P E R T H
Level 26 BankWest Tower 108 St George’s Terrace Perth WA 6000 Australia 25 August 2011
Evans & Tate Creditors’ Trust And
Subsidiaries As Set Out In The Schedule
(In Liquidation) (the Group)
Report to Creditors
GPO Box 2537 Perth WA 6001 phone +61 8 9214 1444 fax +61 8 9214 1400 email perth@fh.com.au www.ferrierhodgson.com ADELAIDE BRISBANE MELBOURNE SYDNEY JAKARTA KUALA LUMPUR SINGAPORE TOKYO I refer to the appointment of Bruce Carter and I as Joint and Several Liquidators of
the above Group on 14 December 2007.
I advise that Bruce Carter resigned as Joint and Several Liquidator of the Group on
23 March 2010. I remain the sole Liquidator of the Group.
The purpose of this report is to provide creditors of the Group with an update
regarding
the status of the Group and to declare a first and final dividend to unsecured creditors
at a rate of 0.006 cents in the dollar.
I hereby update creditors of the Group under the followings headings:
1 CURRENT STATUS 2 STATEMENT OF POSITION 3 DIVIDEND DISTRIBUTION TO CREDITORS 4 ASSET REALISATIONS 5 RECEIPTS AND PAYMENTS 6 INVESTIGATIONS INTO THE AFFAIRS OF THE COMPANY 7 APPOINTEES’ REMUNERATION 8 OUTSTANDING MATTERS TO FINALISE THE LIQUIDATION/CREDITORS' TRUST 9 QUERIES Ferrier Hodgson is an affiliation of independent partnerships/entities.
Liability limited by a scheme approved under the Professional Standards Legislation.
Affiliated through Zolfo Cooper United States United Kingdom Caribbean and KLC Kennic Lui & Co Hong Kong China Page 2
1
CURRENT STATUS
I advise that the current status of the Group is as follows:
(i)
I have concluded my comprehensive investigations into the affairs of the
Group;
(ii)
During the course of my investigations I identified a claim that I considered
may be pursued against the former directors, the Chief Operating Officer, the
Financial Controller, the auditor and the valuer (of the bulk wine inventories) to
recover the total dividend paid to shareholders in 2005 totalling $2.83 million.
However, after further consideration I have determined for commercial reasons
that it is not in the best interests of creditors for me to pursue the claim. I
further note that the secured creditor has a priority for repayment of its debt
ahead of other unsecured creditors from any proceeds recovered from such
actions and in this regard the secured creditor advised, consistent with my view
that it did not wish to pursue the action or fund it. Please refer to section 6 of
this report for further details;
(iii)
I prepared and lodged my report pursuant to Section 533 of the Corporations
Act 2001 (“the Act”) on the affairs of the Group with the Australian Securities
and Investments Commission (ASIC) on 27 October 2010. I note that this
report is confidential between the Liquidator and ASIC and I am therefore
unable to disclose any information in this regard. However, the ASIC has
confirmed that I may proceed to finalise the liquidation in due course;
(iv)
I confirm that the Receivers and Managers of the Group retired on 30 June
2008;
(v)
I have attended to numerous enquiries by creditors by way of written
correspondence and telephone and maintained an electronic portal to enable
creditors to access information relating to the liquidation/trust;
(vi)
I have attended to all statutory requirements of the liquidation/trust; and
(vii) In light of the above, I now consider it appropriate to call for formal proofs of
debt and advise unsecured creditors of my intention to distribute a first and
final dividend. The estimated dividend position is noted below and a formal
notice with respect to Formal Proofs of Debt is attached.
E&T-D11-Report to Creditors 2011.7.11
Page 3
2
2.1
STATEMENT OF POSITION
Set out below is current statement of position for the Group as at 31 July
2011:
Cash at Bank
Less: Priority Claims
Liquidators’ Future remuneration and disbursements (subject to approval)
Funds available for Unsecured Creditors
Unsecured Creditors (estimated)
Estimated Dividend (Cents in the $)
Amount
($)
323,871
(30,000)
293,871
(48,665,000)
0.006
2.2
Please note I have not adjudicated on any proofs of debt and in this regard
the total unsecured creditor pool may be subject to change.
