Darrell Lea Chocolate Shops Pty Ltd ACN 000 498

Transcription

Darrell Lea Chocolate Shops Pty Limited AND Ricci Remond Chocolate Co Pty Limited
(Both Administrators Appointed) | 3 September 2012
Report pursuant to Section 439A of the Corporations Act 2001
Darrell Lea Chocolate
Shops Pty Ltd
A.C.N. 000 498 386
Ricci Remond Chocolate
Co Pty Ltd
A.C.N. 000 489 654
Administrators’ Report to
Creditors
Pursuant to Section 439A of the
Corporations Act 2001
3 September 2012
Administrators:
Mark Robinson
Jack Bournelis
Daniel Walley
G
Page |1
TABLE OF CONTENTS
ANNEXURES ..................................................................................................................................................... 3
GLOSSARY ........................................................................................................................................................ 4
1.
Disclaimer .................................................................................................................................................. 7
2.
Introduction ................................................................................................................................................ 8
2.1
Purpose of Report................................................................................................................................. 8
2.2
First Meeting of Creditors ..................................................................................................................... 8
2.3
Meeting of the COC .............................................................................................................................. 8
2.4
Second Meeting of Creditors ................................................................................................................ 8
2.5
Purpose of the Second Meeting ........................................................................................................... 9
2.6
Administrators’ Opinion ...................................................................................................................... 10
2.7
Preliminary Investigations ................................................................................................................... 10
2.8
Voidable Transactions ........................................................................................................................ 10
2.9
Independence ..................................................................................................................................... 10
2.10
ASIC Assistance ................................................................................................................................. 10
3.
Executive Summary .................................................................................................................................12
4.
History of Darrell Lea ...............................................................................................................................17
4.1
Background ......................................................................................................................................... 17
4.2
Group Structure .................................................................................................................................. 17
4.3
Statutory Information – DL .................................................................................................................. 18
4.4
Statutory Information – Ricci .............................................................................................................. 19
4.5
Financial difficulty and events leading up to our appointment ............................................................ 21
5.
Sale of Business and other assets...........................................................................................................23
5.1
Sale of Business ................................................................................................................................. 23
5.2
Sale and Recovery of other Assets .................................................................................................... 25
6.
Directors Report as to Affairs ...................................................................................................................27
7.
Financial Position .....................................................................................................................................33
7.1
Financial Performance ........................................................................................................................ 33
7.2
Historical Balance Sheet .................................................................................................................... 35
7.3
Overall summary................................................................................................................................. 37
8.
Offences, Voidable Transactions and Insolvent Trading .........................................................................38
8.1
General Investigations ........................................................................................................................ 38
8.2
Books and Records ............................................................................................................................ 38
8.3
Risks of Litigation Action(s) ................................................................................................................ 38
8.4
Proving Insolvency.............................................................................................................................. 39
8.5
Voidable Transactions ........................................................................................................................ 39
8.6
Insolvent Trading ................................................................................................................................ 41
9.
Estimated Return on Winding Up.............................................................................................................45
10. Receipts and Payments ...........................................................................................................................50
11. Remuneration...........................................................................................................................................52
11.1
Initial Estimate of Fees ....................................................................................................................... 52
11.2
Voluntary Administration ..................................................................................................................... 52
11.3
Approval sought to the Conclusion of the Administration ................................................................... 52
11.4
Liquidation .......................................................................................................................................... 53
11.5
Deed of Company Arrangement ......................................................................................................... 53
Page |2
ANNEXURES
A
Notice of the meeting
B
Proxy and Proof of Debt forms
C
Statement of Administrators' opinion
D
Declaration of Independence, Relevant Relationships and Indemnities
E
ASIC Information Sheet: ‘Insolvency information for directors, employees, creditors and shareholders’.
F
PPSR summary of registered interests
G
Leased assets schedule
H
Administrators’ Estimated Realisable Value by company
I
GEERS Fact Sheet – ‘How Your GEERS Claim Will Be Assessed’
J
Individual company accounts
K
IPA information sheet entitled “Creditor Information Sheet: Offences, Recoverable transactions and
Insolvent Trading”.
L
Summary of Administrators’ time spent to date
M
Summary of Administrators’ time expected to be spent in the future
N
Liquidators’/Deed Administrators’ estimated summary of time
O
Administrators' remuneration report
Page |3
GLOSSARY
Defined Term
Definition
Act
Corporations Act 2001 (Commonwealth)
A.C.N
Australian Company Number
Administrators
Mark Robinson, Jack Bournelis and Daniel Walley of PPB Advisory
A.E.S.T
Australian Eastern Standard Time
AFR
Australian Financial Review
APAAP
All Present and After Acquired Property (Fixed and Floating)
ASIC
Australian Securities and Investments Commission
ATO
Australian Taxation Office
AU$
Australian dollar
Bank
Westpac Banking Corporation Limited
Big W
Big W department store. Part of Woolworths Limited
COC
Committee of Creditors
COD
Cash on Delivery
Creditors
Creditors of either Darrell Lea Chocolate Shops Pty Limited or Ricci
Remond Chocolate Co Pty Limited (both Administrators Appointed) who
have a claim admissible to prove in the Voluntary Administration or
Liquidation of the company
Companies or
Darrell Lea
Darrell Lea Chocolate Shops Pty Limited and Ricci Remond Chocolate Co
Pty Limited (Both Administrators Appointed)
DEEWR
Department of Education, Employment and Workplace Relations
Directors
Michael Lea, Alan Batley, Peter McLoghlin and Charles Smith
DIRRI
Declaration of Independence, Relevant Relationships and Indemnities
DL
Darrell Lea Chocolate Shops Pty Limited (Administrators Appointed)
DLN
DLN Pty Limited, ultimate holding company of the Companies
DOCA
Deed of Company Arrangement
EBITDA
Earnings before Interest, tax, depreciation and amortisation
EFTPOS
Electronic Funds Transfer at Point of Sale
EOI
Expressions of Interest
Page |4
Defined Term
Definition
ERV
Estimated Realisable Value
Excl.
Excluding
First Meeting of
Creditors
The First Meeting of Creditors convened in accordance with Section 436E
of the Act
FYXX
Financial year ended 30 June 20XX
GEERS
General Employee Entitlements and Redundancy Scheme
Group
DLN Pty Limited and entities controlled and associated with it
GST
Goods and Services Tax
IPAA
Insolvency Practitioners Association of Australia
k
$’000
m
Million
Management
Senior employees of DL
NDA
Non-Disclosure Agreement
NES
National Employment Standards
NPBT
Net Profit Before Taxes
NSW
New South Wales
Observer
An attendee at the meeting who is not a Creditor of the Companies
PAYG
Pay as you go withholdings
PBT
Profit before tax
PDF
Portable Document Format
POD
Proof of Debt
PPE
Property Plant and Equipment
PPSR
Personal Property Security Register
PILN
Payment in Lieu of Notice
Purchaser or Quinn
Family
DL Assets Pty Limited being an entity associated with Anthony Quinn and
family
RATA
Report as to Affairs
Report
Report pursuant to Section 439A of the Act
Page |5
Defined Term
Definition
Ricci
Ricci Remond Chocolate Co Pty Limited (Administrators Appointed)
ROT
Retention of Title
Second Meeting of
Creditors
The Second Meeting of Creditors convened in accordance with Section
439A of the Act
UK
United Kingdom
USA
United States of America
Westpac
Westpac Banking Corporation
WIP
Work In Progress
Page |6
1. Disclaimer
In reviewing this Report, Creditors should note the following:
•
This Report is based on information sourced from the books, records and other information
provided by the Directors and employees of the Companies. Whilst the Administrators have
reviewed the information there has been no independent verification of the information;
•
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 of
Creditors;
•
Neither the Administrators, PPB Advisory, 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;
•
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 as asset realisations progress and claims are received from
Creditors. 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 of the Companies 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; and
•
Creditors must seek their own independent legal advice as to their rights and the options available
to them at the Second Meeting of Creditors.
Page |7
2. Introduction
On Tuesday 10 July 2012, Mark Robinson, Jack Bournelis and Daniel Walley of PPB Advisory were
appointed as Joint and Several Administrators of the Companies by the Companies’ Directors pursuant
to Section 436A of the Act.
We submit our Report which has been prepared in accordance with section 439A of the Act and is
based on information obtained from the Companies’ books and records, financial systems,
representations from the Directors and Management, and from our own enquiries and investigations.
2.1
Purpose of Report
This Report is designed to provide Creditors of the Companies with sufficient information to allow them
to make an informed decision about the future of the Companies at the Second Meeting of Creditors.
2.2
First Meeting of Creditors
The First Meeting of Creditors of the Companies was held on Friday 20 July 2012. Minutes of that
meeting have been prepared and lodged with ASIC and are available in the ‘Creditors’ Information’
section of our website – www.ppbadvisory.com.
We note that the Creditors did not resolve to replace the incumbent Administrators and elected to
form a COC for DL, comprising:
Name
Bruce O’Keefe
Terry Rowney
Meredith Pollock
Mitchell Mathas
Robert Casey
Jacqueline Wilcox
Brad Baker
Faye Wattsmith
Representing
Australian Manufacturers Workers’ Union
Labelcraft Pty Limited
Creative Toolbox Pty Limited
DLN (legal advisor)
The Manildra Group
K L Koh Australia Pty Limited
E. Karras Refrigerated Transport Pty Limited
Creditors did not resolve to form a COC for Ricci.
2.3
Meeting of the COC
The sole meeting of the COC was held on Tuesday 14 August 2012. Minutes of that meeting
have been prepared and lodged with ASIC.
The Administrators discussed with the COC the status of the Administration and details with
respect to the progress of the sale of business campaign. No resolutions were put to the COC.
2.4
Second Meeting of Creditors
The Administrators must hold the Second Meeting of Creditors, often referred to as the ‘decision
meeting’, for the Companies within five business days before or after the end of the convening
period.
Ordinarily, the convening period is 20 business days from the date of appointment of the
Administrators. On Friday 6 August 2012, the Administrators made an application to the Federal
Court of Australia and successfully sought an extension of the convening period to 5 September
2012. This extension was sought to allow for the sale of the Companies’ business and assets as a
Page |8
going concern and to allow the Administrators more time to carry out investigations into the
reasons for the Companies failure.
Accordingly, we advise that the Second Meeting of Creditors of the Companies will be held on:
Date:
Registration Time:
Meeting Time:
Location:
12 September 2012
10.00am A.E.S.T
11.00am A.E.S.T
Ionic Room, Sydney Masonic Lodge, 66 Goulburn Street, Sydney
NSW 2000.
Please note that Creditors / Observers may be excluded from attending the meeting should they
arrive after the stipulated commencement time. Creditors are encouraged to attend 60 minutes
prior to this time to enable orderly registration for the meeting.
Attached are documents in relation to the meeting:
•
•
The Notice of Meeting as Annexure A; and
The Proxy Form and Proof of Debt form as Annexure B
Completed Proof of Debt and Proxy Forms should be returned prior to close of business,
Tuesday 11 September 2012 by either:
Email:
dlea@linkmarketservices.com.au
Post:
c/o Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Telephone: (02) 8280 7660
Facsimile: (02) 9287 0303
Only Creditors of the Companies are entitled to attend and vote at the Second Meeting of
Creditors for the respective company that they are indebted to. To be entitled to vote at this
meeting, an informal Proof of Debt (Form 535) will need to be completed and supporting
documents attached and submitted to Link Market Services by either email or post prior to 5pm on
Tuesday 11 September 2012.
If you have already submitted a proof of debt you are not required to do so again.
If you are unable to attend in person or are a corporate creditor and wish to appoint a
representative, a Proxy Form (Form 532) must be completed and returned to Link Market Services
by either email or post prior to 5pm on Tuesday 11 September 2012.
Please note that the proxy form submitted for the previous meeting does not apply to this
meeting and a new proxy form is required to be completed.
2.5
Purpose of the Second Meeting
The primary purpose of the Second Meeting is to enable Creditors to decide the future of the
Companies by choosing between one of the following three options:
•
•
•
The Companies execute a DOCA; or
The Companies be wound up; or
The Administration comes to an end (and control of the Companies reverts to the Directors).
The meetings may also be adjourned for a period of up to 45 business days.
Page |9
2.6
Administrators’ Opinion
Section 439A of the Act also requires that the Administrators provide a statement setting out the
Administrators’ opinion as to which course of action is in the best interests of Creditors and to
provide a statement dealing with the reasons behind the Administrators’ opinion.
In the absence of a DOCA proposal, and given that the Companies are insolvent, it is the
Administrators’ opinion that it would be in the Creditors best interest to resolve that the
Companies be wound up at the Second Meeting of Creditors. This will enable a more thorough
investigation of the affairs of the Companies, realisation of assets for the benefit of Creditors, and
the pursuit of any potential claims (as identified below).
Please see Annexure C for further detail.
2.7
Preliminary Investigations
This Report is based upon our preliminary investigations to date. Any additional material issues
which are identified subsequent to this Report may be the subject of a further written report and/or
tabled at the forthcoming meeting of creditors.
Should the Creditors resolve to wind up the Companies, the Liquidators of the Companies are
obliged to investigate and report further.
2.8
Voidable Transactions
Corporations Regulation 5.3A.02 of the Act requires the Administrators to specify whether there
are any transactions that appear to be voidable transactions in respect of money, property or
other benefits which may be recoverable by a liquidator under Part 5.7B of the Act.
This is discussed further in Section 8 of this Report.
2.9
Independence
In accordance with Section 436DA of the Act and the IPAA Code of Professional Practice, a
DIRRI was enclosed with the first circular to Creditors on 12 July 2012. There is no change to the
information provided in the DIRRI. A copy of this is attached as Annexure D.
The declaration disclosed information regarding the independence, any prior personal or
professional relationships the Administrators or PPB Advisory had with the Companies or related
parties, and any indemnities received in relation to these appointments.
2.10 ASIC Assistance
To assist Creditors, employees, and shareholders to understand the Voluntary Administration
process better, ASIC has released a package of insolvency information sheets. These have the
endorsement of the IPA.
P a g e | 10
Enclosed at Annexure E for your attention is the ASIC publication ‘Insolvency Information for
directors, employees, creditors and shareholders’, which provides an index of all the information
sheets that are available. You can download these as PDF files from the ASIC or IPAA websites.
The respective websites are:
•
•
www.ipaa.com.au; and
www.asic.gov.au
P a g e | 11
3. Executive Summary
Item
Preliminary Findings and Recommendations
Analysis
Future of the
Companies
This Report is designed to provide the Administrators
opinion to Creditors and to provide Creditors of the
Companies with sufficient information to allow them to
make informed decisions about the future of the
Companies at the Second Meeting of Creditors.
Sections 2.1
and 2.4
There are three statutory options available for the future of
the Companies:
•
•
•
The Companies execute a DOCA; or
The Companies be wound up; or
The Administration comes to an end (and control of the
Companies reverts to the Directors).
Administrators’
Opinion
At the time of writing this report the Administrators have
not received a DOCA proposal and the Companies are
insolvent. As such, the Administrators recommend that the
Companies be wound up.
Section 2.5 and
Annexure C
Key Milestones
10 July 2012 – Appointment of Mark Robinson, Jack
Bournelis and Daniel Walley as Administrators of the
Companies.
12 July 2012 – Advertisement for sale of the business as a
going concern placed in the AFR.
12 July – 31 August 2012 – Expedited sale campaign.
20 July 2012 – First Meeting of Creditors - Administrators’
appointment confirmed.
2 August 2012 – Closure of 32 retail stores nationally.
14 August 2012 – Meeting of the COC.
31 August 2012 – Contract for sale of the majority of
Darrell Lea assets to the Quinn Family including the
transfer of 83 jobs.
3 September 2012 – Pre-completion restructuring
undertaken involving notice that the remaining 27 retail
stores will be closed and some manufacturing, warehouse
and head office employees not offered a position with the
Purchaser.
3 September 2012 – Administrators’ Second Report
issued to all Creditors.
7 September 2012 – Scheduled date for completion of the
sale of business to the Purcchaser.
9 September 2012 – target date for the closure of the
remaining 27 retail stores.
12 September 2012 – Second Meeting of Creditors to be
held in which the future of the Companies is to be decided.
Throughout
report
P a g e | 12
Sale of Business
The Administrators have conducted an expedited sale
campaign comprising:
Section 5.1
a) advertising an EOI campaign in the AFR on 12 July
2012;
b) indicative offers due by 25 July 2012;
c) accelerated period of due diligence by interested
parties from 25 July 2012 to 6 August 2012;
d) binding offers due 6 August 2012;
e) preferred bidders selected by 9 August 2012;
f) target for sale agreement as agreed between the
parties by 20 August 2012; and
g) contract exchanged with the Purchaser on 31 August
2012.
During the sale campaign there were more than 100
enquiries about a possible bid to purchase all or some of
the assets of the Companies. Parties executed 27 NDAs
and were provided further information. We received six
indicative offers in various forms for all or parts of the
assets of the Companies and one binding offer.
In the Administrators opinion, the Quinn Family offer
represented the best return for the majority of the
Companies creditors.
$’000
Recoveries to 29
August 2012
Pre-appointment debtor collection (Ricci)
Pre-appointment debtor collection (DL)
Post-appointment debtor collection (Ricci)
Post appointmner debtor collections (DL)
2,035
2,759
184
224
Total Recoveries to date
5,202
Sections 5 and
9
In order to achieve the above realisations of assets, the
Administrators have completed the following tasks:
• Identification of assets;
• Correspondence with customers to secure payment
of debtor balances;
• Continued operation of retail stores and
rationalisation to remove underperforming stores;
• Correspondence with debtors to secure ongoing
support during the Administration; and
• “Business as usual” trading since the date of
appointment.
P a g e | 13
Estimated Future
Recoveries
Pre-appointment debtors opening value
Administrators’ trading revenue (less retail
sales)
less receipts to date
Balance of debtors to collect
Stock at 26 August 2012 at cost
Total to collect
$’000
7,839
7,595
Sections 5 and
9
(5,202)
10,232
10,990
21,222
The estimate the book value of circulating assets to collect
totalls $21.2m. In our estimated position statement at
Section 9 we have applied assumptions around the
percentage collections of these assets under both a going
concern and a break-up scenario.
We estimate that future collections may be:
Ricci
Debtors
DL
Debtors
Inventory
Total
Going concern
$’000
Break-up
$’000
4,268
1,601
3,917
5,091
13,276
1,469
2,748
5,818
We are unable to diclose the estimate of future realisations
of other assets due to the commercial sensitivity
surrounding that information.
Secured Creditor
claims
The Bank has an APAAP (fixed and floating) charge over
the Companies as security for money lent to the
Companies and its related parties. The Directors’ RATA
identifies $19.7m as being owed, secured over the assets
of the Companies.
Section 6
As indicated in Section 9 of this Report, we are unable to
indicate what the likely return to the secured creditor will
be as the value of some assets is commercially sensitive.
P a g e | 14
Employee claims
We have calculated employee claims totalling $18.2m in
relation to outstanding wages, superannuation, various
leave entitlements, PILN and redundancy. These
calculations are based on the worst case scenario of all
employees being terminated. If the going concern sale of
the business is completed pursuant to the terms of the sale
agreement, the incoming purchaser will assume the liability
for entitlements attaching to transferring employees. This
would result in employee claims being reduced to $12.3m
Section 6
We expect to communicate with employees in the week
