HOW A BUSINESS GOES FROM THRIVING TO LIQUIDATION
Menzies Advisory works alongside various stakeholders including business owners, accountants and lawyers. When a company collapses a Liquidator is often appointed to guide everyone through the wind up process. Since 2017, Mr Michael Caspaney of Menzies Advisory has been appointed Liquidator of Queensland One Homes Pty Ltd (In Liquidation) when it was placed into liquidation despite what appeared to be several successful prior years.
As the hearing unfolds in Brisbane’s Federal Court as to how Queensland One Home collapsed, attention turned to the accountant and their perception of the company’s finances before the construction company’s collapse in 2017.
The below clipping is from the October 3 issue of The Gold Coast Bulletin Digital Edition. To subscribe, visit https://www.goldcoastbulletin.com.au/.
Q1 ‘thriving’ before fall
The accountant for failed Gold Coast builder Queensland One Homes says it was a “thriving” company with no signs of “going down the tubes” when he first arrived to conduct a crucial review of its finances.
Brisbane accountant Kevin Dellow appeared in the Federal Court in Brisbane yesterday for the third day of a fiveday hearing into the collapse of Q1 Homes.
Q1 Homes, which counts Paul Callender as sole director, collapsed in 2017 owing more than $5.8 million to more than 130 tradies and taxpayers, and leaving families with incomplete homes.
The hearing is the fulfilment of an election-eve funding promise from the State Government and seeks to examine Q1 Homes’ business model in detail and what led to its failure.
Mr Dellow, who first worked with Q1 in December 2013 and was tasked with preparing a crucial financial review for building regulator Queensland Building and Construction Commission (QBCC), gave evidence yesterday that months after he started working with the company he found the accounts a “mess”.
He said this followed an early review he conducted for Q1 Homes that found it had positive net tangible assets thanks to work in progress (WIP) of $2.295 million, ensuring that the company was able to retain its licence.
Counsel assisting the examination Edward Moon had earlier told the court on Tuesday that the WIP figure should have been $1.037 million and had been overstated by more than $1 million.
To be licensed in Queensland builders must meet what are called Minimum Financial Requirements (MFR) to ensure they have enough asset backing to start and finish building projects.
Mr Moon questioned Mr Dellow on the reliability of the figures in his review and delivered to the QBCC for Q1 Homes’ licence in 2014.
“Isn’t it the position given you had only been retained for seven days, and the state of the books when you found them, as at the sixth of December you had no idea what the true financial position of this company was?” Mr Moon asked.
Mr Dellow said: “I had a reasonable expectation that a company as large as this with a turnover in that 2013 year of over $20 million and with a very large staff (was financially sound). Each time I went into the office it was an absolute beehive of activity. It was a bustling thriving business and it certainly did not show the signs of a business going down the tube.”
“So you based it on your impression of how busy the office was?” Mr Moon asked.
Mr Dellow: “That’s putting words into my mouth. It is part of the way I or anyone in my position would assess a company . If it was dead then yes I would take that as being an indication that things are not looking healthy. But it was not the sole point I depended on obviously.”
Mr Dellow said there was “no way in the world” he would provide “dodgy” figures to the QBCC to ensure that a company was able to retain its licence. The hearing continues.
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Registered Liquidators are experienced accountants, licenced and regulated by the Australian Securities and Investments Commission (ASIC). They are appointed to take over the running of insolvent or failed companies and oversee the final period before all affairs are finalised and the trading body is dissolved. Registered Liquidators must be appointed in the event of a Creditors Voluntary Liquidation to resolve any debts accrued by the company in the most efficient way possible. A Creditors Voluntary Liquidation (CVL) is the most common liquidation appointment type. In the event of a company entering insolvent external administration through CVL, it is the task of a Registered Liquidator to manage the finances and affairs of the body in a fiduciary capacity. After an Extraordinary General Meeting between the shareholders of a company, a Special Resolution will be passed which symbolises the instigation of the process by which the company will be wound up: liquidation. The directors, creditors and shareholders then step away from the organisation which has entered liquidation and their responsibilities are passed to a Registered Liquidator. This professional winds up all ongoing affairs which can include the collection of any outstanding debts and the disposal of company-owned assets. A Registered Liquidator must provide a document titled Consent to Act as Liquidator before they are appointed. Throughout all liquidations, the Registered Liquidator must file relevant documents with ASIC as well as providing ASIC with their yearly return. This enables the Commission to ensure only the highest quality of Registered Liquidators are operating and providing services throughout Australia. ASIC keeps a Register of Liquidators under the Corporations Act 2001 upon which every person is provided with a Registered Liquidator Number. In order to be registered, the person must demonstrate their relevant qualifications, experience, abilities and knowledge. Each registration is valid for 3 years, after which the Liquidator must reapply to maintain a valid license. All Registered Liquidators hold an accountancy degree as well as valid membership to the Institute of Chartered Accountants and/or CPA Australia. In the event of an organisation becoming insolvent, the appointment of a qualified, experienced and professional Registered Liquidator will ensure the subsequent process of winding up the company is completed correctly and responsibly. A Registered Liquidator is capable of completing this complex task efficiently and with minimal unnecessary stress to the directors and shareholders. For more information, contact Menzies Advisory Liquidators & Receivers where our Principal is a Registered Liquidator, Official Liquidator and has been a Certified Practicing Accountant for over 35 years.
Sometimes shareholders and company directors decide to cease trading despite the continued viability of the company. When this decision has been made, it is best to bring in external administrators to complete the Members’ Voluntary Liquidation process. By hiring qualified and experienced professionals, the process of finalising all company affairs, deregistering your company and the distribution of remaining funds amongst shareholders will be completed in a timely, commercially beneficial and legally correct fashion. While the terms ‘administration’ and ‘liquidation’ are most often associated with insolvent companies, it is also possible for the affairs of solvent companies to be wound up in this matter. There are various reasons why a business may choose to wind up rather than be sold as a going concern or continue trading. These include: Redistributing capital tax free Restructuring a company Business is no longer trading/required Bringing a company to its legal end – once deregistered it cannot be reinstated When a reason is decided upon, the majority of directors are obliged to sign a Declaration of Solvency form, stating the company is in a position to pay all existing debts within the upcoming year. Dormant companies may also be deregistered through this external administration process. Winding up a solvent company through external administration is easier and simpler than an insolvent company because, by definition, the company is in a position to repay any and all outstanding debts. 75% of company members are required to vote in favour of bringing in an external administrator at a meeting in regards to the Special Resolution. Once a company has entered the Members’ Voluntary Liquidation, the company can begin to be wound up by an external administrator. The appointed administrator will meet with any creditors and take care of any legal paperwork with the court, government and ATO. Once a company has been wound up, the remaining value of the assets can be distributed among shareholders. At this point the company will be legally deregistered. The external administrator is, by definition, independent and impartial. Their sole task is to preserve the company’s assets, comply with all legal obligations and return all funds to creditors and/or shareholders. Therefore, the external administrator cannot be someone with a conflict of interest or some form of duty within the company itself. Impartiality ensures the correct protocols are followed and the liquidation is completed in compliance with all laws. If you are considering placing your solvent company into voluntary external administration, contact Menzies Advisors today and find out more about how our expert liquidators and administrators can help wind up your company as quickly and commercially successfully as possible.
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
