placed into liquidation and an insolvent trading action pursued, then a more accurate analysis of the date of insolvency would be required and the following tasks may form part of a more detailed investigation:- Running balances obtained from the Westpac invoice financing facility to identify the exact amount of equity that Bocar Services had in its financed debtors; Review of all material customers credit terms to identify when debtors were reasonably expected to be received; Identify the capacity, willingness and history of any related entities (including but not limited to the other three companies in administration and the director) to inject available funds into Bocar Services; Review of all material suppliers credit terms to identify exactly when creditors were due and payable; Identify any formal, informal or long-term practices of paying creditors on extended terms to identify whether those debts could be considered not due and payable; Where necessary, review of source documentation rather than Company generated records; Review payment history of taxation and payroll liabilities to identify any defaults or arrears over time; Review of all lease and hire purchase agreements to identify any defaults or arrears over time; and Obtain evidence of non-financial indicators of insolvency (supply stoppages and creditor recovery action) Grant Thornton 27 March

27 Insolvent Trading Having established the likely date the Company became insolvent, a Liquidator can investigate whether the Director incurred debts at a time when they suspected or should have suspected the Company was insolvent ( insolvent trading ). There is a specific requirement under the Act that directors must take action to avoid insolvent trading. If it is proven that there were any breaches of the Act by the director/s for insolvent trading, then the director/s can be held personally liable for any additional debts incurred whilst the company traded whilst insolvent. Pursuant to Sections 588G and 588M of the Act, a Liquidator may seek to recover from the director/s of the company any debt incurred by the company after a time that a reasonable person would suspect that the company could not pay its debts as and when they fell due i.e. after the date it became insolvent. Insolvent trading is governed by section 588G(1) of the Act and applies if: (a) A person is a director at the time the debt is incurred; and (b) (c) The company is insolvent at that time; and At that time, there are reasonable grounds for suspecting that the company is insolvent. This section is breached if: (a) The person is aware at that time that there are grounds for suspecting insolvency; or (b) A reasonable person in a like position in a company in the company s circumstances would be aware of suspecting insolvency. In order to breach these provisions, the company must be insolvent at the time the debt was incurred. Although the Courts have held that insolvency is the inability to pay the company s debts as and when they fall due, it has been held that cash flow shortages or problems do not necessarily constitute insolvency. Directors of such a corporation have several defences available to them as detailed in section 588H of the Act, as follows: (a) (b) (c) (d) If it is proved that, at the time the credit was incurred, the person had reasonable grounds to expect, and did expect, that the company was solvent at that time and would remain solvent. If the person relied on another person to provide the financial information so that if the information was relied upon, the company was solvent and would remain so. The person was ill and did not take part in the management of the company. The person took reasonable steps to prevent the company from incurring the debt. Quantum of Insolvent Trading Claim Preliminary review of the Company records indicates that debts in the vicinity of $3,822,000 (that remain unpaid) were incurred by Bocar Services after the suspected date of insolvency. Further investigations to confirm this figure would have to be conducted before any insolvent trading claim could be made. Creditors are encouraged to lodge proof of debt forms attaching the outstanding invoices that comprise their claim attached. This will assist any further insolvent trading investigations Grant Thornton 27 March

28 Before commencing action against a director for insolvent trading, it is prudent to consider that director s capacity to meet any such claim. Capacity of Director to meet Insolvent Trading Claim Real property searches indicate the director, Mr Henri Baumann does not currently own any real property in Queensland. Searches indicate the Mr Baumann was previously the joint owner of a property at Worongary, Queensland. Mr Baumann appears to have transferred his interest in the property to the other joint owner, Mrs Christine Baumann on 6 March Several of the major creditors of the Company (including Cliplyn and Almax) have indicated that Mr Baumann had provided them with personal guarantees. Given the above information, it is uncertain as to whether Mr Baumann would have sufficient assets available to meet any successful insolvent trading claim that could be brought against him. Should the Company be placed into liquidation, I will continue these investigations to more accurately determine the likelihood of any recoveries from insolvent trading by the director. Voidable Transactions Pursuant to Section 588FA and the associated provisions of the Act, a liquidator is able to recover from creditors any payments preferences or advantages obtained by the creditor from the company. Unfair Preferences Those payments referred to are generally recoverable if the payments were made during a period of six months prior to the commencement of the winding up date, or the date the Administrators were appointed (otherwise known as the relation back date ), which in this case would be the period 26 August 2008 to 25 February 2009 and resulted in the creditor receiving more than they would have if the payment of their debt was set aside and they were to prove for their debt in the winding up of the company. To constitute an unfair preference payment, it must be established that the creditor had a suspicion or ought to have had a suspicion that the Company was insolvent. The following factors can be demonstrative of that suspicion: The Company having prior failed repayment arrangements; making payment(s) to suppliers outside of normal trading terms; and/or seeking additional finance or cash injection. Creditors resorting to legal actions to recover the debts; receiving post-dated cheques following the commencement of legal proceedings; 2009 Grant Thornton 27 March

29 making demands for clearance of the debt unrelated to a promise to recommence supply; and/or seeking additional security to secure the debt. My preliminary investigations have revealed 17 payments totalling $1,232,020 made during the six months prior to the relation back date that have certain characteristics consistent with preferential payments. Should the Company be placed into liquidation, I will continue these investigations to determine the likelihood of any recoveries from unfair preferences. Uncommercial Transactions Section 588FB(1) of the Act defines an uncommercial transaction as a transaction of the company if, and only if, it may be expected that a reasonable person in the company s circumstances would not have entered into the transaction, having regard to: (b) (c) (d) The benefits (if any) to the company of entering into the transaction; The detriment to the company of entering into the transaction; and The respective benefits to other parties to the transaction. Section 588FC of the Act defines an insolvent transaction as one which is an uncommercial transaction and entered into when the company was insolvent at the time of the transaction, or would become insolvent as a result of entering into the transaction. My preliminary investigations have not identified any potential uncommercial transactions. Books and Records Sections 588E(3) and 588E(4) of the Act provides a presumption of insolvency for a period of 12 months from the relation back date if it is proved that the Company failed to keep proper financial records in accordance with Section 286 of the Act. A Liquidator would investigate whether the Company maintained adequate books and records that provided reliable reports to the Director relating to the monthly financial position of the Company. During the limited time available to us to undertake investigations, I believe that adequate books and records were maintained and that adequate reports were produced. My opinion is premised upon the fact that the Company was able to provide us with reasonably up to date financial statements. A liquidator would further investigate whether the Company maintained adequate books and records in accordance with Section 286 of the Act. Accordingly, in the event that a liquidator was successful in establishing that the books and records were indeed deficient, this would assist in considering whether any action might be taken against the Director of the Company in accordance with the Act. The records provided to us included: 1. End of period financial statements prepared by the Group s external accountant; 2. Management accounts prepared at month ends; 3. Registers of large equipment and related documents; 4. Debtors and Creditors ledgers and files containing relevant invoices; 5. Bank statements; and 2009 Grant Thornton 27 March