commencing 10 September 2012 to confirm individual
outstanding entitlements balances. Employee entitlements
will be paid from funds recovered by the
Administrators/Liquidators where there are sufficient funds
to do so. If there is a shortfall, and the Companies are
placed into liquidation, employees may be able to make a
claim to GEERS. This process is discussed further in
Section 6 of this Report.
Ordinary unsecured
creditor claims and
estimated dividend
Per the Companies’ books and records, unsecured
creditors total approximately $12.7m (DL $12.3m and Ricci
$0.4m).
Section 6
Given the insolvent position of the Companies and the
likely shortfall to the Secured Creditor, it is unlikely that
there will be a distribution to unsecured creditors.
Administrators’ fees
to date and expected
fees to the Second
Meeting
$’000
Administrators’ fees to 29 August 2012
Ricci
DL
Estimate of Administrators’ fees from 30
August 2012 to end of Administration
Ricci
DL
Date of Insolvency
Section 11
468
1,636
39
318
Although we have identified possible indicators of
insolvency dating back to July 2009, given the support of
the Companies’ shareholders and banker, it is our
preliminary opinion that the Companies did not become
insolvent before July 2012.
Section 8
The Directors took the view that it was unlikely that the
business could be sold or the debt refinanced outside of a
formal insolvency appointment and accordingly the
Directors resolved to appoint the Administrators to the
Companies on 10 July 2012.
The issue of insolvency is a complicated question that may
require determination by a court.
P a g e | 15
Related Party
Transactions
We have identified a number of transactions totalling
$0.3m involving related parties to the Companies.
Section 8
If the Companies are placed into liquidation a liquidator will
investigate these transactions further.
Unfair Preference
and Uncommercial
Transactions
We have not identified any payments made to creditors in
the six months prior to the commencement of the
administration, which may be unfair preferences or
uncommercial transactions and which warrant further
investigation by a liquidator.
Section 8
We would expect a liquidator to undertake further
investigations and seek legal advice to clarify whether
recovery of the above payments could be pursued as
potential unfair preferences for the benefit of unsecured
creditors.
P a g e | 16
4. History of Darrell Lea
4.1
Background
Established in 1927, Darrell Lea is one of the largest Australian owned confectionery companies
and a leading Australian speciality confectioner Darrell Lea is vertically integrated, holding a
unique industry position by participating in the manufacturing, distribution, wholesaling, export and
retailing of a broad range of confectionery products through most channels in Australia.
At the date of our Appointment Darrell Lea operated 65 specialty retail stores, six outlets
managed by third parties under a licence agreement and had in excess of 1,200 active stockists in
a wide range of channels Australia wide. Darrell Lea also distributes liquorice through the grocery
channel in Australia under the Darrell Lea brand, the Ricci brand and private label.
Darrell Lea has agents in the USA, UK, Canada, New Zealand, South Africa, Belgium and
Denmark to sell and distribute Darrell Lea and Ricci branded liquorice. Darrell Lea has been able
to establish its strong export position through its innovative “Soft Eating Liquorice”. It is
particularly strong in the USA where it is the leading brand of Soft Eating Liquorice and overall the
fourth largest liquorice company.
Darrell Lea manufactures the majority of its product at its Kogarah manufacturing facility based
south of Sydney. In 2005, a state-of-the-art liquorice plant was added to the facilities, representing
a capital expenditure of $11.0m. This plant has supported the successful expansion into
international confectionery markets.
Darrell Lea has a broad range of products such as Soft Eating Liquorice, Rocklea Road, Peanut
Brittle and Bo-Peep jars. Rocklea Road and Soft Eating Liquorice have commanding market
positions. Further, a range of seasonal products are also available over Easter, Christmas,
Mother’s Day, Father’s Day and Valentine’s Day.
4.2
Group Structure
The immediate parent company DLN, is wholly owned by Bentala Pty Limited, which is the trustee
for the Lea Family Trust and Lea Family Trust No. 2. It has five subsidiaries as follows:
•
•
•
•
•
Darrell Lea Chocolate Shops Pty Limited;
Ricci Remond Chocolate Co Pty Limited;
King and George Pty Limited;
Amalgamated Brands (Australasia) Pty Limited; and
D.L.V Pty Limited.
The Darrell Lea confectionery business is wholly owned and operated by DL and Ricci. We
understand the other DLN subsidiaries, together with Land and Portfolio Pty Limited which is
directly owned by the Lea family, largely operate as property holding entities. DL leases a
number of properties from DLN including its Kogarah manufacturing plant, Ingleburn warehouse
and two retail stores.
This group structure is illustrated on the following page:
P a g e | 17
4.3
Statutory Information – DL
4.3.1
Background
DL was incorporated on 8 June 1965.
4.3.2
Corporate offices and place of business
DL’s registered office and principal place of business is 188-200 Rocky Point Road,
Kogarah, NSW 2217.
4.3.3
Directors and officers
Directors
Date appointed
Date ceased
Michael James Roberts Lea
17 April 1975
Current
Alan Francis Batley
01 July 1996
Current
Peter McLoghlin
06 April 2006
Current
Charles Stuart Smith
03 May 2011
Current
Secretaries
Date appointed
Date ceased
27 November 1972
Current
Sandra Du Toit
03 May 2011
Current
P a g e | 18
4.3.4
4.3.5
Alternate Director
Date appointed
Date ceased
Nicholas Stephen Lea
22 May 2006
Current
Auditors
Date appointed
Date ceased
HLB Mann Judd
27 November 1972
Current
Shareholders
Shareholder
Class
Number held
Fully paid
DLN Pty Limited
Ordinary
400,000
Yes
Personal property security register (PPSR)
The following APAAP charges (formerly a fixed and floating charge) were migrated from
the Corporations Registrar of Charges to the PPSR on 30 January 2012 and take the form
of either a fixed and floating charge over the whole of DL’s assets and undertakings, or a
fixed charge over specific assets belonging to DL:
Secured party
Westpac
Registration
number
Effective
Date
201112052877832 06/03/2009
Date
registered
Type
30/01/2012
APAAP (fixed
and floating)
APAAP (fixed
and floating)
APAAP (fixed
and floating)
APAAP (fixed
and floating)
APAAP (fixed
and floating)
APAAP (fixed
and floating)
APAAP (fixed
and floating)
APAAP (fixed
and floating)
APAAP (fixed)
Westpac
201112204562770
21/08/2009
30/01/2012
Westpac
201112204563115
21/08/2009
30/01/2012
Westpac
201112210017323
25/09/2009
30/01/2012
Westpac
201112210041527
25/09/2009
30/01/2012
Westpac
201112210264326
20/10/2009
30/01/2012
Westpac
201112212031741
30/04/2010
30/01/2012
Westpac
201112220062429
07/07/2010
30/01/2012
Westpac
201112280211379
30/01/2012
30/01/2012
Attached as Annexure F is a complete list of security interests recorded on the PPSR.
4.4
Statutory Information – Ricci
4.4.1 Background
Ricci was incorporated on 25 March 1965.
P a g e | 19
Corporate offices and place of business
The registered office is located at 188-200 Rocky Point Road, Kogarah, NSW 2217 while
the principal place of business is located at 3 Brooks Road, Ingleburn, NSW 2565. The
latter is used for warehousing and distribution.
4.4.2 Directors and officers
Directors
Date appointed
Date ceased
17 April 1975
Current
Alan Francis Batley
01 July 1996
Current
Peter McLoghlin
06 April 2006
Current
Charles Stuart Smith
03 May 2011
Current
Secretaries
Date appointed
Date ceased
19 January 1973
Current
Sandra Du Toit
03 May 2011
Current
Alternate Director
Date appointed
Date ceased
Nicholas Stephen Lea
22 May 2006
Current
Auditors
Date appointed
Date ceased
HLB Mann Judd
01 July 1993
Current
4.4.3 Shareholders
Shareholder
Class
Number held
Fully paid
DLN Pty Limited
Ordinary
1,000
Yes
4.4.4 Personal property security register (PPSR)
The following APAAP charges (formerly a fixed and floating charge) were migrated from the
Corporations Registrar of Charges to the PPSR on 30 January 2012 and take the form of
either a fixed and floating charge over the whole of Ricci’s assets and undertakings, or a
fixed charge over specific assets belonging to Ricci:
Secured party
Registration
number
Effective
Date
Date
registered
Type
Westpac
201112052877464
10/10/1991
30/01/2012
Westpac
201112280211346
30/01/2012
30/01/2012
APAAP (fixed and
floating)
APAAP (fixed)
Attached as Annexure F is a complete list of security interests recorded on the PPSR.
P a g e | 20
4.5
Financial difficulty and events leading up to our appointment
Based on our review of the Companies’ financial statements and our discussions with
Management, Darrell Lea has traded at near break-even PBT for several years prior to the FY10
financial year where a $(2.1)m loss was recorded. This was attributed to cost pressures and
falling retail sales. As economic conditions continued to weaken for both the manufacturing and
retail sectors, PBT losses continued to decline to $(6.5)m in FY11 and $(6.0)m in FY12. The
Companies also experienced significant working capital pressure, particularly in funding its export
business which requires extended credit terms of up to 150 days.
Management advise that addressing the underlying performance of the business was difficult
given the macro-economic and financial market downturn that contrived against the industry
sectors in which the Companies operate (manufacturing, retail and export).
The period between FY09 and FY12 saw the business experience significant trading challenges.
This included decreased consumer spending in the retail industry, a strengthening Australian
dollar affecting international exports and an increasing local cost base. This manifested itself in
fluctuating profits and losses for Darrell Lea across these years. Management advise that they
were confident that they had financial support from both the Bank and its parent company (DLN)
to continue to trade through these challenging years.
4.5.1 Significant Losses in FY11 and FY12
Indications of more serious financial distress became apparent in FY11 when Darrell Lea
recorded pre-tax losses of around $6.5m, of which $1.3m related to an impairment of assets
and the underperforming retail stores. Management attribute these losses to declining sales
and increased manufacturing costs. During this period, Darrell Lea required a loan of $2.2m
from its parent company DLN to enable it to make full repayment on its seasonal loan
facility.
Management advise that for the first six months of FY12, trading was consistent with
expectations (despite being below budget) and they felt that the business was stabilising.
All divisions of Darrell Lea, apart from retail, were profitable generating a combined PBT of
$1.0m. This represented a significant improvement of $1.0m on the prior year. Darrell Lea
continued to meet their financial obligations to creditors and the Bank.
Management advise that as a result of the support of the Bank and parent company, they
were of the view that Darrell Lea would be able to survive these difficult economic
conditions and cash constraints while they implemented various revenue generating and
cost saving initiatives. These initiatives including significant store closures, manufacturing
productivity programs, enhanced distributor arrangements, strategic sourcing program, new
channel initiatives (grocery and mass discounters), loyalty reward scheme and retail store
design. A business plan was finalised by December 2011 which identified the above
initiatives and outlined an implementation plan.
As managements’ business plan to address the sustained losses and negative cash flow
was developed and costed, it became evident that significant expenditure was required to
implement the initiatives.
During FY12 Darrell Lea also increased its distribution of an exclusive range of products to
Big W.
Demand was significantly overestimated, resulting in an inventory build that
materially impacted on the Companies’ cash flows and ultimately resulted in inventory write
offs. Darrell Lea had budgeted for sales to Big W of $8.5m in FY12 against actual sales of
$1.3m.
Immediately prior to our appointment $2.4m of obsolete stock, primarily consisting of
packaging materials, was also written off.
P a g e | 21
4.5.2 Expiration of bill facility in related entity and attempted refinance
A $3.7m bill facility in a related entity (Land and Portfolio Pty Ltd), which was secured over
the assets of Darrell Lea, was due to expire in December 2011. This facility was not
immediately rolled over by the Bank. In January 2012, McGrath Nicol were appointed at the
request of the bank to conduct a review of the financial performance of Darrell Lea.
On 19 March 2012, the board of DLN resolved to commence a concurrent refinance of the
Group’s debt and a sales process of the Darrell Lea business. The DLN board appointed
independent corporate finance and debt advisors to assist with this process.
During the first quarter of FY12, results were broadly in line with the revised business plan
and improved on the prior year. At this point, Management advise that there was significant
interest for the refinance, which was expected to be completed prior to July 2012.
The refinance was to be completed with respect to all the total Group’s debts, and secured
over the Group’s substantial real property holdings and the assets of the Companies.
4.5.3 Poor seasonal Trading and Facility Repayment Shortfall
Results in April and May 2012 (traditionally strong months for Darrell Lea with Easter and
Mother’s day) were significantly below forecast ($0.6m PBT compared to a forecast $2.0m),
primarily resulting from poor sales in the licenced channel.
Management disclosed these shortfalls to the potential financiers, and the refinance offers
were subsequently revised downwards or withdrawn. At this point, Management became
aware that any refinance package would be insufficient to enable them to fully pay down
their seasonal bill facility as required. On 7 June 2012, the board of DLN resolved to sell its
Ingleburn warehouse and to seek a refinance sufficient to replace the seasonal credit
facility. In addition, the board of DLN resolved to accelerate the sale process of the Darrell
Lea confectionery business.
On 23 June 2012, the board of DLN met with the Bank to present the April and May trading
results for Darrell Lea and a revised forecast which indicated an inability to repay $3.8m of
the seasonal bill facility by its 2 July 2012 deadline. At this point, Management advise us
that the Bank agreed to support the refinancing and sale of the confectionery business and
Ingelburn while holding DLN assets as security.
On 25 June 2012, the board of DLN was advised that the expected refinance to replace the
seasonal facility was not likely to be successful and that the trading figures had continued to
worsen.
On 30 June 2012, the seasonal bill expired, and despite a positive net asset balance sheet
position and the Bank providing a forbearance period, Management believed that Darrell
Lea was likely to require additional funds in excess of the seasonal bill repayment at a
stage in the future.
The sales process for the business was further accelerated and an offer from an interested
party was considered on 5 July 2012. This was rejected on the basis that additional funding
was required from the parent company to complete the deal and this was not available.
P a g e | 22
5. Sale of Business and other assets
5.1
Sale of Business
The Directors of the Companies had been seeking a sale of the business in the months leading up
to our appointment and had held advanced discussions with at least four parties. These parties
later participated in the sales process conducted by the Administrators.
We understand that offers received for the Companies’ business in the period immediately prior to
our appointment consisted of no cash consideration and for working capital funding to be provided
by Darrell Lea’s parent DLN.
We understand that the failure of the sale process was a material factor in the Directors’ decision
to place the Companies into administration.
Immediately upon our appointment, we commenced a sale of business process aimed at:
•
•
•
•
•
Capitalising on the existing advanced discussions with a number of parties who already had a
detailed knowledge of the business;
Advertising to the wider market in the AFR on 12 July 2012, seeking indicative offers by 25
July 2012;
Identifying our own list of potential acquirers through proprietary databases, discussions with
management and industry contacts;
Completing an expedited sale to preserve goodwill in the business; and
Transferring ownership as quickly as possible to mitigate the adverse impact of the
Administration on customers, suppliers, employees and other stakeholders.
Due to the confidential nature of the sale of business process, we are unable to disclose the
details of any party that participated in either the pre or post-appointment sales processes.
5.1.1 Process
The Administrators determined the quickest and most effective method of sale was to
provide an information memorandum and to establish an electronic data room for the
conveyance of information to interested parties.
Expressions of interest were sought for the business as a going concern or for individual
assets of the Companies with the preference being a sale of the business as a whole. A
sale of the business and its assets on a going concern process was likely to result in the
best outcome for employees and creditors.
Interested parties were required to complete an NDA as part of the sale process.
The following timetable outlines the key milestones achieved during the sale campaign:
P a g e | 23
Week
Date
Milestone
1
10 July
Date of appointment and immediate commencement of sale of
business campaign by EOI.
1
12 July
Advertisement appears in AFR calling for EOI.
1-2
10-18 July
Administrators engage with pre-appointment interested
parties and canvas other interests.
2
18 July
Administrators provide NDA and information memorandum
to interested parties.
2
19 July
Data room goes live and due diligence is commenced by
prospective purchasers.
3
25 July
EOI campaign closes with indicative offers due. Preferred
bidders selected to progress to advanced due diligence.
3-4
25 July – 6 August
Accelerated due diligence period and ongoing negotiations
with prospective purchasers.
4
6 August
Binding offers for the Companies’ business and assets are
due.
5
9 August
Short-list preferred bidders are selected.
7
20 August
Target date for agreement to terms of sale agreement.
7
24 August
Contents of sale agreement agreed with preferred bidder
and the Administrators. Transaction submitted to the
secured creditor for consent to release assets.
8
31 August
Contracts exchanged between the Administrators and
Purchaser.
9
3 September
Employees advised of sale and offers of employment made
to transferring employees.
9
7 September
Scheduled date for completion.
5.1.2 Outcome
During the expression of interest campaign, we received more than 100 enquiries in total
from both domestic and international businesses and private equity funds. A total of 27
NDAs were signed, with those parties undertaking due diligence and being provided with
access to the data room.
We received six indicative and conditional offers for all or part of the assets of the
Companies during the course of the Administration and ultimately received one final offer,
all of which were submitted at various stages of the process.
The Administrators formed the view that the Quinn Family offer represented both the best
outcome for the majority of creditors and was the party best in a position to complete the
transaction in the shortest period of time. As the offer was predicated on being granted a
lease of the operating premises at Kogarah (from a related party to the Companies), the
acquisition of the warehouse facilities in Ingleburn (owned by a related party to the
Companies) and the acquisition of assets that were subject to the Bank’s security, the full
particulars associated with the offer were provided to both DLN and the Bank who each
supported the transaction.
We reached agreement with the Quinn family on the sale of business on 24 August 2012
and contracts were exchanged on 31 August 2012 following a release being provided by the
Bank over the assets subject to their charges.
P a g e | 24
The acquisition will result in all Darrell Lea operations, with the exception of the retail
business, continuing to operate under private Australian ownership. A total of 83
employees at both the Kogarah and Ingleburn sites were provided with continued
employment. Completion is scheduled for 7 September 2012.
As the sale of business has yet to complete and title to the assets subject to the sale have
not yet been transferred, for commercial reasons we are unable to disclose the
consideration paid by the purchaser for the Companies’ plant and equipment assets,
goodwill, intellectual property and business records. The purchaser has agreed to acquire
the majority of active finished goods, work in progress and raw material inventory.
5.2
Sale and Recovery of other Assets
The primary assets available to be realised for the benefit of creditors consists of the Companies’
debtors, inventory and plant and equipment assets.
The Companies primary trading premises (Ingleburn and Kogarah) and three of its retail stores,
are owned by a related party and are not assets of the Companies.
The remaining stores were all leased from third parties.
5.2.1 Debtors and inventory
Below is a summary of the Companies’ debtors and inventory available for realisation by the
Administrators:
DL
$’000
Ricci
$’000
Total
$’000
Pre-appointment debtors (as at appointment)
3,071
4,768
7,839
Post-appointment debtors created (GST excl.)
4,808
2,787
7,595
Finished goods (estimated as at 26 August)
Raw materials and packaging
(estimated as at 26 August)
Work in progress
(estimated as at 26 August)
5,702
NA
5,702
3,385
NA
3,385
1,905
NA
1,905
18,871
7,555
26,426
Total
Upon appointment we made considerable efforts to ensure that the supply chain continued
to operate on a “business as usual” basis both domestically and internationally. We
negotiated with key suppliers to ensure that raw material supplies and ongoing essential
services would continue to be provided during the Administration. Despite unprecedented
demand for Darrell Lea products on the back of the publicity associated with our
appointment, the Companies’ manufacturing operations were able to produce the required
levels of stock to meet immediate demand while also building inventory to service the
Father’s Day trading period.
During the Administration we received significant support from the Companies’ licensed
channel customers, which in part was driven by the support of the Australian public.
We collected $3.5m in pre-appointment debtors in the first month of trading which grew to
$4.8m by 26 August 2012. The collection of these debtors, together with strong retail sales
and funding provided by DLN, enabled the Administrators to be confident in their ability to
continue to trade the business for a short period while a sale of the business as a going
concern was pursued.
P a g e | 25
Debtors and inventory to be collected as at 26 August 2012
Opening value (as above)
DL
$’000
Ricci
$’000
Total
$’000
18,871
7,555
26,426
(2,759)
(2,035)
(4,794)
(224)
(184)
(408)
Less
Pre-appointment debtors collected
Post-appointment debtor receipts collected
(GST excl.)
Balance to collect
15,888
5,336
21,224
e
The sale of business agreement does not provide for the acquisition of debtors which
remain available for the Administrators to realise. The purchasers will be acquiring the
majority of inventory assets at cost (less overhead and burden).
Refer to Section 9 for an overview of the estimated realisable value of both the purchaser
acquired stock and the remaining stock available for the Administrators to realise.
In the unlikely event that completion is unable to occur in accordance with the sale of
business agreement, a “break-up” analysis of the estimated position of the Companies is
provided alongside the “going concern” scenario at Section 9.
5.2.2 Plant and equipment
The Administrators engaged Grays Online and Slattery’s Auctioneers to provide valuations
of the Companies’ assets on a “value in use” and “estimated auction value” basis. As the
Bank holds a fixed and floating charge over the assets of the Companies which is likely to
cover the majority of fixed assets, we sought the consent of the Bank to sell the majority of
these assets.
The remaining plant and equipment that is not subject to the sale agreement consists
largely of leasehold improvement associated with the retail stores. Where there is a benefit
in removing those leasehold improvements to sell by auction, we intend to do so.
