diploma group limited (receivers and managers … · diploma group limited diploma construction...

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DIPLOMA GROUP LIMITED

(RECEIVERS AND MANAGERS APPOINTED)

(ADMINISTRATORS APPOINTED)

Meeting of Creditors

6 January 2017

David Mark Hodgson – Joint and Several Administrator

Matthew James Donnelly – Joint and Several Administrator

Andrew Stewart Reed Hewitt – Joint and Several Administrator


Agenda

1. Introduction

– Formal meeting requirements

– Nomination of alternate Administrator (if applicable)

2. Administrators' update

3. Questions

4. Committee of creditors

– Appointment of a committee of creditors (if required)

5. Closure


Introduction

1. Meeting of creditors in accordance with Section 436E of the

Corporations Act 2001 ("the Act").

• Purpose of meeting is to advise creditors generally about the Voluntary

Administration, confirm our appointment as Voluntary Administrators and, if

necessary, appoint a Committee of Creditors

2. Chairman

• David Hodgson in accordance with Regulation 5.6.17 of the Corporations

Regulations 2001 ("the Regulations")

3. Attendance and proxies

• Creditors in attendance must have signed the attendance register and

lodged with the Administrators a completed proxy form and proof of debt

• Observers present to sign the attendance register


Introduction

4. Voting on resolutions

• A resolution put to the vote is decided on the voices unless a poll is

demanded before or on the declaration of the result of the voices in

accordance with Regulation 5.6.19(1) of the Regulations

5. Time and place convenient

• Notice of meeting (Section 436E(3) of the Act)

• Meeting is held at a time and place convenient to the majority of persons

entitled to receive notice of the meeting, in accordance with Regulation

5.6.14 of the Regulations

6. Quorum

• A quorum is present in accordance with Regulation 5.6.16 of the Regulations


Introduction

7. Prior involvement of the Voluntary Administrators

• Declaration of Independence, Relevant Relationships and Indemnities

• Indemnities and up-front payments

– FPDL Investments Pty Ltd (a related party to the Company) provided an

up-front payment of $200,000 to meet our remuneration and expenses

associated with the administrations of the Company, DGX Construction

Pty Ltd and Diploma Construction (WA) Pty Ltd

– Held in our firm’s trust account and will not be drawn to meet our

remuneration until such time that it is approved by creditors.

– There are no conditions on the conduct or outcome of the administration

attached to the provision of these funds.

– If we form the view that we will recover sufficient funds from the assets of

the Company to pay any remuneration, fees and costs incurred by

ourselves, we will repay the trust funds to FPDL Investments Pty Ltd.


Introduction

8. Confirmation or removal of the Administrators

• We have not received any nominations from any other party to act as an

alternate Administrator

• As a consequence our appointment as Administrators stands


Administrators’ update

• Administrators appointed 22 December 2016 to:

• Diploma Group Limited ("the Company")

• Diploma Construction (WA) Pty Ltd

• DGX Construction Pty Ltd

• Receivers and Managers appointed to the above on 21 December 2016

• Control of the assets, undertakings and management of the companies is

now with the Receivers and Managers

• Deed of Indemnity and Guarantee

• The Company is the ASX listed parent company of the group.


Diploma Group Limited

Diploma Construction (WA)

Pty Ltd

DGX Construction Pty Ltd

Diploma Properties Pty Ltd

Weststructure Pty Ltd

24 Flinders Lane Pty Ltd

Rockingham Waterfront Unit

Trust

176 Adelaide Tce Pty Ltd

176 Adelaide Tce Unit Trust

Rockingham Services Apartments

Pty Ltd

Chamlabs Emporium Pty Ltd

Chemlabs Unit Trust

Lot 101 Hay Street East Perth Pty Ltd

Lot 101 Hay Street East Perth Unit

Trust

Diploma TCO Holdings Pty Ltd

300 Lord St Pty Ltd

300 Lord St Unit Trust

The Highgate Joint Venture

303 Campbell St Pty Ltd

254 West Coast Hwy Pty Ltd

The West Coast Unit Trust

Subiaco Residential Apartments Pty Ltd

The Subiaco Residential

Apartments Unit Trust

Diploma Construction (NSW)

