MEAT WHOLESALE BUSINESS IN VOLUNTARY ADMINISTRATION
Not all businesses are forced to enter administration. Some enter voluntarily, knowing that their business is insolvent and seeking the best resolution for themselves and their creditors. Melrose Wholesale Meats entered voluntary administration in August 2019, revealing debts of approximately $5.2 million.
Menzies Advisory has been appointed to the case and is working with the business and creditors to try and create resolutions which are in everyone’s best interests. However, the director’s initial proposal, a Deed of Company Arrangement, is due to be challenged by some of the company’s creditors.
Read the article written by Jon Condon below and learn more about Menzies Advisory’s involvement in this administration process.
Meat wholesale business remains in administration, with debts above $5m
Jon Condon, November 8, 2019
A QUEENSLAND-based meat wholesale business remains in voluntary administration this week, after creditors expressed opposition to a Deed of Company Arrangement proposed during a meeting on Friday.
Melrose Wholesale Meats, headed by prominent industry identity Kerry Melrose, a former Australian Meat Industry Council national retail chairman, went into voluntary administration in August with debts totalling around $5.2 million.
The business was primarily involved in trading premium Tasmanian lamb under the Tasmanian Royal brand into the Queensland food service and retail market.
Much of the money owed was tied up with freight and livestock costs. Major creditors include Ruralco’s Tasmanian agency arm, Roberts, understood to be owed almost $400,000, and about $200,000 owed to Fresh Freight, a Tasmanian company that shipped carcases to Queensland for the meat supplier.
Melrose Wholesale Meats principal Kerry Melrose told Beef Central that more than half of the debts owed were internal, to family members or personal friends.
He said the primary reason for the business’s failure was because the company’s lamb supply channels out of Tasmania had disappeared.
The closure of JBS’ Devonport abattoir meant the business could no longer supply Tasmanian Royal lamb, the company’s flagship product, as alternative contract kills could not be found in Tasmania.
The only other service kill lamb abattoir at Cressy was already killing for another Queensland wholesaler, and could not accommodate the Tasmanian Royal kill, he said.
“The Tasmanian government could have done more to keep us in business, to be quite honest,” he said.
A tightening meat industry also contributed to the company’s financial position. “When you’re squeezed at both ends you run out of your ability to pay people… even though you want to,” he said.
Mr Melrose said there were still matters to be resolved before any future plans could be considered, however the business would not continue in its previous form. He said the Tasmanian Royal brand remained a well-known and respected lamb brand in the Queensland market.
He said that he and fellow investors had invested every cent they could into the business, and no funds had been extracted.
Administrator Michael Caspaney from Menzies Advisory, said a Deed of Company Arrangement had been applied for at a creditors meeting last week, which was pending.
A Deed of Company Arrangement (DOCA) is a binding arrangement between a company and its creditors governing how the company’s affairs will be dealt with, which may be agreed to as a result of the company entering voluntary administration.
“Basically it means the directors will put some money up, and that money will go towards paying secured creditors a compromised figure, rather than 100 cents in the dollar,” Mr Caspaney said. Unsecured creditors would receive nothing.
The way a DOCA worked, once the arrangement is executed, and the monies distributed, the company is then handed back to the directors, Mr Caspaney said.
However he said he had been put on notice by several unrelated company creditors that they intended to challenge the Deed of Company Arrangement through the courts. He said there were provisions within the Corporations Act for such challenges, in the event where non-related parties could prove that the reason why the DOCA was resolved was because of support for the resolution by related parties.
As a result, Mr Caspaney said he had withheld executing the Deed of Company Arrangement on Melrose Wholesale Meats. There was a three-week statutory period for complainants to exercise their rights through the courts.
Asked what the root cause of Melrose Wholesale Meats financial problems was, he said based on discussions with the principals, it was about the removal of the company’s key source of Tasmanian lamb, after an abattoir closure. “It’s a shadow of what the company used to be,” he said. “It no longer had the volume.”
Melrose Wholesale Meats move into administration became a political issue in Tasmania recently, when the state’s Labor Shadow Minister for Primary Industries Shane Broad criticised his state government, saying it had refused to listen to the concerns of Melrose Meats and others about the loss of the Devonport lamb processing facility.
He said the nationally-renowned supplier of Tasmanian lamb had gone into administration as a direct casualty of the Liberal state government’s incompetent handling of the closure of the JBS abattoir in Devonport.
“Despite the Liberals assuring Tasmanian farmers that everything is fine, Tasmania has now lost a buyer of 50,000 lambs a year due to a lack of a suitable abattoir,” Dr Broad said.
“Labor has been warning for some time that processing Tasmanian lambs in Victoria is not a sustainable solution, adds cost, and risks undermining the Tasmanian brand. Those fears have sadly been confirmed. Melrose has a proud 136 year history and has won numerous awards for its premier product, Tasmanian Royal Lamb,” he said.
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
