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  • FERRIER HODGSON

    LEVEL 26, 108 ST GEORGES TERRACE PERTH WA 6000

    GPO BOX 2537 PERTH WA 6001

    TELEPHONE +61 8 9214 1444 FACSIMILE +61 8 9214 1400

    A L Logistics Pty Ltd

    ACN 103 870 622

    (Administrators Appointed)

    (Receivers and Managers Appointed)

    Report by Administrators pursuant to

    Section 439A(4)(a) of the Corporations Act 2001

    Martin Jones

    Andrew Saker

    Darren Weaver

    22 October 2013

  • Table of Contents Glossary of Terms

    1. Executive Summary 2

    2. Introduction 4

    3. Company Information 6

    4. Historical Financial Information 10

    5. Statement by Directors 12

    6. Trading by Administrators 18

    7. Sale of Business / Expression of Interest campaign 19

    8. Statutory Investigations 20

    9. Proposal for Deed of Company Arrangement 34

    10. Creditors’ options, dividends estimate and cost estimates 39

    11. Administrators Opinion 45

    12. Administrators’ remuneration request approval report 45

    13. Further queries 45

  • _________________________________________________________________________________________

    Section 439A(4)(a) Report by Administrators 22 October 2013 Page 1

    Glossary of terms

    Abbreviation Description

    ABN Australian Business Number

    ACN Australian Company Number

    Act The Corporations Act 2001

    ASIC Australian Securities and Investments Commission

    ATO Australian Taxation Office

    the Company A L Logistics Pty Ltd (Administrators Appointed)

    (Receivers and Managers Appointed) ACN 103 870 622

    NAB / the Bank National Australia Bank Limited

    DIRRI Declaration of independence, relevant relationships and indemnities

    DOCA Deed of Company Arrangement

    ERV Estimated Realisable Value

    FEG Fair Entitlements Guarantee

    GST Goods and Services Tax

    HP Hire Purchase

    IPA Insolvency Practitioners Association of Australia

    OSR Office of State Revenue

    PAYG PAYG Withholding Tax

    PMSI Purchase Money Security Interest

    PPSA Personal Property Securities Act 2009

    PPSR PPS Register

    R&M Receivers and Managers

    ROT Retention of Title

    SGC Superannuation Guarantee Charge

    Statement Directors’ Statement about the Company’s Business, Property, Affairs and Financial Circumstances

    Listing of annexures

    Annexure 1 Administrators’ Remuneration Request Approval Report Annexure 2 IPA – Creditor Information Sheet – Offences, Recoverable

    Transactions and Insolvent Trading Annexure 3 DIRRI Annexure 4 DOCA proposal

  • Section 439A(4)(a) Report by Administrators 22 October 2013 Page 2

    1. Executive summary Andrew Saker, Darren Weaver and I were appointed Joint and Several Administrators of the Company on 24 September 2013, pursuant to Section 436A of the Act. On 2 October 2013, Hayden Leigh White and Damian John Templeton of KPMG were appointed as R&M over the Company. As a consequence of the appointment of the R&M and pursuant to section 442D of the Act, the Administrators’ powers are limited and subject to the powers of the R&M. Whereas immediately following our appointment, we took control of the Company’s assets and continued to carry on the Company’s business, control of the assets and the trading activities of the Company transferred to the R&M upon their appointment. Creditors ratified our appointment as Administrators at the first meeting of creditors held on 7 October 2013. A Committee of Creditors was not formed. Creditors will determine the Company’s future at a second meeting of creditors convened for 30 October 2013 that will be held at the offices of Ferrier Hodgson, Level 26, 108 St Georges Terrace Perth WA 6000 at 11:00am (AWST). At the second creditors meeting the following options are available to creditors regarding the Company’s future:

     That the DOCA proposal is accepted; or  That the Company should be wound up; or  That the Administration should end and control of the Company revert to the directors; or

     Adjourn the meeting for a period of up to 45 business days.

