MENZIES ADVISORY APPOINTED SPECIAL PURPOSE LIQUIDATOR AFTER CONSTRUCTION COMPANY COLLAPSES
Creditors are often left out of pocket when companies collapse, especially large ones. National Australian Bank is now being sued by many creditors for $74 after the collapse of a large construction company, Walton Construction. Michael Caspaney, of Menzies Advisory, is the Special Purpose Liquidator who has been appointed to look into the relationship between Walton Construction’s restructuring advisory firm, the Mawson Group and the National Australian Bank.
This is an ongoing investigation but you can read this article from 4 September 2019 from the ABC News website to learn more about this case. Click here to read the original article.
NAB Facing potential $74 million lawsuit over collapse of Walton Construction
Creditors who lost money in the collapse of a major construction company are attempting to sue the National Australia Bank (NAB) for $74 million.
Key points:
- The Federal Court has appointed a Special Purpose Liquidator to investigate NAB’s role in the collapse of Walton Construction
- The Liquidator will look at the relationship between NAB and the restructuring advisory firm Mawson Group
- More than 1,000 creditors lost over $70 million when Walton collapsed
The creditors successfully applied to the Federal Court to appoint a special purpose liquidator to examine the bank’s role in the 2013 collapse of Walton Construction.
The special purpose liquidator will look at the relationship between NAB and a restructuring advisory firm, the Mawson Group, which put in place a complex set of changes to Walton Construction in the weeks before its collapse.
The effect of these changes was to remove $18 million in unsecured NAB loans to Walton, so the bank lost nothing when the company went into liquidation.
Walton Construction was a big player in the building industry in Queensland, Victoria and New South Wales.
But by early 2013, according to auditors’ reports, it was either close to, or actually, insolvent.
In October of that year it went into voluntary liquidation, with tens of millions of dollars in debt.
Retired building contractor Les Williams, one of 1,400 creditors who collectively lost about $74 million in the Walton Construction building collapse, say they have a strong legal case.
“We believe there is a wrongdoing here, so we want to pursue it,” he told 7.30.
“There’s no justice,” said Melbourne roofer David Panetta, who lost $170,000 when Walton collapsed and eventually had his house repossessed by NAB.
“It’s whoever has the most money wins.”
Brisbane developer Lenny Willis was also stung by the financial disaster, losing $5 million.
He said there appeared to be close collaboration between Mawson and NAB.
“From the documentation I’ve seen, it was a very close relationship, there was continual liaison, reporting and discussions,” he told 7.30.
In a related case late last year, Federal Court Justice Roger Derrington noted the close relationship between the restructuring company and the bank.
“The ‘restructuring’ service provided by Mawson was for the purpose of advancing the interests of the NAB,” he said in his decision.
He also found Mawson “received substantial fees for its services”.
Lawyers acting for the Mawson Group defended the company’s actions.
“Our clients are confident their conduct has been proper and lawful,” they told 7.30.
The special purpose liquidator appointed by Federal Court Justice John Reeves will now examine whether the NAB was involved in “any breaches of statutory or fiduciary duties”, including being involved in a company trading while insolvent.
Barrister and former ASIC investigator, Niall Coburn, is assisting the creditors.
“Our clients are very happy, we have a special purpose liquidator appointed in relation to the Walton issue,” he told 7.30 outside court on the day the orders were granted.
Mr Williams is now trying to raise funds for a class action.
“We hope to have the NAB compensate people for their losses, there’s 1,400 people who lost in the vicinity of $74 million” he said.
NAB told a 2015 senate inquiry that it did not know the true financial position of Walton Construction and rejected the allegation that it arranged for Mawson to protect the bank’s interests.
The senate inquiry however expressed “serious concerns” over the relationship between NAB and Walton, and raised the possibility that the bank “may have facilitated illegal phoenix activity”.
In a written statement to 7.30, NAB general manager of strategic business services, Ross McNaughton, confirmed the bank was aware of the appointment of the Special Purpose Liquidator.
“We understand many unsecured creditors, including sub-contractors, were negatively affected by the insolvency of Walton Construction, and we appreciate the impact that has had on everyone involved in those businesses,” 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