30 6. Contract documentation. It is my opinion that the director of the Company has not committed any offences in relation to the maintenance of proper books and records for the company pursuant to Sections 286 and 591 of the Act. Report Pursuant to Section 438D There were no matters that came to my attention that warranted the Administrators issuing a report to the ASIC pursuant to section 438D of the Act. Director Related Transactions Payments, the issue of securities, conveyances or other dispositions of property by the company in favour of a director, a relative or de facto spouse of a director may constitute an unreasonable director related transaction under Section 588FH of the Act. Summary I have identified 17 payments totalling $1,232,020 that have characteristics consistent with unfair preferences. Should the Company be placed into liquidation, I will continue my investigations into these payments. Potential claims against the director for insolvent trading and uncommercial transactions have been identified. However, creditors should be aware that a cost-benefit analysis of litigation (costs and time to reach a successful outcome) will need to be made prior to commencement of any action to ensure the best interests of creditors are served. I have identified three particular transactions totalling $60,000 occurring in the three months preceding my appointment that should warrant further investigation by a Liquidator. Enforceability of Floating Charges If the company proceeds to liquidation, under Section 588FJ of the Act, a floating charge registered within 6 months of the relation back date, is void against a liquidator except so far as the charge secured an advance paid to the company, or at its direction, at or after the charge is registered and as a consideration for the charge. There are no such charges registered that would be void against a liquidator Grant Thornton 27 March

31 Estimated Outcome Statement I have prepared the analysis opposite outlining the range of estimated returns in a liquidation scenario. An estimated outcome statement for a DOCA scenario has not been prepared as I have not received any DOCA proposals. Both scenarios exclude reference to any trading surplus or loss incurred during the Administration period. Best case scenario assumes a sale of the business and the following:- All trade debtors are collected. WBC is paid out in full from the realisation of the debtors subject to the invoice finance facility; WBC are paid out in full from the realisation of their assets subject to lease/hire purchase agreements; and Unencumbered plant & equipment is realised at market value and used to discharge the balance of WBC s secured liability. Worst case scenario assumes the business closes and the following:- Westpac suffer a shortfall of approximately $50,000 from the realisation of their leased/hire purchase assets; 85% of trade debtors are collected; and A number of contingent liabilities of the Company are realised. Included in the above is an estimate of the costs of the Liquidators should the company proceed to liquidation. Remuneration being sought by the Administrators/Liquidators is detailed later in the report. Unless a sale of the business occurs, it is unlikely that any return to unsecured creditors will occur. Both of the above scenarios assume that there are no recoveries from insolvent trading or voidable transactions. It is possible that if significant recoveries of voidable transactions are made, a modest distribution to unsecured creditors could occur regardless of the outcome of efforts to achieve a sale of the business. Bocar Services Pty Ltd Best Case Scenario ($) Worst Case Scenario ($) Fixed Charge Realisations Plant and Equipment Withheld Withheld Equity available in Plant and Equipment not subject to finance Unknown Nil Goodwill Unknown Nil Total Fixed Charge Assets Withheld Withheld Fixed Chargeholder - WBC Westpac Banking Corporation (after invoice financing debt) 452, ,000 Surplus Fixed Charge Realisations Withheld Nil Floating Charge Realisations Trade Debtors subject to Invoice Finance Facility 1,583,518 1,345,990 less invoice financing debt to Westpac Banking Corporation 1,247,073 1,247,073 Financed Debtors available for Floating Chargeholders 336,445 98,917 Cash at Bank 3,673 3,673 Other Debtors 258, ,718 Debtors (SV Partners) 497, ,450 Total Floating Charge Realisations 1,095, ,758 Equitable Lien held by Previous Administrators 339, ,733 Provision for Legal Costs 20,000 20,000 Voluntary Administration Fees (SV Partners) 118, ,688 Voluntary Administration Outlays (SV Partners) 3,087 3,087 Voluntary Administration Fees (Grant Thornton) 288, ,636 Voluntary Administration Outlays (Grant Thornton) 7,000 10,000 Liquidation Fees 400, ,000 Liquidation Outlays 12,500 16,000 Total Costs 1,189,644 1,196,144 Estimated Surplus Available to Floating Charge Holder Unknown Nil Liability to WBC after Fixed Asset Realisations Unknown Unknown Floating Charge Realisations Available to Unsecured Creditors Unknown Nil Estimated Surplus for Ordinary Unsecured Creditors Unknown Nil Taxation Liabilties - 500,000 Trade Creditors 4,046,505 4,500,000 Liability under Cliplyn Lease - 2,500,000 Shortfall from Financed Assets (incl. WBC insurance funding shortfall) 2,300,000 3,500,000 Total Unsecured Claims 6,346,505 11,000,000 TOTAL ESTIMATED SURPLUS/DEFIENCY Unknown (11,000,000) Estimated Return to Unsecured Creditors Unknown Nil 2009 Grant Thornton 27 March

