LIG Australia Pty Limited (In Liquidation)
Report to Creditors 27 October 2015
Trevor Pogroske Partner T 02 8297 2601 E
[email protected]
Andre Lakomy Associate Director T 02 8297 2540 E
[email protected]
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Glossary ARITA
Australian Restructuring Insolvency and Turnaround Association
ASIC
Australian Securities and Investments Commission
ATO
Australian Taxation Office
c.
Circa/approximately
Circulating
Floating charge security interest
Date of appointment
10 August 2015 (date of Voluntary Administration)
Date of liquidation
19 August 2015
DEEWR
Department of Education, Employment & Workplace Relations
Directors
Jie Weng and Shuxia Li
EBITDA
Earnings Before Interest, Tax, Depreciation and Amortisation
ERV
Estimated Realisable Value
FEG
Fair Entitlements Guarantee Scheme
FY14
1 July 2013 to 30 June 2014
FY15
1 July 2014 to 30 June 2015
Non-circulating
Fixed charge security interest
Opal
Opal (Macao Commercial Offshore) Limited
PPSA
Personal Property and Securities Act
PPSR
Personal Property and Securities Register
RATA
Report as to Affairs
Success Aluminium Success Aluminium Pty Limited (In Liquidation) the Act
The Corporations Act 2001
the Company or LIG LIG Australia Pty Limited (In Liquidation) the Administrators
Sule Arnautovic, Amanda Young and Glen Crisp
the Liquidators
Trevor Pogroske and Gayle Dickerson
Grant Thornton/GTAL Grant Thornton Australia Limited GST
Goods and Services Tax
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
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Contents Section
Page
Appendices
1. Executive summary
4
A. Notice of meeting of creditors
2. Introduction
8
B. Remuneration report
3. Company history and reasons for failure
11
C. Formal proof of debt
4. Receipts and payments
15
D. Proxy form
5. Actions undertaken to date
17
6. Report as to Affairs
19
7. Historical performance
22
8. Investigations
25
9. Employees and employee entitlements
29
10. Estimated outcome statement
31
11. Remuneration and meeting of creditors
34
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
3
Section 1:
Executive Summary
01. Executive Summary 02. Introduction 03. Group history and reasons for failure 04. Receipts and payments 05. Actions undertaken to date 06. Report as to Affairs 07. Historical performance 08. Investigations 09. Employees and employee entitlements 10. Estimated outcome statement 11. Remuneration and meeting of creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Executive summary
Overview Introduction Refer to Section 1.
Sule Arnautovic, Amanda Young and Glen Crisp of Jirsch Sutherland, were appointed as Joint and Several Administrators of the Company on 10 August 2015. The Supreme Court of NSW subsequently appointed Trevor Pogroske and Gayle Dickerson as Joint and Several Official Liquidators of the Company on 19 August 2015. The petitioning creditor was Opal (Macao Commercial Offshore) Limited ("Opal") who is owed c. $42 million. A meeting of creditors of the Company will be held at the offices of Grant Thornton, Level 17, 383 Kent Street, Sydney NSW, 2000 on Wednesday, 11 November 2015 at 11:00am. A formal Notice of Meeting is attached as Appendix A. The purpose of the meeting is to provide creditors an update on the progress of the liquidation, and to fix the remuneration of the Administrators and the Liquidators.
Principal Activity Refer to Section 3.
The Company's primary activity was the importing and selling of aluminium products. Pursuant to the ASIC Company search: − The Company was registered on 24 April 2014; − The Company's registered office was King Hon & Co, Suite 3, Level 1, 377-383 Sussex Street, Sydney NSW 2000; and − The Company's principal place of business was Unit 3C, 14 Glen Street, Eastwood, NSW 2122.
Company History and Reasons for Failure
The Company's management accounts indicate LIG generated a profit of c. $5.1 million during FY15. Included in this amount is c. $4.8 million of "Other income" relating to the write-off of a long-term liability to Centralink International Development Limited. We are seeking confirmation from this party concerning the terms of this arrangement.
Refer to Section 3
At the date of appointment, the Company's balance sheet indicates net assets totalled c. $4.8 million. However, this includes a receivable from Success Aluminium Pty Limited (In Liquidation) ("Success Aluminium") of c. $47 million. The recoverability of this receivable is dependant upon the amount to be recovered from the liquidation of Success Aluminium.
LIG incurred a net loss before tax of c. $200,000 during July and August 2015.
LIG Director, Jie Weng, has noted that the cause of the Company’s failure was "Opal (Macao Commercial Offshores) Ltd, our sole supplier, stopped to supply us goods and our buyer not paying for the goods we sold to it”. Based on the Liquidators’ preliminary discussions with Company Director, Jie Weng, LIG's inability to recover amounts owing from debtors contributed to the Company’s inability to discharge its trade liabilities. This in-turn resulted in some suppliers ceasing to supply goods to the Company. On 10 August 2015, Administrators were appointed to LIG, and on 19 August 2015 an order was made by the Court for the winding up of LIG. Further detail concerning the events leading up to the Administrators' appointment is detailed in Section 3.
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
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Executive Summary
Overview Assets Refer to Section 7.
At the date of appointment of the Administrators on 10 August 2015, the Company's assets comprised: − Cash: c. $710,000 – this has been recovered by the Liquidators (less administration costs). − Debtors: c. $47 million – the majority, being $47,260,668 is owed by Success Aluminium, a company on behalf of whom LIG imported aluminium. Trevor Pogroske and Gayle Dickerson are also the liquidators of Success Aluminium. The extent of the amount that may be recovered from Success Aluminium is unknown at this stage. − Prepayments: c. $1.3 million – a review of these prepayments indicates they relate to deposits for incoming inventory. Whilst the Liquidators have attempted to reconcile this account, due to the aggregated nature in which some of the pre-payments were processed through the bank account, the Liquidators have been unable to verify if all pre-payments have been paid. This is still being reviewed and the Liquidators are liaising with each of the suppliers, the bank, and management to complete the reconciliation. − The balance sheet indicates that the Company owned Die Casts (intellectual property) with a book value of c. $650,000. An intellectual property search did not identify any intellectual property owned by the Company, and no information has been provided by the Company's Directors to verify the ownership of these Die Casts. − At the date of appointment of the Liquidators, they were advised by management that there were three shipping containers in transit (in the possession of ETAL Logistics). After repeated requests including legal demands, ETAL Logistics advised that the shipping containers were delivered to Success Aluminium. The total value of goods in these shipping containers was c. $155,000 and were sold by Success Aluminium for c. $136,000. As LIG did not have a PPSR registration over the items, it is unlikely LIG will be able to recover any funds from Success Aluminium.
Investigations Refer to Section 8.
The Liquidators’ investigations have focused on reviewing insolvent trading, preference payments and uncommercial transactions. Whilst the Liquidators have undertaken a preliminary review of the Company’s books and records, the investigations will be finalised after further discussions with key management in order to seek clarity regarding various transactions. If any stakeholders fail to co-operate the Liquidators will consider holding a public examination. The following is a summary of the findings to-date: − Insolvent trading: The Company appears to have traded whilst insolvent from at least 11 February 2015. Once the investigations are complete the Liquidators will consider the merits of pursuing the Directors for insolvent trading. − Preference payments: The books and records indicate the Company made payments to c. 20 suppliers during the six months leading up to the date of appointment. Payments to other stakeholders include the landlord and statutory bodies, such as the Australian Taxation Office (“ATO”). The review of these payments will be finalised once the Liquidators have further liaised with management and reviewed the information expected to be received from the ATO, pursuant to the Freedom of Information (“FOI”) request. − Uncommercial transactions: 1. A number of payments were made to employees in addition to their salaries. The Liquidators are reviewing the terms and conditions of those employees' employment and will be liaising with management to understand the basis for these payments. 2. The Liquidators’ review of uncommercial transactions included a review of Company assets which may have been sold/transferred for less than market value. To-date, the Liquidators' investigations have not identified any transactions that would be deemed uncommercial.
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
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Executive Summary
Overview Employees Refer to Section 9.
At the date of appointment of the Liquidators, the Company had three employees who were immediately terminated – all postappointment wages were paid by the Administrators. Any post-appointment entitlements will be paid by the Liquidators. The Liquidators were informed that five employees ceased employment sometime prior to the date of appointment of the Administrators. Each of these employees has been contacted by the Liquidators to clarify the date of cessation and confirm that outstanding entitlements have been paid. Subject to final review of the employees' terms of employment and personal details as provided by the Company, the Liquidators estimate the outstanding pre-appointment employee entitlements total c. $58,000.
Estimated outcome Refer to Section 10.
As per the estimated outcome statement in Section 10, the estimated return to creditors is: − Priority creditors / employees: 100 cents in the dollar; − Unsecured creditors: The return to unsecured creditors is uncertain and will be subject to recoveries from debtors, prepayments, and antecedent transactions. Apart from one party that financed a photocopier, there are no other secured creditors.
Finalisation
Depending on the outcome of the investigations, the Liquidators anticipate that they will be in a position to finalise the liquidation within the next six months, following a distribution to creditors and clearance from the ASIC.
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
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Section 2: Introduction
01. Executive Summary 02. Introduction 03. Group history and reasons for failure 04. Receipts and payments 05. Actions undertaken to date 06. Report as to Affairs 07. Historical performance 08. Investigations 09. Employees and employee entitlements 10. Estimated outcome statement 11. Remuneration and meeting of creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Introduction
Appointment, meeting, and report to creditors Appointment and first meeting of creditors Sule Arnautovic, Amanda Young and Glen Crisp of Jirsch Sutherland, were appointed as Joint and Several Administrators of the Company on 10 August 2015. On the application of Opal, the petitioning creditor, the Supreme Court of NSW subsequently appointed Trevor Pogroske and Gayle Dickerson as Joint and Several Official Liquidators of the Company on 19 August 2015. A meeting of creditors of the Company will be held at the offices of Grant Thornton, Level 17, 383 Kent Street, Sydney NSW 2000 on Wednesday, 11 November 2015 at 11:00am. A formal Notice of Meeting is attached as Appendix A. The purpose of the meeting is to provide an update on the progress of the liquidation and to fix the retrospective remuneration of the Administrators and the retrospective and prospective remuneration of the Liquidators. Report to creditors Creditors should note that in preparing this report the Liquidators have relied on information that has been obtained from the following sources: − Information provided by, and discussions with, the Administrators; − Discussions with Company Director, Ms Jie Weng; − Discussions with former employees of the Company; − Advice obtained from our legal advisors; − Information available from ASIC; − Discussions with various stakeholders including creditors; and − The Company's books and records. Whilst we have no reason to doubt the accuracy of any information contained in this report, we have not performed an audit and we reserve the right to alter our conclusions should the underlying information prove to be inaccurate or change materially from the date of this report. © 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
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Introduction
Compliance and Independence Compliance with Best Practice
We confirm that this report complies with the statements of best practice issued by the Australian Restructuring Insolvency and Turnaround Association ("ARITA"), with regard to content of the report and the Code of Professional Practice, with regard to remuneration.
