Wickham Plastics Proprietary Limited ACN 004 318 763 ("the Company") Administrators' Section 439A Report 3 October 2014
Matt Byrnes Joint and Several Administrator T +61 3 8320 2222 E
[email protected]
Andrew Hewitt Joint and Several Administrator T +61 3 8320 2222 E
[email protected] © 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Contents Section
Page
Appendices
Page
1. Introduction
4
A. ARITA creditor information sheet
49
2. Executive summary
8
B. DIRRI
51
3. Background information
11
C. Administrators' Remuneration Report
55
4. Trading during the Administration
17
D. Notice of second meeting of creditors
74
5. Actions undertaken to date
19
E. Proof of Debt form
77
6. Offences, voidable transactions and insolvent trading
24
F. Proxy form
79
7. Estimated return from a winding up
36
8. Employees
38
9. Proposal for a Deed of Company Arrangement
40
10. Administrators' recommendation
42
11. Remuneration
44
12. Meeting
46
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
2
Glossary Administrators
Matt Byrnes and Andrew Hewitt, Voluntary Administrators of the Company appointed under Part 5.3A of the Corporations Act 2001
ASIC
Australian Securities and Investments Commission
ATO
Australian Taxation Office
Deed
Deed of Company Arrangement under Part 5.3A of the Act
DIRRI
Declaration of Independence, Relevant Relationships and Indemnities
Directors
ROT
Retention of Title
Section 439A Report
• A report on the company's business, property, affairs and financial circumstances required to be given to creditors pursuant to Subsection 439A(4) of the Act; and • A statement pursuant to paragraph 439A(4)(b) of the Act, setting out the Administrators' opinion and reasons as to each of the options available under Section 439C in respect of the company's future.
Secured Creditors • Australia and new Zealand Banking Group Limited • GE Commercial Corporation (Australia) Pty Ltd
Anthony John, Roy Gallop and Mark Pratt
Eligible Employee Meaning given by Section 9 of the Act Creditor
Statutory priorities The priority for the payment of creditor claims set down in Subsection 560 and 561 of the Act
ERV
Estimated realisable value
The Act
Corporations Act 2001
FEG
Fair Entitlements Guarantee Scheme
WIP
Work in Progress
GST
Goods and Services Tax
k
Thousands
m
Millions
Non-circulating
Fixed charge security interest
PAYG
Pay As You Go
PPSR
Personal Property Securities Register
Prospective Financial Information
Financial information based on assumptions about events that may occur in the future and possible action by an entity. It is highly subjective in nature and its preparation requires the exercise of considerable judgement.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
3
Section 1
Introduction
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Introduction
Appointment and first meeting Appointment of Administrators
Andrew Hewitt and I, Matt Byrnes, were appointed Joint and Several Administrators of the Company under Part 5.3A of the Act on 3 July 2014 by the Directors. The purpose of the appointment of Administrators is to allow for independent insolvency practitioners to take control of and investigate the affairs of an insolvent company. During that time, creditors' claims are put on hold. At the end of that period we are required to provide creditors with information and recommendations to assist them in deciding upon the Company's future. First meeting
The first meeting of the Company's creditors was held on 15 July 2014 at the offices of Grant Thornton Australia Limited, The Rialto, Level 30, 525 Collins Street, Melbourne, Victoria. At this meeting, it was resolved not to form a Committee of Creditors.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
5
Introduction
Report to creditors The purpose of this report is to provide creditors with sufficient information for them to make an informed decision about the future of the company, including:
The Administrators have relied on information provided from numerous sources to prepare the report, including:
Background information about the company;
Discussions with the Directors of the Company;
The results of our preliminary investigations;
Discussions with the Secured Creditors;
The estimated returns to creditors; and
Information available from public sources, such as, Australian Securities and Investments Commission (ASIC) and the Personal Property Securities Register (PPSR); and
The options available to creditors and our opinion on each of these options. In the time available to us, we have undertaken the following investigations to prepare this report and formulate our opinion: Reviewed the Company's management accounts; Conducted searches of various registers; Interviewed the Directors and employees; and Held discussions with various creditors. Due to the time constraints imposed under the Voluntary Administration regime there was insufficient time to undertake the following: Reconstruct the Company's financial accounts as at 30 June 2014, and Perform a detailed analysis of all preference payments and uncommercial transactions. However, in our opinion the above matters have not prevented us from being able to provide sufficient, meaningful information in this report or from being able to form an opinion on what is in the creditors' best interests. At the meeting of creditors to be held on 13 October 2014, creditors will be asked to make a decision by passing a resolution in respect of the options available to them. We note that in this report we have recommended to creditors that the Company be placed into liquidation, but first that the meeting be adjourned to 18 November 2014, being an extension of twenty-five (25) business days. We have detailed why this option is, in our opinion, in creditors' best interests. © 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
A review of the Company's books and records recovered by the Administrators. Whilst we have no reason to doubt the accuracy of any information, we have not performed an audit and we reserve the right to alter our conclusions, should the underlying data prove to be inaccurate or change materially from the date of this report. In the event that the Company proceeds to liquidation, this report will form the basis of our further investigations. Provided that funding is available, the investigations will be more extensive than those undertaken to date, particularly due to the time constraints of the voluntary administration process. Further investigations may be supported by public examinations of the Directors, officers and others who may be able to provide information about the Company's examinable affairs as that expression is defined in the Act. It is the Administrators' view that this report provides sufficient information to creditors to allow them to make an informed decision as to the Company's future and allows the Administrators to make a reasoned and fair recommendation based upon their opinions and the options available to creditors.
6
Introduction
Compliance, Independence and Communications Compliance with best practice
Disclaimer
We confirm that this report complies with the statements of best practice issued by the Australian Restructuring Insolvency & Turnaround Association ("ARITA"), with regard to content of the Administrators' report and the Code of Professional Practice with regard to remuneration.
In reviewing this report, creditors should note the following:
Independence
As disclosed in our First Notice to Creditors dated 4 July 2014, the Administrators undertook a proper assessment of the risks in relation to their independence prior to accepting the appointment. Our assessment identified no real or potential risk to our independence. We confirm that there have not been any changes to the DIRRI as stated in the initial Notice to Creditors. A copy of the DIRRI is enclosed at Appendix B for your information Communications with various parties
The Administrators have liaised with various parties during the administration, including:
This report is based on information from the books, records and other information provided by the Directors. Whilst the Administrators have reviewed the information, there has been no independent verification of the information; In considering the options available to creditors and formulating their recommendations, the Administrators 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 Administrators' best assessments in the circumstances, creditors should note that the outcome for creditors may differ from the information provided in this report; 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 Administrators; The Administrators 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;
Directors and management of the Company to understand the business' underlying activity, financial position and reasons for failure;
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, we reserve the right to alter any conclusions reached on the basis of any changed or additional information which may be provided to us between the date of this report and the date of the second meeting;
Australia and New Zealand Banking Group Limited and GE Commercial Corporation (Australia) Pty Ltd, the Secured Creditors, to better understand the background of the Company and the financing arrangements; and
Neither the Administrators, 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
Various other parties, including key customers and AusIndustry.
Creditors must seek their own independent legal advice as to their rights and the options available to them at the second meeting of creditors.
All known creditors (including employees) via a creditor circular;
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
7
Section 2
Executive summary
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Executive summary
Executive summary (1 of 2) Background Information Refer to Section 3
Trading during the Administration
The Company was incorporated on 7 May 1954 in the state of Victoria.
The Company operated from 56-60 Woodlands Drive, Braeside, Victoria.
The Company manufactured plastics products and was suffering from cash flow difficulties, culminating in the inability to pay employee wages due on 2 July 2014 which led to the appointment of Voluntary Administrators.
Upon appointment, trading was suspended to allow an urgent assessment to take place to decide whether the business was viable to trade.
With the support of the Company’s major customers, trading recommenced on 10 July 2014 and ceased on 15 August 2014 once all viable orders had been completed.
The Administrators have sold the Company's plant and equipment and are assisting with the removal of same from the Company's leased premises.
The Administrators have liaised with all known creditors and relevant parties to assist with investigations.
For general information about offences under the Act, please refer to the enclosed ARITA creditor information sheet, at Appendix A of this report.
Refer to Section 4
Actions undertaken to date Refer to Section 5
Offences, voidable transactions and insolvent trading
Offences −
Refer to Section 6
Our preliminary investigations have not identified any offences committed by the Directors.
Voidable transactions −
Our preliminary investigations have not identified any unreasonable director related transactions that would be recoverable.
Insolvent trading −
Estimated return from a winding up Refer to Section 7
Employees Refer to Section 8
Our preliminary investigations to date indicate that the Company likely would have been considered insolvent from 2 July 2014.