32 Summary of Receipts and Payments Attached at Annexure D is a Summary of the Receipts and Payments of each trust for the period 9 March 2009 to 20 March Please note that I have yet to receive any accounting of the receipts and payments of the previous administrators. Administrators Statement Pursuant to Section 439A(4)(d) of the Act, Administrators are required to express an opinion whether it would be in the best interests of creditors of the Company to: That the Company Execute a DOCA At the date of this report a DOCA has not been proposed for Bocar Services and this will not be an option available to creditors to consider at the forthcoming meeting. liquidator is required to realise company property and distribute the proceeds to creditors in accordance with the priorities detailed in the Act. A liquidator is also required to undertake further investigation into the company s prior activities and the conduct of its directors. That that the meeting be Adjourned I have not received any proposal from either the Director or any other party for a DOCA. Further the Company is insolvent. Notwithstanding this, an extension of the administration will provide the best means of preserving the Bocar business whilst seeking a sale. It is therefore my recommendation that there be an adjournment of this next meeting for Bocar Services. That the Administration End Should creditors resolve to end the administration, the Company will be placed in a similar position to that which existed prior to the administration (i.e. as if the administration did not occur). Creditors would then have the option of pursuing their usual recovery actions against the Company such as court actions to obtain judgments, warrants of execution or even winding up the Company. As Bocar Services is insolvent, I do not believe there would be any benefit to creditors in ending the administrations. Accordingly, it is my opinion that it would not be in creditors best interests for the administration to end. That the Company be Wound Up Should creditors resolve to wind up Bocar Services, the Company will be placed into liquidation that day and we will be appointed liquidators. A 2009 Grant Thornton 27 March

33 7 Bocar Administration Services Pty Ltd (Administrators Appointed) - Report as to Affairs and Financial Position - Antecedent Transactions - Estimated Outcome Statement - Administrators Statement The director of Bocar Administration Services is yet to complete a Report as to Affairs; The Company may have been insolvent from September 2008; I have not identified any antecedent transactions that may be recoverable should Bocar Services be placed into liquidation; Priority unsecured creditors will not receive any dividend in the liquidation; and It is my recommendation creditors resolve that Bocar Administration Services 2009 Grant Thornton 27 March Pty Ltd be wound up.

34 Report as to Affairs ( RATA ) The director of Bocar Admin is yet to complete an ASIC Form 507 Report as to Affairs. Financial Position of Bocar Administration Services In the absence of a completed Report as to Affairs, I have compiled the schedule of assets and liabilities below for Bocar Admin based on the financial statements of the Company. Please note the figures in this table are prepared using the best information available to me at this time. Bocar Administration Services Pty Ltd Notes to the Financial Position Book Value ($) Estimated Realisable Value ($) Description Note Assets Cash on Hand 10-1 Receivables 126,319-2 Total Assets 126,329 - Amounts Owing to Secured Creditors WBC - Guarantee secured by fixed and floating charge (452,877) (500,000) Amounts Owing to Priority Creditors Employee Enitlements (57,665) (2,561,716) 3 Amounts Owing to Unsecured Creditors Australian Taxation Office (35,000) (35,000) 4 Office of State Revenue (888,274) (888,274) 5 Related Party Loans (326,281) (326,281) 6 Total Liabilities (1,760,097) (4,311,271) Surplus of Assets to Liabilties (1,633,768) (4,311,271) 1 - Cash on Hand There was no cash on hand at the Company at the time of the administration. 2 - Receivables The financial statements recorded a prepayment of workplace insurances. I have not been advised of any likely refund. 3 Employee Entitlements The financial statements of Bocar Admin included net provisions for employee entitlements of $57,665. Preliminary calculations of employee entitlements are shown below:- Unpaid Wages $2,504 Annual Leave $471,024 Long Service Leave $271,084 Payment in Lieu of Notice $742,494 Redundancy $1,195,557 Unpaid Superannuation $135,673 less Reduction for Excluded Employees ($256,620) Total $2,561,716 4 Australian Taxation Office Bocar Admin has an amount of approximately $35,000 outstanding to the Australia Taxation Office for unremitted PAYG tax withheld. 5 Office of State Revenue Bocar Admin has an amount of approximately $888,274 outstanding to the Australian Taxation Office representing unpaid periodic instalments from September 2008 through to February Related Party Loans The financial statements disclose a loan payable from Bocar Admin to Bocar Services of $326, Grant Thornton 27 March

35 Antecedent Transactions Recoverable by a Liquidator Insolvent Trading My preliminary investigations into the solvency of Bocar Admin indicate the Company may have been insolvent since the non-remittance of the payroll tax liability for the period ended 30 September 2008, which was due on 7 October 2008 ( suspected date of insolvency ). Bocar Admin was always reliant on funding from Bocar Services by way of payroll management fees in order to meet its liabilities. Bocar Admin never had any assets with which to satisfy any of its liabilities which became payable. Should the Company be placed into liquidation, I will determine the amount of the debts incurred by the directors after the suspected date of insolvency and as such, the extent of any potential insolvent trading claim. Ms Christine Baumann is also a director of Bocar Administration Services and therefore potentially liable in addition to Mr Henri Baumann in any insolvent trading claim. Real property searches indicate Ms Baumann is the sole owner of a property located at Worongary, Queensland. The property is subject to a registered mortgage provided to Ronald Ray on the day of the transfer. It would be necessary to conduct further investigations into Ms Baumann s capacity to meet any insolvent trading claim before commencing any recovery action. Should the Company be placed into liquidation, I will continue my investigations to more accurately determine the likelihood of any recoveries from insolvent trading by the directors. Voidable Transactions Unfair Preferences My preliminary investigations have not identified any transactions (outside of account keeping fees) in the bank account of Bocar Admin. Historically, Bocar Services made payment of all liabilities incurred by Bocar Admin. Accordingly, should Bocar Admin be placed into liquidation, there will be no recoveries from unfair preferences. Uncommercial Transactions My preliminary investigations have not identified any potential uncommercial transactions. Books and Records The records provided to us included: 1. Instruments of employment for employees, including the Company s Enterprise Bargaining Agreement; 2. Individual Employee Records; and 3. Employee Entitlement Calculations. It is my opinion that the director of the Company has not committed any offences in relation to the maintenance of proper books and records for the company pursuant to Sections 286 and 591 of the Act. Report Pursuant to Section 438D There were no matters that came to my attention that warranted the Administrators issuing a report to the ASIC pursuant to section 438D of the Act. Director Related Transactions Should the Company be placed into liquidation, I will continue my 2009 Grant Thornton 27 March