2.3
Please refer to Section 7 of this report in respect of my remuneration incurred
to date and future estimated remuneration.
2.4
I have been advised by the former Receivers and Managers that employees’
priority claims afforded under Section 556 of the Act were settled during
2007. To this end, I do not expect there to be any further claims of priority to
that of unsecured creditors save for my remuneration and out of pocket
expenses. However, please note this position is not definitive at this point
pending any formal proofs of debt which may be submitted and my
adjudication of the same.
3
DIVIDEND DISTRIBUTION TO CREDITORS
3.1
I confirm that I have not yet made a distribution to creditors during the course
of the liquidation.
3.2
As noted above, it is my intention to call for Formal Proofs of Debt for
adjudication purposes. As noted in the above statement of position, the
current estimated first and final dividend to unsecured creditors is 0.006 cents
in the dollar.
3.3
Please note the existing value of all creditor claims may be subject to change
as formal proofs of debt are received and adjudicated upon.
3.4
In view of the above, please find enclosed the following documents:
(a)
Notice of Intention to Declare a First and Final Dividend to Unsecured
Creditors
(b)
Notice of Inviting Formal Proofs of Debt
(c)
Formal Proof of Debt Form.
E&T-D11-Report to Creditors 2011.7.11
Page 4
3.5
In this regard, a first and final dividend is to be declared on or before 7
October 2011. The following table summarises the dividend timeline:
Date
Thursday, 25 August 2011
Tuesday, 30 August 2011
Thursday, 22 September 2011
Friday, 7 October 2011
Action
Declaration of dividend and request for formal PODs sent to
creditors
Notice of Intention to Declare Dividend Advertised in Gazette
Final Day for Creditors to Submit Formal Proofs of Debt
Dividend Declared on or Before this Date
3.6
With respect to the above, I note that pursuant to Regulation 5.6.65(2) of the
Corporation Regulations 2001 creditors must submit a Formal Proof of Debt
to this office on or before Thursday, 22 September 2011. In this regard, I
enclose a Formal Proof of Debt for your completion.
3.7
I note that a number of creditors have already submitted Formal Proofs
of Debt. Accordingly, if you have already submitted a Formal Proof of
Debt you are not required to submit a further Formal Proof of Debt
unless you wish to alter your original claim.
3.8
I confirm that the debts owed to holders of ETWG 8.25% Convertible Notes
(Convertible Noteholders) rank as unsecured claims against Evans & Tate
Limited pursuant to the Unsecured Convertible Note Trust Deed (Trust Deed)
dated 7 October 1999. Pursuant to the Trust Deed, Permanent Nominees
(Aust) Limited (the Trustee) acts as Trustee for all Convertible Noteholders.
3.9
I further advise that the Trustee pursuant to the Trust Deed has lodged a
Formal Proof of Debt on behalf of all Convertible Noteholders. Accordingly,
individual Convertible Noteholders are not required to lodge a further
Formal Proof of Debt. The Trustee has further confirmed that they will
distribute any dividend received from the Evans & Tate Creditors’ Trust to
each respective Convertible Noteholder.
3.10
Section 140 of the Bankruptcy Act allows a Trustee and Liquidator the
discretion as to whether it is to distribute dividends to creditors that are less
than $25.00. Based upon our analysis, there are a large number of creditors
that are expected to receive dividend cheques under $25.00. Given the cost
of processing, distributing and liaising with creditors who are to receive such
nominal dividends we consider that these costs are likely to outweigh the
benefit to creditors. Accordingly, it is not our intention to distribute dividends
to admitted creditors which fall under this $25.00 threshold.
4
4.1
ASSET REALISATIONS
In addition to the funds payable under the DOCA to the creditors trust, 2.5
million ordinary shares were issued to the trust by the DOCA proponent in the
recapitalised ETW Corporation Ltd (formerly Evans & Tate Limited). These
shares were realised on the market for the sum of $36,662.