As the value of these assets is commercially sensitive, we are unable to disclose their
value.
5.2.3 Leased assets
The Administrators also engaged Grays Online and Slattery’s Auctioneers to provide an
estimate of the value of leased assets. This valuation indicated that there is no equity in
any of the leased assets and that there is likely to be a deficiency to the financiers should
the assets be realised at auction value.
The sale of business contract does not provide for the assignment of any leases and as
such, we are working with the financiers to take possession of the assets and either return
them or realise them for the benefit of the financiers.
A summary of leased assets is provided at Annexure G
P a g e | 26
6. Directors Report as to Affairs
Upon the appointment of an Administrator, Directors must provide a RATA outlining the financial
circumstances of the company concerned, including an estimate of the book values and realisable
values of known assets and liabilities as at the date of our appointment (10 July 2012).
On 18 July 2012 the Directors submitted a single RATA for the Companies. We note this RATA was
signed by each of the Directors.
The RATA provided was prepared on a consolidated basis between the two entities subject to our
appointment. As such, the information provided below has also been provided on a consolidated basis.
A summary of the Administrators’ opinion of the estimated realisable value per entity has been provided
at Annexure H.
A number of the items below are commercially sensitive and have been withheld from this report.
Notes
Book Value
Director
ERV
Administrators’
ERV
$’000
$’000
$’000
Assets not specifically charged
Trade debtors
1
8,451
Nil
7,839
Other assets
2
409
Nil
Nil
Cash on hand
3
49
49
49
Cash at bank
3
979
979
13
Stock
4
12,623
Nil
Withheld
WIP
4
2,385
Nil
2,364
Plant and equipment
5
17,899
Nil
Withheld
42,796
1,028
Withheld
Sub Total
Assets subject to specific charges
6
Nil
Nil
Withheld
Less: amounts owing
6
Nil
Nil
Withheld
Nil
Nil
Withheld
7
(3,963)
Nil
(18,153)
Less: Amounts owing and secured by
debenture or circular security interest
8
(19,661)
Nil
(19,661)
Unsecured creditors
9
(12,732)
Nil
(12,732)
Contingent Assets
10
Nil
Nil
Nil
Contingent Liabilities
10
Nil
Nil
Nil
6,440
1,028
Withheld
Surplus/(deficiency)
Less: Amounts owing for employee
entitlements
Estimated Surplus/(Deficiency)
P a g e | 27
The information disclosed in the RATA by the Directors is relatively uninformative. Accordingly, we have
undertaken a separate review of the major asset and liability categories disclosed in the RATA,
discussed in the notes below:
Notes
1.
Trade debtors
The Directors’ RATA disclosed trade debtors of $8.5m as at the date of appointment. Our review
of the Companies’ books and records at the time of writing this report is relatively consistent at
$8.8m. We believe that the debtor collections in Administration should be strong given our
positive dealings with customers to date and the continuity of supply that the sale of the business
provided. However, we note that there remains a risk in collecting older or disputed balances and
in realising overseas debtors. We note that we have collected $4.8m of the balance that was due
at appointment (refer to Section 5).
A summary of the ten largest debtors as at 10 July 2012 is provided below:
Debtor
Woolworths
Big W (Syd)
Petty Wood & Co Limited
Grocery Holdings Pty Limited
Big W (Melb)
International Food Association
Limited
Kookaburra Liquorice Co (USA)
Trader Joe's Company
Glader Distribution Pty Limited
Premier Brands Canada
Total top 10 debtors (in value)
Others
Total
2.
International
/domestic
Domestic
Domestic
International
Domestic
Domestic
DL
($‘000)
Ricci
($‘000)
1,253
923
592
489
Total
($‘000)
1,253
923
592
489
413
International
380
380
International
International
International
International
296
274
296
274
189
176
4,985
2,854
7,839
413
189
602
2,469
3,071
176
4,383
385
4,768
Other assets
The Directors RATA disclosed pre-payment assets totalling $0.4m.
prepayments will be recovered.
It is unlikely that these
The Directors’ RATA did not disclose any related party loans, however, the Companies’ balance
sheet as at 30 June 2012 indicated $0.4m in related party loans payable to the Companies’,
consisting of the following:
Loan account
Description
DLN Pty Limited
DLN Pty Limited
Total
Administration and other fees
PAYG tax instalments
$‘000
98
258
356
The PAYG tax instalments formed the quarterly tax instalment which Ricci remitted on behalf of
the DLN tax consolidated group. We also note there is a loan of $2.2m owing to DLN. As such,
for the purposes of this report, we have assumed a realisable value of nil.
Should creditors resolve to place the Companies into liquidation, further investigations into the
related parties’ capacity to repay the loans will be undertaken.
P a g e | 28
3.
Cash at bank
At appointment the Administrators requested a debit freeze over the Companies’ bank accounts.
Below is a summary of all pre-appointment bank accounts and their balances as at the date of our
appointment. Cash at bank available to the Administrators is consistent with the Directors’ RATA,
less the Bank’s application of set-off.
Account
DL – Westpac Account
DL – Non-Westpac Accounts
Ricci – Westpac Account
Application of set-off by the Bank
Total cash at bank as at 10 July 2012
Balance
$’000
863
13
104
(968)
13
At the date of our appointment the Bank froze $968k of cash in the Companies accounts which
was captured by its registered security interest over the Companies.
The Administrators have instructed the Bank to sweep all future deposits into the Administrators’
Macquarie bank account.
Cash on hand consisted of floats from retail stores, Kogarah manufacturing site/head office and
Ingleburn warehouse totalling approximately $49k.
4.
Stock and WIP
The Directors’ RATA discloses stock with a book value of $12.6m and WIP totalling $2.4m. This
is broadly consistent with stock as per the Companies’ perpetual inventory system at the date of
our appointment, indicated below at book value:
Inventory assets as at 10 July 2012
Finished goods
Raw materials
Packaging
WIP
Total
Balance
$’000
9,039
1,660
2,340
2,364
15,403
Given the realisable value of stock and WIP at the date of our appointment is commercially
sensitive, we have not disclosed an estimate of the realisable value for the purposes of analysing
the Directors’ RATA.
Immediately upon appointment we instructed Grays Online to conduct some sampling exercises to
confirm physical stock existence. This exercise did not uncover any material variances to the
Companies’ perpetual inventory count.
We have received a total of 14 claims for retention of title or security interests over stock
registered on the PPSR. We are currently reviewing these claims with the view to either paying
for or returning stock associated with any valid claim.
P a g e | 29
5.
Plant and Equipment
Plant and equipment comprises a number of pieces of machinery primarily associated with the
bulk production of confectionery products. The balance of the equipment includes packaging,
office, retail store fit-out, and other sundry assets.
The Administrators engaged Grays Online and Slattery’s Auctioneers to conduct a full stocktake
and valuation of all plant and equipment of the Companies at both primary operating sites. A
sample of retail stores stocktake and valuation was also undertaken.
As the Administrators have exchanged contracts with respect to the Companies plant and
equipment, we cannot provide further specific details of expected realisations due to the
commercial sensitivity of that information.
The Directors’ RATA identifies PPE with a book value of $17.9m as at 10 July 2012.
6.
Leases and specific security interests
The Companies have a number of leases primarily with respect to manufacturing equipment,
forklifts and vehicles. The Directors’ RATA has not disclosed a value for these assets.
We instructed Grays Online and Slattery’s Auctioneers to conduct a valuation of all leased plant
and equipment in order to determine whether there is any residual equity in the equipment. Our
preliminary investigations suggest that the payout figures are likely to exceed the valuation and
therefore there is no equity in those assets for the benefit of creditors.
We have not disclosed the value of the assets as that information is commercially sensitive.
7.
Employee Entitlements
On appointment, the Administrators confirmed their intention to continue to trade the business in
order to maximise the prospects of selling the Companies’ business as a going concern. Upon
completion, the sale of business agreement provides for the transition of 83 employees to the
Purchaser. The employment of 339 casual employees and 277 part and full time employees have
been made redundant during the course of the administration.
Given the unlikely event that the sale of business does not complete, we have prepared our
estimated employee entitlements on both a “going concern” and “break-up” basis.
Our calculations of employee entitlements are based on the Companies’ payroll records and
discussions with our legal advisors. The calculations differ to those disclosed by the Directors in
their RATA primarily as a result of the crystallisation of severance and pay in lieu of notice. For
illustrative purposes we have provided a summary of the entitlements below.
P a g e | 30
Director
Going
RATA
Concern
$’000
$’000
$’000
Nil*
Nil*
Superannuation
Nil
Nil
61*
61*
PILN
Nil
1,353
1,890
364
579
1,737
2,506
1,526
2,254
Nil
7,220
10,863
3,963
12,261
18,153
Employee Entitlements
Pre-Appointment Wages
Personal / carers leave
Annual Leave and Rostered Day off
3,963
Long Service Leave
Redundancy
Total
Break-up
*We note that the Administrators have discharged all pre-appointment unpaid wages and
superannuation.
We note that the Companies’ EBA also provides for participation in NEST, where certain
entitlement balances (annual leave to six weeks and all long service leave) are required to be paid
into trust for the benefit of employees. As at the date of our appointment, NEST was significantly
underfunded with a balance of $0.9m. NEST holds funds that are individually assigned to
employees.
Employees are encouraged to contact NEST directly to make a claim for the individual balance
held by them. The balance of entitlements owed to employees are provided priority treatment in
the administration and liquidation of the Companies. Section 556 of the Act, indicated that
employees are priority creditors in respect of outstanding entitlements such as wages,
superannuation, annual leave, long service leave, PILN and redundancy (if applicable) from the
realisation of circulating charge assets.
Entitlements for excluded employees (including the Director and his lineal relatives) are capped at
$2,000 for wages, including superannuation, and $1,500 for unpaid annual leave and long service
leave, with the balance of their entitlements ranking as an unsecured claim pursuant to Section
556 (1A) and (1B) of the Act.
DEEWR, a Federal Government department, administers GEERS. GEERS is a safety net in the
event that a company is placed into liquidation and has insufficient funds to pay the employees’
entitlements. GEERS is a Federal Government discretionary scheme and claimants are subject to
GEERS’ Operational Arrangements. DEEWR has a right of subrogation in respect of employee
claims once it has paid these amounts (i.e. it stands in the shoes of employees in liquidation).
The Administrators will work with employees and DEEWR to help facilitate the payment of
employee entitlements in the event the Companies are placed into liquidation and we are unable
to realise sufficient assets to discharge all outstanding entitlements. A copy of the GEERS fact
sheet has been attached as Annexure I for employees’ consideration and review.
An estimate of the return to employees and other creditors of the Companies is included in
Section 9.
P a g e | 31
8.
Secured creditors
The Director’s RATA indicates the debt owed to the secured creditor is $19.7m.
9.
Unsecured Creditors
The Director’s RATA identifies unsecured creditors totalling $12.7m which is consistent with the
Administrators’ estimate
An estimate of the return to unsecured and other creditors on a Group basis is included in Section
9 of this Report.
P a g e | 32
7. Financial Position
Outlined below are the financial statements of the Companies’ for the 12 months to 30 June 2010,
30 June 2011 and 30 June 2012.
These financial statements have been prepared on a consolidated basis. The individual financial
accounts are provided at Annexure J.
7.1 Financial Performance
Management
Accounts
Audited Accounts
Audited Accounts
12 months to 30
June 2012
$‘000
12 months to 30
June 2011
$‘000
12 months to 30
April 2010
$‘000
93,191
98,562
103,070
(4,901)
(52,981)
(57,882)
35,309
(4,693)
(55,272)
(59,965)
38,597
(4,761)
(59,889)
(64,650)
38,420
38%
39%
37%
(4,492)
(4,765)
(3,580)
(9,456)
(12,557)
(1,517)
(36,367)
(4,833)
(3,690)
(3,966)
(9,981)
(13,084)
(1,799)
(37,353)
(3,567)
(2,717)
(4,365)
(9,794)
(12,322)
(1,644)
(34,409)
Operational EBITDA
(1,058)
1,244
4,011
Depreciation &
amortisation
(3,386)
(4,810)
(4,831)
(4,444)
(3,566)
(820)
(1,571)
(1,530)
(1,268)
(6,015)
(1,388)
(6,484)
(2,088)
Revenue
Less cost of goods sold:
Freight
Other COGS
Total
Gross Profit
Gross Margin %
Expenses
Direct overheads
Head office costs
Marketing
Rent & outgoings
Wages & Salaries
Other expenses
Total Expenses
Operational EBIT
Interest and borrowing
expenses
Asset write-down
PBT
These figures have been extracted from audited and management accounts. We are unable to
comment on the accuracy of these figures.
We note that audited financial statements have not been prepared for the Companies for FY12.
P a g e | 33
The Companies sustained losses in each of the last three financial years. The extent of the losses
increased significantly in FY11 with a PBT loss of $(6.5)m, an increase of $4.3m from the prior year.
The FY11 loss included, however, an extraordinary $1.4m write-down relating to an impairment of
leasehold improvements in the Companies’ retail stores. The Companies’ were in a similar loss
making position in FY12 with a PBT loss of $6.0m.
Throughout the three year period, the Companies’ revenue continued to decline while cost base and
gross margin remained relatively consistent at 37% to 39%. Despite a 9.6% decline in revenue from
FY10 to FY12, the business was not able to make savings in its cost base with expenses increasing
by 6%.
Since FY11, the Companies’ have been unable to generate sufficient EBITDA to cover their interest
obligations. The Companies’ losses in FY11 and FY12 resulted in an inability to generate sufficient
cash from operations to meet debt service obligations.
EBITDA
Interest expense
Surplus / (shortfall)
FY12
($’000)
FY11
($’000)
FY10
($’000)
(1,058)
1,571
(513)
1,244
1,530
(286)
4,011
1,268
2,743
P a g e | 34
7.2
Historical Balance Sheet
Detailed over the page is a summary of the Companies’ balance sheet for the last three financial
years.
Management
Audited
Audited
30-Jun-12
30-Jun-11
30-Apr-10
Notes
$’000
$’000
$’000
1
2
3
3
3
455
8,411
2,489
4,077
8,772
363
24,567
58
10,575
3,133
4,338
7,952
555
26,611
97
10,511
4,173
2,112
8,568
465
25,990
1,785
17,964
19,749
3,236
19,601
22,837
2,126
22,225
24,351
44,316
49,448
50,340
9,446
19,300
4,548
123
33,417
8,849
8,130
4,580
2,484
24,043
11,574
3,916
4,489
19,979
359
361
19
739
671
494
19
9.850
11,034
702
225
20
10,550
11,497
TOTAL LIABILITIES
34,156
35,077
31,476
NET ASSETS
10,160
14,371
18,864
Current Assets
Cash
Debtors
WIP
Finished goods
Prepayments
Total Current Assets
Non-Current Assets
Tax related assets
Property, plant & equipment
Total Non-Current Assets
4
TOTAL ASSETS
Current Liabilities
Trade payables and provisions
Loans and borrowings
Provisions for employees
Shareholder loans
Total Current Liabilities
Non-Current Liabilities
Hire purchase liabilities
Tax related asset
Loans and Borrowings
Total Non-Current Liabilities
5
6
5
These figures have been extracted from both audited and management accounts. We are unable
to comment on the accuracy of these figures.
Further commentary in relation to certain accounts has been provided on the following page.
P a g e | 35
1.
Cash
The Companies maintained a low cash balance at each of the financial period ends. The
Companies had an overdraft of $5.8m as at June 2011, which is included as loans and
borrowings above.
2.
Debtors
Total trade debtors have decreased over the last three years primarily as a result of a
reduction in turnover. Debtors include the various channels in which the Companies
operate; licence channel, grocery, route and export.
3.
Inventory
The Companies held total inventory (WIP, raw materials and finished goods) at circa
$15.0m at the end of each financial period. Finished goods include both retail store and
warehoused inventory.
4.
Property, plant and equipment
The Companies’ PPE predominantly includes manufacturing equipment and leasehold
improvements made to the Companies’ leased retail stores. The majority of PPE is aged (with
two noticeable exceptions being the new liquorice line and modern packaging equipment) and
has been depreciated significantly to net book value. The leasehold improvements are also
significantly impaired with over five different ‘generations’ of store fit-outs still in existence. The
remainder includes financed and owned motor vehicles.
5.
Loans & borrowings
The Companies’ overdraft was reduced from $6.5m to $1.0m in September 2011 and
replaced with a flexible limit facility of $5.5m.
The Companies’ were in receipt of total financing from the Bank of $19.3m as at 30 June
2012. This financing arrangement is secured over the assets of the Companies, by
registered mortgages over property owned by related entities and fixed and floating charges
over the Companies and other related parties.
6.
Related party loans
The Companies’ parent DLN provided a loan of $2.3m to the business in June 2011 to
assist with working capital deficiencies. This loan remains payable to DLN as at 30 June
2012. This loan is offset by $2.1m relating to receivables owed by DLN to the Companies,
as illustrated in the table below:
Amounts owing from DLN
Amounts payable to DLN
Net liability
30-Jun-12
($’000)
30-Jun-11
($’000)
30-Jun-10
($’000)
(2,161)
2,284
123
2,484
2,484
-
This $2.1m owing from DLN relates primarily to tax refunds payable to the Companies
based on the utilisation of tax losses within the consolidated tax group in FY12.
P a g e | 36
7.3
Overall summary
The Companies have maintained a positive net asset position throughout the comparative
periods. The Companies net asset position has progressively declined, reducing by $4.5m from
FY10 to FY11 and $4.2m from FY11 to FY12.
The Companies liquidity position declined substantially in FY12 as evidenced by the current and
quick liquidity ratios. The current ratio is current assets divided by current liabilities, while the
quick ratio is current assets less inventory divided by current liabilities. A ratio of less than one is
a key indicator of insolvency as discussed in Section 8 of this report.
Current ratio
Quick ratio
7.3.1
30-Jun-12
($’000)
30-Jun-11
($’000)
30-Jun-10
($’000)
0.74
0.28
1.11
0.47
1.30
0.56
Director’s explanation for the Companies’ failure
The Directors each provided the following explanation for the failure of the Companies
in their questionnaire completed on appointment.
•
A very weak speciality retailing market;
•
Increased competition from overseas products;
•
Strength of the Australian dollar;
•
Failure of a number of initiatives to improve trading; and
•
Strength of the confectionery offer in supermarkets (particularly Coles and
Woolworths).
7.3.2
Administrators’ opinion on the reasons for the Companies’ failure
Our preliminary investigations into the cause of the Companies’ failure disclosed the
following factors which may have contributed to the Companies’ demise:
•
•
•
•
•
7.3.3
Poor macro-economic conditions including the strength of the Australian dollar on
exports and a challenging domestic retail environment;
A tired retail concept at the same time as a number of competitors aggressively
increased market share through modern retail experiences;
Working capital pressures on international trading terms and seasonal products;
Underperforming distribution agreements; and
Tight pricing on grocery channel products.
Outstanding or previous winding up applications
There are no winding-up applications detailed on the ASIC search.
P a g e | 37
8. Offences, Voidable Transactions and Insolvent Trading
8.1
General Investigations
Administrators are required to complete and lodge a report with ASIC pursuant to Section 438D of
the Act where it appears to the Administrator that a past or present officer of the company may
have been guilty of an offence in relation to the company and in other limited circumstances.
For general information about what offences may be identified by an Administrator, please refer to
the attached as Annexure K, IPA information sheet entitled “Creditor Information Sheet: Offences,
Recoverable transactions and Insolvent Trading”.
Throughout our investigations to date, we have not identified anything that would suggest that the
Directors may be guilty of any offences as defined in the Act or the IPA information sheet.
8.2
Books and Records
Pursuant to Section 286 of the Act, a company must keep written financial records that:
a) Correctly record and explain its transactions and financial position and performance; and
b) Would enable a true and fair set of financial statements to be prepared and audited.
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 the liquidator in an application
for compensation for insolvent trading and other actions for recoveries pursuant to Part 5.7B of
the Act.
The Companies’ records and accounting systems are maintained at their registered offices 188 200 Rocky Point Road, Kogarah NSW 2217.
Our preliminary view is that the books and records maintained by the Companies are compliant
with Section 286 of the Act.
8.3
Risks of Litigation Action(s)
If the Companies are wound up, Part 5.7B of the Act gives liquidators (but not administrators) the
right to commence certain legal proceedings to recover money, property or other benefits for the
benefit of the unsecured creditors of a company.
In the context of the Companies, those legal proceedings cannot be commenced if Creditors
resolve that the Companies execute a DOCA.
As an initial comment, Creditors should note that recovery actions:
•
•
•
•
have the potential to add to the funds available to creditors;
are usually expensive, lengthy and have unpredictable outcomes;
should not be commenced unless defendants have the financial resources to satisfy any
judgement; and
must be funded out of the existing assets or, where such assets do not exist, by creditors or by
external litigation funders (who are likely to require a significant share of the proceeds of any
judgement as a condition of funding the litigation).
P a g e | 38
8.4
Proving Insolvency
Creditors should also note that certain recovery actions under Part 5.7B of the Act, namely those
relating to unfair preferences, uncommercial transactions and insolvent trading require liquidators
to demonstrate that the company was insolvent at the time of the transaction (or in the case of
insolvent trading, when the company incurred the particular debt).
In all but the clearest of cases, proving insolvency is a relatively complex exercise, will be subject
to conjecture and ordinarily involves further time and expense.
Further investigations will be conducted by the Liquidators should the Companies be wound up.
8.5
The Act requires an Administrator to specify whether there are any transactions that appear to the
Administrator to potentially be voidable transactions in respect of which money, property or other
benefits may be recoverable by a liquidator under Part 5.7B of the Act. This issue is relevant to
creditors if they are being asked to choose between a DOCA and liquidation, because voidable
transactions are only able to be recovered if the company is being wound up (i.e. in liquidation).
Our investigations into the Companies’ affairs have identified some transactions that have
characteristics consistent with those of voidable transactions. Should the Companies be placed
into liquidation, further investigations are warranted by a liquidator to determine if any of those
transactions may be voidable by a liquidator. These are summarised as follows:
Unfair Preferences
Uncommercial Transactions
Unfair Loan
Unreasonable Payments to Directors
Related Party Transactions
Voidable Charges
Note
No. of Transactions
1
2
3
4
5
6
Nil
Nil
Nil
Nil
unknown
Nil
Amount
Nil
Nil
Nil
Nil
$322k
Nil
Notes:
1.
Unfair Preferences
In accordance with section 588FA of the Act, if a company is placed into liquidation, certain
payments to creditors may be recoverable as voidable transactions if the creditor has received
