a l logistics pty ltd acn 103 870 622 (administrators … · 2013-10-24 · ferrier hodgson level...

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


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


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.


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).

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1317a.html#decision

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#administrator

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#information


At the second meeting, creditors will decide the Company’s future in voting on one of the following options: That the Company execute a DOCA; or

That the Company should be wound up; or

That the administration should end and control of the Company reverts to its directors.

Creditors are also able to resolve that the meeting be adjourned for a period up to forty-five (45) business days.

2.4 Non-disclosure of certain information There are sections of this report wherein we considered it inappropriate to disclose certain information to creditors. Such information includes: Valuations of specific assets

Valuation of the business

Commercially sensitive prospective financial information (for example, projections/forecasts) We fully recognise the need to provide creditors with complete disclosure of all necessary information relating to the Company. However, we believe this information is commercially sensitive and it is not in creditors’ interests for me to disclose the information publicly at this stage. Where necessary in this report, we provide a combined figure for potential realisations of assets when comparing estimated dividends under the relevant options.

2.5 Access to Company Books and Records

We have been unable to ascertain various account balances as our access to the Company’s books and records has been restricted due to the appointment of the R&M. Efforts to ascertain information directly from the Company’s employees have also been limited due to the R&M control of the same and their different priorities.

2.6 Declaration of independence, relevant relationships and indemnities We provided a Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) to creditors with our first Circular to Creditors dated 25 September 2013 and tabled an updated copy of the declaration at the first meeting of creditors. A copy of the updated DIRRI is attached at Annexure 3 of this report. We undertook a proper assessment of the risks to our independence prior to accepting our appointment as Joint and Several Voluntary Administrators of the Company. This assessment identified no real or potential risks to our independence. We were not aware of any reasons that would prevent us from accepting the appointment nor are we aware of any circumstances that would impede our independence going forward.


3. Company information

3.1 Statutory information A search of the ASIC database revealed the following information.

3.1.1 Incorporation date and registered office

The Company was incorporated on 25 February 2003 and its registered office is listed as c/- McGillivrays, Level 1, 2 George Wiencke Drive, Perth Airport, Western Australia. At the time of our appointment, the Company operated its business from the following premises:

Location Address

Perth 11 Lakes Road (Part of 151 Lakes Road), Hazelmere, Western Australia

Darwin 71 Marjorie Street, Pinelands, Northern Territory

3.1.2 Company officers

The ASIC database discloses the Company’s officers over the past 12 months to be:

Name Role/s Appointment Date Cessation Date

Nicholas John Ross Silverthorne Director 1 November 2012 Current

Andrew John Woods Director/Secretary 16 September 2005 Current

A search of the National Personal Insolvency Index maintained by the Insolvency Trustee Service, Australia, shows that the Company’s directors are not currently bankrupt or subject to a Personal Insolvency Agreement under Part X of the Bankruptcy Act 1966. The ASIC database also reveals that the Company’s officers hold positions in the following companies: Andrew John Woods

Company Role Appointment Date Cessation Date

Territory United Pty Ltd Director and Secretary 23/04/2009 Current

Territory LineHaul Company Pty Ltd Director and Secretary 25/07/2007 Current

Frontline Transport (1995) Pty Ltd (Deregistered) Director 8/11/1995 6/07/2011

Andrew Woods Consultants Pty Ltd (Deregistered) Director 19/03/1992 29/05/2011

Andrew Woods Consultants Pty Ltd (Deregistered) Secretary 26/11/1999 29/05/2011


Nicholas John Ross Silverthorne

Company Role Appointment Date Cessation Date

Aus-Com Training Services Pty. Ltd Director 14/04/2011 Current

Brandwest Clothing And Wetsuit Company Director 18/07/2011 Current

Employmac Pty Ltd Director 21/06/2011 Current

Gulf Australian Investments Gate Pty Ltd Director 5/08/2010 Current

JMG Transport Pty Ltd Director 4/09/2013 Current

JRM Resources Pty Ltd Director 20/07/2011 Current

Knotalot Pty Ltd Director and Secretary 29/06/2006 Current

Mitie Developments Boonderoo Pty Ltd Director 14/03/2012 Current

Mitie Infrastructure Pty Ltd Director 17/06/2011 Current

Nashimo Holdings Pty Ltd Director and Secretary 9/10/1995 Current

P&E Securities Pty Ltd Director 4/09/2013 Current

SBC Securities Pty Ltd Director 11/11/2011 Current

ST Air Pty Ltd Director 14/04/2011 Current

Viento Group Limited Director 21/03/2012 Current

Warara Pty Ltd Director and Secretary 28/05/2012 Current

West Suits Pty Ltd Director 12/10/2011 Current

West Surfing Products Pty Ltd Director 13/10/2011 Current

Peel Commercials Pty Ltd Director 31/08/2012 Current

Ashburton Civil & Construction Pty Ltd Director 6/06/2013 Current

JSW Australia Pty Ltd Director 6/05/2010 Current

KVG Joint Venture Pty Ltd Director 23/04/2013 Current

MineWorks Group Pty Ltd Director 1/08/2012 Current

NorthWest Quarries Pty Ltd Director 29/04/2011 Current

QLD Iron Limited Director 15/03/2013 Current

Viento Contracting Services Pty Ltd Director 26/07/2012 Current

Viento Equipment Hire Pty Ltd Director 21/11/2012 Current

Viento Utility Services Pty Ltd Director 20/09/2012 Current

Promac Sales Pty Ltd Director 9/10/2006 14/03/2008

ActionBlast Pty Ltd Director 30/03/2007 25/02/2008

Indigenous Mining & Exploration Company Pty Ltd Director 2/07/2006 25/02/2008

NRW Intermediate Holdings Pty Ltd Director 2/07/2006 25/02/2008

NRW Mining Pty Ltd Director 12/12/2005 25/02/2008

NRW Pty Ltd Director 6/12/2005 25/02/2008

FallBrook Pty Ltd Director 25/09/2006 14/11/2007

NRW Holdings Limited Director 10/02/2006 27/07/2007

NRW Aviation Pty Ltd Director 10/02/2006 3/06/2007

3.1.3 Shareholders The ASIC database discloses the Company’s current shareholders to be: Shareholders Type of Share Held Shares Held Share Value

Lynette Margaret Woods Ordinary 150,000 x $0.01 shares (25%)

$1,500

Nicholas John Ross Silverthorne and Maureen Kaye Silverthorne as joint shareholders

Ordinary 450,000 x $0.01 shares (75%)

$4,500


Our search of the ASIC’s database did not show any lodgements in respect of share issues or transfers within the last 18 months.