E&T-D11-Report to Creditors 2011.7.11
Page 5
5
5.1
RECEIPTS AND PAYMENTS
Set out below is a summary of receipts and payments since my appointment
for the period 20 August 2007 to 31 July 2011:
Amount
($)
Receipts
Contributions from DOCA proponent
Cash at Bank
Realisation of Securities
Other
Total Receipts
Payments
Legal Fees
Professional Services
Insurance
Administrators' Remuneration
Deed Administrators' Remuneration
Trustees' Remuneration
Liquidators' Remuneration
Administrators' Disbursements
Deed Administrators' Disbursements
Trustees' Disbursements
Liquidators' Disbursements
Total Payments
Cash at Bank 31 July 2011
945,705
24,707
36,662
8,672
1,015,746
(59,278)
(9,477)
(450)
(301,341)
(55,000)
(55,000)
(98,939)
(52,052)
(40,098)
(10,111)
(10,129)
(691,875)
$323,871
5.2
I note that the available cash at bank is currently held in a standard business
cheque account at National Australia Bank Limited.
5.3
Creditors are advised pursuant to Section 539(5) of the Act, that the
Liquidators’ account of receipts and payments can be inspected, upon
appointment, at the offices of Ferrier Hodgson, Level 26, BankWest Tower,
108 St George’s Terrace, Perth, Western Australia.
6
INVESTIGATIONS INTO THE AFFAIRS OF THE COMPANY
6.1
Pursuant to Section 533 of the Act, a Liquidator is required to report on the
affairs of the company. I advise that I lodged my Section 533 of the Act
report with ASIC on 27 October 2010. This report is confidential between the
Liquidator and the ASIC and I am therefore unable to disclose any
information in this regard. However, the ASIC has confirmed that I may
proceed to finalise the liquidation of the Group in due course.
6.2
As discussed earlier in this report, during the course of my investigations I
identified a possible claim against the former directors, the Chief Operating
Officer, the Financial Controller, the auditor and the valuer (of the bulk wine
inventories) to recover the total dividend paid to shareholders and
noteholders in 2005 totalling $2.83 million.
E&T-D11-Report to Creditors 2011.7.11
Page 6
6.3
Details of the claim are outlined below:
(a)
The Group declared a dividend to ordinary shareholders registered
with the Group at 24 March 2005 of 2.25 cents per share following the
announcement of a half year profit of $3.7 million as at 31 December
2004. In this regard, funds totalling $2.07 million were distributed to
ordinary shareholders.
(b)
A dividend was also paid to convertible preference shareholders
(“WInES”) and $765K was distributed. In summary, a total of $2.83
million was distributed to ordinary and WInES shareholders. The
Group however would go on to announce a full year loss of $49.8
million which was subsequently restated in 2006 under IFRS to a loss
of $73.7 million.
(c)
I also note that a number of the former directors and officers of ETW
also held shares in ETW and received a financial benefit, albeit a
small dividend in some cases, as a result of the declaration of the
interim dividend.
(d)
At 30 June 2003 and 30 June 2004 valuations of the unallocated bulk
wine were performed. ETW management sought confirmation from a
licensed valuer, by way of correspondence in January 2005, that
market conditions or other factors had not changed such that the 30
June 2004 valuation could be applied to 31 December 2004 inventory
levels. The valuer confirmed that the report prepared at 30 June 2004
was still valid and nothing had changed in the market to alter their
appraisal or their assumptions in respect of inventory value. The
auditors and management of the Group appear to have relied on this
report and management’s view that the 2005 Vintage would be less
than was ultimately the case. As a consequence, the directors formed
the view that no write-down of stock was required at 31 December
2004.
(e)
Around this time, ETW became aware of a major error in their cash
flow forecasting. The error was so significant that ETW wrote to ANZ
on 28 January 2005 advising that due to the error, ETW would be
unable to meet the April Interchargeable Seasonal Funding facility
repayment.
(f)
On 10 February 2005, ANZ wrote to the Group and advised that no
repayment would be required during the April period. On 15 February
2005 the board of the Group met and declared the interim dividend. It
appears that the payment deferral received from ANZ was necessary
to allow the dividend to be paid.