Independence
Trevor Pogroske and Gayle Dickerson undertook a proper assessment of the risks in relation to their independence prior to accepting the appointment as Liquidators. No real or potential risks to the Liquidators' independence were identified. Disclaimer
In reviewing this report, creditors should note the following: − This report is based on information sourced from the books, records and other information provided by the Directors and former employees. Whilst the Liquidators have reviewed the information, there has been no independent verification of the information;
− This report is not for general circulation, publication, reproduction or any use other than to assist creditors in evaluating their position as creditors and must not be disclosed without the prior approval of the Liquidators; − The Liquidators do not assume or accept any responsibility for any liability or loss sustained by any creditor or any other party as a result of the circulation, publication, reproduction or any use beyond that permitted above; − The statements and opinions given in this report are given in good faith and in the belief that such statements are not false or misleading. Except where otherwise stated, the Liquidators reserve the right to alter any conclusions reached on the basis of any changed or additional information which may be provided to them; − Neither the Liquidators, nor any member or employee thereof are responsible in any way whatsoever to any person in respect of any errors in this report arising from incorrect information; and − Creditors should seek their own independent legal advice as to their rights and the options available to them.
− In formulating this report, the Liquidators have necessarily made forecasts of asset realisations and total creditors. These forecasts and estimates may change. Whilst the forecasts and estimates are the result of the Liquidators’ best assessments in the circumstances, creditors should note that the outcome for creditors may differ from the information provided in this report;
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
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Section 3: Company history and reasons for failure
01. Executive Summary 02. Introduction 03. Group history and reasons for failure 04. Receipts and payments 05. Actions undertaken to date 06. Report as to Affairs 07. Historical performance 08. Investigations 09. Employees and employee entitlements 10. Estimated outcome statement 11. Remuneration and meeting of creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Company history and reasons for failure
Background Registered Office and Principle Place of Business
Leased Assets
The Company's primary activity was that of importing and selling aluminium products.
The Company's only leased asset was a multi functional photocopier/printer leased from Fuji Xerox Finance Limited. The Liquidators disclaimed this asset subsequent to their appointment.
The ASIC search dated 19 August 2015 indicates the following: − The Company was registered on 24 April 2014; − The Company's registered office was King Hon & Co, Suite 3, Level 1, 377 - 383 Sussex Street, Sydney NSW 2000, − The Company's principal place of business was Unit 3C, 14 Glen Street, Eastwood, NSW 2122
Subsequent to securing the Company's books and records, the Liquidators also disclaimed the lease for the property from which the Company operated, being, Unit 3C, 14 Glen Street, Eastwood, NSW 2122. Secured Creditor Our review of the Company's books and records and the PPSR register indicates there are no secured creditors who hold a circulating and/or noncirculating charge over the Company's assets.
Company Office Holders A search of the ASIC database confirmed the officeholders are/were: Office holders
Position
Appointment date
Cessation date
Li, Shuxia Weng, Jie Zheng, Lu Gao, Lijun
Director Director Director Director
05-Sep-14 28-Jan-15 11-Jun-14 24-Apr-14
(Note 1) 28-Jan-15 11-Jun-14
Note 1: Jie Weng provided a copy of her resignation to the Administrators on 14 August 2015. The Administrators have advised they were not able to contact Ms Weng about her resignation, however they did contact ASIC advising that they did not accept the resignation as being valid. Company Shareholding The ASIC search indicates the Company's only shareholder is one of the Company Directors, Shuxia Li, who holds 2 x $1.00 ordinary shares. Given the substantial shortfall to creditors based on the information available, there will be no return available to the shareholders of the Company.
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
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Company history and reasons for failure
Reasons for failure Director's reasons for failure
Liquidators' Comments
A questionnaire was forwarded to both Company Directors following the appointment of the Liquidators on 19 August 2015.
The Company's failure is a result of its inability to recover amounts owing from debtors, including Success Aluminium and Opal (who collectively owed c. $47 million). This contributed to LIG being unable to pay its liabilities, which resulted in Opal lodging a winding up application against the Company.
Despite resigning as a company Director on 14 August 2015, Jie Weng has responded to requests from the Liquidators for information including: − Factors leading up to the winding up of the Company; − Completing a Report as to Affairs (“RATA”) and detailing the assets and liabilities of the Company; and − Providing a completed questionnaire responding to a range of questions in relation to the management of the Company and factors leading up the winding up. This information is being reviewed as part of the Liquidators’ ongoing investigations into the affairs of the Company. Jie Weng has noted that the cause of the Company’s failure was: “Opal (Macao Commercial Offshores) Ltd, our sole supplier stopped to supply us goods and our buyer not paying for the goods we sold to it” With respect to the above comments by Ms Weng, the Liquidators understand that she is referring to Success Aluminium as the buyer who did not pay for goods it had received – this in-turn impacted upon LIG's ability to pay its ongoing liabilities including those accrued with Opal. To-date the other Company Director, Shuxia Li, who we understand resides in China, has not responded to the Liquidators' requests for information or assistance.
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Below is a summary of events leading up to the appointment of the Administrators: − On 17 March 2015, Opal served a statutory demand on LIG demanding payment of $20,835,462.50, being the unpaid purchase price of goods supplied by Opal to LIG as at 12 March 2015. − On 7 April 2015, LIG filed an application in the Supreme Court of New South Wales (Court) seeking to set aside the statutory demand (Application). − On 7 July 2015, Justice Black of the Supreme Court of New South Wales dismissed the application by LIG, which sought to set aside the statutory demand issued by Opal. LIG failed to comply with the statutory demand within 7 days of that judgment, hence, the statutory presumption of insolvency arose in respect of the Company. The Company then filed an appeal against Justice Black's decision on 13 July 2015 (that appeal, was discontinued on 14 August 2015). − On 20 July 2015, Opal filed an application with the Court to wind up LIG. − On 10 August 2015, Administrators were appointed to LIG.. − On 19 August 2015, the Supreme Court of New South Wales made orders that LIG be wound up on the ground on insolvency and that Trevor Pogroske and Gayle Dickerson be appointed as liquidators of the Company.
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Company history and reasons for failure
Reasons for failure Liquidators' Comments Our review of the Company's books and records indicates the following: − Trading performance − During FY15 the Company generated "Other income" of c. $5.1 million. However, a review of the Company's financial records indicates c. $4.8 million related to the debt forgiveness of a long-term liability. We are seeking confirmation from the respective creditor concerning the terms of this arrangement. − LIG incurred a net loss before tax of c. $200,000 during July and August 2015. This is attributable to a negative gross margin of 6.21% whilst still incurring overheads in connection with managing the Company. − Net assets − At the date of appointment, the Company's balance sheet reflected net assets totalled c. $4.8 million. However, the assets include a receivable owing from Success Aluminium (which is in liquidation), of c. $47 million. The recoverability of this receivable is unknown and is dependant upon the liquidation of Success Aluminium. Nevertheless, it is unlikely the full amount is recoverable and there would be a net asset deficiency for LIG after taking this into account.
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
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Section 4: Receipts and payments
01. Executive Summary 02. Introduction 03. Group history and reasons for failure 04. Receipts and payments 05. Actions undertaken to date 06. Report as to Affairs 07. Historical performance 08. Investigations 09. Employees and employee entitlements 10. Estimated outcome statement 11. Remuneration and meeting of creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Receipts and payments
Receipts and payments during administration and liquidation Overview
Neither the Administrators, nor the Liquidators, continued the Company's trading activities whilst under external administration. A number of employees were retained by the Administrators for a short period to assist with the winding up of the Company's operations. All post-appointment wages have been paid in full. The Administrators however have not paid any post-appointment accrued entitlements (e.g. annual leave) and these will be paid by the Liquidators once these amounts have been confirmed. All employees were terminated by the Liquidators following their appointment. Detailed opposite is a summary of the receipts and payments for the period 10 August 2015 to 21 October 2015. As per the summary: − c. $56,000 is held by Jirsch Sutherland. $20,003.51 excl. GST (if approved by creditors) will be applied to pay the Administrators' remuneration). The balance of these funds (c. $36,000) will be transferred to the Liquidators. Jirsch Sutherland has confirmed there are no other outstanding costs. − The Liquidators currently hold c. $625,000. These monies will be used to pay the Liquidators' remuneration and other costs associated with the liquidation (such as legal fees and costs incurred with convening meetings of creditors etc.). Any surplus funds will be distributed to creditors.
RECEIPTS Cash GST Refund Transfer from Adminstrators Interest Income Net Receipts PAYMENTS Wages Employee Allowances Superannuation Paid PAYG Paid Legal Fees Mail Re-direction Information technology consultant Bank Fees Transfer to Liquidators Net Payments Total
Adminstration period
Liquidation period
Total
710,753 363 711,116
630,000 270 630,270
710,753 363 630,000 270 1,341,386
(8,811) (5,436) (1,350) (5,397) (3,996) (630,000) (654,989)
(4,268) (198) (536) (3) (5,004)
(8,811) (5,436) (1,350) (5,397) (8,264) (198) (536) (3) (630,000) (659,994)
56,127
625,266
681,393
Details concerning future payments in connection with expenses and a distribution to creditors is provided in Section 10.
