Liquidation

·

01 Apr 2015

Locked Horns in Liquidation

READ TIME

3 min

Open communication provides a commercial outcome

Last year’s Worrells Melbourne story: “Missing Dairy Cattle, Politics and Lack of Records” has concluded with the complex issues of cattle politics and records averted.

The saga commenced when we were appointed over a company that ran a dairy farm on indigenous owned land with some 200 head of cattle and a significant amount of plant and equipment, and buildings. These assets were worth a substantial amount.

While we may have been of the initial view that this should be a fairly straightforward process, actually it turned out to be anything but. The complicating factors were:


  • Creditor A refused to give access to our agents to realise the cattle. Putting this aside, we came to learn that up to 100 head of cattle had been removed from the premises. But without access, this was something we were unable to verify.
  • There was a dispute as to who owned the cattle. The task of correctly identifying the cattle was compounded by a lack of proper records, and the cattle’s identity tags had been removed—and again—the inability to inspect the stock.
  • Creditor A again refused access for our agents to secure and realise the plant and equipment, and buildings. Creditor A claimed that these assets were now their property and that we had no right to these assets.This was despite the fact that creditor A had no PPSR registration for their interest.
  • In addition to the above, Creditor A were claiming a considerable amount for funds loaned to the company.

All this put us in a stalemate position. We could not collect and therefore realise the assets. Creditor A was claiming that the assets were not the company's, but did not appropriate evidence to support their assertions. It seemed that the only way for us to proceed was by way of expensive and drawn-out legal proceedings, which would consume the funds held.

To avoid this detrimental scenario we ‘took the bull by the horns’ and opened lengthy negotiations with the relevant parties, realising that communicating openly and freely was the only way forward. Our persistence paid off when we reached an agreement on the following basis:


  • All interest in plant and equipment, buildings, and stock was transferred to Creditor A; and
  • Creditor A agreed to unconditionally release and forever discharge all its and any related persons’ claims against the company.

By entering into this agreement a significantly larger dividend was paid to the remaining company creditors as we paid out the funds held without any regard to the claim originally made by Creditor A.

This matter is not over by a long shot. The authorities are still dealing with a number of matters including fraud, theft and other illegal events.

So, what is the moral of the story?

The process of liquidation can, in fact, be the best forum to strike a commercial deal. Particularly for parties who traditionally have not been able to do so, by their own volition.

Regards

Farmer Ivan

To read previous article: Missing Dairy Cattle, Politics and Lack of Records

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