Even though the firm is small, there have been some major job highlights achieved over its lifetime. Some of these highlights are illustrated below.
A number of other administrations have achieved a return of 100 cents in the dollar to unsecured creditors through innovative approaches to dealing with the problems which led to our appointment.
Aust-China Business Consultants Pty Ltd (In Liquidation)
Australian Aluminium Sales Pty Ltd
Brockson Pty Ltd
Cairns Day & Night Pharmacy
Daswani Group
Family Dispute
Fine Tube Pty Ltd
Jillperry Earthmoving Pty Ltd (In Liquidation) atf of the Jillperry Property Trust
Kertesz Enterprises Pty Ltd (In Liquidation)
Kingville Pty Ltd
L J Coleman & Co Pty Ltd
Linda Bennetts Pty Ltd
Powerdive International Pty Ltd
Private Financier Dispute
Sunrealty Limited
Toby Burns Pty Limited
Triton Developments Pty Ltd
Universal Underlays Pty Ltd
World Expo Park Pty Ltd
PROVISIONAL LIQUIDATION AND OFFICIAL LIQUIDATION ADMINISTRATIONS
Daswani Group of Companies
I was appointed Official Liquidator over a number of Daswani group companies by the Supreme Court of Queensland. During my period as Liquidator of .....
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Kertesz Enterprises Pty Ltd (In Liquidation) (“Kertesz”)
I was appointed Provisional Liquidator of the company by Order of the Supreme Court of Queensland on 3 October 2000 and Liquidator of the company on 8 November 2000. My appointments were joint engagements with, initially Mr Michael Sheehy and then Mr Dennis Turner of PKF Chartered Accountants.
Mr Turner and I were also appointed to seven other related companies (known as the Daswani Group). Mr Turner predominately handled the interstate work from his Melbourne office whilst I oversaw the entire engagement, undertaking the Brisbane and Gold Coast based work and working closely with the Australian Taxation Office (“ATO”) and the Australian Securities and Investments Commission (“ASIC”).
In addition to these eight appointments, nine other companies in the group were put into external administration with three other practitioners from unrelated firms being engaged.
Upon my appointment, I discovered that Kertesz had been established by Mr Lakhmi Daswani (A Bankrupt) with his wife, disguised by her maiden name, being the company’s sole director and secretary, Mrs Adriana Kertesz (now Daswani).
Mr Daswani, presented Kertesz to financiers as an unrelated computer supply company and proceeded via six fraudulent transactions to raise $2,925,000 by entering into lease agreements, which were financed by external financiers in the name of group companies with Kertesz, for computer equipment that appeared to be never supplied. He funnelled this money through the company for the benefit of other group companies and for his family.
I identified that the $315,000 had been transferred to an account in Honolulu, Hawaii for the benefit of his family.
At the date of my appointment, Mr Daswani and his family had already fled the country for Hawaii. I worked in conjunction with ASIC and ASIC was able to secure a warrant for Mr Daswani’s arrest.
Mr Daswani was later arrested by the FBI, extradited to Australia and pleaded guilty to 27 charges involving fraud and dishonesty and was sentenced to 12 years imprisonment. He remains incarcerated. His estate has also been bankrupted.
I was also successful, with ASIC’s assistance, in securing the return of the funds deposited to the Hawaiian account and after favourable exchange rate fluctuations ASIC recovered $378,636.25.
The external administrators of seven of the related companies, and certain finance companies, sought to claim interest in the funds recovered.
Consequently, Mr Turner and I, under my direct supervision, sought directions from the court and were successful in proving that the funds were an asset of Kertesz.
Under my direction and working closely with the ATO I then rebuilt the company’s accounts and lodged outstanding BAS and income tax returns with the assistance of an external Accountant properly quantifying the debt due and owing to the ATO.
In acknowledgement of the work performed, and with the ATO’s assistance, I was successful in obtaining an order that permitted Mr Turner and I, to pay to 4 other of our appointments in the group, as a priority expense of Kertesz, the remuneration and outlays of same. I also obtain court approval of Mr Turner and my Provisional Liquidators remuneration and creditor approval of our Official Liquidators Remuneration.
In addition to this I was able to pay two dividends to creditors with the ATO being the major beneficiary of same.
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World Expo Park Pty Ltd
I was appointed Official Liquidator of the company, by the Supreme Court of Queensland.
During my period as Liquidator of the company, I successfully recovered a fraudulent disposition of over $5.6 million plus $2.4 million interest after extensive legal action through the Supreme Court, Court of Appeal and a High Court application.