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
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Section 5: Actions undertaken to date
01. Executive Summary 02. Introduction 03. Group history and reasons for failure 04. Receipts and payments 05. Actions undertaken to date 06. Report as to Affairs 07. Historical performance 08. Investigations 09. Employees and employee entitlements 10. Estimated outcome statement 11. Remuneration and meeting of creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Actions undertaken to date
Actions undertaken to date by Administrators and Liquidators Administrators' actions
The tasks undertaken by the Administrators during the period of their appointment were largely administrative in nature and are detailed in the Remuneration Report attached at Appendix B. Liquidators' actions
Detailed below is a summary of the actions undertaken by the Liquidators following their appointment on 19 August 2015: − Liaising with the Administrators concerning the actions undertaken during the Administration period, time incurred, receipts and payments, and handover; − Attendance at Company premises; − Liaising with employees regarding the termination of their employment and their outstanding employee entitlements; − Meeting with, and liaising with, Company Director, Jie Weng, and her legal advisor, regarding the reasons for the Company’s failure, and reviewing information received from Ms Weng; − Liaising with all stakeholders including creditors, debtors, employees, equipment lessor, and landlord; − Securing and archiving the Company’s books and records; − Imaging IT equipment for investigation purposes; − Undertaking preliminary investigations; − Liaising with legal advisers and ETAL Logistics and the Customs Department with respect to stock in transit; − Preparing report to creditors and convening meeting of creditors; − Various statutory tasks required pursuant to the Corporations Act 2001; and − Arranging appropriate insurance cover for the Liquidation period.
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
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Section 6: Report as to Affairs ("RATA")
01. Executive Summary 02. Introduction 03. Group history and reasons for failure 04. Receipts and payments 05. Actions undertaken to date 06. Report as to Affairs 07. Historical performance 08. Investigations 09. Employees and employee entitlements 10. Estimated outcome statement 11. Remuneration and meeting of creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Report as to Affairs
Report as to Affairs ("RATA") Assets Accounts receivable Cash at bank and one hand Die casts (Intellectual property) Pre-payments Leased assets (Subject to charge) Total assets Liabilities Customer deposits - Success aluminium Employee entitlements OPAL (HK) Tax liabilities Trade creditors Total liabilities Net Surplus
Notes
Company records $
Jie Weng RATA $
1 2 3 4
47,716,099 377,091 653,395 1,289,122 50,035,707
45,000,000 590,000 2,880 45,592,880
Unknown 710,753 Unknown Unknown Unknown
5 6 7
2,702,909 19,485 42,162,480 269,600 31,931 45,186,405
20,000,000 20,000,000
42,162,480 Unknown Unknown
4,849,302
25,592,880
Unknown
Estimated Realisable Value $
Directors' RATA Pursuant to Section 475(1) of the Act, the LIG Directors are required to submit a RATA to the Liquidators. The RATA is a snapshot of the assets and liabilities of the Company at the date of appointment, which discloses book values and the estimated realisable values for assets. Whilst Jie Weng has provided a completed RATA, the other Company Director, Shuxia Li, has not responded to any of the Liquidators' requests for information. The RATA, completed by Jie Weng, will be available for inspection by creditors at the upcoming meeting of creditors should they wish to review the document. Notes 1. Pursuant to the Company’s books and records $47,716,099 is owed by debtors, primarily comprising Success Aluminium (which owes c. $47.2 million). The balance, being $455,431, is owed by Opal. As Opal is a major creditor this debtor amount is likely to offset the balance owing. © 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
2. The Company’s books and records indicate the Company maintained three bank accounts as at 10 August 2015. The CBA account was noted as having a balance of $377,901, whilst the balances of the two Westpac accounts were noted as being "TBA". At the date of appointment, the Administrators recovered $710,753 from the three company bank accounts. 3. The Liquidators are still investigating the Die Casts and any potential value that may be recovered. However, the Company Directors have not been able to provide any further information concerning these items and the amount recoverable is uncertain. 4. As at 10 August 2015 pre-payments totalled c. $1.3 million, which comprised of pre-payments totalling c. $8 million and reversing journal entries of c. $6.7 million for goods received. Pre-payments appear to have been made to Parkson Trade Finance Co. Ltd, Yin Qin (HK) Agent Co. Ltd and GuangDong Xingfa Aluminium. Whilst the Liquidators have attempted to reconcile the pre-payment account, due to the nature in which the payments were processed through the bank accounts, at this stage the Liquidators have only identified c. $4.8 million of pre-payments having been paid. The Liquidators are liaising with each of the parties who received pre-payments, the bank, and management to identify which prepayments may be recovered. 5. The Company's books and records indicate LIG held deposits from Success Aluminium totalling c. $2.7 million. At this stage the Liquidators have not been able to reconcile this account to the bank accounts in both LIG and Success Aluminium. However this will require further investigation as part of the formal dividend adjudication process. 6. The employee entitlements recorded in the Company’s records relate to annual leave and long service leave only. Based on the information supplied by the Company, the Liquidators estimate the outstanding preappointment employee entitlements, including redundancy and pay in lieu of notice ("PILN") totals c. $58,000. The employee entitlements will be finalised once the employees confirm their personal details and conditions of employment as provided in the Company's records are accurate. Please refer to Section 9 of this report for further information. 20
Report as to Affairs
Report as to Affairs ("RATA") 7. Whilst Opal served a statutory demand on LIG demanding payment of $20,835,462.50, the total amount outstanding pursuant to the Company's books and records is $42,162,480. The reason for the amount being lower in the statutory demand was due to the fact that c. $20 million of invoices were not overdue when the statutory demand was originally issued.
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
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Section 7: Historical performance
01. Executive Summary 02. Introduction 03. Group history and reasons for failure 04. Receipts and payments 05. Actions undertaken to date 06. Report as to Affairs 07. Historical performance 08. Investigations 09. Employees and employee entitlements 10. Estimated outcome statement 11. Remuneration and meeting of creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Historical Performance
Operating performance prior to administration Overview
Detailed opposite is a summary of the Company's trading performance since it commenced operations in April 2014. A review of the books and records did not locate any management or statutory accounts for the Company. The Liquidators have requested further information from the Company's external accountants, regarding details of any information held by them. We make the following comments in relation to the performance of the Company: 2014 financial year from 1 April 2014 to 30 June 2014 (c. 3 months): − The Company generated revenue of c. $14.5 million during the three months of trading to 30 June 2014. − After taking into account the costs of goods sold, the Company generated a gross profit of c. $36,000 (gross margin of 0.25%). − The Company incurred operating costs of c. $46,000, primarily comprised of payroll and selling expenses. − The Company incurred a net loss before tax of c. $9,000. 2015 financial year to 30 June 2015 (12 months): − The Company generated revenue of c. $82 million during FY15. − After taking into accounts the costs of goods sold, the Company generated a gross profit of c. $1 million (gross margin of 1.33%). − The Company incurred operating costs of c. $1.2 million, primarily comprised of payroll and selling expenses. "Other expenses" primarily relates to consultancy fees paid to MT Global Holdings Ltd of c. $77,000, and professional fees of c. $27,000. − The Company generated "Other income" of c. $5.1 million which included . c. $4.8 million relating to the debt forgiveness of a long-term liability. We are seeking confirmation from the creditor with respect to this agreement. The balance of "Other income" primarily relates to interest.
− After making an adjustment for the debt forgiveness of the long term liability the Company only generated c. $205,000 of profit. Period from 1 July 2015 to 10 August 2015: − LIG incurred a net loss before tax of c. $200,000 during July and August 2015. − The loss was attributable to a negative gross margin of 6.21% whilst incurring overheads in connection with managing the Company. Further information in relation to the deterioration of the gross margin will be determined when management are examined.
Income Sales Cost of Sales Gross Profit Gross Margin Expenses Rent Payroll Expense Selling Expenses Warehouse expenses Other Expense
FY15
YTD as at 10 August 2015
14,505,160 (14,468,604) 36,556 0.25%
82,486,560 (81,389,805) 1,096,755 1.33%
2,648,054 (2,812,576) (164,522) (6.21%)
(1,599) (32,803) (7,310) -
(20,708) (725,155) (265,069) (3,392)
(1,559) (19,296) (12,911) (801)
(4,067)
(170,315)
(2,033)
Total Expenses
(45,778)
(1,184,638)
(36,600)
Operating Profit
(9,222)
(87,883)
(201,122)
Other Income Net Profit / (Loss)
(9,222)
5,073,908 4,986,025
298 (200,824)
Less Other Income Net Profit Loss
(9,222)
(4,781,181) 204,844
(200,824)
Source:
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
FY14
Company MYOB
23
Historical financial position
Financial position prior to administration Overview Detailed opposite is a summary of the Company's financial position as at 30 June 2014, 30 June 2015, and 10 August 2015. Notes 1. Pursuant to the Company's records cash on hand was c. $377,000 excluding the balances held in the Westpac accounts. The Administrators actually recovered c. $710,000 at the date of appointment. 2. Trade debtors decreased from c. $1.8 million as at 30 June 2014 to c. $460,000 as at the date of appointment. The balance at the date of appointment was owing by Opal (which is also the major creditor). 3. The balance owing by Success Aluminium as at 10 August 2015 was c. $47 million (an increase of c. $1.8 million from 30 June 2015). This amount relates to goods ordered and imported by LIG on behalf of Success Aluminium that remained unpaid at the date of appointment. 4. As already noted the Liquidators are in the process of reconciling the prepayments account and will be liaising further with management, the suppliers and the bank. 5. The balance sheet indicates that the Company owned Die Casts (intellectual property) with a book value of c. $650,000. An intellectual property search however did not identify any intellectual property owned by the Company and no information has been provided by the Company's Directors to verify the ownership of these Die Casts. 6. The Company's books and records indicate LIG received deposits from Success Aluminium totalling c. $2.7 million. At this stage the Liquidators have not been able to reconcile this account to the bank accounts in both LIG and Success Aluminium. However this will require further investigation as part of the formal dividend adjudication process. Nevertheless, after taking into account the amount owing to Success Aluminium, the net amount owing by Success Aluminium is c. $45 million.