3.1.4 Registered Security Interests Under new PPSA legislation effective 30 January 2012, security over property, except land, must be registered as a security interest on the PPSR. Briefly, the concept of fixed and floating charges will be replaced under the PPSA by “security interests over non-circulating assets” and “security interests over circulating assets” respectively. In this case of inventory, the title to any inventory will require registration as a PMSI on the PPSR, similar to ROT. Unless a supplier (including ROT supplier) registers a PMSI as a security interest on the PPSR, the goods under ROT may become property of the Company in a liquidation and amount to a windfall to its creditors. Whilst there is a two year transitional period for all pre 30 January 2012 security interests to be registered on the PPSR, any new transaction after 30 January 2012 needs to be considered thoroughly to ensure they are perfected and may be enforceable under the new PPSA legislation. The NAB has registered a circulating charge on the PPSR (Charge No. 201201010063171) over all commercial property of the Company and exercised its security rights to appoint KPMG as the R&M of the Company on 2 October 2013. A search on the PPSR indicates that the following parties hold security interests in the Company’s assets, summarised in the table below:

Registered Security Interests Registered Security Interests

• Ausco Modular Pty Limited • National Tank Hire Pty Ltd

• Australia and New Zealand Banking Group Limited • P&E Securities Pty Ltd

• Steve Batchelor • Paccar Financial Pty Ltd

• BOC Limited • Royal Wolf Trading Australia Pty Ltd

• Caltex Petroleum Services Pty Ltd • S&N Civil Constructions Pty Ltd

• Capital Finance Australia Limited • St. George Finance Limited

• CS Civil Construction Pty Ltd • The Trustee for the TWA Trust

• De Lage Landen Pty Limited • Titan Plant Hire Pty Ltd

• Esanda Finance Corporation Limited • Toyota Finance Australia Ltd

• Goodyear & Dunlop Tyres (Aust) Pty Ltd • Tru Blu Hire Australia Pty Ltd

• Hastings Deering (Australia) Limited • United Equipment Pty Ltd

• National Australia Bank Limited

3.1.5 Outstanding Winding up applications and outstanding legal action Public searches indicate that there were no winding up orders against the Company however we note that an application to wind up the Company under section 459P of the Act was commenced by Starcom Mediavest Group (Australia) Pty Ltd (Starcom) on 31 July 2013. Following the threat of winding–up, the Company made payments to Starcom of approximately $19,559 and the application was subsequently withdrawn on 4 September 2013. Certain creditors have also issued various letters of demand and statutory demands for payments. This is discussed in further detail at Section 8.2.2 of this report.


3.2 Company history The Company was incorporated on 25 February 2003 in Western Australia as J Cooper Services Pty Ltd and its name was changed to A L Logistics Pty Ltd on the same day. Its current and former registered offices are summarised below:

Address Start Date End Date

Level 5, 16 Irwin Street, Perth WA 6000 25 February 2003 06 March 2003

Level 1, 205 Greenhill Road, Eastwood SA 5063 07 March 2003 23 March 2003

Lot 2274 Coonawarra Road, Winnellie NT 0820 24 March 2003 21 November 2005

Level 1, 205 Greenhill Road, Eastwood SA 5063 22 November 2005 28 April 2009

c/- Merit Partners, 9-11 Cavenagh Street, Darwin NT 0800 29 April 2009 30 November 2010

c/- McGillivrays, Level 1, 2 George Wiencke Drive, Perth Airport WA 6105 01 December 2010 02 February 2011

13 Greenhill Road, Wayville SA 5034 03 February 2011 27 March 2011

c/- McGillivrays, Level 1, 2 George Wiencke Drive, Perth Airport WA 6105 28 March 2011 Current

The Company’s business operations included the provision of logistics services in Perth and Darwin, with the head office located in Darwin.

3.3 Decision to appoint administrators Upon becoming aware of the Company’s precarious financial position, the directors sought the services of a third-party consultant to assist in analysing the company’s position and to consider its alternatives. This led to a critical analysis of the Company’s solvency and short term options. In view of the company’s current financial position, the directors’ formed the view that the company was likely to become insolvent and the directors resolved to appoint Administrators to the Company. On Tuesday, 24 September 2013, Martin Jones, Andrew Saker and Darren Weaver were appointed as Joint and Several Administrators of the Company.


4. Historical financial information 4.1 Preparation of financial statements The Company’s financial statements were prepared by Lawler McGillivray for the period 1 July 2010 to 30 June 2012. The financial statements for the year ended 30 June 2013 have not been finalised and as a result we have relied on the Company’s MYOB accounting system for the preparation of the financial statements analysis set out below. It is our understanding that the Company also prepared various management accounts and reports on a weekly and monthly basis. At section 8 of this report, we comment on the adequacy of the Company’s books and records.

4.2 Profit and loss statement and preliminary analysis Set out below is a high-level summary of the Company’s profit and loss statement for the past three (3) financial years and for the period to the date of our appointment, together with our preliminary analysis.

Months in accounting period

12 12 12 3

Profit and Loss Summary 30-Jun-11 30-Jun-12 30-Jun-13 24-Sep-13

($) % ($) % ($) % ($) %

Sales 5,239,090 9,517,691 10,861,561 2,503,098

Cost of Goods Sold (4,143,771)

(6,720,255)

(8,748,257)

(1,689,342)

Gross profit 1,095,319 20.9 2,797,436 29.3 2,113,304 19.4 813,757 32.5

Expenditure (3,196,842) (4,065,357) (4,198,215) (962,209)

Other Income 707,484 233,036 1,121,607 52,916

Net Profit/(Loss) (1,394,039) (26.6) (1,034,885) (0.11) (963,304) (0.09) (95,537) (0.04)

In relation to the above, we note that: The Company was operating at a loss for all of the period reported above – 1 July 2010

onwards.

The Company had high motor vehicles hire costs of motor vehicles and HP liabilities.

Whilst the Company had achieved a successive increase in sales, the gross profit was never sufficient to cover the Company’s operating expenses (including overheads).

For completeness, we note that the accounts for the period to 30 June 2013 and 24 September 2013 are based upon unfinalised (and unaudited) management accounts. Accordingly, we express no comment in relation to the accuracy thereof.


4.3 Balance sheet and preliminary analysis A high level-summary of the Company’s balance sheet for the past three (3) financial years and as at the date of our appointment is set out below together with our preliminary analysis: Balance Sheet 30-Jun-11 30-Jun-12 30-Jun-13 24-Sep-13

($) ($) ($) ($)

Current Assets 1,970,990 3,530,968 2,283,271 2,384,132

Non-current Assets 3,422,164 2,903,425 3,250,296 2,957,677

Intangible Assets 115,708 115,708 115,708 115,708

Total Assets 5,508,862 6,550,101 5,649,275 5,457,518

Current Liabilities (2,042,503) (3,429,794) (3,819,090) (3,703,641)

Non-current Liabilities (5,453,588) (6,327,960) (5,996,880) (5,759,820)

Total Liabilities (7,496,091) (9,757,754) (9,815,970) (9,463,461)

Net Assets (1,987,229) (3,207,653) (4,166,695) (4,005,943)

In relation to the above, we make the following comments: Based on the financial information above, the Company has been trading with a net asset

deficiency for at least the past three (3) financial years.

The non-current liabilities (representing >60% of the Company’s total liabilities) consist mainly of loans from related parties and liabilities owing to the financiers under the hire purchase agreements.

The current liabilities appear to have been capable of being satisfied from current assets at 30 June 2012, but not by 30 June 2011 and 30 June 2013.

Again for completeness, we note that the accounts for the period to 30 June 2013 and 24 September 2013 are based upon unfinalised (and unaudited) management accounts. Accordingly, we express no comment in relation to the accuracy thereof.


5. Statement by directors

5.1 Summary Section 438B of the Act requires the directors to give an Administrator a statement about the Company’s business, property, affairs and financial circumstances. We received a request from the directors for an extension of time to complete the Statement which we granted to 7 October 2013. We have not received the directors’ Statement (at close business 21 October 2013). Accordingly, we have provided a summary below based upon the Company’s book values as known to us, together with the Administrators’ ERVs which result in high and low outcomes for creditors.