    We have carried out preliminary investigations into the Company’s affairs to assist in formulating our opinion as to what is in the creditors’ best interests. During the course of the Administration, we have made preliminary enquiries into the Company’s affairs and the various transactions the Company has entered into, however any future appointed liquidator would be required to conduct a more comprehensive investigation and consider action in respect of recoveries (if any). During the course of the administration, we have received a DOCA proposal from the company’s Directors/Shareholder, Nicholas John Silverthorne and Maureen Silverthorne as Joint Trustees for the Silverthorne Trust. At the date of this report and for the reasons as set out in the report in Section 10, our recommendation is to adjourn the second meeting of creditors as we do not have sufficient information to accurately determine whether entering into a DOCA provides a better return to creditors as compared to an immediate winding-up of the Company.

    We consider it would be in creditors’ best interests to resolve to adjourn the meeting of creditors for a period not exceeding forty-five (45) business days as it would enable the Administrators to:  receive a more detailed analysis from the R&M analysis of the estimated assets available (if any)

    to the Company after the satisfaction of the NAB’s debt and associated fees and charges;

     ascertain the ultimate amount recoverable from assets subject to circulating charge, i.e. debtors

    and extent of priority claims by employees; and

     make further enquiries as to Directors’ ability to repay any claims brought against them by any

    future appointed Liquidator. We note that there is a likelihood that we may never receive a

  • Section 439A(4)(a) Report by Administrators 22 October 2013 Page 3

    statement of financial position of their personal asset position from them and given the complex

    nature of their corporate interest their net asset position will not be able to be determined with any

    certainty.

    In the event that creditors adopt that course, the Administrators will continue their integration of the Company’s records with a view to a restructure of the Company, compile a supplementary report to creditors, in order that we may better inform creditors (and provide more certainly as to the assets values and potential recoveries which would lead to quantification as to the likely returns from the alternatives available). The reconvened the second meeting of creditors is to be held on or before 6 January 2014.

  • Section 439A(4)(a) Report by Administrators 22 October 2013 Page 4

    2. Introduction 2.1 Purpose of Administrators’ appointment and this report The purpose underlying an Administrator’s appointment is to allow for independent control and investigation of an insolvent Company’s affairs. During the administration period, creditors’ claims are put on hold. We are required to provide creditors with information and recommendations to assist creditors decide upon the Company’s future. Section 439A(4) of the Act explains the purpose of an Administrator’s report in providing that the notice (of second meeting) must be accompanied by a copy of: (a) A report by the Administrator about the company’s business, property, affairs and financial

    circumstances; and (b) A statement setting out the Administrator’s opinion about each of the following matters:

    (i) Whether it would be in the creditors’ interests for the company to execute a Deed of Company Arrangement;

    (ii) Whether it would be in the creditors’ interest for the administration to end;

    (iii) Whether it would be in the creditors’ interest for the company to be wound up;

    and also setting out:

    (iv) His or her reasons for those opinions; and (v) Such other information known to the administrator as will enable the creditors to

    make an informed decision about each matter covered by subparagraph (i), (ii) or (iii); and

    (c) If a Deed of Company Arrangement is proposed – a statement setting out details of the proposed

    deed. In the available time, we have undertaken the preliminary investigations detailed in section 8 of this report. These investigations have assisted in forming an opinion about the Company’s future. Our opinions are set out in section 10 of this report.

    2.2 First meeting of creditors and committee of creditors Creditors attended a first meeting of creditors held at the Holiday Inn Perth City Centre, 778 – 788 Hay St, Perth WA 6000 on 7 October 2013. At that meeting, creditors ratified our appointment as Joint and Several Voluntary Administrators of the Company. Creditors present at the meeting did not resolve to appoint a Committee of Creditors.

    2.3 Second meeting of creditors Pursuant to Section 439A of the Act, the second meeting of creditors of the Company has been convened for Wednesday, 30 October 2013 and will be held at the offices of Ferrier Hodgson, Level 26, 108 St Georges Terrace Perth WA 6000 at 11:00am (AWST).

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