36 investigation as to whether there were any director related transactions. Enforceability of Floating Charges There are no charges registered over Bocar Admin that could be considered unenforceable. Summary I have not identified any payments that could constitute an unfair preference. There will be no recoveries from unfair preferences. A potential insolvent trading claim against the directors (following further investigations) has been identified. However, creditors should be aware that a cost-benefit analysis of litigation (costs and time to reach a successful outcome) will be made prior to commencement of any action to ensure the best interests of creditors are served. Estimated Return to Creditors There are no realisable assets in the administration of Bocar Admin and accordingly, the only possible avenue for any return to creditors would be if any funds were recovered from the directors of the Company for insolvent trading. Once the Company is placed into liquidation, employees will become eligible for the General Employee Entitlements Redundancy Scheme, administered by the Department of Employment, Workplace Relations and Small Business. The scheme is designed as a safety net to protect employee entitlements. The scheme applies to employees who were dismissed as the result of their employer s insolvency. Under the scheme, employees are able to claim unpaid wages, annual leave, long service leave, payment in lieu of notice, and up to 16 weeks redundancy pay, subject to the scheme s limitations. The scheme specifically excludes unpaid superannuation. I recommend employees utilise the GEERS scheme and should the Company be placed into liquidation, I will write to all employees with details of the entitlement calculations. Information on GEERS is available at Summary of Receipts and Payments There have been no receipts and payments to date in the administration of Bocar Administration Services Pty Ltd. The wages incurred by Bocar Admin have been paid from funds in the Bocar Services administration bank account and accounted for in that administration. Administrators Statement That the Company Execute a DOCA At the date of this report a DOCA has not been proposed for Bocar Admin and this will not be an option available to creditors to consider at the forthcoming meeting. That the Administration End As Bocar Admin is insolvent, I do not believe there would be any benefit to creditors in ending the administrations. Accordingly, it is my opinion that it would not be in creditors best interests for the administration to end. That the Company be Wound Up As I have not received any proposal from either the Directors or any other party for a DOCA and as the Company is insolvent, I believe that it is in the best interest of creditors that the Company be wound up Grant Thornton 27 March

37 8 Graybond Pty Ltd (Administrators Appointed) - Report as to Affairs and Financial Position - Antecedent Transactions - Estimated Outcome Statement - Administrators Statement The director of Graybond Pty Ltd is yet to lodge a RATA. Graybond Pty Ltd owns the real property located at 1 Sunlight Drive, Burleigh Heads Qld. Graybond Pty Ltd guaranteed several of the larger suppliers of Bocar Services as well as several of the lease/hire purchase agreements. It has also executed an onerous Put/ Call Agreement in respect of a property at Yatala, Qld. The enforceability of several encumberances over the Sunlight Drive property requires further investigation Grant Thornton 27 March

38 Report as to Affairs ( RATA ) The director of Graybond Pty Ltd is yet to complete an ASIC Form 507 Report as to Affairs. Financial Position of Graybond Pty Ltd In the absence of a completed Report as to Affairs, I have compiled the schedule of assets and liabilities opposite for Graybond Pty Ltd based on the financial statements prepared by the Group s external accountants and information provided to me. Please note the figures in this table are prepared using the best information available to me at this time. Notes to this financial position summary are located on the next page of this report. Graybond Pty Ltd Book Value ($) Estimated Realisable Value ($) Note Description Assets Borrowing Costs 22,059 - Put/Call Option on Cliplyn Lease 35,000 - Loan to Bocar Services 3,462,469 - Land, Buildings and Improvements 6,124,870 Withheld 1 Intellectual Property (Superbike) 50,452-2 Total Assets 9,694,850 Withheld Amounts owing to Secured Creditors Challenger Bank Limited 3,949,517 3,949,517 3 Almax Aluminium Pty Ltd - 2,906,363 4 G James Australia Pty Ltd - 250,230 5 Total Liabilities 3,949,517 7,106,110 Surplus of Assets to Liabilties 5,745,333 Withheld 2009 Grant Thornton 27 March

39 Notes to the Financial Position 1 Land, Buildings and Improvements Graybond Pty Ltd is the registered owner of the real property located at 1 Sunlight Drive, Burleigh Heads Qld. The property has been recently valued, however I have withheld that valuation from this report so as to not prejudice any future sale of the property. A current title search reveals the following encumbrances registered over the property:- Party Interest Date Registered Permanent Trustee Australia Limited Mortgage 21 December 2005 (Challenger Bank Limited) Orix Australia Corporation Limited Mortgage 14 May 2003 G James Australia Pty Ltd Caveat 5 March 2003 Representatives of Orix have advised that there is no outstanding liability owed by Graybond or any of the Bocar entities and that the above mortgage may be lifted from the title. 2 Intellectual Property (Superbike) The Bocar Group developed a series of bicycles that can be produced at their factory. The financial statements of Graybond Pty Ltd indicate that the tooling for the Superbike product developed by the Group is owned by Graybond. The superbike was not a core product of Bocar and is no longer produced on mass by the Bocar Group. Accordingly, it may prove difficult to realise any material value for the tooling and intellectual property involved in the production of the superbike. 3 Challenger Bank Limited Challenger provided Graybond Pty Ltd with a loan facility and is secured by way of the first ranking real property mortgage over the property at Sunlight Drive, Burleigh Waters. That loan facility has a current balance of around $3,950, Almax Aluminium Pty Ltd On 17 December 2008, Bocar Services and Graybond Pty Ltd entered into a binding heads of agreement with Almax (the group's largest supplier and trade creditor) to convert $2 million of its then trade debt into a long term loan. The agreement required Graybond Pty Ltd to guarantee the debt and provide a fixed and floating charge and a real property mortgage over the Sunlight Drive property to Almax (behind Challenger). The charge and mortgage over the property is not signed or registered. Should Graybond Pty Ltd be placed into liquidation, I will need to review the enforceability of this security provided to Almax and whether Graybond Pty Ltd received any corporate benefit from providing the guarantee. 5 G James Australia Pty Ltd On 5 March 2009, G James Australia Pty Ltd registered a caveat over the property. I am yet to confirm with G James Australia Pty Ltd the basis of their interest in the property and the enforceability of any security they may hold over it Grant Thornton 27 March

