1st Fleet's liabilities outstrip worth of company assets, forcing sub-contractors to absorb massive losses
By Brad Gardner | June 19, 2012
The assets of failed operator 1st Fleet will not be enough to settle its debts, leaving many sub-contractors out of pocket to the tune of hundreds of thousands of dollars.
A report prepared by liquidator deVries Tayeh for 1st Fleet creditors, and obtained by ATN, details liabilities of more than $46.5 million with a list of unsecured creditors stretching beyond 700.
The report, presented during the May 22 creditors meeting which voted to wind up 1st Fleet, says the firm’s liabilities eclipse the worth of its assets, leaving a $27.5 million deficiency.
1st Fleet listed the value of its assets at $60 million, but the report to creditors believes the realistic figure is closer to $19 million.
A significant chunk of 1st Fleet’s debt is owed to Mercedes-Benz Finance, which is chasing $9 million. Coface is owed $5.7 million, while the Australian Taxation Office (ATO) is owed $4.6 million.
Coface and Mercedes, both secured creditors, are likely to see their money once 1st Fleet is liquidated. But trucking companies which did work for Stephen Brown’s company are unsecured creditors and will not see a cent.
“Unless we can uncover other stuff, it appears remote [unsecured creditors will receive anything]. And if we did get something for those guys, it wouldn’t be substantial,” deVries Tayeh Partner Antony de Vries says.
AEG Interstate Transport is owed $105,600 for six weeks of work it did for 1st Fleet, while B&B Towers Transport in NSW is counting losses totalling $95,996.
Queensland-based Coleman Transport has lost more than $201,000, with Royan Truck and Trailer Repairs in Victoria chasing $88,879.
AEG Manager Lloyd Bowtell questions what effect the large financial losses will have on 1st Fleet’s sub-contractors.
“That’s what is going to hurt, because some of these companies might not even survive over it,” he told ATN.
North South Central Freight Lines in South Australia is owed just over $21,000. 1st Fleet was one of its largest customers, owner Joe Peplinski says.
He says 1st Fleet went under only four weeks before another of Peplinski’s significant customers, AirRoad, ended its relationship with his company.
“That was just a huge whack in the balls for us,” he says.
Peplinski says he has had to let staff go and reduce the hours of his remaining employees. He has already received a letter from deVries Tayeh stating he will get nothing once 1st Fleet is liquidated.
“The [1st Fleet] employees will be looked after, the banks will certainly not have a problem but guys like me all over this country are the ones that will pay,” Peplinski says.
He has expressed sadness more than anger over the demise of 1st Fleet, which he says was a great company to work for in the seven years his business carried goods for it.
“I really enjoyed 1st Fleet as a customer. They were a great customer of ours and it’s a shame it has gone this way,” he says.
“They were worth a lot of money in the seven years we had them and they were good people. I didn’t have anything personally to do with the managing director but the people we dealt with here in Adelaide were fantastic.”
1st Fleet went into administration on April 26 and closed its doors just before midnight on May 2 after its only financial lifeline, debtor funder Coface, cut off funding to the company. Employees, unaware what had happened overnight, turned up the following day to work and were handed redundancy notices.
DeVries Tayeh is now undertaking a detailed investigation of the company, which includes determining if it traded insolvent.
“Our preliminary investigations indicate that there are indications of insolvent trading,” the report to creditors states.
“However, these have not been fully investigated and…there may be defences to the director should any action be taken by the liquidator.”
DeVries Tayeh says the results of the investigation will be conveyed to creditors in further reports. It has asked Brown, who started 1st Fleet in 1988, to provide a personal asset and liabilities statement.
The firm says a preliminary review of his financial position shows he has “few personal assets”, including a 0.1 percent stake in a multi-million dollar property at Watsons Bay in Sydney.
See the July edition of ATN for the full story on the demise of 1st Fleet