Description

Report Reference

Cost or Net Book Value

Administrators’ ERV High Low

$ $ $ Assets:

Interest in land 5.1.1 N/A N/A N/A

Debtors 5.1.2 1,637,234 1,329,240 1,083,655

Cash on hand 5.1.3 N/A N/A N/A Cash at bank 5.1.3 36 N/A N/A Stock 5.1.4 N/A 9,182 4,456

Plant & equipment 5.1.5 N/A 322,273 218,182

Other assets 5.1.6 N/A N/A N/A

Sub-total 1,637,284 1,660,695 1,306,293

Assets subject to specific charges 5.1.7 Unascertained 1,030,421 741,921

Less amounts owing under charges Unascertained (1,072,274) (1,072,274)

Total available assets 1,637,284 1,660,695 1,306,293

Liabilities:

Less: Priority creditors

- Employee entitlements payable in advance of secured creditors

5.1.9 N/A (494,973) (494,973)

- Secured creditors 5.1.10 N/A (303,061) (303,061)

Total priority creditors N/A (798,034) (798,034)

Contingent assets 5.1.6 N/A N/A N/A Contingent liabilities 5.1.11 N/A N/A N/A Available to unsecured creditors 1,637,284 862,661 508,259

Ordinary unsecured creditor claims 5.1.12 (7,608,652) (7,608,652) (7,608,652) Estimated Surplus/(Deficiency) Unascertained (6,745,991) (7,100,393)

The Administrators have not audited the company’s records or the book values. The above summary should not be used to determine the likely return to creditors as a number of realisable values are based on the company’s records and remain subject to the review of the Administrators and, in particular: The Administrators are not in a position to confirm (or otherwise) the estimated realisable

values (“ERV”) as whilst the Administrators initially commissioned a valuation with an independent valuer, the valuer has since engaged directly with the R&M and provided them with their assessment of values for the Company’s plant, equipment and stock. We have obtained a copy of the valuation from the R&M to provide some preliminary analysis to creditors.

The value of creditor claims remains subject to change as further claims may be received and require adjudication.

The abovementioned estimated position does not provide for possible trading losses,

expenditure incurred by the Administrators in preserving and maintaining the assets of the company or the professional costs associated with the Administration process.


We provide the following comments:

5.1.1 Interest in land A national property search indicates that the Company does not currently own any real property. 5.1.2 Debtors Based on the Company’s receivables ledger as at 24 September 2013, the book value of amounts owing to the Company totalled approximately $1,637,234. While it is not possible at this stage to attribute with confidence a value which may ultimately be collected from outstanding debtors for the reasons mentioned above, we have had some discussions with management and provide an estimate of recoveries as follows:

Debtors Age Profile

Book ERV ERV

Value High (90%) Low (75%)

$ $ $

0-30 Days 637,558 573,802 478,169

31-60 Days 758,408 682,568 568,806

61-90 Days 133,908 120,517 100,431

Over 90 Days 107,360 96,624 80,520

Total value of Debtors 1,637,234 1,473,511 1,227,926

Amounts not collectable (144,271) (144,271) (144,271)

Total $1,492,963 $1,329,240 $1,083,655

The Directors have estimated that amounts not collectable totalled approximately $144,271. For completeness, we note that as Administrators we collected a total of $376,585 (prior the appointment of R&M) and generated total sales of approximately $238,502 during the period 24 September 2013 to 2 October 2013. The R&M are now attending to the collection of debtors. For the purposes of this report, we have estimated the high recovery to be 90% and the low recovery to be 75% of book value. 5.1.3 Cash on hand and cash at bank The Company operated an overdraft account with the NAB which at the date our appointment was over its limit of $250,000, having a balance of approximately $303,061. The Company also operated a further 2 accounts with Westpac. Immediately upon our appointment we issued instructions to both NAB and Westpac to freeze all bank accounts held in the company’s name and open a new bank account subject to our control. The balances of the pre-appointment bank accounts held with Westpac as at the date of our appointment are minimal ($36) and we estimated that this amount would be utilised in the day-to-day trading activities.


5.1.4 Stock

Stock represents workshop consumables which include various spares for the fleet vehicles, tyres, workshop spares and tools. For the purposes of the report and based upon the valuation provided, we have estimated that the value of these items to be between $9,182 and $4,456. 5.1.5 Plant and equipment Plant and equipment represents various items of unencumbered equipment which have been categorised as fleet equipment and other equipment (warehouse racking, shelves, ladders, benches). Based upon the valuation provided by the R&M, the estimated value of the unencumbered (company-owned) equipment is set out below:

We note that ultimately, the true measure of value will be determined by the market and the price that interested parties are willing to pay to acquire those assets and that the values ascribed above should only be used as guide as to the assets owned by the Company. 5.1.6 Other Assets / Contingent Assets The company does not currently own any other or contingent assets. 5.1.7 Assets Subject to Specific Charge Based on our review of the Company’s records, the Company entered into numerous hire purchase contracts with the NAB, St George Bank, Toyota Finance and De Lage Landen. Based upon the valuation provided by the R&M, we have made a preliminary determination of the potential equity or shortfall that may eventuate on the sale of the vehicles (at auction value) after paying the respective financiers (NAB excluded):

The total auction value of these assets is estimated at $741,921 while the estimate payout value for these assets is approximately $1,072,274. The individual financiers would be entitled to prove as an unsecured creditor for the amount of the shortfall. As previously noted, following the appointment of R&M to the Company on 2 October 2013, the control and management of assets and the underlying secured liabilities of company went to the R&M.

Asset Description Market Value for Existing Use

($)

Estimated Auction Value

($)

Fleet equipment 322,273 218,182

Other equipment 41,509 25,818

Total 363,782 244,000

Financier Auction Value

$

Estimated Payout

$

Equity/(Shortfall)

$

St George Bank 574,566 813,661 (226,466)

Toyota 49,173 67,267 (18,093)

De Lage Landen 118,182 191,346 (73,164)

Total 741,921 1,072,274 (330,353)


Accordingly, we issued notices to the various financiers notifying them of our intention not to exercise their property rights pursuant to section 443B(3) of the Act. 5.1.8 Employee claims Based on the Company’s employee records available to us, the estimated priority debts owed to employees are as follows:

Employee Entitlements Total Employee

Entitlements ($)

Non-Priority Excluded Amount

($)

Net Priority

Entitlements ($)