This recovery was achieved notwithstanding the administration was substantially un funded whilst we undertook the substantial investigations which were necessary, and recovery action was undertaken.
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Brockson Pty Ltd (In Liquidation)
I was appointed Joint & Several Liquidator of the company by the Supreme Court of Queensland.
Following my appointment, I obtained information for a number of real estate agents which indicated that the company’s Palm Beach property would realise little more than $5M, the approximate value of the debts secured by the property. I was not happy with this and decided to personally initiate and run a campaign of realisation of the property, in order to maximise the surplus over the debts owed to the secured creditors. The gross sale proceeds achieved by my efforts were $7.8M.
Other aspects of the Liquidation included:
• Rejecting claims by associated companies for approximately $33.3M and $350,000.00;
• Recovering the sum of approximately $1.05M, which was previously held as security by an international branch of one of the major banks against the company’s assets;
• A recovery of approximately $317,000.00 plus costs, being part of a total overcharge made by a secured creditor of the company at the time when it was paid out its claim as secured creditor;
• Sale of the company’s vehicles and plant and equipment for approximately $67,000.00;
• Recovery of refunds totaling approximately $45,000.00;
• Release of security guarantee of approximately $52,000.00 into the administration;
• Recovery of option fee of $45,000.00;
• Settling a claim for legal fees which I disputed, which settlement had the effect of reducing the total fees and outlays charged by that solicitor by approximately $95,000.00.
The creditors received three dividends totaling 57.68 cents in the dollar on admitted claims.
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Toby Burns Pty Limited (In Liquidation)
The company was wound up by the Supreme Court of Queensland on the application of a creditor of the company.
Upon my appointment as Liquidator of the company, the director advised that the company had no assets and that most of its records were destroyed in a fire in its premises. I obtained some records from the company’s accountants.
During the course of my investigations of the limited records provided to me, I ascertained that the company’s assets had been transferred to a related company for no consideration. I subsequently demanded payment of the debt from an associated company.
Through my solicitors, an Agreement was prepared and executed under which the related company would secure and pay the debt owed to Toby Burns Pty Limited.
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Sunrealty Limited
I was appointed Provisional Liquidator of the company by the Supreme Court of Queensland as a result of a dispute between the company’s directors. I was subsequently appointed Liquidator of the company by the Supreme Court of Queensland.
Prior to my appointment as Liquidator of the company, one of the directors had issued a Writ of Summons claiming an equitable mortgage on the land owned by the company to secure a debt owed by the company to the director. As Liquidator of the company, I lodged a defence to the action and undertook investigations to gather evidence on the validity or otherwise of the director’s claim. I carried out detailed investigations of all accounting and statutory records of the company and of other records held by other parties, including the company’s solicitors and accountants.
I subsequently approached the Supreme Court of Queensland and obtained orders for the Public Examination of the six directors of the company and other parties. I also applied and was successful in having the Court ordering the director to file an Affidavit requiring answers to prepared questions to be delivered within 28 days.
If the director had been successful in her action to claim the equitable mortgage over the land, the proceeds of realisation of the land would have been insufficient to meet the principal debt and interest claimed by the director, and unsecured creditors would therefore not have received any dividend in the administration.
In an effort to resolve matters speedily, I commenced negotiations with the director to discuss a settlement of her claim for the benefit of all interested parties. I was able to reach an agreement with the director in the form of a Deed, whereby the director discontinued the litigation she had previously commenced in the Supreme Court of Queensland against the company. With this achieved, I was then able to locate a buyer for the property and a Contract of Sale of the land was entered into for $1.5M.
The net proceeds of sale were received into the administration, and unsecured creditors were paid a dividend of 100 cents in the dollar on admitted claims. The three shareholders of the company were returned a total surplus of $116,970.00.
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Australian Aluminium Sales Pty Ltd
A director of the company was in dispute with another director and shareholder of the company as to how best to deal with the financial difficulties that the company was encountering. I was approached by a director of the company who had been referred to me by his accountant.
After receiving my advice, the director petitioned the Supreme Court of Queensland for my appointment as Provisional Liquidator of the company. This appointment was subsequently followed by my appointment as Liquidator of the company.
My role was principally to finalise the sale of a container of aluminum extrusions that was held in a Brisbane dock, recover monies owing to the company from debtors and dispose of the company’s plant and equipment. All of these tasks were undertaken efficiently and within seven months of my initial appointment, I was able to pay out the secured creditor and distribute a dividend of 28.8 cents in the dollar on admitted claims to the unsecured creditors of the company.