more than they would have otherwise received in the winding up of the company.
A liquidator is typically only able to recover unfair preference transactions made in the 6 months
preceding the date of administration.
For an unfair preference to exist it must be established that:
•
•
the company in liquidation was insolvent at the time of the transaction or became
insolvent as a result of that transaction; and
the creditor or a reasonable person in the creditor’s position had reasonable grounds
to suspect that the company was insolvent.
P a g e | 39
Through our enquiries (and as confirmed by officers and staff of the Companies) we have
not identified any of the following indicators that would typically suggest unfair preference
payments may exist:
•
•
•
formal or informal payment arrangements in place with creditors or suppliers;
payment plans in place in respect of taxation or other statutory debts; or
written demands or threats of legal action received within the six month period prior to
our appointment.
We have investigated the Companies’ bank statements for the six month period prior to our
appointment, we are not aware of any transactions that have characteristics consistent with that
of an unfair preference per Section 588FA of the Act.
2.
Uncommercial Transactions
Section 588FB of the Act provides that a transaction is uncommercial if, and only if, it may be
expected that a reasonable person in the circumstances would not have entered into the
transaction having regards to the detriment to the Companies as a result of the transaction.
Our investigations to date have not revealed any transactions that would be deemed to be
uncommercial in terms of section 588FB of the Act.
3.
Unfair Loans
Section 588FD of the Act provides for loans to be voided in circumstances where they were
extortionate.
From our preliminary investigations we have not identified any unfair loans made by the
Companies. Further investigations into loan transactions shall be completed should the
Companies be placed into liquidation.
4.
Unreasonable Payments to Directors
Section 588FDA of the Act provides for payments to be voided in circumstances where a
reasonable person in the Company’s position would not have entered into the transaction.
Our preliminary investigations to date have not identified any payments that would be deemed
to be unreasonable paid to directors in terms of section 588DA of the Act.
5.
Related Party Transactions
Section 588FE(4) of the Act provides that payments to related parties may be voided where the
company was insolvent at the time of the transaction. A liquidator is able to recover related party
transactions made in the four years preceding the date of administration.
Our preliminary review of the Companies’ related parties’ transactions during the 24 month
period immediately prior to our appointment has identified a number of transactions totalling
$322k that were made to a related party.
The transactions relate to the application of rebates notionally paid by the Companies to a
related party pursuant to a licence agreement. These rebates have historically been used to
reduce the amount payable for stock and rent by the related party.
If it is ultimately determined that these payments are potentially recoverable as related party
transactions, it would be necessary to establish:
P a g e | 40
•
•
•
that the relevant Company was insolvent at the time the payments were made; and
that the recipient had reasonable grounds for suspecting that the company from which
the payment was made was insolvent at that time; or
would become insolvent as a result of the payment.
If creditors vote to put the Companies into liquidation, we will investigate these transactions
further.
6.
Voidable Charges
Pursuant to Section 266(1) of the Act, a charge may be void against a liquidator on the basis
that it was registered within six months prior to the critical day (that is, 10 January 2012).
The transaction may also be voidable under Section 588FE(5) of the Act if it was created whilst
the company was insolvent and the transaction was likely entered into for the purpose of
defeating creditors.
We have reviewed the PPSR and have listed at Section 4 a schedule containing all the
registered APAAP (fixed and/or floating) charges over the Companies.
We have reviewed the underlying charge documents for the Bank’s registered security interests
and note that all but two charges were created and registered before 10 January 2012 (i.e. in
excess of six months prior to our appointment). As such, these charges are unlikely to be
voidable against a liquidator.
We have not been able to obtain copies of underlying documents from PPSR for the two
charges registered on 30 January 2012 (within the 6 months prior appointment period). Further
investigation will be carried out if creditors vote to put the Companies into liquidation.
8.6
Insolvent Trading
8.6.1 Definition of insolvency
Section 95A of the Act provides that a company is insolvent if, and only if, the company is
unable to pay all its debts, as and when they become due and payable. A significant body of
case law has developed with respect to this definition.
The exercise of proving insolvency requires a consideration of a company’s financial position
taken as a whole but with specific reference to the company’s cash flow.
8.6.2 Indicators of insolvency
The primary indicator of insolvency is a shortfall between:
•
•
the funds available a company at a particular point in time; and
the total commitments a company has which are due and payable at that time.
The funds available to the company include any overdraft (or similar facility) and financial
support from the directors and related parties.
Further indicators of insolvency include:
•
A low current ratio (being current assets / current liabilities). As a rule of thumb, a trading
company may be insolvent if its current ratio is less than one and will likely be solvent if its
current ratio is greater than two. Where a trading company has a current ratio of between
P a g e | 41
one and two, then the likely solvency status will depend on a number of factors to the
company and the industry in which it operates.
•
The company exhibiting some or all of the “usual indicators of insolvency”. Those indicators
have been accepted by courts in Australia as being the typical characteristics of an
insolvent company and include:
unpaid group tax, payroll tax and worker compensation premiums or superannuation
contributions;
outstanding tax returns;
inability to produce timely audited accounts;
high staff turnover;
dishonoured cheques;
suppliers insisting on COD terms;
the issue of post-dated or round sums cheques;
special arrangements with creditors;
demands from bankers to reduce overdraft and other evidence of deteriorating
relations with bankers;
receipt of letters of demand, statutory demands and court proceeds for debt
collection; and
loss of major customers.
8.6.3 Provisional opinion on insolvency
In considering whether the Companies may have traded whilst insolvent, we have
performed a preliminary review of historical trading performance, working capital and cash
flows of the business and held discussions with the management of the Companies.
We have noted early indicators of insolvency commencing from July 2009 when Darrell Lea
began to suffer regular losses before tax on a monthly basis (but for some seasonaly better
performing months). Despite experiencing sustained losses beyond FY09, the Companies’
have received the ongoing support of the Bank and its parent, who have provided funding
until the date of the appointment of Administrators. Accordingly, our preliminary view is that
the Companies became insolvent upon the withdrawal of financial support from its parent
which happened in the period immediately prior to the appointment of Administrators.
Ultimately the issue of insolvency is determined by a court. Our preliminary investigations
have revealed the following indicators of insolvency:
•
On a consolidated basis, Darrell Lea was largely loss making on a monthly basis from July
2009, and made consistent losses before tax in FY10 ($2.1m), FY11 ($6.5m) and FY12
($6.0m);
•
Since at least June 2011, Darrell Lea has had insufficient current assets to cover its current
liabilities. The current ratio declined from 1.11 at June 2011 to 0.74 by June 2012 - that is
the Companies only had $0.74 in current assets to satisfy every $1.00 in current liabilities.
When excluding inventory from this calculation, the quick ratio as at June 2010 was 0.56
and this declined to 0.47 by June 2011 and 0.28 by 30 June 2012, that is the Companies
only had access to cash assets and assets readily convertible to cash of $0.28 to satisfy
$1.00 in current liabilities;
•
The Companies had made several employees redundant in the months leading up to our
appointment;
•
In FY11, Darrell Lea required a $2.2m loan from its parent (DLN) in order to pay its
seasonal bill facility as required;
P a g e | 42
•
The auditors raised a going concern issue in the notes to the financial statement for the
year end 30 June 2011 due to the negative net current asset position of Darrell Lea.
However as the directors of the Companies had received a written letter of continued
financial support from its parent, and the directors believed that such financial support
would continue to be made available, the financial statements were been prepared on a
going concern basis. We have subsequently sighted a further signed letter of support from
DLN dated 8 June 2012;
•
The aged profile of creditors, along with the total trade creditor balance was slowly
deteriorating. At the time of our appointment, approximately 12% of $7.1m of creditors
were greater than 60 days old, compared to 1.5% of $3.8m in January 2011; and
•
We note that the Companies had largely kept up to date with all statutory requirements
including taxation returns and employees superannuation contributions.
Proceedings may be commenced by a liquidator if, after the assets have been realised, there is
a shortfall to unsecured creditors. Recovery action will be assessed on a cost/benefit basis and
will include consideration of the financial position of the relevant party against whom recovery
action is taken.
a)
Potential Defences
There are certain defences available to directors under the Corporations Act 2001 in
respect to insolvent trading. We have not yet been able to form a view on these
defences.
b)
Director’s Personal Financial Position
On appointment, we requested the Directors provide a statement of their personal
financial positions to assist in the assessment of the amount likely to be recovered from
the Directors in the event of a successful insolvent trading action.
The Directors provided this information, however, did not consent to the disclosure of
that information to creditors.
c)
Examination of Officers of the Companies and Others
The provisions of Div 1 of Part 5.9 of the Act provide a means by which an ‘eligible
applicant’ such as a liquidator can examine officers of a company and others about its
examinable affairs and any other person who may be able to provide information
relating to such affairs. ‘Examinable affairs’ is a comprehensive term of wide ranging
application and includes:
•
•
•
The promotion, formation, management, administration or winding up of the
corporation;
Other affairs of the corporation; and
The business affairs of a connected entity of the corporation in so far as they
appear to be relevant to the corporation or its affairs.
If a court is satisfied that a summons for examination should be issued, the examinee
is usually required to produce at (or prior to) the examination specified books that are
in the person’s possession and relate to the corporation.
It is an offence if the person to be examined fails to attend the court, fails to answer a
question, makes a false or misleading statement or fails to produce books stipulated in
the summons.
P a g e | 43
d)
Litigation Funding
Should creditors resolve the Companies be wound up and a liquidator be appointed, it
is likely they will be substantially without funds to meet the costs of any recovery
actions which may be determined to exist.
In these circumstances, the liquidator will invite creditors to consider providing funding
to conduct further investigation of potential insolvent trading claims or other potential
recovery actions detailed in the preceding paragraphs.
Alternatively a liquidator may look to external funding from a litigation funder in
exchange for a percentage of the recovered proceeds. In the event that creditors
resolve that the Companies be placed into liquidation, then the future appointed
liquidator may request litigation funding in the absence of creditor funding.
Until further investigations are completed by a liquidator, we do not recommend
examinations of the Directors.
P a g e | 44
9. Estimated Return on Winding Up
While the Administrators’ primary focus is to work toward ensuring that completion of the sale of the
business is achieved in accordance with the agreement, the Administrators’ alternate option is to realise
the assets of the Companies on a break-up basis.
Given the commercially sensitive nature of the value attributed to some assets, it is inappropriate for us
to disclose a value for the goodwill, intellectual property, plant and equipment of the Companies’ assets.
Under both the going concern sale and break-up scenario, we have also assumed that the Companies
will continue to trade until 9 September 2012. Although completion of the sale is scheduled to occur on
7 September 2012, some further trading activities will be ongoing as we liquidate residual stock through
the existing retail network before it is shut down on 9 September 2012.
We note that the Companies operate substantially together and the primary trading activities are held
with DL. DL employs all the employees, leases all the property, owns all the plant and equipment, holds
the stock, orders the majority of materials and it is only when a sale of stock is made that the sale is
recognised as that of Ricci.
Pursuant to Section 571 of the Act, in certain circumstances a liquidator may make a determination that
two or more companies are a “pooled group” for the purposes of distributing the proceeds of the assets
of those companies. Section 571(1) of the Act provides that a liquidator can make a pooling
determination where:
•
•
•
each of the companies in the “group” have property that is owned by one company and used by the
other company in business;
the liquidator forms the view that it is just and equitable, as between the various creditors of the
companies in the group, for the group to be pooled; and
the grouping is for the purposes provided for under the Act
It is our view that DL and Ricci are sufficiently connected such that a liquidator may make a
determination that the Companies are a “pooled group” in accordance with Section 571 of the Act. To
the extent that the Companies are placed into liquidation and a liquidator does determine that the
Companies are a pooled group, the creditors of the Companies must resolve to accept the pooling
determination.
Regardless of whether a liquidator makes a pooling determination, we estimate (based on the current
information available to us) it to be likely that all of DL’s net non-circulating asset recoveries would likely
be payable to the Bank and all net recoveries from circulating assets would likely be payable to
employees to meet their entitlements. These recoveries are net of other obligations required to be paid
in advance of both the Bank and employees pursuant to Section 556 of the Act.
The primary impact that pooling would have on creditors is with respect to the net circulating asset
recoveries in Ricci. To the extent that a pooling determination is not made, those realisations would
likely be paid to the Bank under their security. To the extent that a pooling determination is made, those
realisations would likely be paid to employees to meet their entitlements.
For the purposes of this report, we have prepared estimated outcome positions for both DL and Ricci as
separate corporate entities, we note that the net realisations from circulating assets in Ricci would either
be payable to the Bank under its security or employees should a pooling determination ultimately be
made.
These estimated outcome positions have been prepared under two scenarios: the completion of the sale
as a going concern and the realisation of the Companies assets on a break-up basis. A summary of the
estimated returns is provided over page:
P a g e | 45
DL Estimated Position Statement
Unencumbered assets subject to fixed charges
less estimated realisation costs
Estimated funds available from unencumbered assets
Debt owed to secured creditors
Estimated return to secured creditor from
unencumbered fixed charge assets
Going
concern
($‘000)
Break-up
($‘000)
Notes
Withheld
Unknown
Withheld
Withheld
Unknown
Withheld
1
19,661
19,661
Unknown
Unknown
5,091
2,759
224
250
3,667
5,640
1,680
2,748
2,035
224
94
1,375
5,640
1,680
19,311
13,796
Stock to collect
Collection of pre appointment debtors to date
Collection of post appointment debtors to date
Balance to collect from pre appointment debtors
Balance to collect from post appointment debtors
Retail store receipts
Funding provided by parent
Total floating charge assets
Estimated Administrators' costs
Insurance
Trade on costs
Repayment of Administration funding provided by parent
company
Administrators' fees to date
Estimated future administrators fees
Estimated liquidators’ fees
Estimated legal costs
Other advisors and agents
Venue hire for creditor meetings and other costs
Total Administrators' costs
(35)
(9,750)
(35)
(9,750)
(1,697)
(1,636)
(318)
(350)
(300)
(300)
(5)
(14,391)
(1,102)
(1,636)
(318)
(350)
(300)
(300)
(5)
(13,796)
Estimated funds available for employee entitlements
Estimated employee entitlements
Estimated return to employees
4,920
(12,261)
40c in $
Nil
(18,153)
Nil
Nil
12,300
Nil
12,300
Nil
Nil
Estimated funds available for secured creditors from
floating charge assets
Estimated unsecured creditors (before claims from lessors)
Estimated funds available for unsecured creditors
2
3
3
4
5
6
7
8
9
10
P a g e | 46
Ricci Estimated Position Statement
Unencumbered assets subject to fixed charges
less estimated realisation costs
Estimated funds available from unencumbered assets
Debt owed to secured creditors
Estimated return to secured creditor from
unencumbered fixed charge assets
Collections of pre appointment debtors to date
Collections of post appointment debtors to date
Balance to collect from pre appointment debtors
Balance to collect from post appointment debtors
Total floating charge assets
Estimated Administrators' costs
Insurance
Trade on costs
Administrators' fees to date
Estimated future administrators fees
Estimated liquidators’ fees
Estimated legal costs
Other advisors and agents
Venue hire for creditor meetings and other costs
Total Administrators' costs
Estimated return to employees (cents/$)
Estimated return to secured creditor from circulating
assets
Going
concern
($‘000)
Break-up
($‘000)
Withheld
Unknown
Withheld
Withheld
Unknown
Withheld
19,661
19,661
Unknown
Unknown
2,035
184
2,186
2,082
6,487
2,035
184
820
781
3,820
(12)
(3,000)
(468)
(39)
(150)
(80)
(45)
(5)
(3,799)
(12)
(3,000)
(468)
(39)
(150)
(80)
(45)
(5)
(3,799)
2,688
Nil
NA
21
Nil
NA
2,688
400
Nil
21
400
Nil
2,688
(12,261)
22c in $
21
(18,153)
Nil
Nil
400
Nil
Nil
400
Nil
Notes
1
3
3
5
6
7
8
9
10
OR IF A POOLING DETERMINATION IS MADE
Estimated return to employees
Estimated return to secured creditor from circulating
assets
9
10
To the extent that a liquidator does make a pooling determination, the combined funds estimated to be
available for employee entitlements are $7.6m in a going concern scenario and nil in a break up
scenario. This represents a return of 62 and nil cents in the dollar respectively. Should a pooling
determination not be made, employees will be paid as per the DL Estimated Position Statement and
between nil and $2.6m is estimated to be available from circulating assets to the Bank.
All amounts identified above are GST exclusive.
P a g e | 47
Notes:
1.
Unencumbered fixed charge assets
Estimated realisable values of all unencumbered fixed assets are withheld as they are commercially
sensitive in both scenarios whilst the Administrators seek to complete the sale transaction. Given the
level of debt owed to non-circulating asset charge holders it is unlikely that there will be a surplus
available from the sale of unencumbered fixed assets for the benefit of employees or unsecured
creditors.
2.
Stock
The sale agreement provides for the majority of stock to be acquired at a rate that is unable to be
disclosed due to commercial confidence relating to the transaction. The balance of stock excluded
from the sale is largely obsolete and slow moving and likely to be realised at below cost.
For the purposes of the estimated position statement, we have assumed that under the going concern
scenario we may achieve realisations of 70% of the book value of stock. Under the break-up scenario,
we have assumed a 25% of book value is realised from the liquidation of stock, less known deductions
provided for under the sale agreement.
3.
Collection of debtors
Collections from debtors are based on actual receipts as at 26 August 2012. Please refer to Section
5.2.1 of this Report for further information.
Since our appointment, we have recovered a significant portion of the pre-appointment debtor
balance. We have assumed a 80% collectability rate for the remaining balance of the pre-appointment
and post-appointment debtors under the going concern scenario. Under the break-up scenario, we
have assumed a 30% collectability rate for the remaining balance for both the pre and post
appointment debtor balance.
We note that should we be unable to complete the sale of the business as a going concern, many
customers will not receive continuity of supply and it is likely that the realisable value would deteriorate
significantly as those customers seek to set-off damages. .
4.
Retail store receipts
From the period 10 July 2012 to 26 August 2012 the Companies have recorded retail sales of $5.6m.
We have not estimated future retail sales as we have applied a collection assumption with respect to
the balance of stock available for sale.
5.
Trade on costs
These costs have been estimated based on our estimated trading commitments, commitments for
wages and other trading expenses. Trading costs during the administration have been allocated
between DL and Ricci on the following basis:
•
•
6.
Directly to either DL or Ricci where the direct benefit from the expenditure can be determined;
and
As a percentage of revenue with respect to manufacturing, warehousing and head office costs.
Administrators/Liquidators remuneration
Please refer to Section 11 of this Report regarding the Administrators fees to date, forecast fees to the
conclusion of the administration and forecast fees in liquidation. The Administrators’ time costs have
been allocated directly by PPB Advisory staff to the respective legal entity.
P a g e | 48
7.
Other administration costs
These costs are based on advice received from our lawyers and other advisors engaged during the
administration to date.
8.
Venue hire costs
These costs represent the cost of hiring venues to convene the first and second Meetings of Creditors.
These costs have been allocated equally between the entities.
9.
As noted in Section 6 of this Report, employee entitlements have been calculated based on the
employees’ collective agreement, their individual contract or the NES. Under the going concern
scenario, employee entitlements are reduced as a result of a number of employees transitioning to the
new owner.
10.
Return to secured creditors from floating charge assets
While the return to secured creditors from non-circulating assets is commercially sensitive, the
estimated return from floating charged assets is estimated to be nil should a pooling determination be
made by a liquidator and between $1.4m and $2.5m from Ricci net circulating asset proceeds should a
pooling determination not be made.
P a g e | 49
10. Receipts and Payments
A summary of receipts and payments of the Companies from the date of appointment (10 July 2012)
until 24 August 2012 is shown in the tables below.
We note that the receipts and payments as presented below represent the actual cash receipts and
payments through the Companies’ two trading accounts (DL & Ricci) and exclude any additional
forecast receipts or accrued expenses that have not yet been processed. Therefore it should not be
used by Creditors as an approximation of funds available for distribution.
A more relevant and appropriate estimate of the possible outcome for creditors, taking into account
anticipated future receipts and payments, is included in Section 9.
DL Receipts and Payments
Receipts and Payments
Note
Amount ($’000)
(GST exclusive)
Receipts