Pty Ltd

Diploma Capital Pty Ltd

Diploma Capital Securities Pty Ltd

Allegro Realty Holdings Pty Ltd

Allegro Realty Pty Ltd

Diploma Development

Management Pty Ltd

Group Structure

50%

50% Receivers and Managers Appointed

Administrators Appointed

Trustee capacity

50% ownership

Source: Australian Securities and Investments Commission database

Company Searches database

All other information available to the Administrators

as at the date of appointment




Pty Ltd






Trust




Pty Ltd


Chemlabs Unit Trust



Trust


300 Lord St Pty Ltd










Pty Ltd





Diploma Development

Management Pty Ltd

Group Structure

General Security Agreements

50%



Trustee capacity

50% ownership

Subject to General Security Agreement








Pty Ltd






Trust




Pty Ltd


Chemlabs Unit Trust



Trust


300 Lord St Pty Ltd










Pty Ltd





Diploma Development

Management Pty Ltd

Group Structure

Deed of Indemnity and Guarantee

50%



Trustee capacity

50% ownership

Subject to Deed of Indemnity and Guarantee

in favour of Swiss Re International SE






Administrators’ update

• Tasks completed to date

• Preliminary review of financial positon of the Company

• Held discussions with key stakeholders, including Receivers and Managers,

secured creditors, ASX and ASIC

• Commenced investigation into related parties, including related party

transactions and directorship, shareholdings and property searches

• Commenced review of potential Preference Payments received by creditors

• Held discussions regarding a proposed Deed of Company Arrangement

• Notified all known creditors and statutory bodies of our appointment

• Dealt with queries from shareholders and creditors

• Requested a Report as to Affairs from the directors

• Prepared for first meeting of creditors

• Commenced discussions with litigation funders


Administrators’ update - liabilities

• Total liabilities c.$15.0m

• Employee entitlements

• Secured creditors

• Unsecured trade creditors

• Intercompany Loans

• These amounts are based on the

Company's records and remain

subject to formal adjudication of

claims.

[P:\D\DIPLOMA

GROUP

LIMITED\MASTER\0

9 Statutory

meetings\First

Creditors

Meeting\First

Meeting

Slides\Diploma

Group First Meeting

Slides

Workings.xlsx]Credit

ors!$A$23:$C$24

Priority Creditors (Employ ees) $

2 Employ ees 28,887[P:\D\DIPLOMA

GROUP

LIMITED\MASTER\0

9 Statutory

meetings\First

Creditors

Meeting\First

Meeting

Slides\Diploma

Group First Meeting

Slides


ors!$A$9:$C$10

Secured Creditors $ m

4 ALLPAAP Registrations Approx . 7.9

[P:\D\DIPLOMA

GROUP

LIMITED\MASTER\0

9 Statutory

meetings\First

Creditors

Meeting\First

Meeting

Slides\Diploma

Group First Meeting

Slides


ors!$A$28:$C$32

Statutory Creditors $

OSR 49,673

ASIC 315

Australian Securities Ex change 1,868

Total 51,857

[P:\D\DIPLOMA

GROUP

LIMITED\MASTER\0

9 Statutory

meetings\First

Creditors

Meeting\First

Meeting

Slides\Diploma

Group First Meeting

Slides


ors!$E$9:$G$14

Unsecured Trade Creditors No of creditors $

Ov er $100k 3 3,035,055

Ov er $50k 2 187,178

Ov er $20k 3 86,917

Less than $20k 10 68,174

Total 18 3,377,324

[P:\D\DIPLOMA

GROUP

LIMITED\MASTER\0

9 Statutory

meetings\First

Creditors

Meeting\First

Meeting

Slides\Diploma

Group First Meeting

Slides


ors!$J$9:$L$20

[P:\D\DIPLOMA

GROUP

LIMITED\MASTER\0

9 Statutory

meetings\First

Creditors

Meeting\First

Meeting

Slides\Diploma

Group First Meeting

Slides


ors!$J$9:$L$14

[P:\D\DIPLOMA

GROUP

LIMITED\MASTER\0

9 Statutory

meetings\First

Creditors

Meeting\First

Meeting

Slides\Diploma

Group First Meeting

Slides


ors!$J$9:$L$13

Intercompany Loans $

Diploma Group / Dip Dev Mgt 1,000

Diploma Group / Dip Cap Sec 260,204

Diploma Group / Diploma Proper 3,453,026

Total 3,714,230


Administrators’ update - assets

• Assets

• Control of the Company's assets is now with the Receivers and Managers

– Cash at bank

– Interest in subsidiaries

– Insurance claim

• There is unlikely to be any material benefit to unsecured creditors from

the known assets of the Company

• Any return to unsecured creditors is dependent upon:

