Liquidation shortfall

A SEEMINGLY straightforward voluntary liquidation of a multimillion-dollar Toowoomba civil construction business has gone pearshaped.

Hotshot Transport Queensland Pty Ltd, which traded as HTQ Civil Pipe Mining, was placed in a member’s voluntary liquidation on June 30 and Adam Ward of Worrells Solvency and Forensic Accountants was appointed liquidator.

Before placing the company in liquidation, directors Reuben Dolphin and Clint Kenny completed a statutory declaration of solvency, which according to Mr Ward’s latest report to members and creditors, “states that it is the director’s opinion that the company can pay its due and payable debts within 12 months of the commencement of the winding up”.

This week however, Mr Ward informed creditors he had come to the opinion the company was not able to pay its debts within the period stated in the directors’ declaration and was therefore insolvent.

Mr Ward said there were four main reasons for change in status.

He said while the directors declaration stated the company had $250,657 cash, “the company’s bank account balance at appointment was $57,517, not $250,657”.

“One of the directors removed $190,470 from the company’s bank account just prior to my appointment advising that he was holding the funds on trust for the company,” Mr Ward wrote in his report.

“Despite my request, this cash has not been made available to the company to form part of the asset pool to satisfy the debts of the company.”

Mr Ward also wrote that a Caterpillar scraper with an estimated market value of $175,000 was included as an asset of the company, but had been taken possession of by a related company.

He also said assets that appear to be owned by a related company could not be sold and that assets of HTQ were “recorded at higher values than market value of the assets achievable at auction”.

“If all assets included in the solvency declaration were made available to the company, it is likely that the company would be solvent, and the members voluntary liquidation would have continued, and all creditors paid in full,” he said.

Mr Ward’s summary of the company’s financial position showed an almost $1 million gap between the directors’ assessment of the company’s total assets, which totalled almost $2.8 million, and his own assessment, which he put at $1.818 million.

Mr Ward said unsecured creditors are expected to receive between 15 and 60 cents in the dollar.

Concurrent meetings of members and creditors are set for September 30.