Costly fate of Paradise boss

Motorhome group owed almost $20M

ADMINISTRATORS of the Paradise Motor Homes group have found it owed almost $20 million when it collapsed and had been trading while insolvent for at least two and a half years.

The group’s manufacturing arm PMH had just $589 in the bank when it went under, while its Queensland sales arm had $13,885.

Administrators also identified “poor financial control” by the companies, which it said had been insolvent from at least June 30, 2020, resulting in potential insolvent trading claims against director Shannon Burford of $5.2m.

The claims, if progressed, look unlikely to result in cash for Paradise customers, owed as much as $400,000 each, who are last in line to be paid if any funds are recovered.

Administrators said Mr Burford borrowed $120,768 from PMH in the past year, a loan they consider “unrecoverable” because of “the director’s personal financial position”.

Mr Burford, who pulled a $200,000 per year salary from the business, also personally guaranteed debts of the companies totalling more than $1.5m.

Mr Burford’s million-dollar Hope Island home is owned by his wife Josephine Burford, a part owner of Paradise Motor Homes and its former general manager.

Ms Burford was paid a salary of $168,000 per year.

Administrators also identified unfair preference payments as well as “transactions to avoid employee entitlements” and other transactions that required further explanation.

More than $1m is owed in employee entitlements and more than $2.5m is owed in tax.

Mr and Ms Burford are each listed as creditors themselves – with the couple respectively claiming $64,069 and $76,459 in employee entitlements.

Administrators said they had identified four ways Mr Burford may have breached his director duties and/or the Corporations Act.

Mr Burford told administrators the group’s financial problems were due to the expense of re-establishing the business after purchasing it out of receivership in 2017.

The administrator’s report said staffing and supply constraints caused by Covid-19 also had an impact, as well as reduced production capacity.

Paradise had started work on 12 vehicles when it collapsed but had taken deposits on forward orders for 32 more.

Finance companies hold security over 11 of the 12 vehicles, in various stages of production, are owed up to $2.3m between them, the report said.

Administrators found more than $5m in cash received via customer deposits were not used for their respective motorhome builds, but were transferred to PMH, which used them to pay debts and employee expenses.

The report said further investigations were needed into 28 payments totalling $180,000 made from Paradise bank accounts to Clarity Valuations, a company jointly held by Mr and Mrs Burford.

Mr Burford told administrators the payments were consultancy fees.

The administrators said their early investigations had not identified any criminal misuse of customer funds.

Creditors will have the opportunity to vote on whether to place the companies in liquidation at consecutive meetings at The Oaks Gold Coast Hotel from 11am on November 16.

Paradise Motor Homes (NSW) ceased trading in 2021 and is already in liquidation.