The estimated return to priority creditors in a Liquidation scenario is 51 cents in the dollar.
Please note that this estimate is subject to change.
There are unlikely to be sufficient realisations from the Company's assets to allow a distribution to unsecured creditors.
Based on the information provided, there were thirty-six (36) people employed by the Company at the date of our appointment.
There were twenty-four (24) redundancies on appointment due to a rationalisation of production for trading in the administration.
The Administrators will liaise with the Department of Employment to assist with the FEG Scheme which will be available to the employees should the Company be placed into Liquidation. Please note that government funding of employee entitlements is not available if the Company does not enter into Liquidation.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
9
Executive summary
Executive summary (2 of 2) Proposal for a Deed of Company Arrangement ("DOCA")
A DOCA is a mechanism for dealing with creditors claims. A DOCA, if approved by creditors, binds all creditors of the Company arising on or before the date of the appointment of the Administrators unless otherwise specified.
At the date of this report, we have not received a DOCA proposal.
Section 439A(4)(b) of the Act requires the Administrators of the Company to prepare a statement setting out their opinion on the outcome of the Company.
In this report we have recommended to creditors:
Refer to Section 9
Administrators recommendation Refer to Section 10
- that the Company be placed into liquidation at the second meeting of creditors; but - that the meeting of creditors be adjourned to 18 November 2014 in order to facilitate the removal of the plant and equipment from the Company's leased premises by the purchaser.
Remuneration Refer to Section 11
Meeting of Creditors
The Administrators remuneration is to be approved by creditors at the forthcoming meeting of creditors.
A Remuneration Report is enclosed at Appendix C, providing details of work performed to date, estimated future remuneration up to the second meeting of creditors and estimated remuneration of the Liquidators, depending on the creditors' decision of the outcome of the Company at the second meeting.
The second meeting of creditors is to be held at the offices of Grant Thornton Australia Limited, "The Rialto", Level 30, 525 Collins Street, Melbourne, Victoria at 11:00am on Monday, 13 October 2014. Registration will open 15 minutes prior to the meeting. Attendance at this meeting is not compulsory.
We note that we will be seeking an adjournment of this meeting to 18 November 2014 in accordance with s439B(2) of the Act.
The notice in regards to this meeting is enclosed at Appendix D.
A Proof of Debt and Proxy Form are enclosed at Appendices E and F and are to be returned to our office by 4:00pm on Friday, 10 October 2014.
Refer to Section 12
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
10
Section 3
Background information
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Background information
Organisational structure Officeholders and shareholders
Officeholders and shareholders Directors
Date appointed
Date ceased
Anthony John
28 May 2004
N/A
Roy Gallop
28 May 2004
N/A
Mark Pratt
28 May 2004
N/A
Shareholders
Shareholder class
Number issued
Imatek Pty Ltd
Ordinary
160
PPS Register – APAAP registrations Chargee
Charge
Date
Australia and New Zealand Banking Group Limited
Commercial
30 January 2012
GE Commercial Corporation (Australia) Pty Ltd
Commercial
30 January 2012
History of the Company
The Company was incorporated on 7 May 1954 and operated from 56-60 Woodlands Drive, Braeside, Victoria. Its primary operations were plastic injection moulding and tool making. The Company served the automotive, medical, building, electrical, industrial and engineering industries. Whilst we are aware of the operation of an entity trading as "Wickham China", this appears to be a commercial relationship with an unrelated entity. We have not identified at this stage any common shareholders, directors or other direct relationship between the two entities.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
The Company officeholders and shareholders are detailed opposite, as identified from a search from the ASIC database. At this point, we have not identified any other person who may be deemed to be a shadow director of the Company. According to the ASIC database, there have not been any changes to the shareholdings or officeholders in the 12 months prior to the appointment date. Secured creditors
The charges listed opposite are registered on the Personal Property Securities Register (PPSR) as "All Present and After Acquired Property" (APAAP) registrations against the Company. There are a number of other registrations over serial numbered assets (motor vehicles), stock and other assets of the Company (refer to Section 5). Books and records
Pursuant to Section 286 of the Act, a company must keep written financial records that correctly record and explain its transactions, financial position and performance and enable true and fair financial statements to be prepared and audited. Financial records must be kept for seven (7) years after the transactions covered by the records are completed. Failure to maintain books and records may give rise to a presumption of insolvency pursuant to Section 588E of the Act. This presumption may be relied upon by a Liquidator in an application for compensation for insolvent trading and other actions for recoveries pursuant to Part 5.7B of the Act. Our preliminary views are that the books and records have been maintained to an adequate standard.
12
Background information
Historical financial statements (1 of 2) Financial statements
Summarised statement of financial position 30 June 2012 $
30 June 2013 $
30 June 2014 $
Current Assets 272
307
180
Accounts Receivable
Cash at Bank
1,054,324
1,180,505
657,317
Debtor Finance Facility
(748,976)
(805,702)
(500,056)
Inventory
1,140,723
1,307,524
1,156,784
Loan - Imatek Group Pty Ltd Prepayments Total Current Assets
Acquisition Costs Intangible Assets
5,583
5,583
5,583
34,100
29,448
1,478,650
1,722,317
1,349,256
2,086,177
1,867,330
1,653,057
140,931
140,931
140,931
I make the following comments regarding the Company's financial position: The Company had a bank overdraft which increased to the limit of $250,000 as at the date of appointment of Administrators;
903,481
903,481
903,481
Total Non-Current Assets
3,130,589
2,911,742
2,697,469
Total Assets
4,609,239
4,634,059
4,046,725
Bank Overdraft
(135,784)
(191,966)
(248,747)
Trade & Other Creditors
(563,099)
(458,900)
(363,838)
Hire Purchase Liability
(115,192)
(64,449)
(38,488)
Asset Finance Facility
Current Liabilities
(240,000)
(200,000)
(94,165)
Taxation Liabilities
(10,291)
(131,289)
(143,961)
Employee Entitlements
(70,240)
(118,117)
(71,781)
Dividend Payable
(300,000)
(223,728)
(223,728)
Other Current Liabilities
(18,906)
(68,851)
(9,683)
Total Current Liabilities
(1,453,512)
(1,457,300)
(1,194,391)
(68,327)
(41,411)
(41,695)
(236,506)
(98,027)
(36,506)
(97,003)
(246,254)
(246,254)
Non Current Liabilities Hire Purchase Asset finance facility Employee Entitlements Shareholder Loans
(1,956,210)
(2,186,295)
(2,306,295)
Total Non-Current Liabilities
(2,358,046)
(2,571,987)
(2,630,750)
Total Liabilities
(3,811,558)
(4,029,287)
(3,825,141)
797,681
604,772
221,584
Net Assets
Historical financial position
26,724
Non Current Assets Plant & Equipment
The Company's financial statements were last prepared to 30 June 2013. We have relied upon the Company's management accounts for the 2014 financial year as the financial statements for that year had not yet been prepared at the date of our appointment.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
The statements of financial performance summarised opposite have been derived from the Company's unaudited accounts prepared by its external accountant as at 30 June 2012 and 2013, and the Company's management accounts as at 30 June 2014 as maintained in the Company’s Management Information System ("Sybiz").
Inventory included a significant amount of obsolete stock and was therefore overstated; An independent valuer's report prepared for ANZ dated 24 March 2014 estimated that plant and equipment had a value in use of c.$1.08m and an auction realisable value of c.$466k, indicating that the assets were impaired; Intangible assets comprised primarily of goodwill and acquisition costs. Excluding intangible assets, the Company was in a net liability position from at least 30 June 2012; Taxation liabilities increased from c.$10k in FY12 to c.$144k in FY14, indicating a restriction in cash flow; Total balance sheet employee entitlements as at 30 June 2014 were c.$318k; and Shareholder loans consisted of funds advanced by shareholders of Imatek Pty Ltd (being the family trusts associated with the Directors of the Company). We understand these loans represent: − Funds contributed on acquisition of the business; and − Subsequent cash injections to support the business' trading.