Cash at bank on appointment
Pre-appointment debtors
Post-appointment debtors
Retail sales
DLN loan
Other receipts
GST
Total Receipts
Payments
Employee costs
Operating costs
Bank fees and charges
Administration costs
GST
Total Payments
Net Receipts/(payments)
1
2
3
4
5
6
7
8
5
13
2,446
187
4,798
1,697
193
499
9,833
2,742
2,029
69
168
147
5,154
4,678
Notes:
1.
Pre-appointment debtor collections of $2.4m represent 80% of DL’s pre-appointment debtors.
2.
Since the start of the Administration DL has raised invoices totalling $4.8m (GST excl.) of which we
have collected $0.2m.
3.
Retail sales deposited into the Administrators’ account totals $4.8m
4.
Represents a limited recourse loan provided by the Companies’ parent to fund the initial wage costs of
the administration process.
5.
Represents the GST received on post-appointment debtors and retail sale in the receipt line and GST
on purchasers in the payable line
P a g e | 50
6.
Includes the net payment of wages to employees, superannuation contributions and some PAYG
withheld payments.
7.
Ongoing operational costs in trading the business including raw material purchases, license fees, rent,
warehouse fees, packaging materials etc.
8.
Refers to costs incurred by the Administrators in undertaking the Administration. Including valuation
fees, consultant fees and advertising.
Note: funds have been deposited into DL’s pre-appointment bank account totalling $0.4m at 24 August 2012
which at this time had yet to be swept to the Administrators’ account.
Ricci Receipts and Payments
Receipts and Payments
Note
Amount ($’000)
(GST exclusive)
Receipts
Pre-appointment debtors
Post-appointment debtors
GST
Total Receipts
Payments
Operating costs
Administration costs
GST
Total Payments
Net Receipts/(payments)
1
2
3
2,032
182
18
2,238
4
5
3
15
13
1
29
2,210
Notes:
1.
Pre-appointment debtor collections of 2.0m represent 43% of Ricci’s pre-appointment debtors.
2.
Since the start of the Administration Ricci has raised invoices totalling $2.8m (GST excl.) of which we
have collected $0.2m.
3.
Represents the GST received on post-appointment debtors in the receipt line and GST on purchasers
in the payable line. As the majority of sale are made to international customers, GST received is quite
small.
4.
Ongoing operational costs in trading the business including raw material purchases, license fees,
warehouse fees, packaging materials etc.
5.
Refers to costs incurred by the Administrators in undertaking the Administration. Including valuation
fees, consultant fees and advertising.
Note: funds have been deposited into Ricci’s pre-appointment bank account totalling $5k at 24 August 2012
which at this time had yet to be swept to the Administrators’ account.
P a g e | 51
11. Remuneration
11.1 Initial Estimate of Fees
Prior to our appointment as Administrators, we were asked to provide information to the Directors of
the Companies for their consideration that set out our proposed strategy for the Administration and an
estimate of our costs to implement our recommended strategy.
We estimated that the costs to operate the Companies for a period of five weeks whilst seeking a
going concern sale of the business would cost in the range of $2.0m to $2.5m. To achieve a
successful going concern sale of the business we have operated the business for nine weeks which is
longer than initially forecast but has secured a going concern sale.
Despite having to operate the business for a longer period than initially forecast our costs remain in
line with our initial estimate provided to the Directors of the Companies for their pre-appointment
review.
We note that in our initial circular to creditors we advised that we would seek fee approval based on
our complex rates for engagements of this nature. However, due to the strong trading results reducing
our level of risk in respect of the Administration, we are now seeking approval for our fees based on
our standard rates listed in Annexure O. This represents a net decrease in our fees of approximately
$200k. Our initial estimate provided to the Directors was also based on our standard rates.
11.2 Voluntary Administration
Creditors will be requested to determine the Administrators’ remuneration at the meetings of
creditors by reference to the work undertaken by themselves, their partners and staff, at the
hourly rates set out in the aforementioned scale of fees.
Creditors are directed to the Creditor Remuneration Information Sheet, a copy of which is
contained within the Code of Professional Conduct on the IPA website at www.ipaa.com.au.
At the forthcoming meeting, creditors will be asked to consider the work conducted by the
Administrators, their Partners and staff since our appointment on 10 July 2012 to 29 August 2012
for the Companies, and to approve our remuneration as follows:
•
•
$1,636,108.30 (excluding GST) with respect to DL; and
$467,574.60 (excluding GST) with respect to Ricci.
A summary of the time spent by the Administrators and their staff in the conduct of the
administration for this period is outlined in Annexure L for the period from our appointment on 10
July 2012 to 29 August 2012.
11.3 Approval sought to the Conclusion of the Administration
The Administrators also seek approval for future remuneration for the period 30 August 2012 to
the completion of the voluntary administration of approximately:
•
•
$318,272.50 (excluding GST) with respect to DL; and
A summary of future works to be completed during this period is outlined in Annexure M.
P a g e | 52
11.4 Liquidation
Pursuant to Section 473(3) of the Act, a liquidator is entitled to receive such remuneration by way
of percentage or otherwise as is determined:
a)
if there is a committee of inspection – by agreement between the liquidator and the
committee of inspection; or
b)
if there is no committee of inspection or the liquidator and the committee of inspection fail to
agree:
i.
ii.
by resolution of the creditors; or
if no such resolution is passed – by the Court
Where remuneration is fixed under paragraph (a) above, the Court may, on the application of:
a)
a member or members whose shareholding or shareholdings represents or represent in the
aggregate at least 10% of the issued capital of the company; or
b)
a creditor or creditors whose debts against the company that have been admitted to proof
amount in the aggregate total at least 10% of the total amount of the debts of the creditors
of the company that have been admitted to proof; or
c)
ASIC review the liquidators’ remuneration and may confirm, increase or reduce that
remuneration.
Where the remuneration of a liquidator is determined in the manner specified in section 473(b)(i)
the Court may, on the application of the liquidator or of a member or members, review the
liquidators’ remuneration and may confirm, increase or reduce that remuneration.
In the event that the Companies are wound up, a further resolution will be put to the meeting for
the approval of the Liquidators’ fees for the period 12 September 2012 to completion subject to
further fee approval by creditors being sought if required.
If the Companies are placed into liquidation, a resolution will be proposed that the Liquidators’
future fees be paid at the aforementioned scale of fees which may be drawn by the Liquidators
from time to time, as funds permit. Creditors will be asked to approve the future fees for the
Liquidators for the period 12 September 2012 to completion up to an amount of:
•
•
$350,000.00 (excluding GST) with respect to DL; and
A summary of future works to be completed during this period is outlined in Annexure N.
11.5 Deed of Company Arrangement
In the event that the Companies execute a Deed of Company Arrangement, a further resolution
will be put to the meeting for the approval of the Deed Administrators’ fees for the period 12
September 2012 to completion subject to further fee approval by creditors being sought if
required.
However, we note that, to the date of this report, no deed proposal has been received.
11.6 Administrators’ Remuneration Report
Attached as Annexure O is a copy of the Administrators’ Remuneration Report.
P a g e | 53
Darrell Lea Chocolate Shops Pty Limited AND Ricci Reinond Chocolate Co Ply Limited
(Both Administrators Appoinled) I 3 September 2012
PPBAi>\, ISOi\Y
Creditors' questions will be answered at the forthcoming Second Meeting of Creditors. If creditors
have any queries in the interim, please contact Link Market Services Limited on (02) 8280 7660 or
dlea@linkmarketservices. coin, au
DATED this th
'd day of September 2012
Mark Robinson, JackBou lis&Da elWalley
Joint and Several Administrator
Darrell Lea Chocolate Shops Pty Limited
Ricci Reinond Chocolate Co Pty Limited
Page 154
Annexure A
FORM 529
CORPORATIONSACT 2001("THEACT")
NOTICE OF MEETING OF CREDITORS
DAI^RELLLEACHOCOLATESHOPSPTYLTD
ACN 000498386
RICCIREMONDCHOCOLATECOPrYLTD
ACN 000 489654
(BOTH ADMINISTRATORSAPPOINTED)
("THE COMPANIES")
Notice is given that the concurrent Second Meeting of the Creditors of the Companies will be held on:
Date:
12 September 20.2
Registration Time:
Meeting Time:
10.00am AE. S. T
I, .00am A. E. S, T
Location:
Ionic Room, Sydney Masonic Lodge, 66Goulbum Street Sydney NSW 2000.
AGENDA
To review the Joint & Several Administrators' report concerning the Companies' business, properly
affairs and financial circumstances pursuantto Section 439A of the Corporations Act 2001.
2
For creditors to consider the options available and to resolve either:
(a)
(b)
(c)
(d)
3,
that the Companies' executes a Deed of Company Arrangement' or
that the administration of the Companies' should end, or
that the Companies' be wound up; or
that the meeting be adjourned for period of up to 45 business days
To approve:
(a)
(b)
(c)
the Voluntary Administrators' remuneration; and
the remuneration of the Deed Administrator, if one is appointed' or
the remuneration of the Liquidator, if one is appointed.
Ifthe Companies' are wound up, to consider:
(a)
the appointment of a Committee of Inspection,
At the meeting, creditors may also, by resolution, vote to appoint someone else as Liquidator/ Deed
Administrator of the Companies.
Dated this 3 day of September 2012
Mark Robinson, Jack Bournelis and Daniel Walley
Joint & Several Administrators
Darrell Lea Chocolate Shops Pty Ltd
Ricci Reinond Chocolate Co Ply Ltd
Annexure B
Annexure C
PPBAi>\, KOI\\'
DARRELLLEACHOCOLATESHOPSPTYLTD
AC" 000 498 386
RICCIREMONDCHOCOLATEcoPrYLTD
ACN000489654
(BOTHADMINISTRATORS APPOINTED)
("THE COMPANIES")
STATEMENT OFADMINISTRATORS' OPINION
PURSUA"TTOSECTION439A(4)(b)OFTHE
CORPORATIONS ACT 200, ("THEACT")
This statement sets out our opinions in relation to the alternatives which the creditors of the Companies will
consider allhe concurrent Second Meeting of Creditors to be held allhe Ionic Room. Sydney Masonic Lodge,
66 Goulbum Street, Sydney NSW 2000 on Wednesday, 12 September 20.2 at 11:00am AEST (registration at
10:00amAEST). ,
The following options are available to creditors to decide allhe concurrent Second Meeting pursuantto Section
439C of the Act being that
a)
anyorall of the Companies should e)BCute a Deed of CompanyArrangement("DocA"); or
b)
the administration of any or all the Companies should end' or
c)
any orall of the Companies be wound up.
The Actrequires that the Administrators e>press an opinion on each option and make a recommendation. Our
opinion on each option and the reasons for our opinion are set out below:
The Companies execute a Deed of CompanyArrangement(DocA)
At the date of the Second Meeting of Creditors no DocA proposal had been submitted to the Administrators for
either of the Companies. Therefore this option is unavailable to the creditors' of either Companies.
The administration should end
In our opinion, this option is NOT in the creditors'interests for either of the Companies, Our reason for this
opinion is that the Companies are insolvent and there is no likelihood of them returning to solvency in their
circumstances,
c) The Companies should be woundup
In our opinion, this option is presen"y the only option available to creditors and therefore the Administrators'
recommend that each of the Companies be wound up.
DATED 3"dayofSeptember 2012
Mark Robinson, Jack Bournelis
Joint & Several Administrators
Ricci Reinond Chocolate Co Ply, Ltd
anielWally
Annexure D
DECLARATION OF INDEPENDENCE, RELEVANT RELATIONSHIPS AND INDEMNITIES
ACN 000 498 386
Ricci Remond Chocolate Co Pty Ltd
ACN 000 489 654
(Both Administrators Appointed) (“the Companies”)
Independence
We, Mark Robinson, Jack Bournelis and Daniel Walley of PPB Advisory, have undertaken a proper
assessment of the risks to our independence prior to accepting the appointments as Joint and
Several Administrators of the Company in accordance with the law and applicable professional
standards.
This assessment identified no real or potential risks to our independence. We are not aware of any
reasons that would prevent us from accepting this appointment.
Circumstances leading to appointment
On Monday 25 June 2012, Mark Robinson met with the board of DLN Pty Ltd (“DLN”), the 100%
shareholder of the Companies, to discuss the trading and financial position of the Companies.
Between 25 June and 5 July 2012 we communicated with the legal advisor to the Board of DLN,
Mitchell Mathas of Norton Rose lawyers, regarding the Companies’ trading and financial position.
On Thursday 5 July 2012 and Friday 6 July 2012, Mark Robinson and Daniel Walley met with
management of the Companies to discuss their trading and financial position, this included a visit to
the main manufacturing facility in Kogarah.
On Monday 9 July 2012, Mark Robinson and Daniel Walley met with the board of DLN to discuss
the financial position and options for the Companies. The Directors asked us to consent to act as
Voluntary Administrators. Consents to Act as Administrators were signed by Mark Robinson, Jack
Bournelis and Daniel Walley and provided to the Directors.
A meeting of the Directors of the Companies was held on 10 July 2012 where we were appointed
Administrators of the Companies.
Relevant relationships
1.
Relevant professional services
Neither we, nor our firm, have, or have had within the preceding 24 months; any professional
services relationships with the Company or its Directors, any associate of the Company or any
former Practioners of the Company.
2.
Relevant Relationships (excluding Professional Services to the Insolvent)
We, or a member of our firm, have, or have had within the preceding 24 months, a relationship with:
Name
Nature of relationship
Reasons why no conflict of
interest or duty
Westpac Banking WBC hold a number of security There are no matters of which we are
Corporation
interests registered on the Personal aware which give rise to a conflict in
(“WBC”)
- Properties Security Register (PPSR) this appointment. In particular, our
Secured Creditor
Mitchell Mathas
(Norton Rose) –
legal advisor to
the board of DLN
Pty Ltd
Darrell
Lea
Chocolate Shops
Pty Ltd and Ricci
Remond
Chocolate Co Pty
Ltd
(common
shareholder
–
DLN Pty Ltd)
previous relationships with WBC are
not in relation to the Company’s
We have professional relationships and/or the Directors’ affairs or related
with the majority of major banks and parties of the Company’s and/or the
lenders in Australia and with a Directors.
number
of
staff
within
their
organisations, particularly in the
credit area.
We have previously
undertaken formal and informal
assignments on behalf of the WBC
for a number of years.
Mitchell Mathas is a partner of Norton There are no matters of which we are
Rose and was providing legal advice aware which give rise to a conflict in
to the board of DLN Pty. He this appointment.
introduced PPB Advisory to the board
The IPA Code of Professional
of DLN.
Practice (“COPP”) confirms that
We have professional relationships networks of referrals between
with the majority of major lawyers in professionals are normal and are
Australia and with a number of staff acceptable provided the referral and
within their organisations. We have relationship are based on the quality
previously engaged and received of professional service and expertise.
referrals from Norton Rose and its
predecessor firms for a number of As explicitly prohibited in the COPP,
years.
we confirm that the referral was not
conditional upon:
• referral commissions, inducements
or benefits;
• ‘spotter’s fees’;
• recurring commissions;
• ‘understandings’ or requirements
that work in the Administration will be
given to the referrer; or
• any other such arrangements that
restrict the proper exercise of the
Practitioner’s judgment
and duties.
We were appointed as Administrators Darrell Lea Chocolate Shops Pty Ltd
of Darrell Lea Chocolate Shops Pty and Ricci Remond Chocolate Co Pty
Ltd on the same day as our operate the manufacture, retail and
appointment as Administrator to Ricci distribution of confectionery products
Remond Chocolate Co Pty Ltd. Both together The nature of the business
companies are 100% owned by DLN operations
mean
that
the
Pty Ltd.
administrations can be conducted
more efficiently by one practitioner.
over the companies.
At the time of our appointment, we
were not aware of any conflicts of
interest between the two companies.
Should such a conflict arise, weI will
keep creditors informed and take
appropriate action to resolve the
conflict.
There are no other prior professional or personal relationships requiring disclosure.
Annexure E
Insolvency information for directors,
employees, creditors and shareholders
ASIC has 11 insolvency information sheets to assist you if you’re affected by a company’s insolvency
and have little or no knowledge of what’s involved.
These plain language information sheets give directors, employees, creditors and shareholders a basic
understanding of the three most common company insolvency procedures—liquidation, 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
•
INFO 41 Insolvency: a glossary of terms
•
INFO 74 Voluntary administration: a guide for creditors
•
INFO 75 Voluntary administration: a guide for employees
•
INFO 45 Liquidation: a guide for creditors
•
INFO 46 Liquidation: a guide for employees
•
INFO 54 Receivership: a guide for creditors
•
INFO 55 Receivership: a guide for employees
•
INFO 43 Insolvency: a guide for shareholders
•
INFO 42 Insolvency: a guide for directors
•
INFO 84 Independence of external administrators: a guide for creditors
•
INFO 85 Approving fees: a guide for creditors
Getting copies of the information sheets
To get copies of the information sheets, visit ASIC’s 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 IPA’s 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
Annexure F
Annexure F – PPSR Summary of Registered Interests
DL
A.P. Eagers Limited
201202140025027
Date registered
on PPSR
14/02/2012
A.P. Eagers Limited
201202140116599
14/02/2012
Other Goods
Ausco Modular Pty Limited
201203090002879
9/03/2012
Other Goods
Ausco Modular Pty Limited
201205110084360
11/05/2012
Other Goods
Bestlan Bananas Pty Ltd
201205160026701
16/05/2012
Other Goods
Betta Foods Australia Pty. Ltd.
201205170054830
17/05/2012
Other Goods
Secured Party
PPSR #
Collateral Class
/Description
Other Goods
Bronson & Jacobs Pty Ltd
201202140218205
14/02/2012
Other Goods
Buderim Ginger Limited
201203270114643
27/03/2012
Other Goods
Coates Hire Operations Pty Limited
201112201524794
30/01/2012
Motor Vehicle
Coates Hire Operations Pty Limited
201112201524858
30/01/2012
Other Goods
Fleetplus Pty Limited
201203200043400
20/03/2012
Motor Vehicle
Imcd Australia Limited
201201090563332
30/01/2012
Other Goods
Kraft Foods Australia Pty Ltd
201202030008866
3/02/2012
Other Goods
Macquarie Leasing Pty Ltd
201112290285309
30/01/2012
Motor Vehicle
Nuplex Industries (Aust) Pty Limited
201201110674510
30/01/2012
Other Goods
Peerless Holdings Pty. Limited
201112230850725
30/01/2012
Other Goods
Redox Pty Ltd
201202150123713
15/02/2012
Other Goods
Scalzo Trading Co. Proprietary Limited
201201040005586
30/01/2012
Other Goods
Tacca Industries Pty Ltd
201201020074669
30/01/2012
Other Goods
Toyota Material Handling Australia Pty Limited
201201120808532
30/01/2012
Motor Vehicle
201201120808940
30/01/2012
Motor Vehicle
201201120809437
30/01/2012
Motor Vehicle
201201120818615
30/01/2012
Motor Vehicle
201201120818691
30/01/2012
Motor Vehicle
201201120818731
30/01/2012
Motor Vehicle
201201120818945
30/01/2012
Motor Vehicle
201201120818984
30/01/2012
Motor Vehicle
201201120819020
30/01/2012
Motor Vehicle
201201120819065
30/01/2012
Motor Vehicle
201201120819106
30/01/2012
Motor Vehicle
201201120825421
30/01/2012
Motor Vehicle
201201120828107
30/01/2012
Motor Vehicle
201201120828596
30/01/2012
Motor Vehicle
201201120844028
30/01/2012
Motor Vehicle
201201120845309
30/01/2012
Motor Vehicle
201201120850046
30/01/2012
Motor Vehicle
201201120857405
30/01/2012
Motor Vehicle
201201120857446
30/01/2012
Motor Vehicle
201201120857451
30/01/2012
Motor Vehicle
201201120866893
30/01/2012
Motor Vehicle
201201120866935
30/01/2012
Motor Vehicle
201201120876509
30/01/2012
Motor Vehicle
201201120878262
30/01/2012
Motor Vehicle
201201120878301
30/01/2012
Motor Vehicle
201201120879192
30/01/2012
Motor Vehicle
201201120879222
30/01/2012
Motor Vehicle
201201120914805
30/01/2012
Motor Vehicle
201201120914846
30/01/2012
Motor Vehicle
201203270060847
27/03/2012
Motor Vehicle
201206070056595
7/06/2012
Motor Vehicle
Visy Board Proprietary Limited
201201050015896
30/01/2012
Other Goods
Visy Glama Pty Ltd
201201050005264
30/01/2012
Other Goods
201112052877832
30/01/2012
APAAP no exceptions
201112204562770
30/01/2012
APAAP no exceptions
201112204563115
30/01/2012
APAAP no exceptions
201112210017323
30/01/2012
APAAP no exceptions
201112210041527
30/01/2012
APAAP no exceptions
201112210264326
30/01/2012
APAAP no exceptions
201112212031741
30/01/2012
APAAP no exceptions
201112220062429
30/01/2012
APAAP no exceptions
201112280211379
30/01/2012
APAAP with exceptions
201201100397961
30/01/2012
Motor Vehicle
201201100397990
30/01/2012
Motor Vehicle
201201100398025
30/01/2012
Motor Vehicle
201201100398041
30/01/2012
Motor Vehicle
201201100398060
30/01/2012
Motor Vehicle
201201100398104
30/01/2012
Motor Vehicle
201201100398143
30/01/2012
Motor Vehicle
201201100398170
30/01/2012
Motor Vehicle
201201100398213
30/01/2012
Motor Vehicle
201201100398245
30/01/2012
Motor Vehicle
PPSR #
Date registered
on PPSR
Collateral Class
/Description
201112052877464
30/01/2012
APAAP no exceptions
201112280211346
30/01/2012
APAAP with exceptions
RR
Secured Party
Annexure G
Annexure G – DL leased assets
Financier
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Westpac
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Toyota
Sharp
Sharp
Sharp
Sharp
Sharp
Sharp
Sharp
Sharp
Asset
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Forklift
Photocopier
Photocopier
Photocopier
Photocopier
Photocopier
Photocopier
Photocopier
Photocopier
Start date
25-Aug-09
25-Aug-09
22-Sep-09
22-Sep-09
16-Oct-09
06-Jul-10
20-Jul-10
23-Apr-10
22-Nov-10
22-Nov-10
22-Nov-10
22-Nov-10
22-Nov-10
01-Feb-11
07-Feb-11
01-Feb-11
01-Feb-11
25-Aug-10
27-Aug-10
19-Jan-11
01-Apr-10
01-Apr-10
01-Apr-10
01-Apr-10
29-Sep-10
29-Sep-10
28-Sep-10
28-Sep-10
28-Sep-10
28-Sep-10
28-Sep-10
01-Apr-10
01-Apr-10
01-Apr-10
29-Sep-10
29-Sep-10
19-Mar-12
01-Apr-10
01-Apr-10
29-Sep-10
29-Sep-10
01-Apr-10
01-Apr-10
01-Apr-10
unknown
01-Apr-10
unknown
29-Sep-10
01-Nov-10
30-Jun-10
30-Jun-10
30-Jun-10
30-Jun-10
30-Jun-10
30-Jun-10
30-Jun-10
Monthly cost ($)
755.08
755.08
755.08
755.08
746.15
728.72
579.18
746.68
600.27
600.27
600.27
600.27
600.27
600.27
609.47
600.27
600.27
738.72
642.25
769.23
845.00
1,186.25
842.98
377.00
386.02
386.02
386.02
386.02
386.02
386.02
386.02
264.33
264.33
277.33
308.82
308.82
617.02
632.66
632.66
947.91
947.91
858.00
901.33
858.00
unknown
351.00
unknown
334.85
168.00
388.86
516.36
330.28
330.28
330.28
516.36
332.56
Annexure H
Annexure H– Administrators ERV by company
DL
Ricci
Total
$’000
$’000
$’000
Trade debtors
3,071
4,768
7,839
Cash on hand
49
Nil
49
Cash at bank
13
Nil
13
Stock
Withheld
Nil
Withheld
WIP
Withheld
Nil
Withheld
Plant and equipment
Withheld
Nil
Withheld
Withheld
Withheld
Withheld
Assets subject to specific charges
Nil
Nil
Withheld
Less: amounts owing
Nil
Nil
Withheld
Surplus/(deficiency)
Nil
Nil
Withheld
(18,153)
Nil
(18,153)
Less: Amounts owing and secured by
debenture or circular security interest
(19,661)
(19,661)
(19,661)
Unsecured creditors
(12,300)
Nil
(400)
Withheld
Withheld
Withheld
Assets not specifically charged
Sub Total
Less: Amounts owing for employee
entitlements
Estimated Surplus/(Deficiency)
Annexure I
GEERS provides protection for employees who have lost their employment due to the liquidation or
bankruptcy of their employer and who are owed certain employee entitlements. This fact sheet
provides an overview of the eligibility requirements and the entitlements available under GEERS.
What assistance is available
under GEERS?
Am I eligible for GEERS?
GEERS assistance is available for the following outstanding
employee entitlements:

