Metro Builders debt almost tops $5m
INVESTIGATIONS into last month's collapse of Metro Builders has revealed the construction company's debt totals close to $5 million.
Metro Builders closed its doors over the weekend of June 8 with no warning to employees, contractors or suppliers, leaving behind 40 unfinished projects in the local area.
Since the company's collapse, other Central Queensland builders have taken on the unfinished projects.
Jirsch Sutherland then began the liquidation process and have ceased company assets.
Chris Baskerville, partner of liquidator Jirsch Sutherland confirmed $2.5 million was owed to secured and partly secured creditors, with no guarantee they would get all their money back.
A further $2.2 million was owed in unsecured debts as well as $175,000 to unsecured 'priority' creditors (including employee debts).
"This is not factoring in the shortfalls to secured creditors, or the loss suffered by the QBCC under the home warranty scheme," Mr Baskerville said of the unsecured debts.
An independent insolvency report has been commissioned by Mr Baskerville which will reveal the likely date that the company became insolvent.
"That report is in process and takes time to compile all the necessary elements," he said.
"I have followed up with our expert this week who is actively drafting the report."
Mr Baskerville said he could not comment about whether Metro Builders were insolvent when they purchased a $2.6m mansion in Lammermoor until he received the report.
"We are now in the 'investigation stage' of the winding up and this process takes time,.
"The more significant investigations require the need to determine the date when the company first became insolvent and did not recover. As outlined, we need the insolvency report before we can advance our investigations further," Mr Baskerville said.
As for the assets of the business, all plant and equipment and vehicles were secured by auction agents Graysonline and have since been sold.
"There are many financiers who had interests in those assets and most will suffer a shortfall, given the realisation amount is less than the debt owed," Mr Baskerville said.
"I do not expect any surplus funds to flow to the company from those sales.
"We are also investigating whether there are clients of the company who ought to have paid our company for the final progress claim on their home.
"These investigations are ongoing."
Mr Baskerville advised that Jirsch Sutherland are due to release their statutory report on or before September 11.
"All creditors will be notified and able to download that report once issued," he said.
SECURED AND UNSECURED CREDITORS
The following information has been provided by Michael Back from local solvency and forensic accountant Worrells
- A creditor can't just register on the PPSR if they are an unsecured creditor - they need a security interest which is generally created by the written terms of trade.
- Registering on the PPSR (assuming they have a security interest) doesn't move them to the top - they will rank ahead of ordinary unsecured creditors but the first in time rule applies regarding registrations on the PPSR and security holders over specific assets will still rank ahead.
- A receiver's primary obligation is to a specific secured creditor whereas a liquidator's primary obligation is to all creditors. A liquidator still has to follow the priority regime for debts set out in the Corporations Act 2001.
- Preferential payments can only be recovered for payments made within 6 months prior to a company going into administration/liquidation (period extended if it's a court liquidation) not when it became insolvent.
- Department of Education scheme is known as Fair Entitlement Guarantee scheme (FEG) not DOE. Subject to certain criteria, it covers all entitlements (excl. sick leave) other than superannuation and the entitlements of excluded employees.