Fairstar debt recovery tough for City
The City of Kalgoorlie-Boulder’s prospects of recovering a $635,000 debt appear low, with staff indicating the cost of pursuing liquidation action against Fairstar Resources would be in the realm of $60,000.
A three-year campaign to recover the money owed by Fairstar has proven unsuccessful, and took a further hit when a secured creditor recently sent in receivers to recover a debt understood to be more than $2 million.
The City is now weighing whether to pursue a wind-up motion to put Fairstar into liquidation, or wait until the receivership is complete and reassess options.
Acting chief executive Braden Fisher said without knowing what assets Fairstar held and which assets were in the hands of receivers, it was difficult to determine what would be “left over” when the receivership was complete.
“Though the City still has the option to commence winding up proceedings and put the company into liquidation, whilst in receivership, the liquidator will only be able to deal with those assets not subject of the charge,” he said.
“The City needs to consider whether it wants to spend money now in putting the company into liquidation, with the likely chance it will not receive any dividends, or let the receivership process take its course and reassess enforcement options once the secured creditor’s charge has been satisfied.”
Fairstar’s debt to the City has accumulated through unpaid rates on mining tenements, outstanding Emergency Services Levy fees and the cost of legal action to pursue those charges.
Legal action against Fairstar began when the City lodged a general procedure claim in October 2012, which the company defended.
Mr Fisher said solicitors from Perth-based legal firm Price Sierakowski, acting on behalf of the City and its debt collectors, eventually negotiated a deed of settlement to set up a payment arrangement.
But he said Fairstar defaulted on that payment plan, the last of which was due on November 11.
In July, PBB Advisory’s Guy Theobald was sent to sell enough of the charged assets to repay the debt owed to the secured creditor, Fairstar’s former chief geologist Sheldon Coates.
Fairstar’s quarterly report released in June showed the company had a cash balance of $34,000.