Creditors vote to liquidate Mannway, paving the way for an exhaustive investigation into the running of the business
By Brad Gardner | January 22, 2010
Creditors have voted to liquidate the failed Mannway Group, paving the way for an exhaustive investigation into the running of the business.
Geoff Handberg from Rodgers Reidy Chartered Accountants—the firm appointed as administrators—says he will now have the power to look further into whether Mannway Director Stuart Brown traded insolvent.
In his report to creditors based on his initial investigation, Handberg recommended Mannway be liquidated when creditors met on January 20.
“As liquidators, we have the power to continue investigations into preference payments, related party transactions and insolvent trading and any other transactions of the companies that we may become aware of,” Handberg wrote in his report.
“I can now continue my role as liquidator,” Handberg tells ATN.
In the report, Handberg revealed Mannway was insolvent from at least June 30, 2008– more than one year before administrators were called in.
His findings, as reported by ATN, found the company did not have enough assets to maintain its current liabilities from at least June 2007.
“…I consider that there are reasonably good prospects of establishing that the companies traded whilst insolvent,” Handberg wrote.
“Further investigations will need to be undertaken before forming a firmer opinion about the merits of commencing proceedings against him [Brown] for insolvent trading.”
Directors guilty of knowingly trading insolvent may face compensation claims, a maximum fine of $220,000, up to five years in jail and the prospect of being disqualified from running companies.
However Brown will defend any action taken against him on the basis he relied on the information of accountants, auditors and financiers regarding Mannway’s solvency.
According to the report, Mannway defaulted on various payment arrangements with creditors since at least September 2007 and Handberg says the operator’s failure to satisfy creditors forced major financiers to withdraw credit.
The report says the Mannway Group suffered losses of almost $34.5 million due to insolvent trading, while finance costs ballooned from $1.92 million in June 2007 to $5.14 million in 2009.
SOME GOOD NEWS FOR EMPLOYEES
Handberg says the decision to liquidate the company is also good news for former employees because they will have access to the Federal Government’s General Employee Entitlements and Redundancy Scheme (GEERS) for most unpaid entitlements except superannuation.
“Importantly for employees GEERS kicks in,” he says.
Employees are owed more than $5.6 million in unpaid wages, annual leave, long service leave, superannuation and redundancies.
Mannway was founded in 1979 by Bill Mann before being taken over by Brown, a former Linfox executive.
The company went into administration on October 14 last year, but a buyer could not be found.
Family-owned business Costa Logistics was interested at one point, but it could not reach an agreement with administrators on a deal.