40 Antecedent Transactions Recoverable by a Liquidator Insolvent Trading My preliminary investigations into the solvency of Graybond Pty Ltd indicate the Company may not have been insolvent until the appointment of the Administrators. The reasoning for this is as follows:- All of the Company s liabilities are either long term borrowings (Challenger) or liabilities under guarantee (G James Australia and Almax); I have not been advised that the Challenger debt was in default until the appointment of the Voluntary Administrators; and I have not been advised of any demands being received by the Company from creditors holding guarantees provided by Graybond Pty Ltd. Should Graybond Pty Ltd be placed into liquidation, I will review the solvency position further. Voidable Transactions Unfair Preferences My preliminary investigations have not identified any potential unfair preferences. Books and Records The records provided to us included: 1. Financial Statements; 2. Heads of agreement executed with Almax Aluminium Pty Ltd; and 3. Valuation of real property located at 1 Sunlight Drive, Burleigh Heads, Queensland. It is my opinion that the director of the Company has not committed any offences in relation to the maintenance of proper books and records for the company pursuant to Sections 286 and 591 of the Act. Report Pursuant to Section 438D There were no matters that came to my attention that warranted the Administrators issuing a report to the ASIC pursuant to section 438D of the Act. Director Related Transactions Should the Company be placed into liquidation, I will continue my investigation as to whether there were any director related transactions. Enforceability of Floating Charges I will be reviewing the enforceability of the unregistered mortgage and fixed and floating charge provided to Almax Aluminium Pty Ltd in December The charge was to secure past consideration provided to Bocar Services Pty Ltd (trade debt converted to long term debt). Uncommercial Transactions My preliminary investigations have not identified any potential uncommercial transactions. Estimated Outcome Statement I have prepared the analysis opposite outlining the range of estimated returns in a liquidation scenario Grant Thornton 27 March

41 An estimated outcome statement for a DOCA scenario has not been prepared as I have not received any DOCA proposals. Best case scenario assumes the following:- That the unregistered mortgage of Almax and the caveatable interest of G James Australia Pty Ltd are not enforceable against the property owned by Graybond Pty Ltd; Graybond s exposure to guarantees provided to suppliers of Bocar Services is limited to G James Australia Pty Ltd and Almax; and There is no liability under the Cliplyn put/call option. Worst case scenario assumes the following:- There is no equity available to unsecured creditors in the real property located at 1 Sunlight Drive, Burleigh Heads Qld; Graybond s liability to Cliplyn Pty Ltd under the Put/ Call Agreement amounts to $5,000,000; and Graybond Pty Ltd is liable under equipment finance agreements and guarantee for Bocar Services of approximately $3,000,000. The ability of Graybond s assets to support a distribution to unsecured creditors is entirely dependant upon the claims of G James Australia and Almax Aluminium. Graybond Pty Ltd Best Case Scenario ($) Worst Case Scenario ($) Fixed Charge Assets Land, Buildings and Improvements Withheld Withheld less Mortgagees Challenger Bank Limited 3,950,000 4,050,000 G James Australia Pty Ltd - 250,230 Almax Aluminium Pty Ltd - 2,906,363 Total Fixed Charge Assets Withheld Nil Voluntary Administration Fees (SV Partners) 2,062 2,062 Voluntary Administration Outlays (SV Partners) - - Voluntary Administration Fees (Grant Thornton) 8,185 8,185 Voluntary Administration Outlays (Grant Thornton) Liquidation Fees 60,000 70,000 Liquidation Outlays 5,000 10,000 Total Costs 75,747 91,047 Estimated Surplus for Ordinary Unsecured Creditors Withheld Nil Equipment Finance Liabilities and Trade Guarantees 2,000,000 3,000,000 Liability under Cliplyn Agreement - 5,000,000 Total Unsecured Claims 2,000,000 8,000,000 TOTAL ESTIMATED SURPLUS/DEFIENCY Withheld (8,000,000) Estimated Return to Unsecured Creditors Withheld Nil Included in the above is an estimate of the costs of the Liquidators should the company proceed to liquidation. Remuneration being sought by the Administrators/Liquidators is detailed later in this report Grant Thornton 27 March

42 Summary of Receipts and Payments There have been no receipts and payments to date. Administrators Statement That the Company Execute a DOCA At the date of this report a DOCA has not been proposed for Graybond Pty Ltd and this will not be an option available to creditors to consider at the forthcoming meeting. That the Meeting be Adjourned I have not received any proposal from either the Director or any other party for a DOCA. Further the Company is insolvent. Notwithstanding this, an extension of the administration will provide the best means of preserving the Bocar business whilst seeking a sale. It is therefore my recommendation that there be an adjournment of this next meeting for Graybond. That the Administration End As Graybond Pty Ltd is insolvent, I do not believe there would be any benefit to creditors in ending the administrations. Accordingly, it is my opinion that it would not be in creditors best interests for the administration to end. That the Company be Wound Up Should creditors resolve to wind up Graybond, the Company will be placed into liquidation that day and we will be appointed liquidators. A liquidator is required to realise company property and distribute the proceeds to creditors in accordance with the priorities detailed in the Act. A liquidator is also required to undertake further investigation into the company s prior activities and the conduct of its directors Grant Thornton 27 March

43 9 Baumann Design Pty Ltd (Administrators Appointed) - Report as to Affairs and Financial Position - Antecedent Transactions - Estimated Outcome Statement - Administrators Statement There are no apparent realisable assets of Baumann Design Pty Ltd. There is no likely claim for insolvent trading against the director and I have not identified any voidable transactions. There will be no return to creditors. It is my recommendation that creditors resolve to wind the Company up Grant Thornton 27 March