Wages Nil Nil Nil

Superannuation (including any SGC) 317,004 46,527 270,477

Annual leave 115,926 51,258 64,668

Long service leave 70,041 62,930 7,111

Payment in lieu of notice 91,363 27,503 63,860

Redundancy 172,300 83,443 88,857

Total 766,634 271,661 494,973

In general, employee claims are afforded priority of repayment from the circulating assets (floating charge assets) pursuant to Section 556(1) of the Act. . Any unpaid superannuation will attract the SGC as a result of non-payment by the required date pursuant to the Superannuation Guarantee (Administration) Act 1992. The ATO is responsible for proving this debt and any distribution from the company must be paid to the ATO, who will ultimately remit the funds to the employees’ superannuation funds. A breakdown of when the superannuation obligation was incurred is also detailed in Section 8 of this Report. The notice (payment in lieu) and redundancy entitlements crystallise upon the termination of the employment of the employees and, in the case of the notice entitlement, the amount of the obligation depends to what extent that notice period is worked out by the relevant employee. The nature and terms of the employee engagement are to be further investigated, however for the purposes of this report, we have estimated the amounts owed to employees in relation to notice and redundancy. The Act provides that ’Excluded Employees”, which include company directors and their spouses or children or relatives are each restricted to a total maximum priority claim of $2,000 for unpaid wages and superannuation and $1,500 for annual leave entitlements. Amounts owed to Excluded Employees that exceed the statutory cap for wages and superannuation together with annual leave/long service leave, and all payments owing in respect of retrenchment, being redundancy and payment in lieu of notice, rank for dividend with all other unsecured creditors. 5.1.9 Secured creditors We note that the overdraft granted by NAB to the Company is secured pursuant to a security interest dated 9 November 2005 and registered with the personal Property Securities Register, having registration number 201201010063171 which secures the Company’s obligations in respect of debts owed to the Bank by the Company under various hire purchase/equipment loans. At 24 September 2013, the Company owed NAB the overdraft amount of $303,061 with interest and other charges and costs continuing to accrue until full payment is made. The debt is also secured by directors’ guarantees. In addition to the overdraft, the Bank’s charge extends to any shortfall in the hire purchase obligations owing to the NAB, at as the date of our appointment the total payout value for the hire purchase contract


was $1.060M, with the total assets subject to their security interest has an ERV of between $856,477 and $659,228. The equipment loan facility is also secured by directors’ guarantees. In accordance with the provisions of section 450A(3) of the Act, we notified the NAB of the appointment and advised of their right to enforce their security within thirteen (13) business days after the notification of our appointment. The NAB exercised their right to appoint R&Ms from KPMG on 2 October 2013. 5.1.10 Ordinary unsecured creditors Accounting for informal proofs of debts received to date and the Company’s records, we estimate the Company’s liability to unsecured trade creditors to be $7.608M, broken down as follows. Unsecured Creditor Type Amount ($)

Ordinary Unsecured Trade Creditors 2,952,445

Australian Taxation Office 930,966

Payroll Tax 171,359

Related Parties Claims 3,165,254

Shortfall to HP creditors 330,353

Amounts owed to excluded employees over the statutory cap (superannuation + annual leave + LSL)

229,634

Total $7,608,652

The Company is also indebted to the following related parties/entities:

Related Entities/Parties Start date Balance as at 23/9/13

Loan – A& L Woods 1 April 2011 126,314

Loan – Silverthorne 31 March 2011 3,038,940

Total $3,165,254

Other than the loans from Mr Silverthorne, we note that the remaining loans do not have any formal supporting documents. We have been advised that these loans are taken out to meet the Company’s working capital requirements.. Our preliminary view is that the Company owes the amounts claimed. Creditors should be aware the Act allows a creditor to apply to the Court to set aside or modify a resolution authorising the execution of a DOCA if the resolution carries as a consequence of a related entity vote. Similarly, a defeated resolution for the Company to be wound up may be declared carried, if defeated by the vote of a related entity. We also note that the amounts above are subject to the receipt and adjudication of final proofs of debt from creditors. 5.1.11 Contingent liabilities We have not identified any contingent liabilities


5.2 Explanation for current financial position We have not received an explanation from the directors’ on the Company’s current financial position. Our preliminary view is that the Company failed because of a combination of the above and the following factors: Poor management;

Lack of adequate working capital and the general poor financial performance of the Company;

The inability to manage the on-going outstanding taxation commitments and a general emphasis on turnover, not profit; and

Lack of control over costs and expenditure, i.e. with the rising fuel cost. Please note that the above analysis is a preliminary view only, a liquidator would need to conduct further investigations to determine the actual causes of failure.


6 Trading by Administrators

6.1 Overview The Administrators assumed control of the Company’s business upon appointment and senior members of our staff attended the Hazelmere property and addressed the company employees to advise of our appointment and to confirm with them that the Company would continue to trade as usual whilst the financial position of the Company was assessed. Similar attendance and addresses were conducted by a senior member of our staff at the Darwin premises on 25 September 2013 and by the Company’s General Manager, Mr Allan Gordon at Port Hedland quarry site on 26 September 2013. Various further control measures and confirmations were undertaken to ensure the safe operation of the sites, to communicate details of the appointment, to check and record balances and put in place required controls. A number of surplus assets (leased or rented) have also been disclaimed.

6.2 Trading Issues Having regards to the appointment of the R&M on 2 October 2013, we notified suppliers to the Administration of the appointment of the R&M and the effect it has on the Administrators’ indemnity for the Company’s trading liabilities. In this regard, we have advised that any unfulfilled or partly unfulfilled Purchase Orders signed by the Administrators are now withdrawn to the extent they are unfulfilled and instructed the suppliers to seek the Receivers’ approval for any service performed, lease/hire purchase obligations or goods delivered from 2 October 2013 onwards.

6.3 Summary of receipts and payments A summary of the Administrators’ receipts and payments for the period 24 September 2013 to 20 October 2013 is included within Part 10 of the Administrators’ Remuneration Request Approval Report in Annexure 1.


7 Sale of Business / Expressions of Interest Campaign Having regard to a range of strategic considerations including Company’s critical cash position and the tight timeframe imposed by the Act, we commenced a marketing program for the sale of assets or financial reconstruction of Company’s affairs, and established a set of expected key dates in the sale process. A high-level summary of the process appears below: Stage Item Due Date

1 Advertising

Advertising period 27 September 2013 to 9 October 2013

Closing date for registrations and expressions of interest 10 October 2013

2 Review of indicative offers (closes and shortlisted parties identified)

Information Memorandum distributed 7 October 2013 onwards

Short listed parties provided access to online data room materials. Due diligence commences

Friday, 11 October 2013

3 Contract and Settlement

Last date for receipt of Binding Unconditional Offers Thursday, 17 October 2013

Administrator to assess offers Friday, 18 October 2013

S&P Agreements finalised Subject to terms, but by 30 October 2013

Settlement of Consideration (subject to terms) TBC

7.1 Advertisements Advertisements for expressions of interest for the purchase and/or recapitalisation of the Company’s business and assets appeared in The West Australian and Northern Territory Newspaper on 2 October 2013.

7.2 Information Memorandum An Information Memorandum was being developed in consultation with the directors and senior officers of the Company and an Online Data Room was being established from which interested parties could undertake their due diligence. Having regards to the R&M appointment, these initiatives were discontinued.

7.3 Expressions of Interest

As a result of advertising the Company’s assets for sale in the West Australian Newspaper and the Northern Territory Newspaper, ten (10) parties contacted our office to register their interest. We have provided the details of the interested parties to the R&M and similarly, interested parties who wished to progress their interests for a purchase of the Company’ assets have been directed to the R&M.


