AFCA’s Ian Reid and Stacey Gardiner
There are fears forest contractors in Tasmania and interstate face potential bankruptcy because of new legal action being taken by Gunns Limited liquidators. Sources: ABC News, Herald Sun, AAP
The Corporations Act requires the liquidator PPB to identify creditors, including contractors and suppliers, who received payments from Gunns during a period of insolvency before the collapse. The money will be divided among all unsecured creditors.
Gunns went into voluntary administration in 2012, after a reporting a loss of close to $1 billion for the previous financial year.
It owed millions of dollars to hundreds of people, businesses and government departments.
The Australian Forest Contractors Association (AFCA) said the Gunns liquidators, PPB Advisory, were taking legal action to recoup millions of dollars for creditors.
There have been several hearings in the Supreme Court this month involving liquidators, including directions hearings and public examinations.
The Association said harvesting and haulage contractors were among those PPB was taking legal action against.
The Association’s Ian Reid said it could be “the final nail in the coffin” for contractors across Australia.
“I have been told it will likely bankrupt some contractors if they are required to repay money,” he said.
Mr Reid said a number of contractors subject to the action had already lost millions of dollars from unpaid invoices when Gunns collapsed.
“As a result these contractors have already taken a large financial hit as unsecured trade creditors and now are potentially taking another hit,” he said.
“These are businesses that are in regional and rural Australia, they employ a lot of people and it’s local communities that are then affected.”
Mr Reid said contractors had continued to work in good faith through Gunns’ financial troubles, to supply timber and chips so the company could maintain its cash flow.
“This meant that infrastructure, such as local mills, were able to keep going and subsequently be sold,’’ he said.
As well as small contractors, it is believed Forestry Tasmania is being investigated.
Insolvency practitioner Paul Cook said one of the liquidator’s tasks was to identify whether any creditors may have been given preferential treatment in the six months leading up to the collapse.
“A liquidator will look and say ‘did a creditor get paid when they ought to have known that the company was likely to be insolvent, or was insolvent’,” he said.
“Generally a liquidator will look at the transactions that occurred in the six months before, the liquidator will decide at what point the company was actually insolvent, that’s a pretty critical factor.”
The liquidator PPB Advisory has the right to claim back any payments deemed preferential.
It is in talks with between 50 and 100 unsecured creditors.
PPB said it was contacting affected parties directly and encouraging them to seek independent advice. It will work in a constructive manner with affected creditors.
The State Government is seeking a briefing from PPB to try to minimise the impact on the industry.
A spokesman said the Government understood the concern in the industry about the potential for further damage from the Gunns collapse.
Tasmanian Resources Minister Paul Harriss said liquidators PPB Advisory have explained there are obligations to ASIC and the courts to ensure creditors are treated fairly.
But the minister also secured an assurance from the liquidators.
“They will have regard to the financial circumstances of Tasmanian businesses including contractors and the need to avoid further insolvencies,” he said.