7. The Company's records indicate the trade creditor balance decreased by c. $1.1 million during July and August 2015. These payments will be reviewed as part of the Liquidators' investigations into preference payments which is further discussed in Section 8. 8. The Company's records indicate the balance owing to Opal increased significantly from c. $11 million as at 30 June 2014 to c. $42 million as at the date of appointment. Non-payment of invoices within creditor terms led to Opal commencing winding up proceedings against LIG. 9. Provisions relate to employee provisions for annual leave and long service leave. The provisions decreased during the period leading up the appointment of Administrators after an employee ceased working at the Company. 10. The ATO liability of c. $270,000 as at the date of appointment relates to PAYG withholding tax and GST. We are in the process of reviewing whether a GST refund may be recoverable in connection with the bad debt write-off. Note Assets Cash on hand Trade debtors Receivable - Success Aluminium Prepayments Deposits and Other Receivable Inventory Furniture, Fixtures and Office Equipment Die casts Total Assets Liabilities Customer deposits - Success Aluminium Trade Creditors Opal Provisions ATO Total Liabilities Net Assets
1 2 3 4
5
6 7 8 9 10
As at 30-Jun-14
As at 30-Jun-15
As at 10-Aug-15
423,215 1,833,434 10,128,364 3,016 2,248 12,390,276
1,298,428 461,955 45,491,419 3,167,501 365,226 3,876 649,634 51,438,038
377,091 455,431 47,260,668 1,289,122 653,395 50,035,707
956,181 11,388,671 54,647 12,399,499
2,702,909 1,135,212 42,162,480 59,146 401,488 46,461,235
2,702,909 31,931 42,162,480 19,485 269,600 45,186,405
(9,222)
4,976,803
4,849,302
Source: Company Books and Records and bank statements
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
24
Section 8: Investigations
01. Executive Summary 02. Introduction 03. Group history and reasons for failure 04. Receipts and payments 05. Actions undertaken to date 06. Report as to Affairs 07. Historical performance 08. Investigations 09. Employees and employee entitlements 10. Estimated outcome statement 11. Remuneration and meeting of creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Investigations
Voidable Transactions Antecedent transactions recoverable by a Liquidator
− The Company
The transactions generally fall into two categories, i.e. insolvent trading and voidable transactions (comprising unfair preferences, uncommercial transactions and unfair loans).
− having failed to make payments in accordance with repayment arrangements;
As outlined in this report, there is c. $680,000 currently held in the bank accounts by the Administrators and Liquidators. After taking into account time costs and expenses incurred, and likely to be incurred, the Liquidators estimate there will be in excess of $500,000 available to be distributed to creditors.
− seeking additional finance or cash injection.
Depending on the outcome of the investigations, and the likelihood of any recoveries from antecedent transactions, the Liquidators may consider commencing actions with respect to any antecedent transactions. However, this will only be done after first consulting with the creditors. Whilst the Liquidators have undertaken a preliminary review of the Company’s books and records, the investigations will be finalised after further liaising with key management, in order to seek clarity regarding various transactions. If the Directors and management fail to co-operate the Liquidators will consider holding a public examination. Unfair preferences Unfair preference payments are recoverable under Section 588FA of the Act if the payments were made during the period of six months prior to the commencement of the date of the Administration (for third parties) or within 4 years of the commencement of the date of the Administration (for related party transactions). These periods are known as the relation back date, which in the case of third parties would be the period 11 February 2015 to 10 August 2015, and in the case of related parties would be 11 August 2011 to 10 August 2015 (however we note the Company was only registered in April 2014). To constitute an unfair preference payment, it must be proven that the entity was insolvent at the time of the payment and that the creditor had a suspicion or ought to have had a suspicion that the entity was insolvent. As a general guide, the following factors can be demonstrative of that suspicion: © 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
− making payment(s) to suppliers outside of normal trading terms; and/or − Creditors − resorting to legal action to recover the debts; − receiving post-dated cheques following the commencement of legal proceedings; − entering into cash on delivery payment arrangements with suppliers; − making demands for clearance of the debt unrelated to a promise to recommence supply; and/or − seeking additional security to secure the debt. We have undertaken the following investigations to determine whether unfair preferences occurred: − Analysis of ageing of suppliers at the appointment date and during the relation back period; − Review of the Company's books and records; − Identification of suppliers who may have received unfair preferences; and − Review of the bank statements produced during the relation back period identifying large, round sum or regular payments. The books and records indicate the Company made payments to c. 20 suppliers during the six months leading up to the date of appointment. Payments to other third parties included the landlord and the ATO. The review of potential payments will be finalised once the Liquidators have liaised further with management and reviewed information received from the ATO pursuant to the FOI request.
26
Investigations
Voidable Transactions 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: − 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.”
The records collected from the Company included: − Bank statements; − Management accounts; − Accounting system; − Shared IT drive system back up and copies of key personnel email accounts; − Files containing financial information including invoices; and − Employee records.
Section 588FC of the Act defines an insolvent transaction as one which is an uncommercial transaction and entered into when the company was insolvent (within 2 years of the relation back date) at the time of the transaction, or would become insolvent as a result of entering into the transaction.
The Liquidators are not able to rely on the accounts as being accurate or reliable.
A number of payments have been made to employees in addition to their normal salary. The Liquidators are reviewing the terms and conditions of employment and will be liaising with management to understand the basis for these payments.
Unfair Loans During our investigations we have not found any evidence to suggest that the Company entered into any unfair loans, either with a third party or related party.
The Liquidators’ review of uncommercial transactions included a review of Company assets that may have been sold/transferred for less than market value. To-date, the Liquidators' investigations have not identified any transactions that would be deemed uncommercial. 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 a company failed to keep proper financial records in accordance with Section 286 of the Act.
Directors’ Personal Liability for Employee Entitlements A Company Director may be ordered to pay compensation if agreements or transactions were entered into with the intention of avoiding payment of employee entitlements or reducing the amount of entitlements that can be recovered. No transactions or agreements of this nature or intention were discovered during our investigations.
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 in accordance with the Act. © 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
27
Investigations
Voidable Transactions 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 in accordance with Section 588FD. As previously advised a number of payments have been made to employees in addition to their salary. The Liquidators are reviewing the terms and conditions of employment and will be liaising with the Director to understand the basis for these payments. This review will include a review of the relationship of these parties to the Company's Directors. Insolvent trading The test for solvency, and consequently insolvency, is prescribed by Section 95A of the Act which states that: "(1) a company is solvent if, and only if, the company is able to pay all the company's debts, as and when they become due and payable; and (2) a company who is not solvent is insolvent."
There are four distinct statutory defences where a contravention of 588G has occurred. The defences are designed to protect a director where one of the following has occurred: − The director had reasonable grounds to expect solvency (588H(2)); − The director had reasonable grounds to expect solvency based on information supplied by a subordinate (588H(3)); − Illness or other good reason, prevented the director from being involved in management activity (588H(4)); and − The director took all reasonable steps to prevent the company/Group from incurring the debt (588H(5)). In order to justify an insolvent trading action against the Directors, a Liquidator must be satisfied that the directors will be able to pay any judgement obtained against them. Whilst we have not been provided with information relating to the Directors personal financial positions, should the Liquidators consider it appropriate to pursue the Directors for insolvent trading, further investigations will be undertaken.
This translates into the "cash flow test", however analysis of the balance sheet is also important in forming a view as to solvency. Our review identified the following key considerations of insolvency for the Company for the period from 11 February 2015: − Insufficient cash balances (after taking into account its three bank accounts) to satisfy its trading liabilities; − Current ratio and quick ration less than 1.0 which indicates it had insufficient current assets to meet its current liabilities; and − Deteriorating aged creditor profile. Once the investigations into insolvent trading are finalised, the Liquidators will consider the merits of pursuing the Company Directors for insolvent trading.
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
28
Section 9: Employees and employee entitlements
01. Executive Summary 02. Introduction 03. Group history and reasons for failure 04. Receipts and payments 05. Actions undertaken to date 06. Report as to Affairs 07. Historical performance 08. Investigations 09. Employees and employee entitlements 10. Estimated outcome statement 11. Remuneration and meeting of creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Employees and Employee Entitlements
Employees and estimate employee entitlements Overview Following the appointment of Liquidators on 19 August 2015 the Company's remaining three employees were terminated by the Liquidators on 20 August 2015 and 21 August 2015. The Liquidators also contacted the Company's former employees to confirm their employment had ceased prior to the Liquidators appointment. The Liquidators are in the process of calculating the outstanding employee entitlements for each employee. Detailed in the table below is a summary of the estimated amounts owing to employees, which has been calculated by the Liquidators. For the purpose of this report, it has been assumed that all employees are covered by the National Employment Standards ("NES"). Should it become evident that any employees' terms of employment are governed by another instrument, or the details provided by the Company upon which the calculations have been based are incorrect, the preliminary calculations will need to be updated accordingly. One of the factors that may impact on the draft calculations is the respective employee start dates and whether any period of service needs to incorporate a period of employment from another entity that was acquired by LIG. Based on the Liquidators' initial review, transfer and continuity of employment is something that does need to be further investigated in light of the high annual leave hour balances, particularly for a certain employee, which is well above what would be expected for his period of permanent employment with the Company since June 2014.
Wages Super Annual leave and loading Long Service Leave Pay-in-lieu notice Redundancy Total
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
As the Company employed less than 15 employees the entitlement to redundancy is subject to review and the Liquidators will liaise with employees further in this respect. Pursuant to the Act, employee entitlements rank as a priority debt of the Company. The Liquidators anticipate all outstanding employee entitlements will be paid in full from asset realisations. As such the liquidators will not apply to the Department of Education, Employment and Workplace Relations ("DEEWR") that administers the Fair Entitlements Guarantee Scheme ("FEG"), which is a government scheme that can make a contribution for outstanding employee entitlements in a liquidation scenario. Excluded Employees Pursuant to Section 556(2) of the Act, an employee of the Company, who at any time during the previous 12 months was a director, or is a relative of the Director, is an excluded employee. Any claim by the Director(s) or their relatives for outstanding entitlements is capped as follows: − $1,500 for outstanding leave entitlements; and − $2,000 for unpaid wages and superannuation Any amounts claimed which fall outside these amounts will rank as an unsecured claim in the liquidation.