44 Report as to Affairs ( RATA ) The director of Baumann Design Pty Ltd is yet to complete an ASIC Form 507 Report as to Affairs. Financial Position of Baumann Design Pty Ltd In the absence of a completed Report as to Affairs, I have compiled the following schedule of assets and liabilities for Baumann Design Pty Ltd based on the financial statements prepared by the Group s external accountants and information provided to me. Please note the figures in this table are prepared using the best information available to me at this time. Baumann Design Pty Ltd Book Value ($) Estimated Realisable Value ($) Note Description Assets Cash on Hand Shares in Bocar Services Pty Ltd Total Assets Notes to the Financial Position 1 Cash on Hand The financial statements indicate Cash on Hand of $382. No such cash has been recovered. 2 Shares in Bocar Services Pty Ltd Baumann Design Pty Ltd holds 50% of the share capital in Bocar Services Pty Ltd as a result of a buyout of another shareholder. These shares were recorded with no carrying value in the balance sheet as at 31 December Related Party Loans The financial statements of Baumann Design Pty Ltd indicate that the Company has loan accounts owing to:- Henri Baumann for $232,825; and Bocar Services Pty Ltd for $1,711,421 Amounts Owing to Unsecured Creditors Related Party Loans (1,944,246) (1,944,246) 3 Total Liabilities (1,944,246) (1,944,246) Surplus of Assets to Liabilties (1,944,246) (1,944,246) 2009 Grant Thornton 27 March

45 Antecedent Transactions Recoverable by a Liquidator Insolvent Trading My preliminary investigations into the solvency of Baumann Design Pty Ltd indicate the Company may not have been insolvent until the appointment of the Administrators. The reasoning for this is as follows:- Report Pursuant to Section 438D There were no matters that came to my attention that warranted the Administrators issuing a report to the ASIC pursuant to section 438D of the Act. Director Related Transactions I have not identified any unreasonable director related transactions. The only liabilities of the Company are related entity debts (Henri Baumann and Bocar Services) and neither of those liabilities were due and payable; Enforceability of Floating Charges There are no charges registered over Baumann Design Pty Ltd that could be considered unenforceable. Voidable Transactions Unfair Preferences My preliminary investigations have not identified any bank accounts in the name of the Baumann Design Pty Ltd. Accordingly, should the Company be placed into liquidation, there will be no recoveries from unfair preferences. Summary I have not identified any potential recoveries that would be available to creditors in a liquidation scenario. Uncommercial Transactions My preliminary investigations have not identified any potentially uncommercial transactions. Books and Records The records provided to us included: 1. Financial Statements. It is my opinion that the director of the Company has not committed any offences in relation to the maintenance of proper books and records for the company pursuant to Sections 286 and 591 of the Act Grant Thornton 27 March

46 Estimated Return to Creditors There are no realisable assets of Baumann Design Pty Ltd and likely no recovery actions available to a liquidator. Accordingly, there is no likelihood of a return to creditors. Summary of Receipts and Payments There have been no receipts and payments in the administration to date. Administrators Statement That the Company Execute a DOCA At the date of this report a DOCA has not been proposed for Baumann Design Pty Ltd and this will not be an option available to creditors to consider at the forthcoming meeting. That the Administration End As Baumann Design Pty Ltd is insolvent, I do not believe there would be any benefit to creditors in ending the administrations. Accordingly, it is my opinion that it would not be in creditors best interests for the administration to end. That the Company be Wound Up As I have not received any proposal from either the Director or any other party for a DOCA and as the Company is insolvent, I believe that it is in the best interest of creditors that the Company be wound up Grant Thornton 27 March

47 10 Remuneration The Administrators remuneration for each respective Company for the period 9 March 2009 to 31 March 2009 be considered. The previous Administrators remuneration be considered for the period 25 February 2009 to 9 March Should the Companies be placed into liquidation, the Liquidators remuneration be considered for the period 1 April 2009 to the completion of the Liquidation Grant Thornton 27 March

48 Remuneration to be Approved As at the date of this report, no remuneration has been approved by creditors as the upcoming meeting of creditors is the first opportunity for creditors to approve remuneration. At the meeting of creditors to be held on 1 April 2009, creditors will be requested to approve the Administrators remuneration for the period 9 March 2009 to 31 March 2009 and should the Companies be placed into Liquidation, creditors will be asked to approve a fixed amount of remuneration for the Liquidators. Remuneration resolutions will be sought for time costs incurred during the administration of each Company. Once approved, remuneration will be drawn on a periodic basis from the funds available to the Liquidators from each of the Company s assets. No indemnity has been provided to me for remuneration by any third party. In accordance with the Code of Practice issued by the IPAA, I have also enclosed at Annexure E: 1. Grant Thornton s Recovery & Reorganisation Charge Out Rates for the Queensland and Victorian offices; 2. SV Partners Charge Out Rates; and 3. IPAA Creditor Information Sheet which provide information on the approval of remuneration (Information Sheet 85). Basis of Charging Work undertaken during both the Administration period and the Liquidation period, will be charged based on the time spent to attend to the various tasks required under each type of appointment, at a charge out rate relevant to the person required to complete the task. Such rates are set based on the level of skill and experience of the staff required to undertake such work. The Administrators team is structured such that tasks are completed by staff with the appropriate level of experience. During this particular administration, staff from both the Brisbane and Melbourne offices of Grant Thornton assisted with the control of the administration. Victorian staff were utilised on this matter due to their extensive experience and expertise in the manufacturing of automotive components industry and as the majority of customers of the group are based in Victoria. Details of the actual time charges incurred, and the charge out rates of Grant Thornton Recovery and Reorganisation Services will also be made available to creditors at the second meeting to be held on 1 April Arrangements can be made to inspect the time and costs records which give greater detail of the work performed by contacting Mr Andrew Lowe of my office. I would appreciate it if this could be done no later than 2.00pm on 31 March Administrators Remuneration The Administrators remuneration is for work undertaken by the previous Administrators for the period 25 February 2009 to 9 March 2009 and for work performed by the Administrators from 9 March 2009 to 22 March 2009 and for work to be undertaken from 23 March 2009 up to the date of the meeting on 1 April Detailed remuneration reports for each Company for the Voluntary Administration period are attached in the respective Annexures. A summary of the actual and estimated time costs for each Company for the 2009 Grant Thornton 27 March