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Aust-China Business Consultants Pty Ltd (In Liquidation)
On 3 November 2003, the Supreme Court of Queensland ordered that Aust-China Business Consultants Pty Ltd be wound up in insolvency under the provisions of the Corporations Act 2001 and that I be appointed Liquidator. The company traded as a Chinese tour group operator from premises situated in Sydney and Cairns. Other relevant background facts are as follows:-
On 17 October 2003 a creditor of the company lodged an application in the Supreme Court of Queensland (“Court”) in order to have the company wound up. Notice of this application was sent to the company’s registered office as recorded in the ASIC’s records (as required by law). However, the directors of the company had not updated the ASIC with respect to a change of the company’s registered office and principal place business. Accordingly, the company did not receive actual notice of the winding up application and the application was not contested by the company.
Immediately upon my appointment on 3 November 2003 I attempted to make contact with the company’s directors. In this regard, correspondence was sent to relevant addresses as per the ASIC records. However, as the addresses per the ASIC records were not current, the correspondence did not reach the company’s officers. Further, the petitioning creditor was not able to provide any further contact details with respect to the company. White page, yellow page and internet search proved futile as the company did not trade in its own name (as was subsequently discovered).
Additionally upon my appointment, I sent letters to all major banks and financial institutions providing notification of my appointment and requesting that any accounts in the name of the company be frozen. On 19 December 2003 I received a response from the Commonwealth Bank of Australia Limited advising that they had located an account belonging to the company and that a stop would be placed on the account.
Shortly after a stop had been placed on the company’s account I was contacted by and met with the directors of the company and their solicitor. At the meeting the directors presented financial records for the company including a balance sheet which indicated that the company’s assets exceeded its liabilities. As such, it was their intention that an application be made in the Supreme Court of Queensland in order to obtain a stay or termination of the winding up proceedings.
At the meeting it was also resolved that I would allow the company to continue to trade under my control whilst an application was being prepared for a stay or termination of the winding up proceedings. I put strict controls in place to allow continued company trading at the remote locations.
Whilst monitoring the trade on I also undertook a detailed assessment of the Company’s viability and solvency with the view to determining whether an application for the termination of the winding up proceedings was appropriate. My investigations indicated that the company’s balance sheet understated liabilities and overstated assets. Furthermore, it was apparent that the company lacked sufficient working capital and was not solvent. After further discussions with the company’s directors they conceded that the winding up should continue and the business be closed.
I sought legal advice with respect to the liabilities incurred by the company post my appointment as Liquidator, but incurred without my actual authority. The legal advice received suggested that debts incurred by the company’s directors between the date of my appointment and the date that I became aware that the company was still trading (and provided authorisation for such future trading) needed sanction by the Supreme Court of Queensland for payment.
After making a carefully prepared application, on 10 June 2004 the Supreme Court of Queensland issued an order that “the Liquidator be authorised to pay debts incurred on behalf of the company between 3 November 2003 and 19 December 2003 but only to the same proportion as the Liquidator pays dividends on ordinary unsecured debts of the company admitted to proof under section 553 of the Corporations Act”, thus creating a new precedent in law.
The realisation of company assets was complicated by the fact that the majority of assets consisted of debtors located in China. I engaged agents who had experience in collecting debts from parties located in China. As such, the debtor recoveries proved largely successful.
The authorised trade on creditors were paid in full from the proceeds of trade. In this regard, for the period that I continued to trade the company it had gross sales of just over $1.8 million and the company made a net profit of approximately $170,000.
Furthermore, I was able to pay a dividend of 100 cents in the dollar to the Company’s employees.
Additionally, I paid three separate dividends each to the company’s ordinary unsecured creditors and to creditors whose debts were incurred between 3 November 2003 and 19 December 2003. These dividends totalled sixty-five (65) cents in the dollar.
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CREDITORS VOLUNTARY LIQUIDATION
Powerdive International Pty Ltd (In Liquidation)
On 3 October 2005, Robert Eugene Murphy and David James Hambleton were appointed Joint and Several Liquidators of Powerdive International Pty. Ltd. The company had previously manufactured and supplied underwater breathing apparatus scuba divers.
Following their appointment, the assets of the company were secured and collected for the benefit of creditors. Through their auctioneers, the main assets of the company were sold to key individuals who continue to trade and manufacture the highly specialised products initially developed by Powerdive International Pty Ltd. In addition to the company's main assets, the company's Cash at Bank was recovered, remaining stock, plant and equipment were realised and the recovery of the outstanding debtors is continuing.