$0 $0 $31,033 $0 $9,092 $18,185 $58,310
30
Section 10: Estimated Outcome Statement
01. Executive Summary 02. Introduction 03. Group history and reasons for failure 04. Receipts and payments 05. Actions undertaken to date 06. Report as to Affairs 07. Historical performance 08. Investigations 09. Employees and employee entitlements 10. Estimated outcome statement 11. Remuneration and meeting of creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Estimated Outcome Statement
Estimated return to creditors Overview Detailed opposite is a summary of the estimated outcome for creditors. As per the summary, the Liquidators anticipate: − Priority creditors (employees) will be paid in full. − Unsecured creditors: The return to unsecured creditors is uncertain and will be subject to recoveries from debtors, prepayments, and antecedent transactions. Notes 1. At the date of appointment the Administrators recovered $710,753 from the Company’s bank accounts.
Notes
High $
Low $
Realisations Cash at bank and on hand
1
Pre-appointment GST refund and interest
710,753
710,753
633
633
Die casts (Intellectual property)
2
unknown
-
Pre-payments
3
unknown
-
GTS refund
4
Total estimated realisations
unknown
-
unknown
711,386
External administration expenses Voluntary Administrator's remuneration
5
(20,004)
(20,004)
2. The Liquidators are still investigating the Die Casts and any potential value that can be recovered. However, neither Company Director has been able to provide any further information concerning these items.
Voluntary Administrator's expenses
6
(3,996)
(3,996)
Liquidator's retrospective remuneration
7
(87,604)
(87,604)
Liquidator's prospective remuneration
7
(75,000)
(75,000)
3. As at the date of appointment the balance of pre-payments was c. $1.3 million. Further review is being undertaken to ascertain what amounts are recoverable and if necessary these will be pursued by the Liquidators.
Liquidator's disbursements
(10,000)
(10,000)
(196,604)
(196,604)
(20,992)
(20,992)
(20,992)
(20,992)
4. The Liquidators will be liaising with the ATO to ascertain whether any GST is recoverable as a result of the bad debt write-off that will be necessary in relation to the debt owing by Success Aluminium.
Total estimated external administration expenses
Trading expenses Employee expenses Total estimated trading expenses
5. At the upcoming creditors meeting there will be a resolution to approve the Administrators’ remuneration for the period of their appointment, being 10 August 2015 to 19 August 2015, in the amount of $20,003.51 (excl. GST).
Distribution to priority creditors
6. The Administrators incurred legal expenses totalling c. $4,000.
Estimated assets available to unsecured creditors
7. At the upcoming meeting of creditors, the Liquidators will be seeking remuneration to be approved for the period 19 August 2015 to 23 October 2015 in the amount of $87,604.00 (excl. GST). The Liquidators will also be seeking approval of prospective remuneration for the period 24 October 2015 to the finalisation of their appointment in the amount of $75,000.00 (excl. GST) and disbursements. 8. The Administrators advised they incurred employee related costs during the administration period of c. $21,000. © 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
8
Estimated assets available for distribution
Estimated unsecured creditors Estimated surplus / (deficiency) to unsecured creditors
unknown
9
(58,309) unknown
10
493,790
(58,309) 435,481
(45,211,019)
(45,211,019)
unknown
(44,775,538)
Estimated return (cents in the dollar) Priority creditors Unsecurd creditors
100.0
100.0
unknown
1.0
32
Estimated Outcome Statement
Estimated return to creditors 9. Based on information provided to-date, the liquidators estimate outstanding employee entitlements are c. $58,000, however this is subject to change should further information become available. The Liquidators anticipate all employee entitlements will be paid in full from available assets. 10. Based on information available unsecured creditors at the date of appointment totals $45,211,019. The vast majority relates to monies owing to Opal ($42,162,480).
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
33
Section 11: Remuneration and Meeting of Creditors
01. Executive Summary 02. Introduction 03. Group history and reasons for failure 04. Receipts and payments 05. Actions undertaken to date 06. Report as to Affairs 07. Historical performance 08. Investigations 09. Employees and employee entitlements 10. Estimated outcome statement 11. Remuneration and meeting of creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Remuneration and meeting of creditors
Remuneration Administrators’ remuneration At the upcoming meeting of creditors there will be a resolution to approve the Administrators’ remuneration for the period of their appointment, being 10 August 2015 to 19 August 2015, in the amount of $20,003.51 (plus GST and disbursements). Further details concerning the work completed and time costs can be found in the Administrators’ Remuneration Report, attached as Appendix B. Jirsch Sutherland has continued to assist the Liquidators during the Liquidation and has incurred additional time costs of c.$2,000 (excluding GST and disbursements). Any time duly incurred by Jirsch Sutherland will be paid by the Liquidators as a disbursement. Liquidators’ Remuneration At the upcoming meeting of creditors, the Liquidators will be seeking retrospective remuneration to be approved for the period 19 August 2015 to 23 October 2015 in the amount of $87,604.00 (plus GST and disbursements). The Liquidators will also be seeking approval of prospective remuneration for the period 24 October 2015 to the finalisation of their appointment in the amount of $75,000.00 (plus GST and disbursements). Approval for the future remuneration sought is based on an estimate of the work necessary to complete the liquidation. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors. Further details concerning the work completed and time costs can be found in the Liquidators’ Remuneration Report, attached as Appendix B. Staffing of Liquidation The Liquidators’ staff team is structured such that tasks are completed by staff with the appropriate level of experience. Grant Thornton hourly charge out rates are included in Appendix B. © 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
35
Remuneration and meeting of creditors
Meeting of creditors Meeting of creditors
Lodging of proxies
The meeting of creditors of the Company will be held at the offices of Grant Thornton, Level 17, 383 Kent Street, Sydney NSW 2000 on Wednesday, 11 November 2015 at 11:00am.
Please ensure that the proxies are signed under seal, where appropriate (if you are a company) and if the proxy is executed by a power of attorney, that a copy of the power of attorney is enclosed with the proxy form. The proxy form is enclosed as Appendix D.
A formal Notice of Meeting is attached as Appendix A. The purpose of the meeting is to provide an update on the progress of the liquidation, and to fix the remuneration of the Administrators and the Liquidators. We advise that the RATA provided by Jie Weng, Company Director, will be available for the creditors to inspect at the creditor's meeting. The meeting will be open to creditors for questions and general discussion. Should you wish to have us address any issue in detail please advise us prior to the meeting date. This will allow sufficient time to prepare a detailed response to your question. Please note that attendance at the meeting is not compulsory. Telephone Attendance Should you not be able to attend the meeting of creditors in person, creditors are invited to attend via telephone. In order to do so, you will be required to submit a proof of debt and proxy in favour of the party attending via telephone as detailed below. Please contact Andre Lakomy of this office at
[email protected] no later than 10.00am on the business day prior to the meeting, being Tuesday, 10 November 2015 to obtain dial in details.
Proxies for the meeting can be lodged in the following ways: − Post: to arrive no later than 10.00am on the business day prior to the meeting, being Tuesday, 10 November 2015; − Facsimile: to 02 9299 4533 no later than 10.00am on the business day prior to the meeting, being Tuesday, 10 November 2015; − In Person: by person with a person attending the meeting; or − Email: by email to
[email protected] no later than 10.00am on the business day prior to the meeting, being Tuesday, 10 November 2015. If proxies are lodged by facsimile or email, the law requires that the original proxy must be lodged with the Liquidators within 72 hours of lodging the faxed or emailed copy. Contact details Should you have any queries in relation to any matter raised in this report please do not hesitate to contact Andre Lakomy on (02) 8297 2540. Yours faithfully,
Lodging of proofs of debt Should you not have already lodged a proof of debt, you are required to complete the proof of debt as attached as Appendix C.
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
Trevor Pogroske Joint and Several Liquidator
Gayle Dickerson Joint and Several Liquidator
36
Liquidators' Report to Creditors Appendices Appendices A. Notice of meeting of creditors B. Remuneration report C. Formal Proof of Debt D. Proxy forms
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
APPENDIX A: Notice of Meeting of Creditors
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
FORM 529 Subregulation 5.6.12(2) Corporations Act 2001 ACN: 169 229 047 NOTICE OF MEETING LIG AUSTRALIA PTY LTD (IN LIQUIDATION) Notice is hereby given that a meeting of creditors of the above Company will be held at the office of Grant Thornton Australia Ltd, Level 17, 383 Kent Street, Sydney NSW, on 11 November 2015 at 11:00am. AGENDA
The purpose of the meeting is to consider: 1
The Report as to Affairs submitted by the director.
2
The appointment of a Committee of Inspection.
3
The remuneration of the Administrators.
4
The remuneration of the Liquidators.
5
Receive an account of the Liquidators’ acts and dealings and of the conduct of the winding up to date.
6
Authorise the Liquidators to compromise a debt owed to the Company of any amount under Section 277(2A) of the Act.
7
Destruction of the Company’s books and records
Dated this 27th day of October 2015
________________________ TREVOR POGROSKE JOINT AND SEVERAL OFFICIAL LIQUIDATOR
APPENDIX B: Remuneration Report
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Part 1:
Declaration
Sule Arnautovic, Amanda Young and Glen Crisp of Jirsch Sutherland have undertaken a proper assessment of this remuneration claim for their appointment as Administrators of LIG Australia Pty Ltd (Administrators Appointed), in accordance with the law and applicable professional standards and are satisfied that the remuneration claimed is in respect of necessary work, properly performed, or to be properly performed, in the conduct of the Administration. We, Trevor Pogroske and Gayle Dickerson, of Grant Thornton Australia Limited have undertaken a proper assessment of this remuneration claim for our appointment as Liquidators of LIG Australia Pty Ltd (In Liquidation), in accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed is in respect of necessary work, properly performed, or to be properly performed, in the conduct of the Liquidation. Part 2:
Executive Summary
To date, no remuneration has been approved and paid in the administration and liquidation. This report details approval sought for the following fees: Amount (ex GST) Current remuneration approval sought: Voluntary Administration Resolution [1]: That the Administrators’ remuneration for the period 10 August 2015 to 19 August 2015 in the amount of $20,003.51 (plus GST and disbursements) be approved. Total – Voluntary Administration
$20,003.51
$20,003.51
Official Liquidation Resolution [2]: That the Liquidators’ remuneration for the period 19 $87,604.00 August 2015 to 23 October 2015 in the amount of $87,604.00 (plus GST and disbursements) be approved. Resolution [3]: That the Liquidators’ remuneration for the period 24 $75,000.00 October 2015 to Finalisation in the amount of $75,000.00 (plus GST and disbursements) be approved. Total – Official Liquidation* $162,604.00 * Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of the liquidation. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors.