49 period 25 February 2009 to 31 March 2009 is provided on the following page. Company Bocar Services Pty Ltd Bocar Administration Services Pty Ltd Graybond Pty Ltd Baumann Design Pty Ltd SV Partners Remuneration for 25 February 2009 to 9 March 2009 ($) Administrator s Remuneration for 9 March 2009 to 22 March 2009 ($) Note: amounts exclude GST and disbursements. Estimate of Administrator s Remuneration for 23 March 2009 to 31 March 2009 ($) Total ($) 118, , , ,324 3,331 6,463 2,000 11,794 2,062 3,185 5,000 10, ,140 1,500 3,576 Liquidators remuneration In the event of creditors voting for the Companies to be placed into Liquidation, the Administrators may become the Liquidators. Creditors will also be asked to fix an amount of fee approval for the liquidators. A summary of the estimated time costs for each Company for the period 31 March 2009 to the completion of the liquidation is provided below. Company Estimate Time Costs for Liquidation ($) Bocar Services Pty Ltd Bocar Administration Services Pty Ltd Graybond Pty Ltd Baumann Design Pty Ltd 400,000 45,000 70,000 15,000 Note: amounts exclude GST and disbursements. Detailed remuneration reports for each Company for the liquidation period are attached in the respective Annexure for each Company. The remuneration resolutions sought at the forthcoming meeting for each Company will now be detailed below. It is noted that the amounts payable for remuneration will be subject to sufficient funds being available in each company to meet same. Bocar Services Pty Ltd (refer Annexure F) Creditors will be requested to consider the following resolutions:- For the approval of the remuneration of the previous administrators, Paul Sweeney and Terry van der Velde of SV Partners Pty Ltd:- That the remuneration of the Paul Sweeney and Terry van der Velde, their partners and staff incurred in relation to the administration of Bocar Services Pty Ltd for the period 25 February 2009 to 9 March 2009, be hereby calculated on a time basis and by reference to the hourly rates of SV Partners (Qld) Pty Ltd (plus Goods and Services Tax). Such remuneration is to be fixed at $118,688, plus GST, and should be drawn to the extent of available funds. Detailed information on the calculation of the remuneration and a summary of work undertaken by SV Partners is provided in the attached Remuneration Reports at Annexure J. For the approval of the remuneration of the Administrators remuneration:- That the remuneration of the Administrators, their partners and staff incurred in relation to the administration of Bocar Services Pty Ltd for the period 9 March 2009 to 31 March 2009, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton - Recovery & Reorganisation Services (plus Goods and Services 2009 Grant Thornton 27 March

50 Tax). Such remuneration is to be capped at $288,636, plus GST, and should be drawn to the extent of available funds. Should the Company be placed into liquidation, creditors will be asked to approve interim remuneration for the liquidator of $400,000 in relation to the liquidation of Bocar Services Pty Ltd. Creditors will be asked to consider the following motion:- That the remuneration of the Liquidators, their partners and staff for work carried out in relation to Bocar Services Pty Ltd be hereby calculated by reference to the hourly rates of Grant Thornton-Recovery and Reorganisation Services (plus Goods and Services Tax). Such remuneration is to be capped at $400,000 plus GST, and should be drawn to the extent of available funds. Detailed information on the calculation of the remuneration and a summary of work undertaken is provided in the attached Remuneration Reports at Annexure F. Bocar Administration Services Pty Ltd (refer Annexure G) Creditors will be requested to consider the following resolutions:- For the approval of the remuneration of the previous administrators, SV Partners Pty Ltd:- That the remuneration of the Paul Sweeney and Terry van der Velde, their partners and staff incurred in relation to the administration of Bocar Administration Services Pty Ltd for the period 25 February 2009 to 9 March 2009, be hereby calculated on a time basis and by reference to the hourly rates of SV Partners (Qld) Pty Ltd (plus Goods and Services Tax). Such remuneration is to be fixed at $3,331, plus GST, and should be drawn to the extent of available funds. Detailed information on the calculation of the remuneration and a summary of work undertaken by SV Partners is provided in the attached Remuneration Reports at Annexure J. For the approval of the remuneration of the Administrators remuneration:- That the remuneration of the Administrators, their partners and staff incurred in relation to the administration of Bocar Administration Services Pty Ltd for the period 9 March 2009 to 31 March 2009, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton - Recovery & Reorganisation Services (plus Goods and Services Tax). Such remuneration is to be capped at $8,463, plus GST, and should be drawn to the extent of available funds. Should the Company be placed into liquidation, creditors will be asked to approve interim remuneration for the liquidator of $25,000 in relation to the liquidation of Bocar Administration Services Pty Ltd. Creditors will be asked to consider the following motion:- That the remuneration of the Liquidators, their partners and staff for work carried out in relation to Bocar Administration Services Pty Ltd be hereby calculated by reference to the hourly rates of Grant Thornton-Recovery and Reorganisation Services (plus Goods and Services Tax). Such remuneration is to be capped at $25,000, plus GST, and should be drawn to the extent of available funds. Detailed information on the calculation of the remuneration and a summary of work undertaken is provided in the attached Remuneration Reports at Annexure G Graybond Pty Ltd (refer Annexure H) Creditors will be requested to consider the following resolutions: Grant Thornton 27 March

