Last hope for debt-ridden macadamia company
ADMINISTRATORS of struggling macadamia processing and sales company Macaz will seek offers from interested buyers next week after investigations revealed mounting debt, poor management and legal challenges.
Condon Associates Group managing principal Schon Condon said he wants to sell the company as a whole rather than auction off equipment to save jobs and business opportunities in the Lismore area.
Mr Condon has been running Macaz in a "limited capacity” since December 8 but the Alstonville-based company could not afford to pay staff and "some day to day expenses” after January 5, a report for creditors showed.
Workers were owed and paid wages when Mr Condon took over but more than $70,000 in holiday pay, long service leave and superannuation remains outstanding.
Company directors Peter Fuserelli and Brian Wilkin and former director Gregory Woods, who served two years at Macaz between 2014 and 2016, face possible legal action for operating the business when it appears to have been insolvent for the past four years according to the report.
Continuing losses, excessive loans and insufficient liquidity in assets led to the suspected insolvency, the report stated.
Directors gave administrators annual reports dating back to June 2013 showing combined losses of more than $17 million, leaving the company with negative net assets in every submitted report, Mr Condon noted.
A 2014-15 financial year report was absent from those listed.
Mr Condon said reports weren't finalised and there were times in the past four years when the plant wasn't operating.
"I note that the company incurred significant amounts of current liabilities that constantly exceeded current assets of the company,” Mr Condon said in his January 16 report to creditors.
Mounting debts, in the millions, were mostly to trading companies, the Australian Taxation Office and financial lenders.
Potential conflicts of interest
Mr Condon noted non-current debts to related parties increased from nearly $2 million to nearly $2.5 million during the time investigated so far.
"This confirms that the business is not viable if funding wasn't available,” he wrote in the creditors' report.
"Almost by definition, related party transactions involve conflicts of interest,” he wrote later.
"A lack of source documents formalising and recording the terms and conditions of the related party loans may not meet (legal) obligations.”
No money in the bank, missing nuts
Directors reported "a surplus of assets over liabilities in the sum of $608,485” excluding administration fees as of Mr Condon's appointment but a December 2016 balance sheet showed the company had a negative net asset position of more than $3.8 million.
There was no money in the bank, $32 cash on hand, and less than $8000 due from debtors so far but Mr Condon said he expected that figure to increase as investigations continued.
An inability "to negotiate satisfactory resolutions to issues with creditors” and a non-delivery of macadamia nuts from "certain suppliers” led to cash flow problems, Mr Condon stated.
Lawyers acting for creditor Swiss Gourmet Co went to the NSW Supreme Court to have the company liquidated in November and a December 20 hearing was adjourned until February 2.
The company had more than $2 million worth of plant and equipment assets, a professional valuer hired by Mr Condon found.
"It's still running, we've just got to gear up for 2017 season from February to July - it may well be that an external party will come on board,” said Mr Condon on Tuesday.
"I've already been contacted by a couple of people who are interested.”
Creditors at a January 24 meeting voted to adjourn for 45 business days to give Mr Condon and his team more time to investigate.