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Part 3:
Description of work completed/to be completed
Voluntary Administration Resolution [1] from 10 August 2015 to 19 August 2015
“That the administrators remuneration for the period 10 August 2015 to 19 August 2015 in the amount of $20,003.51 (plus GST and disbursements) be approved.” Company
LIG Australia Pty Ltd (Administrators Appointed)
Practitioner(s)
Sule Arnautovic, Amanda Young & Glenn Crisp
Administration Type
Voluntary Administration
Period
10 August 2015 to 19 August 2015
Task Area Assets (2.2 hours) ($833.00)
Creditors (12.5 hours) ($4,904.50)
Firm
Jirsch Sutherland
General Description
Includes
Other Assets
• • •
Tasks associated with realising other assets Dealing with funds held in Pre Appointment Bank Accounts Identification / Securing / Realisation of Other Assets
Creditor Enquiries
• •
Receive and follow up creditor enquiries via telephone Review and prepare correspondence to creditors and their representatives via facsimile, email and post
Creditor reports
• •
Internal Meetings/Discussions regarding Reports to Creditors Prepare Initial Report to Creditors inc. Associated Annexures
Dealing with proofs of debt
• •
Receipting and filing Proofs of Debt when not related to a dividend Corresponding with OSR and ATO regarding Proofs of Debt when not related to a dividend
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Task Area
General Description
Includes
Employees enquiries
• • •
Receive and follow up employee enquiries via telephone Correspondence / Liaising with employees regarding employee entitlements Maintain employee enquiry register
Trade On Management
• • • • • •
Liaising with suppliers Liaising with management and staff Attendance on site Meetings / Discussions regarding trade on management Trade On Administration - Payroll Entering receipt and payments into accounting system
Budgeting and financial reporting
•
Reviewing company’s budgets and financial statements
Conducting investigation
• • • • • • • •
Collection of company books and records Reviewing company’s books and records Review and preparation of company nature and history Conducting and summarising statutory searches Liaising with directors regarding certain transactions Preparation of investigation file Internal meetings regarding investigations Correspondence with solicitors regarding investigation
Employees (0.6 hours) ($192.00)
Trade On (10.4 hours) ($4,863.50)
Investigation (10.7 hours) ($4,213.50)
Processing receipts and payments
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Task Area
General Description
Includes
Administration (14.3 hours) ($4,997.01)
Document maintenance/file review/checklist
• • • • •
File / Document maintenance General Telephone inquiries Incoming / Outgoing mail & correspondence Sundry administration tasks Updating checklists
Insurance
• • • •
Identification of potential issues requiring attention of insurance specialists Correspondence with PRM regarding initial and ongoing insurance requirements Reviewing insurance policies Correspondence with previous brokers
Bank account administration
• • • •
Preparing correspondence opening and closing accounts Requesting bank statements Bank account reconciliations Correspondence with bank regarding specific transfers
Pre Appointment Tax Compliance
•
Correspondence regarding lodgement / returns / other tax obligations
Planning/Review
•
Discussions regarding status of administration
Statutory Compliance
•
Statutory lodgements with ASIC / Other statutory authorities
Total: (50.7 hours) ($20,003.51)
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Official Liquidation Resolution [2] from 19 August 2015 to 23 October 2015
“That the Liquidators’ remuneration for the period 19 August 2015 to 23 October 2015 in the amount of $87,604.00 (plus GST and disbursements) be approved.” Company
LIG Australia Pty Ltd (In Liquidation)
Practitioner(s)
Trevor Pogroske and Gayle Dickerson
Administration Type
Official Liquidation
Period
19 August 2015 to 23 October 2015
Task Area
Assets (16.8 hours) ($8,613.50)
Firm
Grant Thornton Australia Limited
General Description
Includes
Plant and Equipment
• • •
Reviewing asset listings Liaising with Slattery Asset Advisory concerning the plant and equipment at the Company’s premises. Liaising with the landlord concerning the sale of the plant and equipment
Debtors
•
Reviewing and assessing debtors ledgers
Stock
• • •
Liaising with legal advisers and ETAL Logistics concerning various supply containers in transit Liaising with the Customs Department concerning any other stock that may be in transit. Tasks associated with realising other assets
• • •
Reviewing leasing documents Liaising with owners/lessors Tasks associated with disclaiming leases
Other Assets Leasing
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Task Area
General Description
Includes
Creditor Enquiries
• • • • • •
Receive and follow up creditor enquiries via telephone Review and prepare correspondence to creditors and their representatives via facsimile, email and post Search to the PPS Register Notify PMSI creditors identified from PPS Register Receive initial notification of creditor’s intention to claim Investigation, meeting and preparing report to creditors
Dealing with proofs of debt
•
Receipting and filing Proofs of Debt
Meeting of Creditors
• • •
Employees enquiries
• • •
Preparation meeting notices, proxies and advertisements Forward notice of meeting to all known creditors Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting. Receive and follow up employee enquiries via telephone Review and prepare correspondence to creditors and their representatives via facsimile, email and post Receive and prepare correspondence in response to employees objections to leave entitlements
Calculation of entitlements
• •
Calculating employee entitlements Reviewing employee files and company’s books and records
Conducting investigation
•
Liaising with Company Director, Jie Weng, and her legal advisor concerning circumstances leading up to appointment Securing and archiving of Company books and records Reviewing Company’s books and records Conducting and summarising statutory searches
Residual Property Security (‘PPS”) Creditors (53.1 hours) ($17,408.50)
Employees (10.5 hours) ($4,390.00)
Investigation (86.9 hours) ($30,219.00)
Creditor reports
• • •
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Task Area
Administration (45.2 hours) ($20,744.00)
General Description
Includes • • • • • • •
Preparation of comparative financial statements Preparation of deficiency statement Review of specific transactions and liaising with directors regarding certain transactions Preparation of investigation file Filing of documents File reviews Updating checklists
Insurance
• • • •
Identification of potential issues requiring attention of insurance specialists Correspondence with insurers regarding initial and ongoing insurance requirements Reviewing insurance policies Correspondence with previous insurance brokers
Bank account administration
• • • •
Preparing correspondence opening and closing accounts Requesting bank statements Bank account reconciliations Correspondence with bank regarding specific transfers
Planning/Review
•
Discussions regarding status of administration – (including handover) and Liquidation.
Books and records/ storage
• •
Dealing with records in storage Sending job files to storage
Document maintenance/file review/checklist
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Task Area
Statutory (12.0 hours) ($6,229.00)
Total: (224.5 hours) ($87,604.00)
General Description
Includes
Documents of appointment
• • • •
Preparation Review Execution Filing with ASIC
Report as to Affairs
• • • •
Liaising with Company Directors Reviewing RATA received from Jie Weng Directors Questionnaire Completion deadlines and extensions
ASIC Form 524 and other forms
• •
Preparing and lodging ASIC forms including 505, 524, 911 etc Correspondence with ASIC regarding statutory forms
ATO & other statutory reporting
•
Notification of appointment
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Resolution [3] from 24 October 2015 to Finalisation
“That the Official Liquidators’ remuneration for the period 24 October 2015 to Finalisation in the amount of $75,000.00 (plus GST and disbursements) be approved.” Company
LIG Australia Pty Ltd (In Liquidation)
Practitioner(s)
Trevor Pogroske and Gayle Dickerson
Administration Type
Official Liquidation
Period
24 October 2015 to Finalisation
Firm
Grant Thornton Australia Limited
Task Area
General Description
Includes
Assets (4.5 hours) ($2,185.00)
Debtors
• • •
Correspondence with debtors Reviewing and assessing debtors ledgers Liaising with debt collectors and solicitors
Creditor Enquiries
• • •
Receive and follow up creditor enquiries via telephone Review and prepare correspondence to creditors and their representatives via facsimile, email and post Preparing general reports to creditors
Dealing with proofs of debt
•
Receipting and filing Proofs of Debt
Meeting of Creditors
• • •
Preparation meeting notices, proxies and advertisements Forward notice of meeting to all known creditors Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting. Preparation and lodgement minutes of meetings with ASIC Responding to stakeholder queries and questions immediately following meeting
Creditor reports
Creditors (19.0 hours) ($5,550.00)
• •
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Task Area
Employees (20.0 hours) ($9,950.00)
Investigation (88.0 hours) ($39,530.00)
General Description
Includes
Employees enquiries
• • • •
Receive and follow up employee enquiries via telephone Review and prepare correspondence to creditors and their representatives via facsimile, email and post Preparation of letters to employees advising of their entitlements and options available Receive and prepare correspondence in response to employees objections to leave entitlements
Calculation of entitlements
• • • • •
Calculating employee entitlements Reviewing employee files and company’s books and records Reconciling superannuation accounts Reviewing terms of employment Liaising with solicitors regarding entitlements
Employee dividend
• • • • • • • •
Correspondence with employees regarding dividend Correspondence with ATO regarding SGC proof of debt Preparing dividend file Advertising dividend notice Preparing distribution Receipting Proofs of Debt Adjudicating Proofs of Debt Ensuring PAYG is remitted to ATO
Other employee issues
• •
Correspondence with Child Support Correspondence with Centrelink
Conducting investigation
• • • • • • •
Reviewing Company’s books and records Conducting and summarising statutory searches Review of specific transactions and liaising with directors regarding certain transactions Liaising with Directors and management regarding certain transactions Preparation of investigation file Lodgement of investigation with the ASIC Preparation and lodgement of supplementary report if required
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Task Area
Dividend (6.5 hours) ($2,525.00)
General Description
Includes
Examinations
• • • • •
Preparing brief to solicitor Liaising with solicitor(s) regarding examinations Attendance at examination Reviewing examination transcripts Liaising with solicitor(s) regarding outcome of examinations and further actions available
Litigation / Recoveries
• • • • •
Internal meetings to discuss status of litigation Preparing brief to solicitors Liaising with solicitors regarding recovery actions Attending to negotiations Attending to settlement matters
ASIC reporting
• • •
Preparing statutory investigation reports Preparing affidavits seeking non lodgements assistance Liaising with ASIC
Processing proofs of debt
• • • • • •
Preparation of correspondence to potential creditors inviting lodgement of Proofs of Debt Receipt of Proofs of Debt Maintain Proofs of Debt register Adjudicating Proofs of Debt Request further information from claimants regarding Proofs of Debt Preparation of correspondence to claimant advising outcome of adjudication
Dividend procedures
• • • • • • •
Preparation of correspondence to creditors advising of intention to declare dividend Advertisement of intention to declare dividend Obtain clearance from ATO to allow distribution of company’s assets Preparation of dividend calculation Preparation of correspondence to creditors announcing declaration of dividend Advertise announcement of dividend Preparation of distribution
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Task Area
Administration (26.0 hours) ($7,710.00)
General Description
Includes • • •
Preparation of dividend file Preparation of payment vouchers to pay dividend Preparation of correspondence to creditors enclosing payment of dividend
Document maintenance/file review/checklist
• • • •
6 monthly administration review Filing of documents File reviews Updating checklists
Bank account administration
• • • •
Preparing correspondence opening and closing accounts Requesting bank statements Bank account reconciliations Correspondence with bank regarding specific transfers
Finalisation
• • •
Notifying ATO of finalisation Completing checklists Finalising WIP
Planning/Review
•
Discussions regarding status of liquidation
Books and records/ storage
• •
Dealing with records in storage Sending job files to storage
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Task Area
General Description
Includes • •
Preparing and lodging ASIC forms including 505, 524, 911 etc Correspondence with ASIC regarding statutory forms
• • •
Notification of appointment Preparing BAS’ Completing PAYG Payment Summaries
ASIC Form 524 and other forms
Statutory (16.0 hours) ($7,550.00)
ATO & other statutory reporting Total (180.0 hours) ($75,000)
Part 4: Calculation of Remuneration
Please find attached a calculation of remuneration by staff and task area. Part 4A:
Schedule of remuneration methods and hourly rates
Please find attached a schedule of remuneration method, the method chosen for this remuneration claim and an explanation of the hourly rates.