unpaid wages for work performed in the 3 month
period prior to the appointment of an insolvency
practitioner

unpaid annual leave

unpaid long service leave

unpaid pay in lieu of notice up to a maximum period
of 5 weeks, and

unpaid redundancy pay up to a maximum of 4
weeks per completed year(s) of service.
Note – if your employer entered liquidation between
22 August 2006 and 31 December 2010, the
maximum redundancy entitlement you will be
eligible for under GEERS is 16 weeks.
To be eligible for GEERS you must meet all of the eligibility
requirements outlined in the GEERS Operational
Arrangements. An overview of a number of key eligibility
requirements is provided below.
Your employer has entered liquidation or
bankruptcy
To receive GEERS assistance, you must be an employee of
an employer who has entered liquidation or bankruptcy.
In calculating all outstanding employee entitlements
under GEERS, a maximum annual wage is used. If you earn
more than this rate at the date your employment ceased,
your GEERS assistance will be calculated as if you earned
the maximum annual wage. The maximum annual wage is
indexed annually and rates are available on our website.
Unremitted employer contributions under the
Superannuation Guarantee are not eligible entitlements
under GEERS and are covered by separate legislative
requirements. For more information, please contact the
Australian Taxation Office Superannuation Information
line on 131 020.
You are not eligible for GEERS assistance if you are an
‘excluded employee’ (including company directors,
principals of bankrupt employers and their relatives),
contractor, subcontractor, agent, shareholder, investor,
volunteer or are owed money by the employer for any
reason other than in respect of eligible employee
entitlements.
For further information about:

Liquidation: visit the Australian Securities and
Investments Commission (ASIC) website –
www.asic.gov.au

Bankruptcy: visit the Insolvency Trustee Service
Australia (ITSA) – www.itsa.gov.au
Where a Deed of Company Arrangement (DoCA), Trust,
Personal Insolvency Agreement or Debt Agreement
operated in the 12 months prior to insolvency, special
requirements apply – refer to clause 16(f) of the
1 January 2011 GEERS Operational Arrangements.
If you have unremitted employer contributions under the
Superannuation Guarantee, you may also wish to contact
the insolvency practitioner managing your former
employer’s affairs to discuss your rights as an employee
creditor.
GEERS – Eligibility for GEERS assistance – Fact Sheet
Page 1 of 2
Updated: July 2012
Termination of your employment is linked to
insolvency
You are entitled to reside permanently in
Australia
To receive GEERS assistance, the termination of your
employment must be linked to the insolvency of your
former employer. The link between termination of
employment and insolvency will usually be clear when
your employment has ceased in one of the following
ways:



To receive GEERS assistance, you must be an Australian
citizen or the holder of a permanent resident visa.
For further information about Australian citizenship or
obtaining a visa, visit the Department of Immigration and
Citizenship website – www.immi.gov.au
Your employment was terminated because an
insolvency practitioner was appointed to your
employer
You lodge your claim for GEERS in the required
timeframe
You resigned after the appointment of an
insolvency practitioner to your employer, or
You resigned or your employment was terminated
in the 6 month period before an insolvency
practitioner was appointed to your employer.
An insolvency practitioner may, for example, include an
administrator, receiver or liquidator.
You have eligible outstanding employee
entitlements
To receive GEERS assistance, your entitlements must be
provided for in an industrial instrument, such as
legislation, an award, an agreement or a written contract
of employment.
There are no other funds available to cover your
outstanding employee entitlements
You may not be eligible for GEERS, or the amount of
assistance you receive may be reduced if:
If you think you may be eligible for GEERS, please lodge
your claim form as quickly as possible. We must receive
your GEERS claim within 12 months of one of the
following events (whichever occurred last):

The termination of your employment

Your resignation from employment, or

The date the insolvency practitioner was appointed
to your employer.
If you are unable to lodge your claim in this timeframe,
please explain the reasons for this with your claim.
You provide relevant information in the
required timeframe
To assess your GEERS claim, we generally rely on the
information provided by the insolvency practitioner as
they should have access to your former employer’s
records.

The insolvency practitioner expects funds will be
available to pay your outstanding entitlements
within 16 weeks of the date we receive your claim.
You can contact us if payment is delayed.

We may also request additional information from you to
support your claim. If you do not provide this information
within 28 days of our request or contact us within this
timeframe to make other arrangements we may be
unable to process your claim.
You are able to receive a payment for your
outstanding employee entitlements from a fund,
such as a long service leave industry trust fund or
redundancy trust fund.
Want more information?

For more information, you can:
You receive funds, or are entitled to receive funds,
in respect of employee entitlements from any other
source.