– Terms of a Deed of Company Arrangement (if accepted by creditors); or

– Recovery of Antecedent Transactions (if creditors resolve to wind up the

Company)


Administration Timeline

[P:\D\DIPLOMA

GROUP

LIMITED\MASTER\0

9 Statutory

meetings\First

Creditors

Meeting\First

Meeting

Slides\Diploma

Group First Meeting

Slides

Workings.xlsx]Timeli

ne!$B$11:$S$28

06-Jan-17

Option 1Deed of Company

Arrangement

Option 2 Liquidation

Option 3 Administration Ends

22-Dec-16 by 8-Feb-2017

Second Creditors'

Meeting to decide on

Company's future

Appointment of

Administrators

First Creditors'

Meeting Administrators' Investigations and

Report to Creditors


Administrators’ report

• Pursuant to Section 439A of the Act the Administrators are required to:

• Convene a second meeting of creditors at which creditors will vote on the

future of the Company with regard to the options available to them

• Report provided to creditors prior to the meeting, which includes details of:

– the Company's business, property, affairs and financial circumstances;

– DOCA proposal(s) received, including key terms and estimated return(s) to

creditors;

– Assets available to a liquidator, including estimated return(s) to creditors in

liquidation; and

– Administrators' recommendation to creditors as to which of the options

available to them is in their best interests.

• A resolution put to the vote is decided on the voices unless a poll is

demanded. Under a poll a resolution passes or fails on the majority of

creditors in number and value


Option - DOCA

• Deed of Company Arrangement ("DOCA")

• Binding arrangement between a company and its creditors

• Aims to maximise the chances of the company, or as much as possible of its

business, continuing, or to provide a better return for creditors than an

immediate winding up of the company, or both

• Details of any DOCA proposals received will be provided by the

Administrators in their report to creditors issued prior to the second meeting

• The Administrators will provide their recommendation to creditors on any

DOCA proposals received


Option - DOCA

• The Di Latte family have indicated there intention to propose a DOCA.

• Based on our preliminary discussions the proposal would:

• Encompass creditors from all 3 companies in administration;

• Provide for a debt to equity swap into Diploma Group Limited;

• Deal with the recapitalisation of the Company, including a possible merger

with a property focused business, which is unrelated to the current Group;

and

• Provide for a preferred dividend to unsecured creditors from one or more of

the Diploma property projects.


Option - Liquidation

• Unlikely to be any material benefit to unsecured creditors from the

known assets of the Company at the date of our appointment

• Fair Entitlements Guarantee for Employees

• Antecedent transactions (Section 588FE and 588G of the Act)

– Uncommercial Transactions

– Unfair Preference Payments

– Unfair Loans

– Unreasonable Director-Related Transactions

– Insolvent Trading Claim

– NB. Recovery of antecedent transactions are only available to a

liquidator (if appointed). The recovery of such amounts are therefore

excluded from, and not available in, any DOCA approved by creditors


Questions

• Questions to be addressed the Chairperson

• State name and the name of the creditor you are representing


Committee of creditors

• Creditors have the opportunity to appoint one or more of their number to

form a committee of creditors ("the Committee")

• The purpose and function of the Committee is to consult with the

Administrators about matters relating to the Voluntary Administration,

receive and consider reports by the Administrator

• No nominations to be Committee members have been received:

• Resolution: (Insert Names) be appointed to the Committee of Creditors

of Diploma Group Limited (Receivers and Managers Appointed)

(Administrators Appointed)


Closure

• Thank you for your attendance, no further business declare the meeting

closed

• Second creditors' meeting to be held on or before 8 February 2017.

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