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Part 5:
Statement of Remuneration Claim
Part 5 (a): Statement of Remuneration Claim by Voluntary Administrators Resolution 1 “That the Administrators’ remuneration for the period 10 August 2015 to 19 August 2015 in the amount of $20,003.51 (plus GST and disbursements) be approved.” Part 5 (b): Statement of Remuneration Claim by Official Liquidators Resolution 2 “That the Liquidators’ remuneration for the period 19 August 2015 to 23 October 2015 in the amount of $87,604.00 (plus GST and disbursements) be approved.” Resolution 3 “That the Liquidators’ remuneration for the period 24 October 2015 to Finalisation in the amount of $75,000.00 (plus GST and disbursements) be approved.”
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Part 6:
Remuneration Recoverable from External Sources
The Liquidators anticipate all outstanding employee entitlements will be paid in full from asset realisations. As such the liquidators will not apply to the Department of Education, Employment and Workplace Relations ("DEEWR") that administers the Fair Entitlements Guarantee Scheme ("FEG"), which is a government scheme that can make a contribution for outstanding employee entitlements in a liquidation scenario. Part 7:
Disbursements
Disbursements are divided into three types: • • •
Externally provided professional services - these are recovered at cost. An example of an externally provided professional service disbursement is legal fees. Externally provided non-professional costs such as travel, accommodation and search fees - these are recovered at cost. Internal disbursements such as photocopying, printing and postage. These disbursements, if charged, would generally be charged at cost; though some expenses such as telephone calls, photocopying and printing may be charged at a rate which recoups both variable and fixed costs. The recovery of these costs must be on a reasonable commercial basis.
We have undertaken a proper assessment of disbursements claimed for the Company, in accordance with the law and applicable professional standards. We are satisfied that the disbursements claimed are necessary and proper. The following disbursements have been paid by the Liquidation to my firm for the period from 19 August 2015 to 23 October 2015. Where amounts have been paid to my firm for externally provided services and costs, those payments are in reimbursement of costs previously paid by my firm, either due to a lack of funds in the Liquidators’ at the time the payment was due, or the direct invoicing of my firm by the supplier. All of the below transactions appear in the receipts and payments listing attached to this report as Appointee disbursements. Where payments to third parties are paid directly from the Liquidators’ bank account, they are only included in the listing of receipts and payments in the Report to Creditors. Disbursements paid 19 August 2015 to 23 October 2015
Internal disbursements Statutory Company Searches
Basis
At Cost
Total (Excl GST)
$112.00
LIG Australia Pty Ltd (In Liquidation) Remuneration Request Approval Report
Disbursements paid 19 August 2015 to 23 October 2015
Postage Couriers Total
Part 8:
Basis
At Cost At Cost
Total (Excl GST) $28.80 $77.44 $218.24
Report on Progress of Administration
The tasks undertaken by the Administrators during the period of their appointment were largely administrative in nature and are detailed in the Remuneration Report attached at Appendix B. The administration ended on 19 August 2015 when Gayle Dickerson and Trevor Pogroske were appointed as Official Liquidators. Part 9:
Summary of Receipts and Payments
A summary of the receipts and payments is provided in the Report to Creditors. Part 10:
Queries
Arrangements can be made to inspect the time and costs records which give greater detail of the work performed by contacting Andrew Bull of this office on (02) 8297 2486 or
[email protected] Part 11:
Information Sheet
The ASIC Creditors Information Sheet (INFO 85) that outlines further information regarding the remuneration approval and payment process can be obtained from the following web address: www.asic.gov.au/insolvencyinfosheets
LIG Australia Pty Ltd (In Liquidation) Voluntary Administration Time Summary - 10 August 2015 to 19 August 2015 Task Area Admin
Assets
Partner
$/Hr (excl. GST) 585
Total Hours 3.3
Total Cost excl. GST ($) $1,930.50
Hrs 1.1
$ $643.50
Sule Arnautovic
Partner
585
3.4
$1,989.00
0.5
$292.50
Amanda Young
Partner
535
8.6
$4,601.00
3.0
$1,605.00
Employee Glenn Crisp
Position
Hrs
1
Creditors $
Employees
$0.00
Hrs 1.1
$ $643.50
$0.00
2.4
$535.00
Hrs
Investigations $ $0.00
$ $643.50
$1,404.00
$0.00
0.5
$292.50
$0.00
1.6
$856.00
$0.00
3.0
$1,605.00
$0.00
4.8
$1,536.00
Otim Oluk
Senior Manager
505
10.5
$5,302.50
$0.00
$0.00
2.2
$1,111.00
$0.00
George Simos
Senior
320
10.4
$3,328.00
5.1
$1,632.00
$0.00
0.5
$160.00
$0.00
Nathan Jammal
Senior
320
6.2
$1,980.80
1.6
$508.80
$256.00
1.1
$352.00
Brandon Chatky
Cadet
105
0.8
Trade On
Hrs 1.1
8.3
$871.71
3.0
$315.21
0.4
$42.00
3.6
$378.00
50.7
$20,003.51
14.3
$4,997.01
2.2
$833.00
12.5
$4,904.50
$0.00
0.6
$192.00
$0.00
$0.00
1.3
$136.50
0.6
$192.00
10.7
$4,213.50
Hrs
$ $0.00
8.3
$4,191.50
2.1
$672.00
10.4
$4,863.50
$0.00 $0.00
LIG Australia Pty Ltd (In Liquidation) Time Entries Summary - 19 August 2015 to 23 October 2015 IPAA Tasks 000O Admin
000B Assets
0006 Creditors
000J Employees
000R Investigations
0002 Statutory
$/Hr (excl. GST) 650
Total Hours 31.2
Total Cost excl. GST ($) $20,280.00
Hrs 5.3
$ $3,445.00
Hrs 1.2
$ $780.00
Hrs 4.7
$ $3,055.00
Hrs 0.5
$ $325.00
Hrs 12.0
$ $7,800.00
Hrs 7.3
$ $4,745.00
Associate Director
560
47.4
$26,544.00
15.0
$8,400.00
10.5
$5,880.00
8.5
$4,760.00
4.5
$2,520.00
8.6
$4,816.00
0.3
$168.00
Louise Taylor
Senior Manager
535
2.3
$1,230.50
2.3
$1,230.50
David Trehy
Supervisor / Assistant Manager
430
12.9
$5,547.00
4.9
$2,107.00
Andrew Bull
Senior / Senior Consultant
390
30.5
$11,895.00
13.3
$5,187.00
Senior / Senior Consultant
285
2.5
$712.50
Employee Trevor Pogroske
Position Partner
Andre Lakomy
2.5
$712.50
Jacob Solly
Graduate
265
6.0
$1,590.00
Anna Hu
Graduate
240
4.0
$960.00
Archie Ramsay
Undergraduate
215
19.3
$4,149.50
Dale Slater
Undergraduate
215
68.1
$14,641.50
Leisl Wratten
EA / PA
180
Sau Yen Tsui
3.9
$838.50
0.3
$54.00
0.3
$54.00
224.5
$87,604.00
45.2
$20,744.00
4.4
$1,716.00
5.8
$2,262.00
17.6
$3,784.00
0.5
$107.50
16.5
$3,547.50
16.8
$8,613.50
53.1
$17,408.50
1.5
$585.00
4.0
$960.00
10.5
$4,390.00
7.5
$3,225.00
0.5
$215.00
4.0
$1,560.00
1.5
$585.00
6.0
$1,590.00 1.7
$365.50
46.5
$9,997.50
0.7
$150.50
86.9
$30,219.00
12.0
$6,229.00
LIG Australia Pty Ltd (In Liquidation) Prospective Time Summary - 24 October 2015 to Finalisation Task Area Admin
Assets
Creditors
$/Hr (excl. GST) 650
Total Hours 22.0
Total Cost excl. GST ($) $14,300.00
$0.00
Hrs 1.0
Associate Director
560
40.0
$22,425.00
1.0
$560.00
1.0
$560.00
David Trehy
Supervisor / Assistant Manager
430
10.0
$4,300.00
5.0
$2,150.00
Andrew Bull
Senior / Senior Consultant
390
62.5
$24,375.00
5.0
$1,950.00
2.5
$975.00
Archie Ramsay
Undergraduate
215
10.0
$2,150.00
Dale Slater
Undergraduate
215
30.5
$6,550.00
Leisl Wratten
EA / PA
180
5.0
$900.00
180.0
$75,000.00
Employee Trevor Pogroske Andre Lakomy
Position Partner
Hrs
$
$
Dividend
Hrs
$
3.0
$1,680.00
$650.00 $0.00
$975.00
10.0
$2,150.00
10.0
$2,150.00
$0.00
3.5
$745.00
5.0
$900.00
$0.00
26.0
$7,710.00
$2,185.00
2.0 2.5
$975.00
$0.00 2.5
$0.00
4.5
$
$0.00
$0.00
2.0
$5,550.00
6.5
Investigations
Statutory
$ $3,250.00
Hrs 15.0
$ $9,750.00
Hrs 1.0
$
$0.00
Hrs 5.0
$1,120.00
5.0
$2,800.00
23.0
$12,905.00
5.0
$2,800.00
$0.00
5.0
$2,150.00
10.0
$3,900.00
35.0
$13,650.00
5.0
$1,950.00
$0.00
$0.00 19.0
Employees
Hrs
$0.00
$0.00
$0.00
$430.00
$0.00
$0.00
$0.00
$2,525.00
20.0
$9,950.00
15.0
$0.00
$0.00
$3,225.00
$0.00
$0.00 88.0
$650.00
$39,530.00
$0.00 16.0
$7,550.00
Schedule of Remuneration Methods and Hourly Rates Remuneration Methods
There are four basic methods that can be used to calculate the remuneration charged by an Insolvency Practitioner. They are: Time based / Hourly rates
This is the most common method. The total fee charged is based on the hourly rate charged for each person who carried out the work multiplied by the number of hours spent by each person on each of the tasks performed. Fixed Fee
The total fee charged is normally quoted at the commencement of the external administration and is the total cost for the administration. Sometimes a Practitioner will finalise an administration for a fixed fee. Percentage
The total fee charged is based on a percentage of a particular variable, such as the gross proceeds of assets realisations. Contingency
The practitioner’s fee is structured to be contingent on a particular outcome being achieved. Method Chosen
Given the nature of this Liquidation, we propose that our remuneration be calculated on the time based/hourly rates method. In our opinion, this is the fairest method for the following reasons: •
We will only be paid for work done, subject to sufficient realisations of the Company assets.