13
Background information
Historical financial statements (2 of 2) Summarised statement of financial performance Financial Year Ended
Historical performance
30 June 2012 $
30 June 2013 $
30 June 2014 $
Income Sales
6,069,684
6,349,054
5,576,326
(3,857,147)
(4,356,655)
(4,061,715)
2,212,537
1,992,399
1,514,611
Gross Profit %
36%
31%
27%
Other Income
185,875
264,138
164,984
(19,764)
(26,070)
(11,419)
Cost of Goods Sold Gross Profit
Expenses Accountancy Fees Bad debts
-
(22,722)
-
(16,383)
(14,707)
(18,667)
The statements of financial performance summarised opposite have been derived from the Company's unaudited accounts prepared by its external accountant as at 30 June 2012 and 2013 and the Company's management accounts as at 30 June 2014 as maintained in the Company's Management Information System ("Sybiz"). I make the following comments regarding the Company's financial performance: The Company experienced a c.$773k (12%) decline in revenue in FY14 on FY13 levels. Management comment that this was largely due to a reduction in order volumes from automotive customers (which made up c. 60% of the Company's business);
(141,678)
(154,564)
(144,578)
Equipment Rental
(26,956)
(30,790)
(35,425)
Factory Expenses
(23,466)
(18,462)
(18,516)
FY14 gross margin of 27% also represents a reduction on prior periods. Our discussions with management indicate this is likely to largely be a result of not sufficiently reducing direct labour costs in line with reduced production volumes (and revenue);
Debtor Finance Facility Fees
(71,882)
(78,871)
(58,583)
FY14 non-direct wages were reduced substantially on prior year;
Freight
(27,372)
(32,490)
(25,346)
Fringe Benefits Tax
(45,214)
24,062
(1,345)
Insurance
(99,033)
(113,712)
(117,017)
Interest expense for FY14 has not been disclosed as the management accounts had not been prepared for this period;
(172,641)
(84,885)
(79,337)
(77,312)
(75,915)
(81,456)
Computer Expenses Electricity
Motor Vehicle Expenses Payroll Tax Rates & Land Taxes Rent on Land & Buildings
(21,329)
(8,705)
(31,658)
(312,395)
(320,783)
(327,675)
(71,094)
(55,606)
(39,111)
(713,132)
(938,672)
(661,332)
Telephone
(23,309)
(21,095)
(19,201)
Travel, Accommodation and Conferences
(22,042)
(30,510)
(16,062)
Other Expenses
(46,785)
(61,502)
(55,492)
Total Expenses
(1,931,787)
(2,065,999)
(1,742,220) (62,625)
Repairs & Maintenance Salaries & Wages
EBITDA
466,625
190,538
Interest Expense
(80,827)
(96,499)
-
(326,740)
(293,269)
(209,355)
59,058
(199,230)
(271,980)
Depreciation Net Profit/(Loss)
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
All other material costs remained largely in line with prior year; and Notwithstanding the above, the Company generated negative EBITDA in the FY14 period.
The Company operated at negative EBITDA in FY14.
14
Background information
Directors' report as to affairs (RATA) (1 of 2) Directors report as to affairs (RATA)
RATA
Description
Note
Book Value $
Director's Estimated Realisable Value $
1
300,837
300,837
-
-
Assets not specifically charged Sundry Debtors Cash on Hand Cash at Bank
2
-
-
Stock
3
1,199,233
1,199,233
Plant and Equipment
4
1,625,288
1,044,051
3,125,358
2,544,121
500,056
500,056
Total Assets not specifically charged Assets subject to specific charges Accounts receivable
5
Motor Vehicles
6
Amount owing to Charge Holders
33,769
33,769
(533,825)
(533,825)
-
-
3,125,358
2,544,121
Net Assets subject to specific charges Total Assets Amount owing in advance to Secured Creditors
7
Assets available to Priority Creditors Amount owing to Priority Creditors
2,001,873 8
Assets available to Floating Charge Holders Amount Owing to Floating Charge Holders
9
Assets available to Unsecured Creditors Amount owing to Unsecured Creditors
(542,248)
Assets available to Shareholders
On 10 July 2014 a written request was issued to the Directors to complete the RATA for the Company. The Directors requested an extension of time to prepare this information and this request was granted until 31 July 2014. The Directors provided the RATA to the Administrators on 1 August 2014 and a summary is presented opposite. We provide our comments on the RATA on the following page. Explanation for difficulties Directors' explanation
The Directors have stated the following reasons for the Company's financial difficulties and the need to appoint Voluntary Administrators:
(568,629)
Diminishing order volumes due to reduced automotive manufacturing;
1,433,244
Diminishing margins; and
(394,982)
Cash flow restrictions that eventually prevented the payment of wages.
1,433,244 10
Pursuant to Section 438B(2) of the Act, the Director of the Company is required to complete a statement about the Company's business property, affairs and financial circumstances, also known as the RATA. The RATA is a snapshot in time as at the date of our appointment of the assets and liabilities of the Company, disclosing book values and the estimated realisable value (ERV) for assets.
(1,339,390) 93,854
Amount owing to Shareholders
11
(320)
Surplus before Realisation and Administration costs
12
93,534
Administrators' opinion
Our investigations into the affairs of the Company, confirm that the Company's difficulties were brought about by reasons identified by the Director(s). In addition, we also note the following reasons: Investment in plant and equipment outside the Company's 'core' business which drained cash flow (finance costs exceed revenues generated); and
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Staff costs as a proportion of revenue continued to increase in the FY14 period, indicating that the business was overstaffed – particularly in relation to direct manufacturing labour.
15
Background information
Directors' report as to affairs (RATA) (2 of 2) Administrators' comments on the RATA submitted by the Directors Note
Item
Administrators' comment
1
Sundry Debtors
The value included by the Directors reflects the total value in the Company's trade and sundry debtor ledgers at the date of appointment, less the amount owing to GE under the debtor finance facility at that date (refer note 5, below). The Administrators comments regarding the collectability of the Company's debtors are included at page 22 of this report.
2
Cash at Bank
The Company operated a bank overdraft and therefore there was no positive cash at bank on appointment of the Administrators.
3
Stock
The stock on hand at the date of the appointment included c.$0.8m of finished goods and c.$0.4m of raw materials. Whilst the Administrators comments regarding the realisable value of this stock on hand are included at page 22 of this report, we note that the stock on hand included some obsolete stock and realisations from stock are likely to be below book value.
4
Plant and Equipment
Plant and equipment was listed by the Directors at its "value in use" as estimated by an independent third party valuer in a report prepared for the ANZ dated 24 March 2014. The Administrators comments on the realisable value of the Company's plant and equipment are included at page 21 of this report.
5
Accounts receivable
The value included by the Directors reflects the balance they believed to be outstanding on the GE debtor finance facility at the date of appointment.
6
Motor Vehicles
The value included by the Directors reflects the pay-out value for two financed motor vehicles held by the Company. The Administrators comments on actions taken in respect of these vehicles are included at page 21 of this report.
7
Amount owing in advance to Secured Creditors
The amount included by the Directors at this item reflects balance sheet employee entitlements at the date of appointment. It therefore does not include any provision for redundancy and payment in lieu of notice entitlements.
8
Amount owing to Priority Creditors
This amount includes 'the amount owing in advance to secured creditors' as well as an amount owing for tax instalment deductions and prescribed payments tax. The calculation therefore appears to 'double count' the employee entitlement liability.
9
Amount owing under Circulating Asset Security Interest
This amount includes the amounts owing under the ANZ overdraft and asset finance facility, however it does not include the amount owing under the corporate credit cards that are covered under the ANZ's security.
10
Amount owing to Unsecured Creditors
Unsecured creditors total consists of trade creditors, shareholder loans, unpaid dividends and the ATO.
11
Amount owing to Shareholders
This amount included by the Directors represents share capital only.
12
Surplus before Realisation & Administration Costs
The Directors have estimated that there will be a surplus subject to the costs of the Administration. However we consider based on the actions undertaken in the Administration to date (discussed variously throughout this report) that:
The Administrators note that any amounts owing to shareholders in their capacity as members is a subordinate claim and should have been included by the Directors in the 'amount owing to shareholders'.
- the realisable value of assets estimated by the Directors are not likely to be achievable; and - a number of liabilities appear to be understated (in particular employee entitlements).
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
16
Section 4
Trading during the Administration
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Trading during the Administration
Trading during the Administration Rationale for continuing to trade
Upon our appointment on 3 July 2014, the Administrators commenced an urgent assessment of the viability of continuing to trade the business in the short term whilst an urgent sale of business campaign was commenced.
Estimated trading receipts and payments Actual to 26-Sep-14 Estimated future (inc GST) (exc. GST)
$
Estimated total
With the support of the Company's key customers by way of a 'piece-price' increase of 100%, the Administrators recommenced trading of the business in a limited capacity on 10 July 2014 to meet firm orders from these customers over a four (4) to five (5) week period. This piece price increase was calculated based on known and confirmed orders from customers to ensure the Administrators did not incur losses in trading the business during the administration.
Income Sales Expenses Raw material purchases Wages and salaries (including allowances and superannuation) Rent and outgoings Utilities and telephone Other trading expenses Administrators' fees related to trading of the business Administrators' disbursements related to trading of the business Post-appointment employee entitlements Superannuation payable PAYG payable GST payable Total trading expenses Net receipts and payments from trading
On recommencement, twenty-four (24) positions were made immediately redundant as there was excess labour capacity with respect to production. Twelve (12) employees remained with the business.