Access our website – www.deewr.gov.au/geers

Phone the GEERS Hotline – 1300 135 040

Email the GEERS Hotline – GEERS@deewr.gov.au
For language assistance contact the Translating and
Interpreting Service (TIS) on 13 14 50 for free help 24
hours a day, 7 days a week.
GEERS – Eligibility for GEERS assistance – Fact Sheet
Page 2 of 2
Updated: July 2012
Annexure J
Annexure J – Individual company accounts
Historical Financial Performance
Profit & Loss
ACN 000 498 386
Revenue
Freight
Other COGS
Total
Gross Profit
Gross Margin %
Expenses
Direct overheads
Head office costs
Marketing
Rent & outgoings
Wages & Salaries
Other expenses
Total expenses
Operational EBITDA
Management
Accounts
Audited
Accounts
Audited
Accounts
12 Months to
30 June 2012
$'000
67,230
12 Months to
30 June 2011
$'000
74,093
12 Months to
30 June 2010
$'000
79,074
(3,225)
(33,710)
(36,935)
30,295
45%
(2,969)
(38,024)
(40,993)
33,100
45%
(3,213)
(41,550)
(44,763)
34,311
43%
(3,741)
(3,731)
(2,520)
(9,456)
(11,925)
(1,795)
(33,168)
(5,262)
(3,611)
(2,641)
(9,981)
(12,563)
(1,395)
(35,453)
(4,931)
(3,550)
(2,492)
(9,794)
(11,785)
(2,789)
(35,341)
(2,873)
(2,353)
(1,030)
Profit & Loss
ACN 000 489 654
Revenue
Freight
Other COGS
Total
Gross Profit
Gross Margin %
Expenses
Direct overheads
Head office costs
Marketing
Rent & outgoings
Wages & Salaries
Other expenses
Total expenses
Operational EBITDA
Management
Accounts
Audited
Accounts
Audited
Accounts
12 Months to
30 June 2012
$'000
25,961
12 Months to
30 June 2011
$'000
24,469
12 Months to
30 June 2010
$'000
23,996
(1,676)
(19,271)
(20,947)
5,014
19%
(1,724)
(17,248)
(18,972)
5,497
22%
(1,548)
(18,339)
(19,887)
4,109
17%
(751)
(1,034)
(1,060)
(632)
(474)
(3,951)
(589)
(1,097)
(1,325)
(547)
(1,078)
(1,873)
(521)
(404)
(3,936)
(537)
(455)
(4,490)
1,063
1,561
(381)
Historical Financial Position*
Balance Sheet
ACN 000 498 386
Audited
Accounts
Audited
Accounts
30-Jun-11
30-Jun-10
$'000
$'000
56
4,338
4,339
3,133
54
3,307
4,173
2,177
8,568
Current Assets
Cash
Debtors
WIP
Finished goods
Prepayments
20,584
18,744
Non-Current Assets
Tax related assets
3,135
19,449
22,583
1,979
22,225
24,204
TOTAL ASSETS
43,167
42,948
Current Liabilities
Shareholder loans
10,784
8,181
4,498
2,555
26,018
10,910
3,916
4,489
19,315
Tax related liablility
753
362
19
9,850
10,983
702
225
20
10,550
11,497
TOTAL LIABILITIES
37,001
30,812
6,167
12,136
NET ASSETS
8,112
607
465
Balance Sheet
ACN 000 489 654
Audited
Accounts
Audited
Accounts
30-Jun-11
30-Jun-10
$'000
$'000
219
8,967
43
7,203
9,186
7,246
101
147
101
147
9,287
7,392
1,082
664
1,082
664
-
-
TOTAL LIABILITIES
1,082
664
NET ASSETS
8,206
6,728
Current Assets
Cash
Debtors
WIP
Finished goods
Prepayments
Non-Current Assets
Tax related assets
TOTAL ASSETS
Current Liabilities
Shareholder loans
Tax related liablility
* Although requested the Administrators were not provided with the Companies’ financial position statement as at
30 June 2012 on a deconsolidated basis.
Annexure K
Creditor Information Sheet
Offences, Recoverable transactions and
Insolvent Trading
Offences
A summary of offences that may be identified by the administrator:
180
Failure by officer to exercise a reasonable degree of care and diligence in the exercise of his powers and
the discharge of his 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 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 corporation while being an insolvent under an administration.
206A, B
Acting as a director or promoter or taking part in the management of a company within five 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
Failure to keep proper accounting records.
312
Obstruction of auditor.
314-7
Failure to comply with requirements for financial statement preparation.
437C
Performing or exercising a function or power as officer while a company is under administration.
437D(5)
Unauthorised dealing with company's property during administration.
438B(4)
Failure by directors to assist administrator, deliver records and provide information.
438C(5)
Failure to deliver up books and records to administrator.
590
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 Report as to Affairs or false representation to creditors.
Preferences
A preference is a transaction such as a payment between the company and one or more of its creditors, in
which the creditor receiving the payment is preferred over the general body of creditors. The relevant time
period is six months before the commencement of the liquidation. The company must have been insolvent at
the time of the transaction, or become insolvent as a result of the transaction.
Where a creditor receives a preferred payment, the payment is voidable as against a liquidator and is liable to
be paid back to the liquidator subject to the creditor being able to successfully maintain any of the defences
available to the creditor under either the Corporations Act.
Uncommercial Transaction
An uncommercial transaction is one that it may be expected that a reasonable person in the company's
circumstances would not have entered into having regard to:
•
the benefit or detriment to the company;
•
the respective benefits to other parties; and,
•
any other relevant matter.
To be voidable, an uncommercial transaction must have occurred during the two years before the liquidation.
However, if a related entity is a party to the transaction, the time period is four years and if the intention of
the transaction is to defeat creditors, the time period is ten years.
Insolvency Practitioners Association of Australia ABN 28 002 472 362
33 Erskine Street, GPO Box 3921, Sydney NSW 2001 P+61 2 9290 5700 F +61 2 9290 2820 www.ipaa.com.au
The company must have been insolvent at the time of the transaction, or become insolvent as a result of the
transaction.
Unfair Loan
A loan is unfair if and only if the interest was extortionate when the loan was made or has since become
extortionate. There is no time limit on unfair loans – they only have to have been entered into any time on or
before the day when the winding up began.
Arrangements to avoid employee entitlements
If an employee suffers loss because a person (including a director) enters into an arrangement or transaction
to avoid the payment of employee entitlements, the liquidator or the employee may seek to recover
compensation from that person. It will only be necessary to satisfy the court that there was a breach on the
balance of probabilities. There is no time limit on when the transaction occurred.
Unreasonable payments to directors
Liquidators have the power to reclaim "unreasonable payments" made to directors by companies prior to
liquidation. The provision relates to transactions made to, on behalf of, or for the benefit of, a director or
close associate of a director. To fall within the scope of the section, the transaction must have been
unreasonable, and have been entered into during the 4 years leading up to a company's liquidation,
regardless of its solvency at the time the transaction occurred.
Voidable charges
Certain charges are voidable by a liquidator:
•
Floating charge created with six months of the liquidation unless it secures a subsequent advance;
•
Unregistered charges; and
•
Charges in favour of related parties who attempt to enforce the charge within 6 months of its creation.
Insolvent Trading
In the following circumstances, directors may be personally liable for insolvent trading by the company:
•
a person is a director at the time a company incurs a debt;
•
the company is insolvent at the time of incurring the debt or becomes insolvent because of incurring the
debt;
•
at the time the debt was incurred, there were reasonable grounds to suspect that the company was
insolvent;
•
the director was aware such grounds for suspicion existed; and
•
a reasonable person in a like position would have been so aware.
The law provides that the liquidator, and in certain circumstances the creditor who suffered the loss, may
recover from the director, an amount equal to the loss or damage suffered. Similar provisions exist to pursue
holding companies for debts incurred by their subsidiaries.
A defence is available under the law where the director can establish:
•
there were reasonable grounds to expect that the company was solvent and they actually did so
expect;
•
they did not take part in management for illness or some other good reason; or,
•
they took all reasonable steps to prevent the company incurring the debt.
The proceeds of any recovery for insolvent trading by a liquidator are available for distribution to the
unsecured creditors before the secured creditors.
Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some
provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about
the law or the exceptions and qualifications that are relevant to your circumstances.
Insolvency Practitioners Association of Australia
Creditor Information Sheet s439A report (2)
Page 2
Annexure L
ANNEXURE L – SUMMARY OF ADMINISTRATORS’ TIME
SPENT TO DATE
DL
A summary of the time spent by the Administrators and their staff in the conduct of the administration for
this period is outlined in the table below for the period from our appointment on 10 July 2012 to 29
August 2012.
Task Area
Administration
430 hours
$138.5k
Assets
456 hours
$184k
General Description
Includes
Administration support
General administration, photocopying, mailing, faxing,
printing, file notes, telephone correspondence, general
process of receipts & payments.
Document
maintenance/file
review/checklist
Initial file review.
Filing of documents.
File reviews & Updating checklists.
Insurance
Identification of potential issues requiring attention of
insurance specialists.
Correspondence with Willis (broker) regarding initial and
ongoing insurance requirements.
Reviewing insurance policies.
Correspondence with previous brokers.
Bank account
administration
Preparation of correspondence for opening bank account.
Requesting bank statements.
Regular bank account reconciliations.
Attendance to bank correspondence.
Correspondence with bank regarding specific transfers.
Correspondence with retail staff regarding takings
deposits.
ASIC Forms
Preparation and lodging ASIC forms.
Correspondence with ASIC regarding statutory forms.
ATO & other statutory
reporting
Notification of appointment.
Requesting new GST registration for the Administration.
Preparing Business Activity Statement.
Corresponding to ATO re GST payments/receipts.
Planning / Review
Discussions regarding status of administration.
Regular with directors, directors’ advisors, senior
management and external consultants.
Regular internal strategy meetings.
Books and records/
storage
Retrieve and listing books and records from various sites
and project sites as required.
Dealing with records in storage.
Cash
Liaising with banking institutions regarding transfer of preappointment cash at various banks.
Cash controls.
Daily review of sales takings
Task Area
Creditors
487 hours
$165k
General Description
Includes
Plant and Equipment
Liaising with valuers, auctioneers and interested parties.
Attending sites to inspect assets.
Reviewing asset listings.
Reviewing asset valuations.
Assets subject to
specific charges
Liaising with and obtaining payout figure from financiers.
Negotiations with interested parties.
Disclaiming onerous properties.
All other tasks associated with realising a charged asset.
Debtors
Correspondence with debtors.
Negotiate early payment of debtors
Reviewing, assessing and maintaining debtors ledgers.
Reviewing key documentation and liaising with staff.
Negotiating with debtors.
Liaising with solicitors as required.
Other Assets
Collecting books and records from various offices.
Collecting Companies’ assets from various sites including
following the closure of 32 retail stores.
Leasing
Reviewing leasing documents for various premises.
Liaising with owners/lessors and managing agents.
Tasks associated with disclaiming leases.
Creditor Enquiries
Receive and follow up creditor enquiries via telephone and
email.
Engaging call centre services to assist with replying to
creditors enquiries.
Maintaining creditor enquiry register.
Meeting with COC
Correspondence to the COC
Attending to queries of the COC
Review and prepare correspondence to creditors and their
representatives via email and post.
Security interests
Claims
Reviewing security interest registrations on PPSR.
Reviewing initial notification of creditor’s intention to claim.
Liaising with creditors and their representatives.
Seeking advice from solicitors.
Meeting claimants on site to identify goods.
Adjudicating security interests claims.
Corresponding with claimants.
Notifying outcome of adjudication.
Secured creditor
Preparing appointment notification to secured creditors.
Responding to secured creditors’ queries.
Assessing secured creditors claims and registration on
PPSA.
Liaising with secured creditors regarding the sale of
business
Task Area
General Description
Creditor reports
Dealing with Proofs of
debt & Proxy
Meeting of Creditors
Employees enquiry
Employees
169 hours
$73k
Preparing first circular of creditors upon the appointment
Preparing 439A report, completing investigations,
preparing for meeting and general reports to creditors.
Preparing notices to creditors in relation to extension of
convening period.
Receipting and filing PODs.
Liaising with call centre regarding PODs.
Correspondence with OSR and ATO regarding PODs.
Updating Proxy register for first creditors meeting.
Setting up and maintaining PODs register.
Assisting creditors to complete POD and Proxy.
Preparation of meeting notices, proxies and
advertisements.
Forward notice of meeting to all known creditors.
Preparing meeting file, including agenda, certificate of
postage, attendance register, list of creditors, reports to
creditors, advertisement of meeting and draft minutes of
meeting.
Attending the meeting of creditors.
Preparing and lodging minutes of meetings with ASIC.
Responding to stakeholder queries and questions
immediately following meeting.
Uploading creditor notifications to PPB Advisory website.
Reviewing and follow up of employee enquiries.
Maintaining employee enquiry register.
Preparing letters to employees advising of their position
and options available.
Correspondences relating to employees’ leave
entitlements.
Review of NEST.
Regular discussions with various unions (AMWU, NUW
and SDA).
Preparing separation certificate.
Calculation of employee entitlements by:
Calculation of
entitlements
Other employee
issues
Investigations
165 hours
$68k
Includes
Conducting
Investigation
•
Reviewing employee files and companies’ books
and records.
•
Reconciling superannuation accounts.
•
Reviewing industrial awards.
•
Liaising with solicitors regarding entitlements.
Attending to all other tasks related to employee issues.
Imagining forensic copy of Companies’ hard drive and key
personnel’s’ laptops.
Collating the Companies books and records from various
premises and construction sites.
Requesting and reviewing Report as to Affairs.
Task Area
General Description
Includes
Reviewing the Companies books and records.
Reviewing and preparing a summary of the Companies’
nature and history.
Conducting and summarising statutory searches from
ASIC and PPSA.
Preparing comparative financial statements.
Preparing deficiency statement.
Reviewing of specific transactions and liaising with director
regarding certain transactions.
Reviewing companies’ emails regarding certain
transactions.
Sale of
business
568 Hours
$266k
Sale of Business as a
Going Concern
Collect information and preparation of information
memorandum.
Advertising business for sale.
Setting up data room for due diligence purpose.
Correspondence and negotiations with interested parties
and maintaining register.
Negotiating with interested parties who had submitted
offers.
Internal meetings to discuss/review offers received.
Liaising with solicitors.
Liaising with bank, charge holders and lessors.
Negotiate the release of assets held subject to a lien.
Trade On
Management
Liaising with suppliers.
Liaising with management and staff.
Attendance on site.
Authorising purchase orders.
Maintaining purchase order registry.
Reviewing and monitoring production.
Reviewing and monitoring procurement.
Liaising with superannuation funds regarding contributions,
termination of employees employment.
Liaising with OSR regarding payroll tax issues.
Closure of 32 retail stores.
Negotiate the release of assets held subject to a lien.
Processing receipts
and payments
Entering receipt and payments into accounting system.
Preparing and authorising receipt vouchers.
Preparing and authorising payment vouchers.
Budgeting and
financial reporting
Reviewing the Companies’ budgets and financial
statements.
Preparing budgets.
Preparing cash flow forecast and updating daily.
Preparing periodic financial reports.
Finalising trading profit and loss.
Internal meetings to discuss trading position.
Trade on
1,814 hours
$740k
Ricci
A summary of the time spent by the Administrators and their staff in the conduct of the administration for
this period is outlined in the table below for the period from our appointment on 10 July 2012 to 29
August 2012.
Task Area
Administration
67 hours
$24k
Assets
70 hours
$30.5k
General Description
Includes
Administration support
General administration, photocopying, mailing, faxing,
printing, file notes, telephone correspondence, general
process of receipts & payments.
Document
maintenance/file
review/checklist
Initial file review.
File reviews & Updating checklists.
Insurance
Identification of potential issues requiring attention of
insurance specialists.
Correspondence with Willis (broker) regarding initial and
ongoing insurance requirements.
Reviewing insurance policies.
Correspondence with previous brokers.
Bank account
administration
Preparation of correspondence for opening bank account.
Requesting bank statements.
Correspondence with retail staff regarding takings
deposits.
ASIC Forms
Preparation and lodging ASIC forms.
reporting
Requesting new GST registration for the Administration.
Corresponding to ATO re GST payments/receipts.
Planning / Review
Regular with directors, directors’ advisors, senior
management and external consultants.
Regular internal strategy meetings.
Books and records/
storage
Retrieve and listing books and records from various sites
and project sites as required.
Cash
Liaising with banking institutions regarding transfer of preappointment cash at various banks.
Plant and Equipment
Nil
Assets subject to
specific charges
Nil
Debtors
Reviewing, assessing and maintaining debtors ledgers.
Reviewing key documentation and liaising with staff.
Task Area
General Description
Includes
Negotiating with debtors.
Liaising with solicitors as required.
Other Assets
Collecting books and records from various offices.
Leasing
Review of records to identify any leases.
Creditor Enquiries
Receive and follow up creditor enquiries via telephone and
email.
Engaging call centre services to assist with replying to
creditors enquiries.
Review and prepare correspondence to creditors and their
representatives via email and post.
Security interests
Claims
Secured creditor
Creditor reports
Creditors
111 hours
$49k
Dealing with Proofs of
debt & Proxy
Reviewing security interest registrations on PPSR.
Preparing appointment notification to secured creditors.
Responding to secured creditors’ queries.
Assessing secured creditors claims and registration on
PPSA.
Liaising with secured creditors regarding sale of head
office and sale of other assets.
Preparing first circular of creditors upon the appointment
Preparing notices to creditors in relation to extension of
convening period.
Liaising with call centre regarding PODs.
Updating Proxy register for first creditors meeting.
Setting up and maintaining PODs register.
Assisting creditors to complete POD and Proxy.
Preparation of meeting notices, proxies and
advertisements.
Forward notice of meeting to all known creditors.
Preparing meeting file, including agenda, certificate of
postage, attendance register, list of creditors, reports to
creditors, advertisement of meeting and draft minutes of
meeting.
Attending the meeting of creditors.
Preparing and lodging minutes of meetings with ASIC.
Responding to stakeholder queries and questions
Uploading creditor notifications to PPB Advisory website.
Task Area
Sale of
business
382 Hours
$184k
Investigations
6 hours
$3k
Trade on
380 hours
$177k
General Description
Sale of Business as a
Going Concern
Includes
Collect information and preparation of information
memorandum.
Advertising business for sale.
Setting up data room for due diligence purpose.
Correspondence and negotiations with interested parties
and maintaining register.
Negotiating with interested parties who had submitted
offers.
Internal meetings to discuss/review offers received.
Liaising with bank, charge holders and lessors.
Conducting
Investigation
Imagining forensic copy of Companies’ hard drive and key
personnel’s’ laptops.
Collating books and records from various premises and
construction sites.
Requesting and review Report as to Affairs.
Reviewing books and records.
Reviewing and preparing Companies’ nature and history.
Conducting and summarising statutory searches from
ASIC and PPSA.
Preparing comparative financial statements.
Preparing deficiency statement.
Reviewing of specific transactions and liaising with director
regarding certain transactions.
Reviewing companies’ emails regarding certain
transactions.
Preparing investigation file.
Trade On
Management
Attendance on site.
Respond to international customer queries.
Processing receipts
and payments
Budgeting and
financial reporting
Reviewing Companies’ budgets and financial statements.
Preparing budgets.
Forecasting cashflow and updating daily.
Preparing periodic financial reports.
Annexure M
ANNEXURE M – SUMMARY OF ADMINISTRATORS’ TIME
EXPECTED TO BE SPENT IN THE FUTURE
DL
The Administrators also seek approval for future remuneration for the period 30 August 2012 to the
completion of the voluntary administration of approximately $318k (excl GST) split as follows between
the key tasks:
Task Area
Administration
40 hours
$16k
Assets
158 hours
$63.5k
Creditors
79 hours
$32k
General Description
Includes
Correspondence
General administration works of photocopying, mailing,
faxing, printing, file note, telephone correspondence,
general process of receipts & payments.
Bank account
administration
Cash flow monitoring/review of receipts and payments.
ASIC Forms
reporting
Corresponding to ATO re GST/ PAYG payments/
receipts.
Books and records/
storage
Retrieving and listing Books and Records from various
head office site and project sites as required.
Planning / Review
Finalisation
Notifying ATO of finalisation
Cancelling ABN / GST / PAYG registration
Completing checklists
Debtors
Liaising with solicitors regarding recoverability.
Attend negotiation and settlement meetings as
required.
Plant and Equipment
Complete sale transaction.
Other Assets
Deal with sundry assets.
All tasks related to realising other assets.
Realisation of inventory assets surplus to the sale.
Creditor Enquiries
Receipt and follow up of creditor enquiries.
Maintaining a creditor enquiry register.
Instructions to call centre assisting creditors’ enquiries
regarding the second meetings of creditors and other
general issues.
Creditor reports
Preparing meeting notices to creditors.
Proof of Debt
Liaising with call centre regarding PODs received.
Updating and maintaining POD register.
Task Area
Employees
158 hours
$64k
Sale of
business
198 hours
$79.5k
General Description
Includes
Notification of and preparation for second meetings of
creditors (incl. agenda, notices, advertising).
Preparation of meeting packs (including attendance
register, list of creditors, draft minutes).
Holding the meeting.
Lodgement of minutes of meetings with ASIC.
Consider holding COC meeting.
Employees’ enquiries
Receipt and follow up of employee enquiries.
Maintenance of employee enquiry register.
Sales of Business as a
Going Concern
Finalisation of sale process.
Stocktake coordination.
Address retail employees and transfer remaining stock in
retail stores.
Coordinate offer of employment to transferring