8 Statutory investigations

8.1 Nature and scope of review The Act requires an administrator to carry out preliminary investigations into a company’s business, property, affairs and financial circumstances. Investigations centre on transactions entered into by the company that a liquidator might seek to void or otherwise challenge or pursue where the company is wound up. Investigations allow an administrator to advise creditors what funds might become available to a liquidator such that creditors can properly assess whether to accept a DOCA proposal or resolve to wind up the company. Funds recovered would be available to the general body of unsecured creditors including secured creditors but only to the extent of any shortfall incurred after realising their security. A liquidator may recover funds from each type of transaction detailed in the Creditor Information Sheet described in Annexure 2 of this report. A deed administrator does not have recourse to these voidable transactions. A liquidator may also recover funds through other avenues - for example, through action seeking compensation for insolvent trading or breach of director duties. An administrator is not obliged to carry out investigations to the same extent as a liquidator. A liquidator may require many months of investigation and conduct public examinations before forming a concluded view on recovery action. We investigated matters to the extent possible in the time available. The dividend estimate in a liquidation scenario set out in section 10.2 of this report reflects the outcome of our investigations. The Administrators’ knowledge of the Company’s affairs comes principally from the following sources:

Communications with the Company’s major unsecured creditors regarding the nature and amount

of the debts owed. Those creditors confirmed that the details disclosed by the Company are

substantially correct.

Communications with the secured creditor regarding the nature and amount of the debt owed. The

secured creditor confirmed the information supplied by the company.

Discussions with the directors and their advisors.

Discussions with independent auctioneers and valuers as to the Company's plant, equipment and

stock and the fleet list which was maintained by the Company.

A search of the ASIC records relating to the Company and any related entities.

Searches obtained from the relevant Department of Transport in WA and NT, National Property

searches.

An examination of the Company’s books and records including its financial statements and

electronic MYOB records.


8.2 The Company’s solvency 8.2.1 Overview A precursor to the recovery of funds by a liquidator through the voiding of certain transactions or through other legal action, such as seeking compensation from directors for insolvent trading, is establishing the Company’s insolvency at the relevant time. Establishing insolvency is a complex matter due in part to the complexity of corporate financial transactions and the lack of clear prescriptive legal authority on proof of insolvency. Notwithstanding, there are two primary tests used in determining a company’s solvency, at a particular date; namely: Balance sheet test; and

Cash flow or commercial test. The Courts have widely used the cash flow or commercial test in determining a company’s solvency at a particular date. Section 95A of the Act also contains a definition of solvency. That definition reflects the commercial test in stating that a person is solvent if “the person is able to pay all the person’s debts as and when they become due and payable”. However, the commercial test is not the sole determinant of solvency. Determining solvency derives from a proper consideration of a company’s financial position in its entirety and in the context of commercial reality. Relevant issues include, but are not limited to the following: The degree of illiquidity. A temporary lack of liquidity is not conclusive;

Regard should be had to:

(i) Cash resources

(ii) Monies available through asset realisations, borrowings against the security of assets or equity/capital raising;

All a company’s assets might not be relevant when considering solvency. For example, where a company proposes selling assets which are essential to its business operations, the proceeds of those assets should not be taken into account;

The voluntary and temporary forbearance by creditors not to enforce payment terms; and

It is not appropriate to base an assessment of whether a company can meet its liabilities as and when they fall due on the prospect that a company might trade profitably in the future.

In summary, it is a company’s inability using such resources as are available to it through the use of its assets, or otherwise, to meet its debts as they fall due, which indicates insolvency.


8.2.2 Preliminary determination Set out below is a summary of our preliminary investigations and our determination as to the Company’s solvency. Review of the Company’s bank facilities, including its bank accounts, for the period 1 January 2013 to 24 September 2013 A review of the company’s bank facilities held with the NAB reveals that the Company has been utilising the NAB overdraft facilities and as mentioned in Section 5.1.9 above, the amount owing by the Company under the overdraft is $303,061 with interest and other charges continuing to accrue until full payment is made. Our preliminary review indicates that the overdraft limits were breached on numerous occasions during the review period, however it was rectified within a few business days. Aged payables review

The table below sets out an analysis of the aged payables (trade creditors only) over the last 6 months ending at month end and our appointment as Administrators:

Month Current 30+ 60+ 90+ Total

31-Mar-13 $725,380 $421,497 $169,909 $249,925 $1,566,711

% of Total 46.30% 26.90% 10.84% 15.95% 100%

30-Apr-13 $1,222,793 $577,978 $233,008 $316,847 $2,350,627

% of Total 52.02% 24.59% 9.91% 13.48% 100%

31-May-13 $730,226 $994,979 $286,673 $394,924 $2,406,801

% of Total 30.34% 41.34% 11.91% 16.41% 100%

30-Jun-13 $818,781 $529,273 $444,130 $375,783 $2,167,966

% of Total 37.77% 24.41% 20.49% 17.33% 100%

31-Jul-13 $819,060 $606,818 $212,359 $704,322 $2,342,560

% of Total 34.96% 25.90% 9.07% 30.07% 100%

31-Aug-13 $780,660 $671,068 $248,792 $765,901 $2,466,420

% of Total 31.65% 27.21% 10.09% 31.05% 100%

24-Sep-13 $248,131 $600,989 $348,124 $945,552 $2,142,796

% of Total 11.58% 28.05% 16.25% 44.13% 100%

The above is also depicted in the following graphs:

$0.00

$500,000.00

$1,000,000.00

$1,500,000.00

$2,000,000.00

$2,500,000.00

$3,000,000.00

60+

90+

Total


We comment on the above analysis as follows: Trading terms for the majority creditors were on average, 30 days from month end.

The aged creditor balance beyond ninety (90) days doubled from 31 March 2013 to 31 August

2013, indicating the Company having difficulties in paying creditors within trade terms over the

period.

The increasing aged creditor balance beyond ninety (90) days was accompanied with actions

taken by creditors issuing various letters of demand and statutory demands for payment.

The above aged payables analysis, suggests that the Company was insolvent from at least June 2013, the point at which the 60-90 day creditor balances doubled.

Creditor demands and payment plans Our review of creditor correspondence has been limited having regards to the R&M appointment, however our review of available correspondence indicates that the following creditors took the actions against the Company as set out below:

Date of Action Creditor Type Amount

outstanding ($)

24/08/2010 G & A Lombardi Pty Ltd Court Judgement 24,328

3/04/2013 Commissioner of State Revenue Court Writs and Summons 43,642

13/06/2013 Royal Wolf Trading Australia Pty Ltd Letter threatening Legal Action 9,102

24/06/2013 J. Blackwood & Son Pty Ltd Letter threatening Legal Action 4,108

4/07/2013 Northern Territory News Letter threatening Legal Action 6,657

12/07/2013 Toll North Pty Ltd T/as NQX Freight Systems

Letter threatening Legal Action 3,905

18/07/2013 Groenveld Australia Letter threatening Legal Action 4,917

1/08/2013 Haulmore Trailer Rentals Pty Court Writs and Summons 90,829

16/08/2013 ANZ Banking Group Limited Creditor's Statutory Demand 307,120

21/08/2013 CBC Australia Pty Ltd Letter threatening Legal Action 2,576

30/08/2013 Transport Spares & Equipment Pty Ltd

Letter to Guarantor requesting payment 63,892

4/09/2013 Fennell Tyres International Pty Ltd Letter threatening Legal Action 9,366

12/09/2013 ANZ Banking Group Limited Letter of Demand from Creditor 15,000

17/09/2013 Crown Equipment Pty Limited Letter threatening Legal Action 2,682

24/09/2013 VON Pace Group Pty Ltd Letter threatening Legal Action 6,738

24/09/2013 Rentco Letter threatening Legal Action 124,239

8/10/2013 GPC Asia Pacific Pty Ltd Notice of Payment from Magistrates Court 2,072