(g)
Concerns were raised by the Group’s auditors and Korda Mentha,
who were engaged by ANZ to perform an Investigative Accountants
report on the Group, with respect to the current value of inventory as
at 30 June 2005. Consequently, the Group engaged a secondary
valuer to conduct a valuation as to allocated and unallocated bulk
inventory of the Group.
E&T-D11-Report to Creditors 2011.7.11
Page 7
(h)
Following receipt of the secondary valuers report, the Board resolved
that one-off charges of $45.2 million and year end adjustments of
$11.4 million were required for the financial year ending 30 June 2005
made up of the following:
Inventory write-downs
Intangible write-downs
Provisions
One-Off Adjustments
Other Adjustments
Inventory costing allocation
Other
Total
6.4
$ ‘000
30.6
7.3
6.8
0.5
45.2
9.1
2.3
11.4
$56.6 m
(i)
The main basis for the inventory write-downs was the deterioration in
bulk wine prices for certain categories across the industry. The writedown of the bulk wine inventory amounted to $30.6 million.
(j)
The auditors of the Group conducted an independent review of the
half year financial report to 31 December 2004 which included a
review of correspondence from the first valuer with respect to the
value of unallocated bulk wine. The auditor concluded that the half
year financial report to 31 December 2004 represented a true and fair
value of the Group’s financial position and financial performance.
(k)
A fundamental question that has been the focus of my investigations
was whether the Board carried out sufficient tests to determine the
value of inventory at 31 December 2004 and acted correctly in failing
to provide in whole or part for the write-down of inventory as a result
of adverse industry conditions.
Notwithstanding the above, after careful consideration of the potential claim,
risks and benefits of pursuing the claim, we concluded that it is not in the
interests of creditors for the Liquidators/Trustees to proceed with the claim for
the reasons below. I further note that the secured creditor has a priority for
repayment of its debt ahead of other unsecured creditors from any proceeds
recovered from such actions and in this regard the secured creditor advised,
consistent with my view that it did not wish to pursue the action or fund it
(a)
There are various defences that may be available to the defendants to
fully defend or limit the claim.
(b)
The possible contravention occurred a considerable time before my
appointment as Administrator, such that obtaining documentary
evidence to support the claim and communicating with witnesses and
parties involved may be difficult.
E&T-D11-Report to Creditors 2011.7.11
Page 8
(c)
The Group holds limited funds and approval from unsecured creditors
is required to pursue the matter which may not be forthcoming in any
event.
(d)
The cost of pursuing the action, should the matter go to trial, is likely
to exceed current funds held based upon the advice we obtained.
(e)
It appears unlikely that a litigation funder would fund such a claim
given its size and likely risk of success. Further, if a litigation funder
was involved, it is likely that the success fee would substantially
reduce the net return to creditors. Given our understanding of the
secured creditor’s outstanding debt no return would be available to
unsecured creditors if the action was successful.
(f)
The progression of the claim is likely to take considerable time given
the lack of documentary evidence collated thus far and general legal
complexities.
(g)
I have reported the matter to ASIC pursuant to Section 533 of the
Corporations Act, of which ASIC advised that they do not intend to
take any further action.
(h)
The Receivers and Managers did not progress the matter for the
benefit of their appointers, ANZ Bank.
(i)
Further, I wrote to ANZ Bank, the secured creditor of the Group to
seek their final views on whether they may wish to pursue and fund
the above matter. In this regard, the secured creditor confirmed they
do not wish to pursue the matter or fund it.
(j)
If I do not proceed to advance the claim I can immediately seek to
distribute a first and final dividend to unsecured creditors from existing
funds (as discussed earlier) and finalise the Creditors’ Trust and
liquidations.
E&T-D11-Report to Creditors 2011.7.11
Page 9
7
7.1
APPOINTEES’ REMUNERATION
I table below the Liquidators’ remuneration that has been approved and
drawn during the course of the administration:
Period
Voluntary Administration
Deed of Company Arrangement
Creditors Trust
Liquidation
Total
Amount approved
($ ‘000 excl GST)
300,000
50,000
50,000
100,000
$500,000
Amount drawn
($ ‘000 excl GST)
273,946
50,000
50,000
89,944
$463,890
7.2
I note that the Liquidators’ remuneration up to an amount of $100,000 has
been previously approved by creditors.