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Jillperry Earthmoving Pty Ltd (in Liquidation) ATF of the Jillperry Property Trust
I was appointed Voluntary Administrator of Jillperry Earthmoving Co Pty Ltd (“Jillperry”) on 11 February 2002 and Liquidator on 8 March 2002.
Jillperry traded in its own right and as Trustee of the Jillperry Property Trust (“Trust”). In this regard, Jillperry in its own capacity provided labour hire services to a related company to operate a refuse facility. The Trust owned a nine tenth interest in the land used to operate the refuse facility and leased its interest in the land to the related company. Separate books of account were maintained for Jillperry and the Trust.
The land itself was contaminated (as a consequence of being used as a refuse facility). Furthermore, it had been filled almost to its approved capacity. The Environmental Protection Agency (“EPA”) and Brisbane City Council regulations required that upon completion of the site, to its capacity of fill, the site was required to be rehabilitated to certain standards. Estimates received for completion of these rehabilitation works were in excess of $300,000. I was also advised that the end use of this land could only be at a recreational level and as such the land had a virtual zero worth for resale after rehabilitation.
The administration of the Company’s and Trust affairs was further complicated by the deaths of each of the three directors shortly before and during the Voluntary Administration of the Company. (The causes of death were not related).
Furthermore, on careful review of the Deed of Trust it became apparent that it contained certain provisions that ipso facto disqualified the Company from continuing to act as trustee of the Trust and thereby created a casual vacancy in that office. As such it became necessary as Liquidator of the Company to make an application to the Supreme Court of Queensland to be appointed Receiver of the Trust in order to effect the winding up of the insolvent Trust. Such an order was obtained after careful preparation for the application.
After the conclusion of lengthy l iaisons and negotiations with the Brisbane City Council and EPA and I was able to locate a buyer prepared to purchase the Trust’s interest in the contaminated land on an “as is, where is basis” for an amount of $275,000 (inc. GST). Such an extraordinary high sale price (and the fact that no rehabilitation expenditure was required on the Trust’s behalf to facilitate the sale) meant that I was able to declare and pay a dividend to the ordinary unsecured creditors of the Trust of thirteen (13) cents in the dollar.
The related entity that operated the refuse facility was a creditor of the Trust and a debtor of the Company in its own capacity. The payment of the dividend to creditors of the Trust, including the related entity, allowed funds to flow back from the related entity to Jillperry in its own capacity. As such, distributions are now to be made pursuant to the priorities in the Corporations Act 2001 for Jillperry in its own right.
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CORPORATE RECEIVERSHIP
Universal Underlays Pty Ltd (Receiver & Manager Appointed) (In Liquidation)
I was appointed Receiver and Manager of the company by a secured creditor who was a private financier to the company.
My role was principally to trade-on the company’s business and to offer the business for sale in an effort to recover sufficient funds to satisfy the debt of the secured creditor. Shortly after my appointment, I commenced an extensive nationwide marketing program in which the sale of the business was advertised widely. I prepared a comprehensive information package on the business, which was distributed to almost 50 parties who had expressed an interest in the business. A further detailed package was distributed to 12 of those interested parties once a confidentially agreement had been executed.
After extensive negotiations a contract for sale was entered into for a sale price that enabled a return to the secured creditor of in excess of 90% of its original exposure. In addition, the claims of the company’s employees were paid in full therefore ensuring a positive approach to their employment with the new owner. A trading profit was generated during the period that I operated the business of the company.
This administration also involved the marketing and sale of an investment unit at Coomera, together with negotiations for the sale of substantial trade dollars accumulated by the company.
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NON-CORPORATE RECEIVERSHIP
Cairns Day & Night Pharmacy
I was appointed Receiver and Manager over the assets of the non-corporate business.
As Receiver and Manager, I traveled to Cairns and took control of the pharmacy from the date of my appointment. I continued to operate the pharmacy utilising existing staff. Having established proper systems, controls and reporting functions, I was able to carry out my role without the necessity for further travel to Cairns.
Part of my role as Receiver and Manager was to facilitate negotiations between the proprietor of the business and a third party for the restructure of funding and control the existing business and other pharmacies in the Cairns district. The negotiations settled within two months of my appointment, and surplus Receivership funds were paid to the relevant parties.
My role as Receiver and Manager terminated upon the objectives of my appointment being achieved and the business was returned to the proprietor in accordance with the settlement reached.
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Family Dispute – Corporate Trustee
I was appointed jointly by the Court to take possession of two properties and market and sell those properties to facilitate the settlement of a family dispute.