8/10/2013 Repco Letter threatening Legal Action 1,469

Due to the limited records available to us, we are unable to draw a conclusion against this, save to note the increasing creditor pressure in or around June 2013 and the month leading up to our appointment on 24 September 2013. Further, our review shows that the Company have entered into a number of payment arrangements with

the following statutory bodies:


Creditor Date of Action Type of Action

Amount Outstanding

($)

Australian Taxation Office 11 January 2012 Formal payment arrangement 609,915

Australian Taxation Office 27 February 2012 Formal payment arrangement 579,305

Australian Taxation Office 22 May 2012 Formal payment arrangement 634,218


Office of State Revenue - Western Australia 3 May 2013 Formal payment arrangement 125,171

Australian Taxation Office 14 June 2013 Formal payment arrangement 456,144

Office of State Revenue - Northern Territory 26 July 2013 Formal payment arrangement 34,979

We also understand that there were a number of informal payment plans on foot with trade creditors, however given the limited time available to investigate the affairs of the Company and the limited records available to us, we were unable to determine when those arrangements were entered into and the quantum of debt. Finance Commitments Review At the date of our appointment, we note that the we are aware that the Company has been carefully managing the various leases and hire purchase contracts whilst most were kept in “good standing”, there were some arrears due to the individual financiers. We are also aware that the Company has been not been making payments on time with regards to its lease obligation for its premises at Darwin, having been issued with a statutory demand by the previous landlord, the ANZ Banking Group Limited in August 2013, in relation to a broken-promise to repay a payment plan in relation to a rental arrears or meet its obligations for the property for the period January - June 2013. Profitability The Company’s profit results for the year ending 30 June 2011, 30 June 2012, 30 June 2013 and for the period ending 23 September 2013 are tabled below:

Period ending 30-Jun-11 30-Jun-12 30-Jun-13 23-Sep-13

Net Profit/ Loss (1,394,039) (1,034,885) (963,304) (95,537)

As you will note above, the Company did not derive a profit for the financial years ending 30 June 2011 up to 30 June 2013. This has led to the Company having to seek “soft funding” arrangements through related party loans to continue the Company’s operations. Working Capital The working capital position determines whether or not a Company can pay its immediate debts with its immediate assets, a positive working capital is when current assets exceeds current liabilities. The table below outlines the working capital ratio of the Company up to the date of our appointment.

Balance Sheet as at 30-Jun-11 30-Jun-12 30-Jun-13 23-Sep-13

($) ($) ($) ($)

Current Assets 1,970,990 3,530,968 2,283,271 2,384,132

Current Liabilities 2,042,503 3,429,794 3,819,090 3,703,641

Working Capital Ratio 0.96 1.03 0.60 0.64


A working capital ratio below one indicates that the Company will not be able to meet its current liabilities through the realisation of its current assets. Given the Company’s working capital ratio deteriorates substantially from 30 June 2012 onwards, we undertook a further review of the Company’s working capital position from 31 December 2012 to 24 September 2013. The result which are as follows: Balance Sheet 31-Dec-12 31-Jan-13 28-Feb-13 31-Mar-13 30-Apr-13

($) ($) ($) ($) ($)

Current Assets 2,774,374 2,708,083 2,564,131 2,275,352 2,525,096

Current Liabilities 3,244,606 3,069,324 2,998,997 2,961,167 3,687,174

Working Capital Ratio 0.86 0.88 0.85 0.77 0.68

Based on the above analysis, the Company has been operating with a deteriorating working capital position leading up to our appointment. The above analysis indicates that the Company may have been insolvent in late January 2013. Net Assets As reported in Section 4.3, the Company has traded with a net asset deficiency from at least 30 June 2011.

Balance Sheet 30-Jun-11 30-Jun-12 30-Jun-13 23-Sep-13

($) ($) ($) ($)

Current Assets 1,970,990 3,530,968 2,283,271 2,384,132

Non-current Assets 3,422,164 2,903,425 3,250,296 2,957,677

Intangible Assets 115,708 115,708 115,708 115,708

Total Assets 5,508,862 6,550,101 5,649,275 5,457,518

Current Liabilities (2,042,503) (3,429,794) (3,819,090) (3,703,641)

Non-current Liabilities (5,453,588) (6,327,960) (5,996,880) (5,759,820)

Total Liabilities (7,496,091) (9,757,754) (9,815,970) (9,463,461)

Surplus / Deficiency (1,987,229) (3,207,653) (4,166,695) (4,005,943)

Statutory Commitments The records of the Company disclose that the following statutory payments were due at the date of our appointment. Superannuation Based upon the Company’s records, we note that the Company has not been making superannuation payments since the January 2012 and the total outstanding superannuation payments for the period from 1 January 2012 to 24 September 2013 totals $317,004, broken down as follows:

Balance Sheet 31-May-13 30-Jun-13 31-Jul-13 31-Aug-13 23-Sep-13

($) ($) ($) ($) ($)

Current Assets 2,803,130 2,283,271 2,446,701 2,390,896 2,384,132

Current Liabilities 3,776,564 3,819,090 3,911,299 4,044,462 3,703,641

Working Capital Ratio 0.74 0.60 0.63 0.59 0.64


Superannuation Outstanding Amount ($)

Quarter ending March 2012 36,102

Quarter ending June 2012 41,041

Quarter ending September 2012 46,361

Quarter ending December2012 48,135

Quarter ending March 2013 54,239

Quarter ending June 2013 51,275

Period 1 July 2013 to 23 September 2013 (not due till 28 October 2013) 39,852

Total $317,004

Non-payment of superannuation indicates the Company may have been insolvent in or around April 2012, when the payment of the superannuation for the quarter ending March 2012 was due. GST and PAYG At the date of our appointment, the amount of PAYG and GST owing to the ATO totalled approximately $769,126. The Business Activity Statement for the September 2013 quarter (due late October 2013) remains outstanding and will likely to increase the amount of debt owing to the ATO. We note that the Company had previously entered into a number of payment arrangements with the ATO and tabled below a summary of the payment arrangements entered into:

Creditor Date of Action Type of Action

Amount Outstanding

($)

Australian Taxation Office 11 January 2012 Formal payment arrangement 609,915


Australian Taxation Office 22 May 2012 Formal payment arrangement 634,218


Australian Taxation Office 14 June 2013 Formal payment arrangement 456,144

For each time the Company failed to comply with the payment plan, the Company re-negotiated the terms of the payment plan, the latest of which was entered into on 14 June 2013. Payroll Tax At the time of our appointment the Company records indicate an outstanding debt to OSR Northern Territory (NT) and OSR Western Australia (WA) for the non-payment of Payroll Tax of approximately $171,359. We note that the Company entered into a payment arrangement with the OSR WA and OSR NT in May 2013 and July 2013 respectively for the required payments for the financial year ended 30 June 2012. Summary of Preliminary Determination of Solvency

Solvency Indicator Likely date Insolvent

Aged Payables Review June 2013

Creditor demands and Payment Plans Inconclusive

Financial Commitments Review May 2013

Creditor Actions Inconclusive

Profitability Prior to June 2011

Working Capital December 2012 onwards

Net Asset Position Inconclusive

Payment of Statutory Commitments

Superannuation April 2012

GST and PAYG February 2013

Payroll Tax May 2013


Based on the above analysis, it is our preliminary view that the Company was insolvent at the latest May 2013 when the Company working capital deteriorated rapidly and when the aged creditor balance beyond ninety (90) days increased, coupled with the increase in creditors’ demands and actions. A liquidator would need to conduct further investigations, and possibly conduct public examinations of relevant parties, to ultimately determine whether or not the Company became insolvent at that time or earlier.