The table above summarises the Administrator's receipts and payments from trading in the period to 26 September 2014 and estimated to completion of all trading matters, with an estimated surplus generated of c.$316k.
Trading of the business during the administration ceased on 15 August 2014 once all viable orders had been completed.
We note that this surplus was largely generated through:
We note that trading had been suspended on the day prior to appointment when the Company was unable to pay its weekly wages. Initial discussions with key customers indicated an on-going demand for products supplied by the Company and it was the Administrators' view that continuing to trade during the Administration represented the best opportunity to realise the business as a going concern through a trade sale or DOCA.
Assistance provided to the Administrators
As noted above, the Administrators retained twelve (12) employees for the trading period. Three (3) further employees have been retained on a casual basis to assist with specific tooling and customer order matters. Management at the Company have also assisted with debtor recoveries, dealing with ROT claims and general trading. © 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
903,425
-
903,425
(131,838) (113,777) (51,894) (18,020) (11,093) (326,622) 576,803
(9,000) (15,000) (10,000) (102,443) (2,566) (8,873) (11,306) (38,900) (62,824) (260,912) (260,912)
(131,838) (113,777) (60,894) (33,020) (21,093) (102,443) (2,566) (8,873) (11,306) (38,900) (62,824) (587,534) 315,892
− Use of raw material on hand at the date of appointment – i.e. it represents conversion and sale of stock on hand on appointment; and − Additional orders received during the administration trading period, in excess of those confirmed at the outset in calculating the piece price increase. All orders placed for manufacture during the administration trading period were subject to the 100% piece price increase. The Administrators are currently working with suppliers and other parties to finalise all trading liabilities as soon as possible. 18
Section 5
Actions undertaken to date
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Actions undertaken to date
Sale of Business/Assets Overview
Overview (continued)
As noted at Section 4 of this report, the Administrators were able to achieve some short-term trading of the business during the Administration. It is our view that this period provided the best opportunity to achieve a sale of the business as a going concern.
The feedback received from interested parties from this process was that:
However given the short time period of this trading period (4 to 5 weeks), the Administrators did not have sufficient time to conduct a full advertised sale campaign for the business. Accordingly, a targeted campaign was undertaken with a number of parties known to be actively interested in this market. A summary of this targeted campaign is as follows:
− they believed the business to be heavily reliant on sales into the automotive industry; − the business had invested too heavily in 'non-core' manufacturing assets (primarily a 'switchable glass' manufacturing line); and − they were unable to gain sufficient comfort over the on-going support from key customers if they were to make a successful offer for the business.
− Interest registered by fifteen (15) parties, with a Non-Disclosure Deed ("NDD") issued to each for execution; − An executed NDD was returned by eight (8) of these parties and a short form Information Brief was issued to each; − Six (6) parties requested and were provided access to the Company's premises to view assets, hold discussions with the Administrators' and Company's staff and view Company records (including contracts, under the terms of the NDD); and − Other information was provided to parties on an 'ad hoc' basis as requested. Whilst the process attracted one initial bid for substantially all of the Company's assets, it was substantially below a recent (undertaken in March 2014) plant and equipment valuation prepared by an independent valuer for the Company's financier (ANZ) ("the Valuation"). This offer was subsequently withdrawn by the interested party. The sale of business process did not identify an acceptable offer for the business as a whole. © 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
20
Actions undertaken to date
Sale of Plant and Equipment Sale of plant and equipment
Tooling
Whilst the sale of business process discussed on the previous page did not attract an acceptable offer for the business as a whole, a number of parties continued to express interest in limited plant and equipment ("P&E") of the Company.
Following appointment of the Administrators, a large number of parties submitted claims in relation to certain tooling held by the Company.
One offer was received for substantially all P&E of the Company (excluding tooling and motor vehicles) for the sum of $510,000 (excluding GST). This offer exceeded the auction realisation value in the Valuation. The Asset Sale Agreement between the parties was signed on 9 September 2014 and completed on receipt of funds from the purchaser on 11 September 2014. All title and risk in the purchased assets transferred to the purchaser on completion. Under the terms of the Asset Sale Agreement the purchaser is granted the period up to and including 17 November 2014 in order to remove the purchased assets from the Company's leased premises. As discussed at Section 10 of this report, the Administrators will seek an adjournment of the second meeting of creditors to be held on 13 October 2014 in order to benefit from the protection offered by s.440B of the Act whilst these assets are removed from the Company's leased premises.
Whilst a number of these parties held PPSR registrations supporting their claims, the majority did not. In these instances, the Administrators sought further information to establish whether there was a "bailment" arrangement between the parties. In most instances, the additional information supplied suggested a bailment arrangement existed, which should have been registered on the PPSR. However whilst the Administrators might otherwise have been free to deal with the tools they had vested in the Company, they are each manufactured to a customer specification and design – and therefore a sale to the general market might be considered a breach of the customer's intellectual property rights. Accordingly, the Administrators' only options were to sell to the customer or to scrap the tool. To 26 September 2014, the Administrators have realised c.$19k from the sale of tooling to customers. A small volume of tooling remains on hand and is likely to be sold for scrap, with realisations not expected to be material.
Motor Vehicles
On review of the PPSR and other searches undertaken by the Administrators on appointment, we established that three (3) of the five (5) motor vehicles in the possession of the Company were free from encumbrances. We discuss the two (2) leased vehicles at page 23. Of the three (3) Company owned vehicles: − Two (2) were sold to employees where the offers materially exceeded the Valuation in respect of those vehicles, totalling c.$11k; and − One (1) is currently held by Grays Online pending sale, with proceeds after costs expected to total c.$13k. © 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
The Administrators have now sold substantially all of the Company's plant and equipment. 21
Actions undertaken to date
Inventory and Debtors Inventory
Debtors
As at 30 June 2014, the Company's management information system recorded that the Company held inventory totalling c. $1.157m (refer balance sheet at page 13).
The book value of the Company's debtors ledger at the date of appointment totalled c.$699k.
A listing of finished goods inventory provided to me by the Company's staff immediately following appointment indicated finished goods stock on hand of c.$768k and raw materials on hand totalling c.$389k. Products manufactured by the Company were generally made to customer specification and therefore the Administrators were able to circulate to each customer a list of finished goods on hand manufactured for each customer. Twenty-two (22) customers placed offers which were accepted by the Administrators for some or all of the stock on hand manufactured to their specifications, generating c.$486k. A large portion of the raw material inventory on hand has been used in manufacturing during the administration trading period (refer section 4).
The Company's debtors had been assigned to GE Commercial Corporation (Australia) Pty Ltd ("GE") under a debtor finance facility between GE and the Company dated 28 January 2010. GE issued a Notice of Assignment to each debtor on or around 7 July 2014 advising amounts outstanding to the Company should be paid directly to GE. We understand that a number of debtors off-set amounts owed to them by the Company prior to remitting the net amount to GE but that the balance outstanding on the GE facility was repaid in full on or around 1 August 2014. The Administrators have collected a further c.$36k since this date. The Administrators continue to investigate the collectability of the remaining outstanding balances.
A small amount of finished goods and raw material inventory remains on hand and the Administrators are exploring all options to realise this inventory. However further realisations are not expected to be material. We refer to our comments on PPSR registrations in stock held by the Company on the following page.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
22
Actions undertaken to date
PPSA PPSA claims - inventory
PPSA claims - inventory (continued)
On review of the PPSR on appointment, the Administrators noted 14 parties that had registered interests against the collateral class "inventory" as follows:
The Administrators wrote to all parties shortly following appointment to request further details of their claims.
Registered party
Registered as a PMSI?
Outstanding creditor balance
Stocktake
All parties that responded to that letter were invited to attend the Company's premises on or around 10 July 2014 to identify stock on hand that the claimant believed they may have a security interest in. We note that these inspections were undertaken on a "without prejudice" basis in order to ensure all records and details were protected in the event any party was able to prove it had a valid and enforceable interest in inventory.