51 For the approval of the remuneration of the previous administrators, SV Partners Pty Ltd:- That the remuneration of the Paul Sweeney and Terry van der Velde, their partners and staff incurred in relation to the administration of Graybond Pty Ltd for the period 25 February 2009 to 9 March 2009, be hereby calculated on a time basis and by reference to the hourly rates of SV Partners (Qld) Pty Ltd (plus Goods and Services Tax). Such remuneration is to be fixed at $2,062, plus GST, and should be drawn to the extent of available funds. Detailed information on the calculation of the remuneration and a summary of work undertaken by SV Partners is provided in the attached Remuneration Reports at Annexure J. For the approval of the remuneration of the Administrators remuneration:- That the remuneration of the Administrators, their partners and staff incurred in relation to the administration of Graybond Ltd for the period 9 March 2009 to 31 March 2009, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton - Recovery & Reorganisation Services (plus Goods and Services Tax). Such remuneration is to be capped at $8,185, plus GST, and should be drawn to the extent of available funds. Should the Company be placed into liquidation, creditors will be asked to approve interim remuneration for the liquidator of $70,000 in relation to the liquidation of Graybond Pty Ltd. Creditors will be asked to consider the following motion:- That the remuneration of the Liquidators, their partners and staff for work carried out in relation to Graybond Pty Ltd be hereby calculated by reference to the hourly rates of Grant Thornton-Recovery and Reorganisation Services (plus Goods and Services Tax). Such remuneration is to be fixed at $70,000, plus GST, and should be drawn to the extent of available funds. Detailed information on the calculation of the remuneration and a summary of work undertaken is provided in the attached Remuneration Reports at Annexure H. Baumann Design Pty Ltd (refer Annexure J) Creditors will be requested to consider the following resolutions:- For the approval of the remuneration of the previous administrators, SV Partners Pty Ltd:- That the remuneration of the Paul Sweeney and Terry van der Velde, their partners and staff incurred in relation to the administration of Baumann Design Pty Ltd for the period 25 February 2009 to 9 March 2009, be hereby calculated on a time basis and by reference to the hourly rates of SV Partners (Qld) Pty Ltd (plus Goods and Services Tax). Such remuneration is to be fixed at $936, plus GST, and should be drawn to the extent of available funds. Detailed information on the calculation of the remuneration and a summary of work undertaken by SV Partners is provided in the attached Remuneration Reports at Annexure J. For the approval of the remuneration of the Administrators remuneration:- That the remuneration of the Administrators, their partners and staff incurred in relation to the administration of Baumann Design Pty Ltd for the period 9 March 2009 to 31 March 2009, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton - Recovery & Reorganisation Services (plus Goods and Services 2009 Grant Thornton 27 March

52 Tax). Such remuneration is to be capped at $2,640, plus GST, and should be drawn to the extent of available funds. Should the Company be placed into liquidation, creditors will be asked to approve interim remuneration for the liquidator of $15,000 in relation to the liquidation of Baumann Design Pty Ltd. Creditors will be asked to consider the following motion:- That the remuneration of the Liquidators, their partners and staff for work carried out in relation to Baumann Design Pty Ltd be hereby calculated by reference to the hourly rates of Grant Thornton-Recovery and Reorganisation Services (plus Goods and Services Tax). Such remuneration is to be capped at $15,000, plus GST, and should be drawn to the extent of available funds. Detailed information on the calculation of the remuneration and a summary of work undertaken is provided in the attached Remuneration Reports at Annexure I Grant Thornton 27 March

53 11 Meeting of Creditors The second meetings of creditors of the Companies will be held concurrently at the offices of Grant Thornton, Ground Floor, Grant Thornton House, 102 Adelaide Street, Brisbane Qld 4000 on 1 April 2009 at 2.30pm. Creditors who have not submitted a proof of debt form are required to submit this form if they are to vote at the upcoming meeting and must complete the form for the Company of which they are a creditor. New proxy forms are required for this meeting, and must be submitted prior to the meeting Grant Thornton 27 March

54 Second Meeting of Creditors In accordance with Subsection 439A(4) of the Act, this report includes a formal notice convening the concurrent second meetings of creditors for the Companies to be held at Grant Thornton, Ground Floor, Grant Thornton House, 102 Adelaide Street, Brisbane Qld 4000 on Wednesday, 1 April 2009 at 2.30pm. Creditor meeting documentation is attached at Annexure K. At the second meeting of creditors: The Administrator s report regarding the company s business, property, financial affairs and circumstances will be presented; and The Administrator s opinion regarding the future of the companies will be provided. This report will supply creditors with sufficient information to determine: New proxy forms are required for this second meetings of creditors. It should be noted that where the creditor is a company, the attendee is required to hold a proxy in his / her name from the company. All proxies lodged by a company must be completed in accordance with its Constitution (i.e. under the Company s Common Seal if the Constitution so requires). If the proxy is executed under a power of attorney, a copy of the power of attorney is to be enclosed with the proxy form. Proxies for the meeting can be lodged in the following ways: by post to arrive at least a day prior to the meeting; by facsimile to (07) prior to the close of business on 31 March 2009; by person when attending the meeting; or by to anlowe@grantthornton.com.au prior to the close of business on 31 March (i) (ii) (iii) Whether it is in the creditors' interests for the Companies to execute Deeds of Company Arrangement (DOCAs); Whether it is in the creditors' interests for the Administrations to end; or Whether it is in the creditors' interests for the companies to be wound up. If proxies are lodged by facsimile or , the law requires that the original proxy must be lodged with the Administrator within 72 hours of lodging the faxed or ed copy. If you are attending the meeting, it would be appreciated if you could arrive at the meeting venue at least 20 minutes before the scheduled commencement time to allow for the registration of attendees. Creditors who have already lodged a proof of debt form are not required to lodge another unless amending their previous claim. For voting purposes creditors are asked to ensure that their claim is submitted against the correct Company. Destruction of Books and Records In order to avoid the Liquidator, should one be appointed at the forthcoming meeting, from incurring substantial unnecessary storage charges for the books and records of the Companies, the following resolution in respect to the early destruction of books and records will be put forward for creditors of each Company to consider: 2009 Grant Thornton 27 March

55 That subject to obtaining approval from the Australian Securities and Investments Commission pursuant to Section 542(4) of the Corporations Act 2001, the books and records of Bocar Services Pty Ltd, Bocar Administration Services Pty Ltd, Baumann Design Pty Ltd, Graybond Pty Ltd be disposed of by the Liquidator, six months after the dissolution of the company or earlier at the discretion of the Australian Securities and Investments Commission. Should you wish to discuss this report further, please contact Mr Andrew Lowe of this office on (07) Yours faithfully M G McCANN Administrator 2009 Grant Thornton 27 March

56 Annexure A Statement of Independence 2009 Grant Thornton 27 March 2009

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58 Annexure B Group Structure 2009 Grant Thornton 27 March 2009

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60 Annexure C Comparative Financial Statements 2009 Grant Thornton 27 March 2009

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65 Annexure D Summary of Receipts and Payments 2009 Grant Thornton 27 March 2009

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67 Annexure E IPAA Creditor Information Sheet and Charge Out Rates 2009 Grant Thornton 27 March 2009

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81 Annexure F Bocar Services Pty Ltd Remuneration Reports 2009 Grant Thornton 27 March 2009

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