7.3
I anticipate that my staff and I will incur a further $25,000 in respect of the
adjudication of proofs and distribution of the dividend. In this regard, I seek
further approval from creditors in respect of my remuneration which I
envisage seeking at the final meeting of creditors (which is required to be
convened for companies in liquidation).
7.4
Arrangements can be made to inspect the time and costs records which
provide greater detail of work performed by me and my staff by contacting Mr
Sean Holmes of my office on +61 8 9214 1444.
8
8.1
8.2
OUTSTANDING MATTERS TO FINALISE THE LIQUIDATION / CREDITORS’ TRUST
At this stage, the outstanding matters relate to:
(i)
Calling for formal proofs of debt from unsecured creditors;
(ii)
Adjudicate on proofs of debt received and correspond with creditors
as appropriate.
(iii)
Declare and distribute the first and final dividend to unsecured
creditors.
Once the above matters have been finalised I will be in a position to finalise
the liquidation and Creditors’ Trust which will involve the following tasks:
(i)
Convening of a final meeting of members and creditors; and
(ii)
Attending to final statutory requirements of the liquidation and Trust.
E&T-D11-Report to Creditors 2011.7.11
Page 10
9
QUERIES
9.1
Information pertaining to the Liquidation of the Group will continue to be
posted
as
necessary
on
the
Ferrier
Hodgson
website
at
www.ferrierhodgson.com in the “Creditors Information – Current
Administrations” section.
9.2
Should you have any queries with regard to the above, please do not hesitate
to contact Sean Holmes at this office.
Martin Jones
Joint and Several Trustee
Joint and Several Liquidator
Encl.
E&T-D11-Report to Creditors 2011.7.11
THE SCHEDULE
Company
Australian Wineries Pty Ltd
A.W.T. Pty Limited
Cranswick Purchasing Pty Ltd
Evans & Tate (USA) Pty Ltd
Evans & Tate Vineyards Pty Ltd
Ironbark Wines Pty Ltd
Irybel Pty Limited
Oakridge Vineyards Pty Ltd
Redello Wines Pty Limited
VA-G-159
ACN
058 399 134
054 567 690
082 976 921
084 350 425
008 713 764
090 894 974
005 405 194
076 706 440
003 753 491
Company
Selwyn Viticultural Services Pty Ltd
Selwyn Wines Pty Ltd
Sovint Pty Limited
Wine Source (NSW) Pty Ltd
Wine Source (QLD) Pty Ltd
Wine Source (VIC) Pty Ltd
Wine Source (WA) Pty Ltd
Wine Source Holdings Pty Ltd
ACN
093 317 198
055 105 201
005 514 367
062 372 605
108 365 742
065 453 803
111 551 547
082 150 801
FORM 534
CORPORATIONS ACT 2001
Subregulation 5.6.48(3)
THE EVANS AND TATE CREDITORS’ TRUST
(E&T TRUST)
NOTICE INVITING FORMAL PROOF OF DEBT OR CLAIM
Take notice that creditors of the E&T Trust, whose debts or claims have not already been admitted,
are required on or before Thursday, 22 September 2011 to prove their debts or claims and to
establish any title they may have to priority by delivering or sending through the post to me at my
address, a formal proof of debt claim in accordance with Form 535 or 536 containing their
respective debts or claims. If they do not they will be excluded from:
a)
The benefit of any distribution made before their debts or claims are proved or their priority is
established; and
b)
Objecting to the distribution.
Form of proof may be obtained from me.
DATED this 25th day of August 2011
Martin Jones
Joint and Several Trustee of
The Evans & Tate Creditors’ Trust
Ferrier Hodgson
Level 26, BankWest Tower
108 St George’s Terrace
PERTH WA 6000
VA-G-159
FORM 546
CORPORATIONS ACT 2001
Subregulation 5.6.65(1)
NOTICE OF INTENTION TO DECLARE A FIRST AND FINAL DIVIDEND TO CREDITORS
THE EVANS AND TATE CREDITORS’ TRUST
(E&T TRUST)
A first and final dividend is to be declared on or before 7 October 2011 for the E&T Trust.