Plastral Pty Ltd
$5,456.00
Unknown
Kantfield Pty Ltd
$7,216.82
$102.48
Nuplex Industries (Aust) Pty Ltd
$3,236.77
$222.75
Bayer Material Science Pty Ltd
$4,934.88
No stocktake
Orica Australia Pty Ltd
None identified
No stocktake
Primaplas Pty Ltd
$854.70
$284.90
Cryovac Australia Pty Ltd
None identified
No stocktake
Amtrade International Pty Ltd
$14,051.95
$7,746.00
Toyota Tsusho (Australasia) Pty Ltd
None identified
No stocktake
PPSA claims – other
Redox Pty Ltd
None identified
No stocktake
Polymers International Australia Pty Ltd
None identified
No stocktake
In addition to those claims noted opposite, a number of parties had registered claims against specific serial numbered goods (being two (2) motor vehicles) held by the Company or other "commercial" goods. We note:
Duromer Products Pty Ltd
$5,343.80
$1,652.50
Hilditch Pty Ltd
None identified
No stocktake
Hella Australia Pty Ltd
$1,794.10
No stocktake
Note 1: Outstanding creditor balance reflects the Company's aged creditor ledger on appointment of the Administrators. Creditor claims have not been reviewed and /or accepted by the Administrator at this time. Note 2: Stocktake value estimated by the Administrators based on inspections undertaken on or around 10 July 2014, discussed opposite. "No stocktake" indicates no stock inspection was undertaken by this supplier.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
We note that a number of other parties that do not have an interest registered in inventory on the PPSR made contact with the Administrators and have made claims in inventory held by the Company. These parties were offered the opportunity to inspect stock on hand on the same terms outlined above. The Administrators are currently reviewing all PPSA claims in stock and therefore the outcome from these claims is presently uncertain.
− On review of the realisable value of the serial numbered goods and the payout values to the financier, these assets were disclaimed to the financier once they were no longer required for the trading of the business; and − Whilst we are continuing to work with a number of parties in relation to "commercial" goods registrations, these generally relate to: − Purported interests in inventory (i.e. incorrect registrations); or − Interests in tooling held by the Company (refer page 21).
23
Section 6
Offences, voidable transactions and insolvent trading
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Offences, voidable transactions and insolvent trading
Offences, voidable transactions and insolvent trading Overview
Insolvent trading
For general information about offences, voidable transactions and insolvent trading under the Act, please refer to the enclosed information sheet at Appendix A, published by ARITA, titled 'Creditor Information Sheet'.
Information about possible insolvent trading is relevant to creditors when making a decision about the future of a company as directors of a company may generally only be sued for insolvent trading if the company is in liquidation. As with the voidable transaction analysis, creditors have to assess the advantages to them of a Deed, which cannot include proceeds from insolvent trading actions, compared to the likely return in a liquidation, which could include the proceeds of any successful insolvent trading action.
In accordance with the Act, as Administrators we are required to undertake investigations into the Company's business operations, financial situation, property, and other areas. The following findings will assist in the preparation of statutory reports which are required to be submitted to the ASIC as well as assist in any potential action against the Director for trading the Company whilst insolvent or pursuing voidable transactions if the Company is placed into liquidation. I note that pursuant to Regulation 5.3A.02 of the Corporations Regulations 2001, as Administrators, we are also required to investigate and report to creditors on any possible recovery actions which may be available to a Liquidator should the Company be placed into Liquidation. Voidable transactions
Section 588J of the Act provides that a Liquidator, and under certain circumstances a creditor, may recover from the director of an insolvent company compensation in respect of losses suffered by creditors from transactions entered into at a time when a company is insolvent. By definition, a company is insolvent when it cannot pay its debts as and when they fall due. Directors have a statutory duty to prevent insolvent trading pursuant to Section 588G of the Act. Should it be proven that the Company traded whilst insolvent, there is potentially a claim against the Director of the Company either by the Liquidator or in limited circumstances a creditor. The likelihood of there being any monies available to creditors as a result of such recoveries is dependent upon the financial position of the Director.
The law requires an administrator to specify whether there are any transactions that appear to the administrator to be voidable transactions in respect of which money, property or other benefits may be recoverable by a liquidator under Part 5.7B of the Corporations Act. The issue is relevant to creditors if they are being asked to choose I note that the Director may also have valid defences available to them in such between a Deed of Company Arrangement or a liquidation, because voidable circumstances as noted pursuant to Section 588H of the Act. Prior to transactions are only able to be challenged if a liquidation occurs. commencement of any legal action, any defences raised by the Director would first need to be assessed.
I have conducted preliminary investigations and the likelihood of a claim and potential recovery will continue to be assessed if we are appointed Liquidators of the Company. If creditors have information which would assist our investigations then we request that you please provide same in writing. Additionally, if there are creditors who wish to pursue and fund such an action please contact us to discuss this in further detail. © 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
25
Offences, voidable transactions and insolvent trading
Director Offences Summary of offences Section Reference
Offence Description
180
Failure by officer to exercise a reasonable degree of care and diligence in the exercise of his/her powers and the discharge of his/her duties.
181
Failure to act in good faith.
182
Making improper use of position as an officer or employee, to gain, directly or indirectly, an advantage.
183
Making improper use of information acquired by virtue of his/her position.
184
Reckless or intentional dishonesty in failing to exercise duties in good faith for proper purpose. Use of position or information dishonestly to gain advantage or cause detriment.
206A
Contravening an order against taking part in management of a corporation.
206A,B
Taking part in management of a corporation whilst being an insolvent under administration. Acting as a director or promoter or taking part in the management of a company within five (5) years after conviction or imprisonment for various offences.
209(3)
Dishonest failure to observe requirements on making loans to directors or related companies.
254T
Paying dividends except out of profits.
286 312 437C
Failure to keep proper accounting records. Obstruction of auditor.
437D(5) 438B(4) 438C(5) 590
Other Offences
● The Act stipulates that a Director has a number of duties and obligations to properly fulfil their position. ● A summary of offences that may be identified by the Administrators is provided in the table opposite. Our investigations to date have not revealed any offences committed by the Directors. Further investigations will take place should the Company be placed into Liquidation. Report Pursuant to Section 438D
● Section 438D of the Act requires an Administrator to lodge a report with ASIC if it appears to the Administrator that a past or present officer, or employee, or member of the Company may have been guilty of an offence in relation to the Company. ● It has not been necessary to submit a report pursuant to Section 438D of the Act.
Performing or exercising a function or power as officer whilst company is under administration. Unauthorised dealing with company's property during administration. Failure by directors to assist administrator, deliver records and provide information. Failure to deliver books and records to administrator. Failure to disclose property, concealed or removed property, concealed a debt due to the company, altered books of the company, fraudulently obtained credit on behalf of the company, material omission from RATA or false representation to creditors.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
26
Offences, voidable transactions and insolvent trading
Voidable transactions (1 of 4) Voidable transactions
Voidable transactions (cont'd)
In circumstances where a Liquidator is appointed he or she may be able to recover certain payments or dispositions of property that appear to the Liquidator to be voidable transactions pursuant to Part 5.7B of the Act.
An unsuccessful action can result in a negative return as the Liquidator may possibly be required to settle both the Company’s and the defendant’s legal costs. Accordingly, a Liquidator is required to fully investigate the circumstances surrounding the payment before commencing legal action. I wish to stress that by no means should you assume that each of the payments referred to are recoverable.
Voidable transactions include the following: Voidable Transactions Unfair preference payments Uncommercial transactions Unfair loans Unreasonable director related transactions The above transactions and preliminary findings are discussed in detail in the following pages. The assessment of voidable transactions is relevant to creditors in choosing between the three (3) options available at the second meeting of creditors, as they are only recoverable in a liquidation scenario. Should we be appointed as Liquidators of the Company, we will conduct a further detailed assessment of payments in order to assess whether there are any likely recoveries. Pursuing such payments may incur substantial costs by us as Liquidators and our legal advisors and there are a number of defences available to creditors in defending a preferential or uncommercial transaction action brought against them by a liquidator.
Please note that recoveries of this nature are only available if the Company is placed into liquidation. © 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
27
Offences, voidable transactions and insolvent trading
Voidable transactions (2 of 4) Voidable Transaction Description Ref
Indicator
Commentary
2.1
Unfair Preference: Section 588FA
What is an Unfair Preference To be recoverable, the following circumstances must have existed at the time the unfair preference transaction was entered into:
The Company is insolvent or becomes insolvent at the time of entering into the transaction;
The transaction was entered into in the six (6) months prior to the appointment of the Voluntary Administrators of the Company, the period being 4 January 2014 to 3 July 2014 ("the relation back period");
The transaction results in the creditor receiving from the Company more than the creditor would otherwise have received in respect to the debt in a winding up of the Company;
A reasonable person in the creditors circumstances would have been aware the Company was insolvent; and
The creditor must not have an offset for goods or services provided after the payment which remain unpaid, for an amount greater than the payment.