8.2.3 Presumption of insolvency – inadequate books and records Failure to keep or retain adequate books and records in accordance with Section 286 of the Act provides a rebuttable presumption of insolvency under Section 588E of the Act. A liquidator can rely on the presumption of insolvency in litigation including: Compensation claims arising from insolvent trading; and

Recovery of voidable transactions from related entities. The presumption cannot be relied upon in the recovery of an unfair preference except where the recovery is sought from a related entity. Our preliminary view is that the Company maintained adequate books and records in accordance with Section 286. Accordingly, the presumption of insolvency under Section 588E would not be available.

8.3 Potential liquidator recoveries - voidable transactions

8.3.1 Unfair preferences A payment to a creditor is preferential if it is made at a time when the company is insolvent and it results in the recipient receiving a greater return than they would receive if the payment were set aside and the creditor lodged a claim in the liquidation. Should a Liquidator establish any such unfair preference payments, these amounts may be recouped thereby increasing the funds available to ordinary unsecured creditors. If a creditor disgorges an unfair preference payment to a Liquidator, the creditor is entitled to prove for dividend. Therefore, whilst recovering an unfair preference increases the pool of funds available to creditors, it also increases total creditor claims. We are advised by the Company’s Director that no formal written payment plans were in place with creditors (other than the ATO) prior to our appointment and our investigations to date have not located any documentation to evidence preferences. Factors which indicate these payments might be unfair preferences are: Payments in response to winding up applications, statutory demands and other pressure from

the creditor;

Repayment plans with the creditor;

Significant ‘round’ figure payments were made to the creditor. The payments would be protected if the creditor from whom the liquidator seeks to recover: Became a party to the transaction in good faith; and

At the time when they became a party:


(i) They had no reasonable grounds for suspecting that the Company was insolvent at that

time, or would become insolvent; and (ii) A reasonable person in that person’s circumstances would have had no such grounds for

so suspecting; and

Provided valuable consideration under the transaction or has changed their position in reliance on the transaction.

A creditor seeking protection must prove all three elements. Further, where a creditor received a series of payments as part of a so called ‘running account’ and their overall indebtedness increases over the same period, the creditor is taken not to have received an unfair preference. This is called ’the running account defence’. Notwithstanding the above, a liquidator would likely seek legal advice on the strength of a claim including the applicability of these defences. It is likely any recovery action commenced by a liquidator would be defended. Therefore, costs are a major consideration. For the purposes of this report, we estimate from our preliminary investigations that $200,000 in potential recoveries from unfair preferences would be available in a liquidation scenario. There is no guarantee that a liquidator will recover funds or that costs ultimately dissipate the benefit to creditors.

8.3.2 Uncommercial transactions A transaction is an uncommercial transaction if it is made at a time when the Company is insolvent and it may be expected that a reasonable person in the Company’s circumstances would not have entered into the transaction having regard to: The benefits or detriment to the company of entering into the transaction;

The prospective benefits to other parties to the transaction upon entering into it. Should a liquidator establish any such uncommercial transactions, those transactions may be set aside thereby increasing the funds available to ordinary unsecured creditors. Our preliminary investigations do not disclose any transactions of an uncommercial nature which may lead to recoveries by a liquidator in the event that the Company is wound up.

8.3.3 Unfair loans Section 588FD provides that a loan to a company is unfair if the interest and charges are extortionate. In considering whether interest and charges are extortionate, regard must be had to: Risk the lender is exposed to;

Value of security;

Term;

Repayment schedule; and,

Amount of loan. Based on our investigations to date, the Company was not a party to any unfair loans.


8.3.4 Unreasonable director-related transactions Pursuant to Section 588FDA of the Act, a transaction is an unreasonable director-related transaction of the company if: The transaction is a payment, transfer of property, issue of securities or incurring of an obligation

by the company; and,

Made by the director or close associate of the director;

That a reasonable person in the company’s circumstances would not have entered into having regard to the benefit or detriment to the company or other parties.

Should a liquidator establish any such transactions, they may be set aside thereby increasing the funds available to unsecured creditors. We are assessing the validity of a number of transactions that the directors entered into having regard to their timing and the benefit derived by the directors through the repayment of related party loan accounts. It may be the case that such transactions are of a voidable nature however further detailed investigation will be undertaken of the director and related party loan accounts to determine whether there were any unreasonable director related transactions.

8.3.5 Obstruction of creditors’ rights Section 588FE of the Act provides for the voiding of transactions designed to defeat, delay or interfere with creditors rights. Our investigations do not disclose any such transactions.

8.4 Potential liquidator recoveries - insolvent trading

8.4.1 Director liability Section 588G of the Act imposes a positive duty upon company directors to prevent insolvent trading. If a director is found guilty of an offence in contravening Section 588G, the Court may order him or her to pay compensation to the company equal to the amount of loss or damage suffered by its creditors. The Court may also impose upon the directors’ one of two types of civil penalty orders. The first can include a fine not exceeding $200,000 or an order prohibiting directors from participating in the management of a company. The second, where there is criminal intent and a conviction, a director could also be imprisoned for up to five years or fined as well. ASIC usually applies for civil penalty orders while applications for compensation payable to the company are usually made by a liquidator, or in specified circumstances, a creditor. The substantive elements of Section 588G are: A person must be a director of a company at a time when the company incurs a debt;

The company must be insolvent at that time or becomes insolvent by incurring the debt;

The director must have reasonable grounds for suspecting that the company is insolvent or would so become insolvent by incurring the debt.


Summarised below are the defences contained in Section 588H: The directors had reasonable grounds at the time the debt was incurred to expect the company

to be solvent and would remain solvent even after the debt was incurred;

The directors relied on another person to provide information about whether or not the company was solvent;

The directors were ill or for some other good reason did not take part in the management of the company;

The directors took reasonable steps to prevent the incurring of the debt. A liquidator must form an opinion as to the date the company became insolvent and determine the debts incurred from that date, thereby quantifying the loss to the company. Based on our analysis at Section 8.2.2 of this report, we indicated it was likely that the Company was insolvent since May 2013, and that the directors would have had reasonable grounds for suspecting so. Based on that analysis, we have formed the preliminary view that the Company traded whilst it was insolvent. In their defence, the directors could argue: No substantial debts which were incurred beyond this date (if they can substantiate that claim).

Engaged professional advisers in or around early September regarding its financial position.

The directors, through their professional adviser, sought specific solvency advice on 24

September 2013 which led to the appointment of administrators immediately following.

A reasonable expectation that the Company was or would remain solvent due to ongoing businesses from existing and new customers and negotiations with interested parties regarding some forms of funding injection/arrangement and to structure a sale of the business.