employees.
Attendance to pre-completion activities.
Prepare completion and post-completion statements.
Trade On
Management
Attendance on site.
Liaising with superannuation funds regarding
contributions, termination of employees’ employment.
Attendance to the closure of 27 retail stores.
Hold stock liquidation sale.
Discharging administration liabilities.
Processing receipts
and payments
Budgeting and
financial reporting
statements.
Preparing budgets.
Preparing weekly financial reports.
Trading on
158 hours
$63.5k
Ricci
The Administrators also seek approval for future remuneration for the period 30 August 2012 to the
completion of the voluntary administration of approximately $39k (excl GST) split as follows between the
key tasks:
Task Area
Administration
4 hours
$2k
Assets
29 hours
$15.5k
Creditors
7 hours
$4k
General Description
Includes
Correspondence
General administration works of photocopying, mailing,
faxing, printing, file note, telephone correspondence,
general process of receipts & payments.
Bank account
administration
Cash flow monitoring/review of receipts and payments.
ASIC Forms
reporting
Corresponding to ATO re GST/ PAYG payments/
receipts.
Books and records/
storage
Retrieving and listing Books and Records from various
head office site and project sites as required.
Planning / Review
Finalisation
Notifying ATO of finalisation
Cancelling ABN / GST / PAYG registration
Completing checklists
Debtors
Liaising with solicitors regarding recoverability.
Attend negotiation and settlement meetings as
required.
Plant and Equipment
Nil
Other Assets
Deal with sundry assets.
All tasks related to realising other assets.
Creditor Enquiries
Receipt and follow up of creditor enquiries.
Maintaining a creditor enquiry register.
Instructions to call centre assisting creditors’ enquiries
regarding the second meetings of creditors and other
general issues.
Creditor reports
Preparing meeting notices to creditors.
Proof of Debt
Liaising with call centre regarding PODs received.
Updating and maintaining POD register.
Notification of and preparation for second meetings of
creditors (incl. agenda, notices, advertising).
Task Area
General Description
Includes
Preparation of meeting packs (including attendance
register, list of creditors, draft minutes).
Holding the meeting.
Lodgement of minutes of meetings with ASIC.
Consider holding Committee of Creditors meeting.
Sale of
business
18 hours
$10k
Trading on
14 hours
$8k
Sales of Business a
Going Concern
Finalisation of sale process.
Attendance to pre-completion activities.
Prepare completion and post-completion statements.
Trade On
Management
Attendance on site.
Liaising with superannuation funds regarding
contributions, termination of employees employment.
Processing receipts
and payments
Budgeting and
financial reporting
statements.
Preparing budgets.
Preparing weekly financial reports.
Annexure N
ANNEXURE N – LIQUIDATORS’ ESTIMATED SUMMARY OF
TIME
DL
A summary of the tasks to be completed by the Liquidators and their staff, if appointed, in the conduct of
the liquidation for the period 12 September 2012 to the completion of the liquidation is outlined in the
table below.
Task Area
Administration
$87.5k
Assets
$52.5k
Creditors and
payment of
Dividends
$35.0k
General Description
Includes
Correspondence
General correspondence with creditors, employees and
other stakeholders.
Document
maintenance/file
review/checklist
First month, then 6 monthly administration reviews.
File reviews.
Updating checklists.
Bank account
Maintaining bank accounts controlled by Liquidators.
Liaising with banks and correspondence as required.
Regular bank reconciliations.
Statutory reporting
Preparing of statutory reports to ASIC.
Correspondence with ASIC’s queries.
reporting
Requesting a new GST registration.
Preparing BAS lodgements timely.
Cancellation and deregistration.
Finalisation
Notifying ATO/ OSR of finalisation.
Cancelling ABN / GST / PAYG registration.
Notifying all other stakeholders on finalisation.
Planning / Review
Meetings regarding status of liquidation.
Books and records /
storage
Sending job files to storage.
Debtors
Finalising claims against debtors.
Liaising with customers regarding final payments.
Finalising ongoing litigation/pursuing settlements.
Creditor Enquiries
Receive and follow up creditor enquiries via telephone.
Reviewing and preparing correspondence to creditors
and their representatives via facsimile, email and post.
Correspondence with committee of creditors.
Creditor reports
Preparing notification/circulars of the Liquidation.
Dealing with Proof of
debt
Receipting and filing POD’s when not related to a
dividend.
As required, call for formal PODs and adjudicate.
Corresponding with OSR and ATO regarding POD’s
when not related to a dividend.
Task Area
General Description
Includes
Notification of and preparing for meetings as required.
Creating and distribution of circular to all known
creditors.
Preparation of meeting file, including agenda,
certificate of postage, attendance register, list of
creditors, reports to creditors, advertisement of meeting
and draft minutes of meeting.
Preparation and lodgement minutes of meetings with
ASIC.
Respond to stakeholder queries and questions
Employees enquiry
GEERS
Advising employees of GEERS.
Assessing and reviewing any potential GEERS claims.
Correspondence to DEEWR regarding GEERS claims.
Liaising with DEEWR and assisting with claim
verifications.
Distributing GEERS advances to employees as
required.
Conducting investigation
Continued investigations of potential voidable
transactions.
Litigation / Recoveries
Attending to potential litigation recoveries.
Liaising with solicitors regarding recovery actions.
ASIC reporting
Preparing statutory investigation reports.
Preparing affidavits seeking non lodgements
assistance.
Liaising with ASIC.
Employees
$87.5k
Investigations
$87.5k
Liaising with DEEWR for the GEERS process.
Calculation of GEERS entitlements.
Distribution of funds and preparation of
correspondence regarding the payments.
Ricci
A summary of the tasks to be completed by the Liquidators and their staff, if appointed, in the conduct of
the liquidation for the period 12 September 2012 to the completion of the liquidation is outlined in the
table below.
Task Area
Administration
$37.5k
Assets
$37.5k
Creditors and
payment of
Dividends
$37.5k
General Description
Includes
Correspondence
General correspondence with creditors, employees and
other stakeholders.
Document
maintenance/file
review/checklist
First month, then 6 monthly administration reviews.
File reviews.
Updating checklists.
Bank account
Maintaining bank accounts controlled by Liquidators.
Liaising with banks and correspondence as required.
Regular bank reconciliations.
Statutory reporting
Preparing of statutory reports to ASIC.
Correspondence with ASIC’s queries.
reporting
Requesting a new GST registration.
Preparing BAS lodgements timely.
Cancellation and deregistration.
Finalisation
Notifying ATO/ OSR of finalisation.
Cancelling ABN / GST / PAYG registration.
Notifying all other stakeholders on finalisation.
Planning / Review
Meetings regarding status of liquidation.
Books and records /
storage
Sending job files to storage.
Debtors
Finalising claims against debtors.
Liaising with customers regarding final payments.
Finalising ongoing litigation/pursuing settlements.
Creditor Enquiries
Receive and follow up creditor enquiries via telephone.
Reviewing and preparing correspondence to creditors
and their representatives via facsimile, email and post.
Correspondence with committee of creditors.
Creditor reports
Preparing notification/circulars of the Liquidation.
Dealing with Proof of
debt
Receipting and filing POD’s when not related to a
dividend.
As required, call for formal PODs and adjudicate.
Corresponding with OSR and ATO regarding POD’s
when not related to a dividend.
Notification of and preparing for meetings as required.
Creating and distribution of circular to all known
creditors.
Preparation of meeting file, including agenda,
Task Area
General Description
Includes
certificate of postage, attendance register, list of
creditors, reports to creditors, advertisement of meeting
and draft minutes of meeting.
Preparation and lodgement minutes of meetings with
ASIC.
Respond to stakeholder queries and questions
Investigations
$37.5k
Conducting investigation
Continued investigations of potential voidable
transactions.
Litigation / Recoveries
Attending to potential litigation recoveries.
Liaising with solicitors regarding recovery actions.
ASIC reporting
Preparing statutory investigation reports.
Preparing affidavits seeking non lodgements
assistance.
Liaising with ASIC.
Annexure O
Annexure O – DL
Remuneration Report
1.
Declaration
We, Mark Robinson, Jack Bournelis and Daniel Walley of PPB Advisory have undertaken a proper assessment
of this remuneration claim for our appointment as Joint and Several Administrators of the Companies in
accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed
is in respect of necessary work, properly performed, or to be properly performed, in the conduct of the
Administration.
2.
Remuneration Methods
There are four basic methods that can be used to calculate the remuneration charged by an insolvency
Practitioner. They are:
a. Time based / hourly rates
This is the most common method. The total fee charged is based on the hourly rate charged for each person
who carried out the work multiplied by the number of hours spent by each person on each of the tasks
performed.
b. Fixed Fee
The total fee charged is normally quoted at the commencement of the administration and is the total cost for
the administration. Sometimes a Practitioner will finalise an administration for a fixed fee.
c. Percentage
The total fee charged is based on a percentage of a particular variable, such as the gross proceeds of
assets realisations.
d. Contingency
The practitioner’s fee is structured to be contingent on a particular outcome being achieved Method chosen.
3.
Method Chosen
Given the nature of this administration we propose that our remuneration be calculated on time based / hourly
rates method. This is because:
•
•
•
It ensures that creditors are only charged for work that is performed. Our time is recorded and charged
in six minute units.
We are required to perform a number of tasks which do not relate to the realisation of assets, for
example:
o responding to creditors’ enquiries;
o reporting to the ASIC; and
o distributing funds in accordance with the provisions of the Corporations Act.
We are unable to estimate with certainty the total amount of fees necessary to complete all tasks
required in this administration.
The rates for our remuneration calculation are set out in the following table.
Title
Hourly Rate
(excl GST)
Partner
620
Director/Principal
560
Senior Manager
490
Manager
445
Supervisor
410
Senior Analyst 1
370
Senior Analyst 2
360
Analyst 1
305
Analyst 2
240
Graduate
210
Undergraduate
190
Senior Bookkeeper
190
Bookkeeper
180
Personal Assistance
150
Administration
120
4.
Calculation of Remuneration
(Administrators Appointed)
CALCULATION OF REMUNERATION
Professional fees For the Period 10 July to 29 August 2012
Employee
Mark Robinson
Jack Bournelis
Colin Egan
Other Partners
Daniel Walley
Matthew Gugerly
Matthew Jesse
Alan Walker
Other Directors
Michelle Leah
Daniel Cawthorne
Aaron Finlayson
Shane Stewart
Andrew Yeomans
Other Senior Managers
Katie Blyth
Claudine Cleaver
Eoin Healy
Bianca Munoz- Greco
Other Managers
Ryan Borg
Gary Cagney
Andrew Fawcett
Mahala Hazell
Koh Li Tze
Richard Lawrence
Sophia Liu
Mark Monzon
Brendan Roney
Erica Thompson
Other Supervisors
Farnaz Bassiri
Zheng (Sally) Chen
Jeremy Opat
Other Senior Analyst 1
Alan Jenkins
Other Senior Analyst 2
Mellonie Amin
Patrick Hanrahan
Michelle Harper
Christopher Holt
Ashley Orth
Sally Pace
Jaimie Carmichael
Rachit Jaiswal
Robert Krachler
Other Analyst 2
Position
Partner
Partner
Partner
Partner
Director
Director
Director
Director
Director
Senior Manager
Senior Manager
Senior Manager
Senior Manager
Senior Manager
Senior Manager
Manager
Manager
Manager
IT Forensics Mgr
Manager
Supervisor
Supervisor
Supervisor
Supervisor
Supervisor
Supervisor
Supervisor
Supervisor
Supervisor
Supervisor
Supervisor
Senior Analyst 1
Senior Analyst 1
Senior Analyst 1
Senior Analyst 1
Senior Analyst 2
Senior Analyst 2
Analyst 1
Analyst 1
Analyst 1
Analyst 1
Analyst 1
Analyst 1
Analyst 2
Analyst 2
Analyst 2
Analyst 2
Current
Rate
(Ex GST)
620.00
620.00
620.00
620.00
560.00
560.00
560.00
560.00
560.00
490.00
490.00
490.00
490.00
490.00
490.00
445.00
445.00
445.00
445.00
445.00
410.00
410.00
410.00
410.00
410.00
410.00
410.00
410.00
410.00
410.00
410.00
370.00
370.00
370.00
370.00
360.00
360.00
305.00
305.00
305.00
305.00
305.00
305.00
240.00
240.00
240.00
240.00
Hrs
152.10
23.80
47.77
6.60
109.00
150.25
19.30
21.50
33.90
20.50
297.70
164.25
17.20
119.90
8.30
12.20
23.40
194.80
38.00
15.50
63.00
251.50
98.60
16.70
26.40
14.90
108.70
92.80
21.40
253.50
33.95
235.60
126.50
12.60
57.00
188.40
65.10
17.40
66.00
13.00
10.40
15.70
22.90
258.00
15.00
25.10
18.30
Total
$
94,302.00
14,756.00
29,617.40
4,092.00
61,040.00
84,140.00
10,808.00
12,040.00
18,984.00
10,045.00
145,873.00
80,482.50
8,428.00
58,751.00
4,067.00
5,429.00
10,413.00
86,686.00
16,910.00
6,897.50
25,830.00
103,115.00
40,426.00
6,847.00
10,824.00
6,109.00
44,567.00
38,048.00
8,774.00
103,935.00
13,919.50
87,172.00
46,805.00
4,662.00
21,090.00
67,824.00
23,436.00
5,307.00
20,130.00
3,965.00
3,172.00
4,788.50
6,984.50
61,920.00
3,600.00
6,024.00
4,392.00
Task Area
Administration
$
13,516.00
682.00
5,600.00
6,216.00
672.00
1,400.00
19,845.00
833.00
6,615.00
89.00
712.00
712.00
756.50
13,632.50
205.00
3,075.00
410.00
1,763.00
185.00
4,625.00
2,340.00
1,830.00
5,154.50
30.50
3,965.00
1,800.00
2,016.00
600.00
456.00
Hrs
Assets
$
21.80
-
23,002.00
5,022.00
5,600.00
4,060.00
5,768.00
49.00
11,123.00
490.00
2,646.00
1,201.50
13,884.00
1,913.50
4,305.00
1,599.00
2,460.00
2,706.00
18,450.00
48,655.00
111.00
2,775.00
6,300.00
305.00
5,154.50
762.50
3,568.50
4,980.00
1,200.00
-
1.10
10.00
11.10
1.20
2.50
40.50
1.70
13.50
0.20
1.60
1.60
1.70
33.25
0.50
7.50
1.00
4.30
0.50
12.50
6.50
6.00
16.90
0.10
13.00
7.50
8.40
2.50
1.90
Hrs
37.10
8.10
10.00
7.25
10.30
0.10
22.70
1.00
5.40
2.70
31.20
4.30
10.50
3.90
6.00
6.60
45.00
131.50
0.30
7.50
17.50
1.00
16.90
2.50
11.70
20.75
5.00
-
Investigation
$
1,240.00
168.00
196.00
489.50
16,910.00
2,050.00
38,048.00
2,419.00
481.00
740.00
3,600.00
884.50
762.50
-
Hrs
2.00
-
0.30
0.40
-
1.10
38.00
-
5.00
92.80
5.90
1.30
2.00
10.00
2.90
2.50
-
Creditors
$
11,656.0
434.0
2,800.0
4,508.0
7,154.0
22,613.5
489.5
979.0
6,252.5
6,191.0
82.0
11,174.0
45,029.0
185.00
2,745.0
4,117.5
61.0
-
Hrs
18.80
0.70
5.00
8.05
14.60
46.15
1.10
2.20
15.25
15.10
0.20
30.20
121.70
0.50
9.00
13.50
0.20
-
Employees
$
6,944.00
2,800.00
840.00
784.00
11,074.00
6,615.00
4,895.00
1,735.50
25,830.00
1,640.00
164.00
820.00
41.00
3,280.00
102.50
444.00
629.00
576.00
305.00
549.00
457.50
213.50
960.00
264.00
144.00
Hrs
11.20
5.00
1.50
1.40
22.60
13.50
-
11.00
3.90
63.00
4.00
0.40
2.00
0.10
8.00
0.25
1.20
1.70
1.60
1.00
1.80
1.50
0.70
4.00
1.10
0.60
Sale of
Business
$
3,472.00
29,617.40
620.00
21,560.00
112.00
33,467.00
80,482.50
49.00
1,715.00
445.00
311.50
5,022.50
40,426.00
8,774.00
12,505.00
205.00
27,343.00
-
Hrs
5.60
47.77
1.00
38.50
0.20
68.30
164.25
0.10
3.50
-
1.00
0.70
12.25
98.60
21.40
30.50
0.50
73.90
-
-
Trade on
$
34,472.00
9,300.00
2,790.00
22,680.00
69,356.00
10,136.00
9,800.00
12,152.00
9,996.00
63,210.00
7,056.00
18,350.50
4,067.00
5,340.00
8,010.00
65,281.50
2,180.50
72,262.50
6,847.00
1,845.00
4,346.00
29,971.00
3,198.00
69,700.00
11,767.00
1,184.00
4,033.00
12,136.00
67,824.00
10,620.00
122.00
5,154.50
3,904.00
1,952.00
305.00
2,043.50
54,180.00
384.00
5,160.00
3,792.00
Hrs
55.60
15.00
4.50
40.50
123.85
18.10
17.50
21.70
20.40
129.00
14.40
37.45
8.30
12.00
18.00
146.70
4.90
176.25
16.70
4.50
10.60
73.10
7.80
170.00
28.70
3.20
10.90
32.80
188.40
29.50
0.40
16.90
12.80
6.40
1.00
6.70
225.75
1.60
21.50
15.80
Employee
Nicholas Clark
Timothy Evans
Galvin Tsui
Other Graduate
Undergraduates
Bookkeeper
Personal assistance
Filing
TOTAL
GST
Position
Graduate
Graduate
Graduate
Graduate
Undergraduate
Bookkeeper
PA
Administration
TOTAL (including GST)
Average hourly rate (excluding GST)
Current
Rate
(Ex GST)
210.00
210.00
210.00
210.00
190.00
180.00
150.00
120.00
Hrs
43.74
84.20
231.20
68.40
14.90
1.60
27.80
13.40
4,089.66
Total
$
9,185.40
17,682.00
48,552.00
14,364.00
2,831.00
288.00
4,170.00
1,608.00
1,636,108.30
163,610.83
Task Area
Administration
$
751.80
16,149.00
9,870.00
5,901.00
76.00
288.00
4,170.00
1,608.00
138,549.80
Hrs
Assets
$
3.58
76.90
47.00
28.10
0.40
1.60
27.80
13.40
429.63
2,011.80
1,428.00
210.00
2,604.00
184,344.30
Hrs
9.58
6.80
1.00
12.40
-
456.58
Investigation
$
210.00
68,198.50
Hrs
1.00
-
165.20
Creditors
$
2,818.20
105.00
35,847.00
126.00
165,367.20
Hrs
13.42
0.50
170.70
0.60
-
487.47
Employees
$
279.30
714.00
228.00
73,328.30
Hrs
1.33
3.40
1.20
168.98
Sale of
Business
$
266,126.90
Hrs
-
568.07
Trade on
$
Hrs
3,324.30
2,415.00
5,019.00
2,527.00
740,193.30
15.83
1,799,719.13
400.06
322.49
403.75
412.82
339.24
433.95
468.48
408.11
11.50
23.90
13.30
1,813.73
5.
Disbursements
Disbursements are divided into three types: A, B1, B2.
A
Disbursements are all externally provided professional services and are recovered at cost. An example
of an A disbursement is legal fees.
B1
Disbursements are externally provided non-professional costs such as travel, accommodation and
search fees. B1 disbursements are recovered at cost.
B2
Disbursements are internally provided non-professional costs such as photocopying and document
storage. B2 disbursements are charged at cost except for photocopying, printing and telephone calls
which are charged at a rate which is intended to recoup both variable and fixed costs.
A break-down of disbursements on this appointment for the period 10 July 2012 to 29 August 2012 are
summarised as follows:
Classification
A
Amount $
0.00
B1
34,717.00
B2
9,647.00
Annexure O – Ricci
Remuneration Report
1.
Declaration
We, Mark Robinson, Jack Bournelis and Daniel Walley of PPB Advisory have undertaken a proper assessment
of this remuneration claim for our appointment as Joint and Several administrators of the Companies in
accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed
is in respect of necessary work, properly performed, or to be properly performed, in the conduct of the
Administration.
2.
Remuneration Methods
There are four basic methods that can be used to calculate the remuneration charged by an insolvency
Practitioner. They are:
e. Time based / hourly rates
This is the most common method. The total fee charged is based on the hourly rate charged for each person
who carried out the work multiplied by the number of hours spent by each person on each of the tasks
performed.
f.
Fixed Fee
The total fee charged is normally quoted at the commencement of the administration and is the total cost for
the administration. Sometimes a Practitioner will finalise an administration for a fixed fee.
g. Percentage
The total fee charged is based on a percentage of a particular variable, such as the gross proceeds of
assets realisations.
h. Contingency
The practitioner’s fee is structured to be contingent on a particular outcome being achieved Method chosen.
3.
Method Chosen
Given the nature of this administration we propose that our remuneration be calculated on time based / hourly
rates method. This is because:
•
•
•
It ensures that creditors are only charged for work that is performed. Our time is recorded and charged
in six minute units.
We are required to perform a number of tasks which do not relate to the realisation of assets, for
example:
o responding to creditors’ enquiries;
o reporting to the ASIC; and
o distributing funds in accordance with the provisions of the Corporations Act.
We are unable to estimate with certainty the total amount of fees necessary to complete all tasks
required in this administration.
The rates for our remuneration calculation are set out in the following table.
Title
Hourly Rate
(excl GST)
Partner
620
Director/Principal
560
Senior Manager
490
Manager
445
Supervisor
410
Senior Analyst 1
370
Senior Analyst 2
360
Analyst 1
305
Analyst 2
240
Graduate
210
Undergraduate
190
Senior Bookkeeper
190
Bookkeeper
180
Personal Assistance
150
Administration
120
4.
Calculation of Remuneration
Ricci Remond Chocolate Co Pty Limited
Employee
Position
Mark Robinson
Partner
Jack Bournelis
Partner
Colin Egan
Partner
Daniel Walley
Director
Matthew Gugerly
Director
Alan Walker
Director
Daniel Cawthorne
Senior Manager
Aaron Finlayson
Senior Manager
Andrew Yeomans
Senior Manager
Eoin Healy
Manager
Gary Cagney
Supervisor
Andrew Fawcett
Supervisor
Koh Li Tze
Supervisor
Sophia Liu
Supervisor
Maged Mostafa
Supervisor
Erica Thompson
Supervisor
Farnaz Bassiri
Senior Analyst 1
Ross Jackson
Senior Analyst 1
Lu Yang Pan
Senior Analyst 1
Alan Jenkins
Senior Analyst 2
Christopher Tung
Senior Analyst 2
Mellonie Amin
Analyst 1
Patrick Hanrahan
Analyst 1
Nicholas Clark
Graduate
Timothy Evans
Graduate
Nicholas Valtas
Graduate
Joseph Le
Bookkeeper
Personal assistance
PA
Filing
Administration
TOTAL
GST
TOTAL (including GST)
Average hourly rate (excluding GST)
Current
Rate
(Ex GST)
620.00
620.00
620.00
620.00
620.00
620.00
490.00
490.00
490.00
445.00
410.00
410.00
410.00
410.00
410.00
410.00
370.00
370.00
370.00
360.00
360.00
305.00
305.00
210.00
210.00
210.00
180.00
150.00
120.00
Hrs
24.10
12.40
21.98
76.50
49.45
7.50
16.20
159.65
71.00
118.60
56.75
99.20
20.90
109.30
3.10
38.00
7.00
3.00
0.50
43.00
16.50
14.00
18.30
10.25
5.70
1.10
1.60
10.90
0.10
1,016.58
Total
$
14,942.00
7,688.00
13,627.60
47,430.00
30,659.00
4,650.00
7,938.00
78,228.50
34,790.00
52,777.00
23,267.50
40,672.00
8,569.00
44,813.00
1,271.00
15,580.00
2,590.00
1,110.00
185.00
15,480.00
5,940.00
4,270.00
5,581.50
2,152.50
1,197.00
231.00
288.00
1,635.00
12.00
467,574.60
46,757.46
514,332.06
459.95
Task Area
Administration
$
1,550.00
1,302.00
1,209.00
620.00
588.00
3,577.00
845.50
2,460.00
2,214.00
1,271.00
1,110.00
72.00
1,830.00
1,433.50
367.50
1,197.00
189.00
288.00
1,635.00
12.00
23,770.50
353.20
Hrs
2.50
2.10
1.95
1.00
1.20
7.30
1.90
6.00
5.40
3.10
3.00
0.20
6.00
4.70
1.75
5.70
0.90
1.60
10.90
0.10
67.30
Assets
$
248.00
1,127.00
25,365.00
717.50
1,435.00
1,128.50
384.30
30,405.30
431.40
Hrs
0.40
2.30
57.00
1.75
3.50
3.70
1.83
70.48
Investigation
$
62.00
196.00
712.00
1,640.00
2,610.00
427.87
Hrs
0.10
-
0.40
1.60
4.00
6.10
Creditors
$
2,480.0
310.0
2,480.0
1,519.0
3,479.0
21,143.5
2,255.0
7,585.0
2,590.0
185.0
2,440.0
1,921.5
787.5
49,175.50
444.02
Hrs
4.00
0.50
4.00
2.45
7.10
43.15
5.50
18.50
7.00
0.50
8.00
6.30
3.75
110.75
Sale of
Business
$
Hrs
Trade on
$
7,192.00
1,922.00
13,627.60
22,320.00
1,862.00
78,228.50
1,715.00
133.50
2,152.50
40,672.00
8,569.00
5,940.00
184,334.10
11.60
3.10
21.98
36.00
3,410.00
4,154.00
22,630.00
27,931.00
4,030.00
2,009.00
7,031.50
25,721.00
15,682.50
31,939.00
15,580.00
15,408.00
1,098.00
613.20
42.00
177,279.20
482.83
3.80
159.65
3.50
0.30
5.25
99.20
20.90
16.50
381.78
466.32
Hrs
5.50
6.70
36.50
45.05
6.50
4.10
14.35
57.80
38.25
77.90
38.00
42.80
3.60
2.92
0.20
380.17
5.
Disbursements
Disbursements are divided into three types: A, B1, B2.
A
Disbursements are all externally provided professional services and are recovered at cost. An example
of an A disbursement is legal fees.
B1
Disbursements are externally provided non-professional costs such as travel, accommodation and
search fees. B1 disbursements are recovered at cost.
B2
Disbursements are internally provided non-professional costs such as photocopying and document
storage. B2 disbursements are charged at cost except for photocopying, printing and telephone calls
which are charged at a rate which is intended to recoup both variable and fixed costs.
A break-down of disbursements on this appointment for the period 10 July 2012 to 29 August 2012 are
summarised as follows:
Classification
Amount $
A
0.00
B1
93.00
B2
198.90

Darrell Lea Chocolate Shops Pty Ltd ACN 000 498

Transcription

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