The properties were in disrepair and required a hands-on approach in conjunction with engaged Real Estate Agents to ensure that a successful realisation was achieved.
Both properties, despite some less than desirable building inspection reports, were successfully sold, with high realisations achieved and funds were thus available, after the settlement of secured debt, for distribution amongst the disputing parties.
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Private Financier Dispute – Recovery of Debt by Sale of Asset
I was appointed Receiver and Manager under a mortgage debenture to realise a real property asset in an attempt to achieve repayment of a private loan.
I organised vacant possession of the site through a controlled relocation of the directors of the defaulting company and with the assistance of Real Estate Agents was able to market the property for sale.
The property was successfully sold at auction with me taking a hands-on approach.
The financier was repaid in full, with my costs and the financier’s legal costs being paid from the proceeds of same with surplus funds being returned to the former property owners.
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VOLUNTARY ADMINISTRATIONS
Kingville Pty Ltd
I was appointed Voluntary Administrator of the company by a resolution passed by the directors of the company, who were referred to me by their accountant.
The principal assets of the company were 350,000 shares held in a publicly listed company, and substantial debts owing by associated companies in the group.
My role as Voluntary Administrator, and subsequently Liquidator of the company, was to investigate and assess whether any of these debts could be recovered. As a result of my investigations, the creditors resolved to write off the debts.
My role was also to arrange for the sale of the shares in a manner which ensured that not only did the company receive the best return from the sale, but also that this sale was undertaken on a timely basis in order that a distribution could be made to the creditors of the company. Notwithstanding the poor performance of the company in which the shares were held, I was able to obtain a satisfactory sale of the shares as I disposed of several parcels over a period of time.
As a consequence of this, I was able to provide a dividend to the unsecured creditors of the company within 9 months of my initial appointment as Administrator.
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Fine Tube Pty Ltd
I was appointed Voluntary Administrator of the company by the directors of the company due to its insolvency and disagreements between the directors/shareholders.
Following my appointment, I took action to secure and collect the assets of the company for the benefit of creditors. Parties associated with the company put forward a proposal for the company to enter into a Deed of Company Arrangement. This proposal was subsequently accepted, via a resolution of the creditors of the company. The Deed was executed and became effective and I became the Administrator of the Deed.
In this capacity, and in accordance with the provisions of the Deed, I recovered the company’s debtors and realised the company’s Cash at Bank, stock and plant and equipment. The employees of the company were subsequently paid a dividend of 100 cents in the dollar in respect of their outstanding entitlements, and unsecured creditors were paid a dividend of 46 cents in the dollar on admitted claims.
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Linda Bennetts Pty Ltd (In Liquidation)
The company operated a physiotherapy business just outside the CBD of Brisbane. The company had experienced cash flow difficulties for a number of years and was referred to me by the director’s accountant.
After meeting with the director of the business, it was obvious that the company was insolvent and as a consequence I was appointed as Voluntary Administrator of the company. Following my appointment, negotiations were held for the sale of the business, which subsequently resulted in a successful sale some three weeks after my initial appointment.
During the course of the administration I was also able to identify a number of assets that were not initially disclosed to me, which resulted in an increased sale price, and ensured a substantially higher return for the creditors of the company. The secured creditor was repaid almost all of its debt. I expect that some preference payments made to some creditors may be recovered in the Liquidation to enable a return to the unsecured creditors of the company.
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MEMBERS’ VOLUNTARY LIQUIDATIONS
L.J. Coleman & Co Pty Ltd
I was appointed Liquidator of the company by a resolution of its members because of their concern at the possible tax implications and obligations on the use of its surplus funds
Out of the funds held, the creditor of the company was paid a dividend of 100 cents in the dollar. The two shareholders of the company were subsequently paid a return of paid up capital and their respective shares of capital profits from pre-Capital Gains Tax assets of approximately $194, 460 and $3,540. The administration was finalised within 8 months, including the time to obtain specialist tax advice and obtain Australian Taxation Office clearance.
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Triton Developments Pty Ltd (In Voluntary Liquidation)
This company had not traded for many years but had been retained by its director as he was uncertain as to what was required to wind up the affairs of the company. After the director had been referred to me by his accountant, I provided the director of the company with a comprehensive summary of the steps involved in the Voluntary Winding Up of the company.
Following my appointment as Liquidator of the company, I took the necessary steps to settle the company’s liabilities, including negotiations with the Australian Taxation Office for an outstanding liability of which the company was not aware.
I also arranged for specialist taxation advice to be obtained in relation to the various distributions to be made to the shareholders in order to maximise their returns.
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