•
It ensures creditors are only charged for work that is performed. Our time is recorded and charged in six minute increments and staff are allocated to duties according to their relevant experience and qualifications.
•
We are required to perform a number of tasks which do not relate to the realisation of assets, e.g. responding to creditor enquiries, reporting to the ASIC, distributing funds in accordance with the provisions of the Corporations Act 2001.
Explanation of Hourly Rates
The rates for our remuneration calculation are set out in the following table together with a general guide showing the qualifications and experience of staff engaged in the administration and the role they take in the administration. The hourly rates charged encompass the total cost of providing professional services and should not be compared to an hourly wage.
Title
Description of Title
Partner
Registered Liquidator / Trustee. Partner bringing specialist skills to Administrations and Insolvency matters. Controlling all matters relating to the assignment. Qualified accountant (CA/CPA) and may be a registered Liquidator/Trustee. Minimum 7/8+ years’ experience. Likely to be appointed as a director in due course. Highly advanced technical and commercial skills. Planning and control of all Administration and Insolvency tasks. Controlling substantial matters relating to the assignment and reporting to the appointee. Qualified accountant (CA/CPA). 7/8+ years’ experience. Well developed technical and commercial skills. Planning and control of all Administration and Insolvency tasks. Controlling substantial matters relating to the assignment and reporting to the appointee. Typically CA/CPA Qualified. 5-8 years’ experience. Well developed technical and commercial skills. Planning and control of Administration and Insolvency tasks with the assistance of the appointee. Typically CA/CPA Qualified. 4+ years’ experience. Co-ordinates planning and control of small to medium Administrations and Insolvency tasks. Conducts certain aspects of larger Administrations. Typically CA/CPA Qualified. 3-5 years’ experience. Required to control the fieldwork on Administrations and Insolvency tasks. Typically undertaking CA/CPA Qualifications. Up to 3 years’ experience. Required to conduct the fieldwork on smaller Administrations and Insolvency tasks and assist with fieldwork on medium to large Administrations and Insolvency tasks. Typically less than 1 years’ experience. Required to assist with the day to day fieldwork on Administrations and Insolvency tasks under the supervision of intermediate and senior staff. Typically less than 1 years’ experience, usually working part time whilst studying a university undergraduate qualification. Required to assist with the day to day fieldwork on Administrations and Insolvency tasks under the supervision of intermediate and senior staff. Carries out all secretarial functions relating to an Administration. Typically a school leaver with limited experience. Provides general administrative support.
Associate Director
Senior Manager
Manager
Supervisor / Assistant Manager Senior Intermediate
Graduate
Undergraduate
Secretary Junior
Hourly Rate (ex GST) (NSW) $650
$560
$535
$480
$430
$390 $320
$265
$215
$180 $140
Disbursements
Disbursements are divided into three types: •
Externally provided professional services - these are recovered at cost. An example of an externally provided professional service disbursement is legal fees.
•
Externally provided non-professional costs such as travel, accommodation and search fees - these are recovered at cost.
•
Internal disbursements such as photocopying, printing and postage. These disbursements, if charged to the Administration, would generally be charged at cost; though some expenses such as telephone calls, photocopying and printing may be charged at a rate which recoups both variable and fixed costs. The recovery of these costs must be on a reasonable commercial basis.
We are not required to seek creditor approval for disbursements, but must account to creditors. Full details of any actual costs incurred will be provided with future reporting.
APPENDIX C: Formal Proof of Debt
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
ACN 169 229 047 FORM 535 Subregulation 5.6.49(2) Corporations Act (2001) FORMAL PROOF OF DEBT OR CLAIM (GENERAL FORM) To the Official Liquidators of LIG Australia Pty Ltd (In Liquidation) 1.
This is to state that the company was on 10 August 2015 (date of court order in winding up by the Court, or date of resolution to wind up, if a voluntary winding up), and still is, justly and truly indebted to:
_________________________________________________________ (full name and address of the creditor and, if applicable, the creditor's partners. If prepared by an employee or agent of the creditor, also insert a description of the occupation of the creditor) for $_______________and______cents. Date
2.
*3.
Amount $ c
Remarks (include details of voucher substantiating payment
To my knowledge or belief the creditor has not, nor has any person by the creditor's order, had or received any satisfaction or security for the sum or any part of it except for the following: (insert particulars of all securities held. If the securities are on the property of the company, assess the value of those securities. If any bills or other negotiable securities are held, show them in a schedule in the following form). Date
*3.
Consideration (state how the Debt arose)
Drawer
Acceptor
Amount $c
Due Date
I am employed by the creditor and authorised in writing by the creditor to make this statement. I know that the debt was incurred for the consideration stated and that the debt, to the best of my knowledge and belief, remains unpaid and unsatisfied. I am the creditor's agent authorised in writing to make this statement in writing. I know that the debt was incurred for the consideration stated and that the debt, to the best of my knowledge and belief, remains unpaid and unsatisfied.
........................................... Signature Occupation: Address
Dated
*Do not complete if this proof is made by the creditor personally.
APPENDIX D: Proxy form
© 2015 Grant Thornton | LIG Australia Pty Ltd (In Liquidation) | 27 October 2015
FORM 532 Corporations Act 2001 Regulation 5.6.29
LIG Australia Pty Ltd (In Liquidation) ACN: 169 229 047 (the Company) APPOINTMENT OF PROXY I/We (1) _____________________________________________________________________________ of _________________________________________________________________________________________________ a creditor/member of LIG Australia Pty Ltd (In Liquidation) appoint (2)_____________________________________________ or in his/her absence (3) _____________________________________________as my/our general/special proxy to vote at the meeting of creditors to be held on 11 November 2015 at 11:00am or at any adjournment of that meeting. Resolution
Type
For
Against
Abstain
To consider the appointment of a Committee of Inspection.
Ordinary
□
□
□
That the Administrators remuneration for the period 10 August 2015 to 19 August 2015 in the amount of $20,003.51 (plus GST and disbursements) be approved.
Ordinary
□
□
□
That the Liquidators’ remuneration for the period 19 August 2015 to 23 October 2015 in the amount of $87,604.00 (plus GST and disbursements) be approved.
Ordinary
□
□
□
That the Liquidators’ remuneration for the period 24 October 2015 to Finalisation in the amount of $75,000.00 (plus GST and disbursements) be approved.
Ordinary
□
□
□
That creditors authorise the Liquidator under Section 477(2A) of the Corporations Act 2001 to compromise a debt owed to the Company of any amount’
Ordinary
□
□
□
If no Committee of Inspection is appointed, the Liquidator be permitted to apply to the Australian Securities and Investments Commission for approval to destroy the books and records of the Company and of the liquidation six months after the dissolution of the Company or earlier at the discretion of the Australian Securities and Investments Commission.
Ordinary
□
□
□
DATED this ___________ day of ________________________ 2015 (4) Signature ___________________________________ CERTIFICATE OF WITNESS - only complete if the person given the proxy is blind or incapable of writing. I, ____________________________________________ of _______________________________________________ certify that the above instrument appointing a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him before he attached his signature or mark to the instrument. DATED this ___________ day of ________________________ 20 Signature of witness
___________________________________
Description
___________________________________
Place of residence ___________________________________
___________________________________ Notes: (1) (2) (3) (4)
If a firm strike out "I" and set out the full name of the firm. Insert the name of the person appointed. If a special proxy, “add the words ‘to vote for’ or the words ‘to vote against’ and specify the particular resolution”. If the creditor is a sole trader , sign in accordance with the following example: “A.B., proprietor”. If the creditor is a partnership, sign in accordance with the following example: “A.B., a partner of the said firm.” If the creditor is a company, then the form of proxy must be under its Common Seal or under the hand of some officer duly authorised in that capacity, and the fact that the officer is so authorised must be stated in accordance with the following example: “for the company, A.B.” (duly authorised under the Seal of the Company).
Proxy forms should have been completed and returned by no later than 4:00 PM on 10 November 2015 to be eligible to vote at the meeting. RETURN TO: of care of Address: Phone: Fax:
LIG Australia Pty Ltd (In Liquidation) Grant Thornton Australia Limited Locked Bag Q800, QVB Post Office, Sydney NSW 1230 +61 2 8297 2400 +61 2 9299 4533