Ordinarily, this would be investigated further in a liquidation and any payments to creditors in the six (6) months prior to the appointment of the Voluntary Administrators will be identified and considered. Certain transactions which may be pursued by a liquidator (depending on the findings regarding insolvency) and potentially recoverable under these provisions will be based on indicators including, but not limited to:
Threats to suspend or stop future supply;
Being paid outside of their documented or agreed trading terms;
Receiving large rounded payments upon the suspension of the supply of goods;
Being advised that the Company is experiencing cash flow problems and being requested to hold off on presentation of cheques;
Warnings that future supply would be dependant on Cash on Delivery or payment prior to delivery i.e. altered trading terms; and/or
Requests that outstanding invoices be paid or at least part paid before further future supply would be entertained.
Procedures undertaken The following procedures were carried out in determining whether an unfair preference occurred:
Analysis of ageing of all creditors for the six (6) months leading up to my appointment;
Review of bank statements throughout the relation back date period identifying any large, round sum or regular payments;
Discussions with the Director and other relevant stakeholders of the Company;
Searching for evidence of payment plans, winding up applications or other changes in relationships with creditors; and
Analysis of the running account balance for those creditors identified as being at risk of receiving unfair preferences.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
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Offences, voidable transactions and insolvent trading
Voidable transactions (3 of 4) Voidable Transaction Description Ref
Indicator
Commentary
2.1
Unfair Preference: Section 588FA (continued)
Findings Further investigations will be undertaken should the Company be placed into liquidation, however, our preliminary investigations have not identified any unfair preferences that would be recoverable.
Uncommercial Transactions: Section 588FB
What is an Uncommercial Transaction These are transactions that a reasonable person would not have entered into having regard to the benefit (if any) and detriment to the Company of entering into the transaction and the benefit to other parties of entering into the transaction.
2.2
Procedures undertaken The following procedures were carried out in determining whether any Uncommercial Transactions occurred:
Identification of recurring payment amounts throughout the relation back date;
Identification of all payments made to 'cash' and payment transactions where not allocated to a supplier code;
Consideration of whether the substance of the identified transactions are on commercial terms; and
Specific investigations into the Company's transactions with related parties.
Findings Further investigations will be undertaken should the Company be placed into liquidation, however, our preliminary investigations have not identified any potential Uncommercial Transactions.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
29
Offences, voidable transactions and insolvent trading
Voidable transactions (4 of 4) Voidable Transaction Description Ref
Indicator
Commentary
2.3
Unfair Loans: Section 588FD
What is an Unfair Loan Section 588FD(1) of the Act states a loan to a company is unfair "if and only if the interest incurred due to the loan was extortionate when the loan was made or has since become extortionate". Regard is made to the risk of the lender, the value of security (if any), the terms of the loan, amount and any other relevant matters. Procedures undertaken The following procedures were carried out in determining whether any unfair loans occurred:
Review of the Company's historical loan repayment and drawings throughout the relation back-date period; and
Consideration of whether the interest rates on the identified financing arrangements are on commercial terms.
Findings Further investigations will be undertaken should the Company be placed into liquidation, however, our preliminary investigations have not identified any unfair loans that would be recoverable. 2.4
Unreasonable Director Related Transactions: Section 588FDA
What is a Director Related Transaction For a transaction to be voidable under these provisions a director or an associate of a director must have benefited from the transaction in circumstances where a reasonable person would not have entered into the transaction given the nature of the resulting benefits and detriments to the respective parties. 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 of the Act. Procedures undertaken The following procedures were carried out in determining whether any unreasonable director related transactions occurred:
Identification of related and associated parties to the Company;
Identification of all significant payments to the Director and others throughout the relation back period;
Identification of all significant payments to related entities throughout the relation back period; and
Tracing all identified payments to supporting documentation.
Findings Further investigations will be undertaken should the Company be placed into liquidation regarding payments to the Director however, our preliminary investigations have not identified any other unreasonable director related transactions that would be recoverable.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
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Offences, voidable transactions and insolvent trading
Insolvent Trading Review (1 of 5) Introduction
Procedures
Common law has determined that certain factors, if present, constitute reasonable grounds for suspecting insolvency.
The following procedures were undertaken as part of the insolvent trading review:
These factors make up the two (2) common tests of insolvency. The two common tests of insolvency are the “Balance Sheet Test” and the “Cash Flow Test”. The “Balance Sheet Test” analysis the financial performance of a company and generally a deficiency in assets is viewed as failure of this test. The second common test of insolvency, the “Cash Flow Test”, is more subjective and requires more pragmatic evidence such as significantly overdue creditors, previous applications to wind up the Company, statutory demands issued by creditors and the inability to obtain further funding. In the following pages we discuss our investigations in respect of indicators of insolvency. We reiterate that recoveries of this nature are only available if the Company is placed into liquidation.
Insolvent Trading Investigation Procedures 1. Balance Sheet Test of insolvency 1. Review of the maintenance of books and records in accordance with Section 286 of the Act. 2. Analysis of the financial position of the Company. 3. Analysis of the financial performance of the Company. 2. Cash Flow Test of insolvency 1. Analysis of the cash flow test of insolvency. 2. Relationship with financiers, shareholders or other funders. 3. Review of the Company's history of remittance of Commonwealth and State taxes. 4. Identification of any post-dated or dishonoured cheques. 5. Review of creditor ageing and other overdue payables. 6. Review of any demands for repayment or legal action pending.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
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Offences, voidable transactions and insolvent trading
Insolvent Trading Review (2 of 5) Indicators of insolvency: Balance Sheet Test Ref
Indicator
Commentary
1.1
Maintenance of proper books and records
•
Pursuant to Section 286 of the Act, a company must keep written financial records that correctly record and explain its transactions, financial position and performance, and enable true and fair financial statements to be prepared and audited.
•
My investigation in relation to the Company’s solvency has included a review of the following:
• • 1.2
Financial position
-
Sybiz management accounts; Bank statements; Financial statements; and Other miscellaneous documents.
Failure to maintain books and records may give rise to a presumption of insolvency pursuant to Section 588E of the Act. Our preliminary view is that the books and records maintained and kept by the Company are in accordance with the requirements of Section 286 of the Act.
Liquidity Ratios We present below the key liquidity ratios of the Company, based on the financial statements provided by management (refer statement of financial position at page 13):
Current ratio Quick ratio
30 June 2012
30 June 2013
30 June 2014
1.02 0.23
1.18 0.28
1.13 0.16
Current Ratio
-
The Company had a current ratio of 1.02 as at 30 June 2012, 1.18 as at 30 June 2013, and 1.13 as at 30 June 2014. We would not expect there to have been any material change in the current ratio between 30 June 2014 and our appointment on 3 July 2014. A ratio of more than 1 indicates a positive working capital position whereby a Company's current assets are sufficient to service its current obligations.
-
We note that a current ratio prepared on a "realisable value" basis is likely to be unfavourable to that presented above due (and likely less than 1) to the overstatement of asset values (inventory) discussed under Directors' RATA at section 3.
Quick Ratio
-
A consistently low (i.e. less than 1) quick ratio is considered to reflect a Company’s inability to cover its present obligations with sufficient liquid assets. The Company maintained a quick ratio of less than 1 since at least 30 June 2012.
-
However this largely reflects the Company's working capital was largely funded through available headroom on its debtor finance and overdraft facilities, rather than reliance on current assets (cash and debtors) on hand.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
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Offences, voidable transactions and insolvent trading
Insolvent Trading Review (3 of 5) Indicators of insolvency: Balance Sheet Test Ref
Indicator
Commentary
1.2
Financial position (cont'd)
Net Assets We present below a net asset extract from the Company's financial statements provided by management (refer statement of financial position at page 13):
Net Assets
1.3
Financial performance
30 June 2012 $
30 June 2013 $
30 June 2014 $
797,681
604,772
221,584
The Company maintained a positive net asset position throughout the period reviewed, being 30 June 2012 to 30 June 2014. A net asset position is an indicator of a solvent entity, as it demonstrates that the Company holds adequate assets to meet its liabilities.
We note that the net asset position includes goodwill and intangible assets, which are unlikely to have a realisable value.
We note however that the net asset position of the Company suffered a material decline over the period reviewed.
Key metrics We present below a summary of some key financial performance metrics calculated based on the Company's financial statements provided by management (refer statement of financial performance at page 14): Financial Year Ended Revenue Net Profit/(Loss)
30 June 2012 $
30 June 2013 $
30 June 2014 $
6,069,684
6,349,054
5,576,326
59,058
(199,230)
(271,980)
36.5%
31.4%
27.2%
Key metrics Gross profit margin % EBITDA % Sales growth %
7.7%
3.0%
(1.1)%
-
4.6%
(12.2)%
The table above summarises that whilst revenues were variable between the periods reviewed, other key indicators of financial performance demonstrate decline over the period reviewed.
Whilst the Company incurred net losses in each FY13 and FY14 , it generated negative EBITDA (which is used to measure the underlying performance of a business) only in FY14.
