Queries on joinery cash
Bust business’s insolvency claim
THE administrator investigating a Hobart construction company that went belly-up last month says the director may have been trading insolvent for nearly three years and made “unreasonable” director-related transactions.
A spokeswoman on behalf of director Adam Burbury denied the company had been trading insolvent, but declined to comment further.
At a second creditors’ meeting on June 21, creditors voted to accept the recommendation to liquidate the company. Mornington company Kam Tasmania Pty Ltd, which traded as Kam Joinery and had been in business for more than 30 years, appointed administrator Shelley-Maree Brooks on May 25. Ms Brooks has now filed a report on the company’s affairs with ASIC.
According to Ms Brooks’ report, the company has debts totalling an estimated $1,508,322 – about $500,000 more than identified by Mr Burbury, who bought the business from founder Simon Ottway in 2017.
The administrator estimated the realisable value of the company’s assets to be between $269,710 and $340,000. The report said Mr Burbury attributed his company’s collapse to Covid-19, supplier price increases and staffing issues – 11 employees resigned in the period between February 2021 and Ms Brooks’ appointment in May.
While Ms Brooks substantively agreed with that account, she also identified “under-capitalisation, inadequate cash flow or high cash use, poor strategic management of the company’s business and trading losses” as contributing to Kam’s downfall.
Ms Brooks noted the business would have posted a loss in every financial year back to 2018-19 were it not for $487,000 in JobKeeper payments in the 2020-21 and 2021-22 financial years.
Her report identified a number of areas warranting further investigation, chief among them the possibility of trading while insolvent.
“Further potential misconduct may be identified as my investigations advance,” she said.
Negotiations continue between liquidator Shelley-Maree Brooks and parties interesting in purchasing the business’s assets, including its trading name.