Bleak for creditors

UNSECURED creditors of a failed dairy co-operative must wait to see if a giant spray drying project can be resurrected before they will know if they will see any significant return on the $11m they are owed.

The overwhelming share of Organic Dairy Farmers of Australia’s unsecured debt is to dairy farmers, but Geelong-based businesses that provided maintenance, repairs and milk transport to the dairy processing plant are also facing losses.

A half share in a former joint venture with Wattle Health Australia will still hold value if administrators can salvage a $55m spray drying project at North Geelong, which is about 75 per cent complete.

ODFA’s other major assets, including land, building, brands and trademarks, have been sold by the receiver, Deloitte Australia, which was recovering about $8m for the only secured creditor, the National Australia Bank.

The co-operative’s liquidator, Worrells Geelong partner Scott Andersen, said Deloitte was preparing a final financial position statement after the sale of ODFA but he was not expecting much to be left for unsecured creditors.

“My preliminary views are that it is unlikely that there would be any surplus available for non-bank creditors after the bank has been paid,” Mr Andersen said.

When ODFA went into administration in May, its share in the Corio Bay Dairy Group joint venture was for a period consolidated with the other partner, Wattle Health Australia, as it tried to shore up a $20m rescue deal.

Mr Andersen confirmed the time for that arrangement had lapsed and the ODFA share was potentially a recoverable asset. “It is possibly an asset, (but) of a value to be determined at this juncture,” he said.

Meanwhile, the collective of organic dairy farmers, former members of ODFA, are yet to declare who will be processing their milk supply after an announcement had been expected more than two weeks ago.

The administrators of the Corio Bay Dairy Group, David Mutton and Jonathon Kingsley, of RSM Australia Partners, have been seeking expressions of interest in the business, which does not include the joint venture’s former milk supply contracts.

As the ODFA farmers’ hopes of getting a return on their $11m depends on the project being completed, it appears in their interest to be involved in negotiations with any potential buyer, but that could not be confirmed.

The former ODFA dairy processing plant, which adjoins the spray dryer, has been bought by the Remarkable Milk Company, backed by the Kyvalley Dairy Group.