It is noted that these results by themselves – and in particular losses – are not necessarily the sole measure for the Company to be deemed insolvent.
Conclusion on the Balance Sheet Test of insolvency On the basis of our review of the Company's books and records, financial position, liquidity ratios and financial performance, it appears the Company may have been insolvent from the beginning of FY15 based on a deterioration in both the net asset position and liquidity ratios of the Company.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
33
Offences, voidable transactions and insolvent trading
Insolvent Trading Review (4 of 5) Indicators of insolvency: Cash Flow Test Ref
Indicator
Commentary
2.1
Cash flow
$
We utilised both independent third party documents such as bank statements and the Company's records to undertake the Cash Flow review. The Company maintained a bank account with the ANZ which had a negative balance (overdraft) of ($258,015.78) as at the date of appointment. The chart below demonstrates the balance on this account in the period from 1 January 2013 to the date of appointment: 0 Account balance
(50,000) (100,000)
Overdraft limit
(150,000)
Trendline (Account balance)
(200,000) (250,000) (300,000) 1-Jan-13
2.2
2.3
1-Mar-13
1-May-13
1-Jul-13
1-Sep-13
1-Nov-13
1-Jan-14
1-Mar-14
1-May-14
1-Jul-14
The Company was reliant on its overdraft facility to fund ongoing working capital and trading expenses, with the Company reaching (or maintaining minimal headroom) its overdraft limit on several occasions from August 2013.
The chart illustrates a steady decline in available funds throughout the period, and in particular in the 2014 period. This decline was to some extent off-set by the cash injections in January 2014 ($80k) and May 2014 ($60k) provided by the Directors.
Relationship with financiers, shareholders or other funders
The Company's everyday banking account was held with ANZ who held two registrations on the PPSR which were over plant and equipment and circulating assets.
The Directors sought additional funding from the ANZ, however this request was rejected.
As noted above, the Directors had injected funds by way of loans in order to support the trading the business. We understand the Directors' and shareholders' capacity and/or desire to provide further financial support to the business was exhausted by 2 July 2014.
Statutory creditors
Correspondence was sent to the ATO on 9 July 2014 advising them of the Administration. The ATO have provided a proof of debt in the Administration in the amount of $147,413.79. We note that the Company was subject to a payment arrangement with the ATO during 2014.
Correspondence was sent to the State Revenue Office of Victoria ("SRO") on 9 July 2014. The SRO have advised the Administrators that they are owed a total of $4,229.38 by the Company.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
34
Offences, voidable transactions and insolvent trading
Insolvent Trading Review (5 of 5) Indicators of insolvency Ref
Indicator
Commentary
2.4
Post-dated cheques or dishonoured cheques
The Company operated a management information system (Sybiz) and the majority of payments were made by EFT.
Our investigations to date have not revealed any post-dated cheques or dishonoured cheques.
Financial Information
The records as found in the Sybiz file were current as at the date of our appointed. Management accounts were able to be prepared and financial information was available.
Therefore the Company would not be presumed to be insolvent pursuant to Section 588E(4)(a) of the Act.
The creditor ageing summary chart below indicates the Company increased its payables outside of ordinary terms (which we understand were generally 30 days) from 47% as at 30 June 2012, to 55% as at 30 June 2013 and to 59% as at 30 June 2014.
2.5
2.5
Aged creditors
1% 7%
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Demands for repayment or legal action
6%
47% 47%
> 90 days (%) 34%
61 - 90 days (%) 31 - 60 days (%)
53%
As at 30 June 2012
2.6
19%
0 - 30 days (%)
45%
41%
As at 30 June 2013
As at 30 June 2014
In particular, we note the increase in payables in excess of 90 days to 19% as at 30 June 2014.
Our initial investigations to date have not revealed any demands for repayment or legal action.
Conclusion on the review of cash flow test On the basis of our review of the Company's cash flow and other indicators of insolvency, the Company was insolvent from 2 July 2014.
In reviewing all the indicators of insolvency under both the balance sheet and cash flow test, it appears that the Company was insolvent from 2 July 2014. © 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
35
Section 7
Estimated return from a winding up
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Estimated return from a winding up
Estimated return from a winding up Estimated return from a winding up
The table opposite summarises the estimated return to creditors in a winding up of the Company. We note: We expect there to be a shortfall on the amount owing to the general security interest ("GSI") holder (ANZ) after allocation of specific realisation costs to non-circulating asset realisations. Allocation of these costs has been discussed and agreed with ANZ. We would expect a return to priority creditors of approximately 51c in the $, based on our current estimate of priority claims, being outstanding employee entitlements as at 3 July 2014 and outstanding superannuation at the same date. We refer to section 8 of this report regarding the ability of employees to make a claim under the Fair Entitlements Guarantee ("FEG") scheme for outstanding employee entitlements. Therefore given the quantum of the expected shortfall to both ANZ (c.$62k) and priority creditors (c.$605k), there are unlikely to be sufficient realisations from the Company's assets to allow for a distribution to unsecured creditors. Whilst our calculation of priority claims includes claims of the Directors (i.e. related parties), removal of these amounts as priority claims would not make a material difference to the estimated return. The timing of any priority creditor distribution is likely to be impacted by a number of factors, including: − Finalisation of trading matters (refer section 4); and − Further investigations required in liquidation (refer section 6) and potential further recoveries from these investigations. We have included in the table opposite our estimate of future fees (refer further detail at section 11) to complete the Administration ($90,825) and to complete the liquidation ($80,129) should we be appointed liquidators of the Company at the second meeting of creditors. In both instances we would expect our fees to be calculated on a time cost basis.
Estimated outcome statement – winding up $
Non-circulating asset realisations Plant and equipment 510,000 Motor vehicles 10,909 Machine tooling 18,809 Total non-circulating asset realisations 539,718 Specific costs allocated to non-circulating asset realisations (30,677) Net non-circulating asset realisations payable to ANZ 509,041 Amount owed to general security interest holder (ANZ) (approximate) Shortfall to ANZ Circulating asset realisations Inventory 534,671 Pre-appointment debtors (after payment of GE facility) 35,855 Trading surplus from inventory 576,803 Interest received 24 Total circulating asset realisations 1,147,353 Non-trading expenses to be allocated to circulating asset realisations Insurance (1,898) Valuers' fees (800) Legal fees (6,454) Administrators' fees (incurred to 26 September 2014) Administrators' disbursements (incurred to 26 September 2014) Administrators' fees to 18 November 2014 Liquidators' fees Other costs (164) Net circulating asset realisations available to priority creditors 1,138,038 Priority creditor claims Outstanding employee entitlements as at 3 July 2014 Superannuation Total priority creditor claims Estimated return on priority creditor claims (c in the $) Notes:
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
To 26-Sep-14 Estimated future (exc. GST) (exc. GST)
Estimated total
13,440 13,440 (115,254) (101,814)
510,000 24,349 18,809 553,158 (145,931) 407,227 (468,941) (61,714)
5,000 10,000 (260,912) (245,912)
539,671 45,855 315,892 24 901,441
(2,000) (20,000) (114,544) (229) (90,825) (80,129) (20,000) (573,638)
(3,898) (800) (26,454) (114,544) (229) (90,825) (80,129) (20,164) 564,400 (1,081,105) (29,568) (1,110,672) 0.51
a. Administrators' fees allocated to non-trading circulating assets ($114,544) are after $102,443 allocated to trading (refer page 18) and $29,460 to non-circulating assets (included in "Specific costs allocated to non-circulating asset realisations" above.
37
Section 8
Employees
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Employees
Employees Upon recommencement of trading on 10 July 2014, twenty-four (24) positions were made immediately redundant as there was excess capacity with respect to production. Twelve (12) employees remained with the business during the limited trading period. Eleven (11) of these were made redundant on cessation of trading, with one (1) remaining with the Company at the date of this report. Entitlements owing to employees as at the date of our appointment are a claim against the Company. Under the Fair Entitlements Guarantee (“FEG”), which provides a safety net arrangement for eligible employees, an employee may be entitled to receive a portion of their claim if the Company enters into liquidation. At present, the Company is not in liquidation. I note that the eligibility of each claim is determined by the Department of Employment who administer the FEG. For further information, please visit www.employment.gov.au or call the FEG hotline on 1300 135 040 between 9am and 5pm (Canberra time). In accordance with Section 556 of the Corporations Act 2001, any unpaid wages, superannuation, leave and other such entitlements arising out of employment with the Company will ordinarily rank as a priority claim against certain assets of the Company.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
39
Section 9
Proposal for a Deed of Company Arrangement
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Proposal for a Deed of Company Arrangement
Proposal for a deed of company arrangement Deed of Company Arrangement
The provisions of Part 5.3A of the Act allow the Company and its creditors to negotiate a proposal to deal with the Company’s affairs and in such circumstances execute a deed of company arrangement ("DOCA"). A DOCA is a flexible arrangement which is available to a Company in Voluntary Administration and is usually proposed by the Director. I advise that neither the Directors nor any other party have submitted a DOCA, and it is unlikely for one to be submitted. If this position changes, we will advise creditors accordingly and seek further time to assess the merits of any DOCA proposal.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
41
Section 10 Administrators' recommendation
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Administrators' recommendation
Administrator's recommendation Administrators' recommendation
3. The Company be Wound Up (Liquidation)
In accordance with Section 439A(4)(b) of the Act, the Administrators are required to make a recommendation to creditors as to which of the options available to them is in their best interests. The following options are available for creditors to vote on at the meeting convened pursuant to Section 439A of the Act:
Creditors may resolve to wind up the Company which would result in the Company being placed into Liquidation. If creditors do not nominate a different person to be Liquidator, Andrew Hewitt and I will be taken as having been nominated as Joint and Several Liquidators of the Company.