Creditors whose debts or claims have not already been admitted are required on or before
Thursday, 22 September 2011 to formally prove their debts or claims. If they do not they will be
excluded from the benefit of the dividend.
A Formal Proof of Debt form may be obtained from this office.
DATED this 25th day of August 2011
Martin Jones
Joint and Several Trustee of
The Evans & Tate Creditors’ Trust
Ferrier Hodgson
Level 26 BankWest Tower
108 St George’s Terrace
PERTH WA 6000
VA-G-159
FORM 535
CORPORATIONS ACT 2001
Subregulation 5.6.49(2)
FORMAL PROOF OF DEBT OR CLAIM
To the Trustee of Evans & Tate Limited Creditors’ Trust
1.
This is to state that the company was, on 20 August 2007 (1) and still is, justly and truly
indebted to(2)
.................................................................................................................................................................
............................................................................................................................................................ for
................................................................... dollars and ........................................................................cents.
Particulars of the debt are:
Date
Consideration(3)
Amount
$
GST
included
$
Remarks(4)
2.
To my knowledge or belief the creditor has not, nor has any person by the creditor's order,
had or received any manner of satisfaction or security for the sum or any part of it except for
the following:(5)
3.(6)*
I am employed by the creditor and authorised in writing by the creditor to make this
statement. I know that the debt was incurred for the consideration stated and that the debt,
to the best of my knowledge and belief, still remains unpaid and unsatisfied.
3.(6)*
I am the creditor's agent authorised in writing to make this statement in writing. I know that
the debt was incurred and for the consideration stated and that the debt, to the best of my
knowledge and belief, still remains unpaid and unsatisfied.
DATED this
day of
2011
Signature of Signatory ...............................................................................................................................
NAME IN BLOCK LETTERS .....................................................................................................................
Occupation.................................................................................................................................................
Address ......................................................................................................................................................
See Directions overleaf for the completion of this form
OFFICE USE ONLY
POD No:
Date Received:
/
/
Entered into IPS/Computer:
Amount per RATA
$
PREP BY/AUTHORISED
DATE AUTHORISED
VA-G-159
/
/
ADMIT - Ordinary
$
ADMIT - Preferential
$
Reject
$
H/Over for Consideration
$
TOTAL PROOF
$
Directions
*
Strike out whichever is inapplicable.
(1)
Insert date of Court Order in winding up by the Court, or date of resolution to wind up, if a voluntary
winding up.
(2)
Insert full name and address of the creditor and, if applicable, the creditor's partners. If prepared by an
employee or agent of the creditor, also insert a description of the occupation of the creditor.
(3)
Under "Consideration" state how the debt arose, for example "goods sold and delivered to the company
between the dates of .....................................................", "moneys advanced in respect of the Bill of
Exchange".
(4)
Under "Remarks" include details of vouchers substantiating payment.
(5)
Insert particulars of all securities held. Where the securities are on the property of the company, assess
the value of those securities. If any bills or other negotiable securities are held, specify them in a
schedule in the following form:
Date
(6)
Drawer
Acceptor
$
¢
Amount
Date Due
If proof is made by the creditor personally, strike the two (2) paragraphs numbered 3.
Annexures
A.
If space provided for a particular purpose in a form is insufficient to contain all the required information in
relation to a particular item, the information must be set out in an annexure.
B.
An annexure to a form must:
(a)
have an identifying mark;
(b)
and be endorsed with the words:
"This is the annexure of (insert number of pages) pages marked (insert an
identifying mark) referred to in the (insert description of form) signed by me/us
and dated (insert date of signing); and
(c)
be signed by each person signing the form to which the document is annexed.
C.
The pages in an annexure must be numbered consecutively.
D.
If a form has a document annexed the following particulars of the annexure must be written on the form:
E.
VA-G-159
(a)
the identifying mark; and
(b)
the number of pages.
A reference to an annexure includes a document that is with a form.