1. The Administration should end
A more detailed review of the Company’s financial affairs would be conducted and as a consequence a report on its affairs and the conduct of its officers would be prepared and the findings conveyed to ASIC.
It is possible that creditors may consider ending the Administration which would return the Company to the control of its Directors. Ordinarily, the Directors would resume control of the Company's assets and be able to deal with them as they deem appropriate. It would not be in the creditors' best interests for the Administration to end as the Company is not able to meet its commitments and therefore requires a mechanism to deal with creditors' claims.
Further investigations in relation to voidable transactions and insolvent trading would be made as well as a determination to proceed with such claims, if any. In the event sufficient funds are recovered, monies would be distributed in accordance with the provisions of Section 556 of the Act. This option is recommended as the Company is now insolvent and creditors' claims need to be dealt with under a formal appointment.
2. The Company executes a Deed Of Company Arrangement
The provisions of Part 5.3A of the Act allow the Company and its creditors to negotiate a proposal to deal with the Company’s affairs and in such circumstances execute a DOCA. A DOCA is a flexible arrangement which is available to a Company in Voluntary Administration and is usually proposed by the Director. I advise that neither the Directors or any other party have submitted a DOCA, and it is unlikely for one to be submitted. If this position changes, we will advise creditors accordingly and seek further time to assess the merits of the DOCA proposal. As no DOCA proposal has been received, this option is not available to creditors. © 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Recommendation: In accordance with Section 439A(4)(b), the Administrators recommend that creditors resolve to place the Company into liquidation, however the Administrators will be seeking an adjournment to the second meeting of creditors pursuant to Section 439B(2) in order to facilitate the removal of plant and equipment from the Company's leased premises. 43
Section 11 Remuneration
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Remuneration
Remuneration Voluntary Administrators' remuneration (exc. GST and disbursements) Amount ($)
Description Joint and Several Administrators remuneration for the period 3 July 2014 to 26 September 2014. Joint and Several Administrators' estimated future remuneration for the period 27 September to 18 November 2014, being the date of the second meeting (following the proposed adjournment).
246,446.00
90,825.00
Remuneration
Enclosed at Appendix C is the Administrators' Remuneration Report, which provides details of: Voluntary Administrators' retrospective remuneration to be approved; Voluntary Administrators' prospective remuneration to be approved; and Liquidators' future remuneration to be approved. Creditors should note that all work has, and will be, performed by the appropriate level of staff in order to optimise any potential realisations which may be available to unsecured creditors
Liquidators' future remuneration (exc of GST and disbursements) Description Joint and Several Liquidators' remuneration for the period 19 November 2014 to the completion of the Liquidation.
Amount ($) 80,128.52
Voluntary Administrators' remuneration
The remuneration has been split between actual fees incurred for the period 3 July 2014 to 26 September 2014 and the estimated future fees to be incurred for the period 27 September 2014 to 18 November 2014, being the date the of the second meeting (following the proposed adjournment). We note that $29,460.00 of the Administrators' remuneration for the period 3 July 2014 to 26 September 2014 has been applied to the realisations of non-circulating assets and will not impact the funds available to priority and unsecured creditors. This is reflected in the Estimate Outcome Statement at Section 7 of this report. Liquidators' future remuneration
It will be necessary for the creditors to approve the drawing of remuneration for the Liquidators, should creditors vote that the Company be placed into liquidation. At the forthcoming meeting of creditors on 13 October 2014, the creditors will be requested to approve our remuneration as provided in the tables opposite.
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
45
Section 12 Meeting
01. Introduction 02. Executive summary 03. Background information 04. Trading during the Administration 05. Actions undertaken to date 06. Offences, voidable transactions and insolvent trading 07. Estimated return from a winding up 08. Employees 09. Proposal for a Deed of Company Arrangement 10. Administrators' recommendation 11. Remuneration 12. Meeting
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Meeting
Second meeting of creditors Second meeting of creditors
Lodging of proxies
The second meetings of creditors is to be held at the offices of Grant Thornton Australia Limited, "The Rialto", Level 30, 525 Collins Street, Melbourne, Victoria at 11:00am Monday, 13 October 2014. Please arrive 15 minutes before hand to allow sufficient time for registration.
Proxies lodged for the previous meeting are not valid for this meeting and therefore, new proxies need to be lodged to enable voting at the second meeting. 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 F.
The notice in regards to the meeting is enclosed as Appendix D. 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.
Proxies for the meeting can be lodged in the following ways:
Please note that attendance at the meeting is not compulsory.
Post: to arrive no later than 4:00pm on the business day prior to the meeting, being Friday, 10 October 2014.
Adjournment
Facsimile: to (03) 8320 2200 no later than 4:00pm on the business day prior to the meeting, being Friday, 10 October 2014.
The Administrators will seek an adjournment of the second meeting of creditors of twenty-five (25) business days to 18 November 2014 pursuant to Section 439B(2) of the Act in order to facilitate removal of the plant and equipment from the Company's leased premises. Telephone Attendance
Should you not be able to attend the second 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 Thomas Austin of this office at
[email protected] no later than 4:00pm on the business day prior to the meeting, being Friday, 10 October 2014 to obtain dial in details.
In Person: by person with a person attending the meeting; or Email: by email to
[email protected] no later than 4:00pm on the business day prior to the meeting, being Friday, 10 October 2014. If proxies are lodged by facsimile or email, the law requires that the original proxy must be lodged with the Voluntary Administrators 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 then please do not hesitate to contact Thomas Austin on (03) 8320 2222. 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 E. © 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Matt Byrnes Joint and Several Administrator 47
Appendices
A.
ARITA creditor information sheet
B.
DIRRI
C.
Administrators' Remuneration Report
D.
Notice of second meeting of creditors
E.
Proof of Debt form
F.
Proxy form
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
Appendices
A. ARITA creditor information sheet
© 2014 Grant Thornton | Wickham Plastics Proprietary Limited (Administrators Appointed) | 3 October 2014
49
Insolvency information for directors, employees, creditors and shareholders ASIC has 11 insolvency information sheets to assist you if youre affected by a companys insolvency and have little or no knowledge of whats involved. These plain language information sheets give directors, employees, creditors and shareholders a basic understanding of the three most common company insolvency proceduresliquidation, voluntary administration and receivership. There is an information sheet on the independence of external administrators and one that explains the process for approving the fees of external administrators. A glossary of commonly used insolvency terms is also provided. The Insolvency Practitioners Association (IPA), the leading professional organisation in Australia for insolvency practitioners, endorses these publications and encourages its members to make their availability known to affected people.
List of information sheets x INFO 41 Insolvency: a glossary of terms x INFO 74 Voluntary administration: a guide for creditors x INFO 75 Voluntary administration: a guide for employees x INFO 45 Liquidation: a guide for creditors x INFO 46 Liquidation: a guide for employees x INFO 54 Receivership: a guide for creditors x INFO 55 Receivership: a guide for employees x INFO 43 Insolvency: a guide for shareholders x INFO 42 Insolvency: a guide for directors x INFO 84 Independence of external administrators: a guide for creditors x INFO 85 Approving fees: a guide for creditors
Getting copies of the information sheets To get copies of the information sheets, visit ASICs website at www.asic.gov.au/insolvencyinfosheets. The information sheets are also available from the IPA website at www.ipaa.com.au. The IPA website also contains the IPAs Code of Professional Practice for Insolvency Professionals, which applies to IPA members. Important note: The information sheets contain a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. These documents may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances. You will need a qualified professional adviser to take into account your particular circumstances and to tell you how the law applies to you. © Australian Securities & Investments Commission, December 2008 Page 1 of 1
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