Again, a liquidator would likely seek legal advice on these issues and conduct more investigations possibly including a public examination. The Director (Mr Silverthorne) through his advisor has advised that he would strongly deny any claims of trading whilst insolvent and would challenge any recovery action against him. The costs of proceeding with an insolvent trading action must be considered as does the personal financial capacity of the Directors to pay a judgement obtained against them. The latter issue is addressed in Section 8.8 and we note that we have requested that the directors provide us with a statement of their assets and liabilities however none has been forthcoming. Various searches from publically available information have revealed that the Directors’ net asset position (in particular Mr Silverthorne’s position) is complex and subject to a mixture of personal and corporate interests. We also note that from a review of the Company’s available records, the Directors are burdened with guarantees on almost all of the finance contracts and may have further exposure to unsecured trade creditors through personal guarantees provided on trade accounts including the fuel accounts held with Caltex.


Any future appointed liquidator would likely seek legal advice on these issues and conduct further investigations into this matter and possibly including a public examination of both the Directors to be able to ascertain their true net worth. Presently, unless further information is uncovered, it is in our view that an insolvent trading action may not be commercially viable in that the likely realisations in liquidation would be nil.

8.5 Arrangements to avoid employee entitlements Provisions contained in Part 5.8A of the Act commenced operation on 30 June 2000 and aim to protect the entitlements of a company’s employees from agreements that deliberately defeat the recovery of those entitlements upon insolvency. Under Section 596AB(1) of the Act, it is an offence for a person to enter into a transaction or relevant agreement with the intention of, or with intentions that include: Preventing recovery of employee entitlements; or

Significantly reducing the amount of employee entitlements recoverable.

The offence created in Part 5.8A is not limited to the company’s, directors, officers or employees. The section is applicable to any individual regardless of their relationship to the company or employees. If a breach is proven, Part 5.8A provides for the imposition of both criminal and civil penalties. Under Section 596AC(1), a civil penalty, in the form of compensation, is available to employees where: Section 596AB(1) is contravened;

The company is being wound up; and,

Employees suffered loss or damage. It should be noted the company need not have been insolvent at the time. A liquidator may take action to recover compensation as a debt due to the company. Employees would have priority to the compensation under Section 556 of the Act. While the liquidator has priority standing to take the action for any contravention, an employee may sue directly for compensation in certain circumstances pursuant to Section 596AF(1) of the Act. Based on our investigations to date, there has been no contravention of Part 5.8A by any person.

8.6 Breaches of Director Duties Based on our preliminary investigations, it is arguable that directors may have breached their duties as directors in failing to discharge their duties with reasonable care and diligence as statutory amount owing for employee superannuation has been outstanding since January 2012. As a consequence of these alleged breaches, the directors may be liable to compensate the Company or are liable under the Act’s civil penalty provisions. In the time available and based upon the limited records in our possession, we have not been able to determine the potential recoveries for the Company. We note breaches of this position are primarily a regulatory matter and not one that would form the basis for recovery by the Company’s creditors.


Any future appointed liquidator would likely seek legal advice on these issues and conduct more investigations possibly including a public examination to be able to determine the potential recoveries for the Company and if any of the above potential breaches warrant a report to ASIC.

8.7 Summary of potential liquidator recoveries Set out below is a summary of the potential recoveries by a liquidator in the event the Company is wound up:

Potential Recovery Item High ($) Low ($)

Unfair preferences 200,000 Nil

Uncommercial transactions Nil Nil

Unfair loans Nil Nil

Unreasonable director related transactions Unascertained Nil

Transactions undertaken to obstruct creditors’ rights N/A N/A

Compensation from director for insolvent trading Unascertained Nil

Avoidance of employee entitlements N/A N/A

Breaches of directors duties Unascertained Nil

Total 200,000 Nil

8.8 Directors’ ability to pay a liquidator’s claims The value of any claims that a liquidator may have (as set out at 8.7 above) must be measured against the capacity of the directors to meet such claims. As noted above, we have requested that the directors provide a statement of their individual financial position so that creditors could adequately consider, in the event of a winding up scenario, whether a liquidator would be able to recover any form of compensation for creditors generally. At the date of this report, no such statement has been forthcoming. Our preliminary investigations (including public database searches) have revealed that the Director’s net asset position is complex and subject to a mixture of personal and corporate interests, including significant personal guarantees provided by them in respect to the secured creditors’ debt, lease obligations and trade creditors’ account. It appears their personal net assets positions would also depend on the outcome of the R&M’s work within the Company, should there be any shortfall to the NAB. Our preliminary investigation also indicates that the Company does not have a directors’ and officers’ insurance policy which may otherwise have responded to claims brought by a Liquidator. Any future appointed liquidator would likely seek legal advice on these issues and conduct further investigations into this matter and possibly including a public examination of both Directors to be able to ascertain their true net worth. Accordingly, our preliminary view is that potential claims against both the Directors in a Liquidation scenario will not be viable.


8.9 Report to ASIC Section 438D of the Act requires us to lodge a report with the ASIC should we become aware of: Any offences committed by a past or present officer of any of the company’s over which we are

appointed; Evidence that monies or property has been misapplied or retained; and Evidence that a party is guilty of negligence, default, breach of duty or breach of trust in relation

to any of the company’s over which we are appointed. Based on our limited investigations conducted to date, we are giving consideration to preparing a preliminary report to the ASIC in respect to the Company. Creditors should also be aware that any report lodged pursuant to section 438D (or an investigative report lodged by a liquidator pursuant to section 533 of the Act) is not available to the public.

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9 Proposal for Deed of Company Arrangement (DOCA)

9.1 Statement of Proposed DOCA We have received a proposal for the reconstruction and recapitalisation of the Company from the company’s Directors/Shareholder. We advise that we have reviewed the offer received for both conditions and return to creditors and recommend that creditors resolve to accept the reconstruction proposal put forward by the company’s directors/shareholder. The complete proposal is included as Annexure 4 and also and is also outlined below:

9.2 Key Commercial Features The proposed DOCA includes the following key commercial features:

Key Elements Proposal

1. Proposal: 1.1 The Proponent will provide an Equity Investment to the Company in the

amount of $250,000 payable by 28 February 2014 (Equity Investment).

1.2 The Deed Administrators will be at liberty to amend the dates for payment of the Equity Investment up to a maximum of 90 days without seeking approval from the Company’s creditors.

1.3 In consideration for the Equity Investment, the Deed Administrators will

either:

transfer all shares in the Company to the Proponent; or

if for any reason the Deed Administrator are unable to transfer all shares to the Proponent, then the Deed Administrators will cause the Company to issue new shares to the Proponent that will result in the Proponent’s shareholding in the Company increasing to 99.999%.

2. Proponents of the DOCA

2.1 Nicholas John Silverthorne and Maureen Silverthorne as Joint Trustees for the Silverthorne Trust

3. Deed Administrators:

3.1 The Deed Administrators are to be Darren Weaver, Andrew Saker and Martin Jones who will have extensive powers to administer the DOCA.

4. National Australia Bank Limited (“NAB”)

4.1 The rights of the NAB will not be prejudiced by the Deed.

5. Available Property 5.1 The assets of the Company (Available Property) will compromise:

5.1.1 Cash at Bank after retirement of the Receivers. 5.1.2 All amounts payable to the Company from its trade debtors (i.e

receivables ledger) after retirement of the Receivers. 5.1.3 The proceeds of the Equity Investment. 5.1.4 The proceeds from the sale of any equipment owned by the

Company after the retirement of the Receivers. 5.1.5 The proceeds from any claim by the Company against the

Secured Creditor or the Receivers for any act or omission by them that resulted in damage to the Company.

6. Participating Creditors: 6.1 Creditors of the Company who had claims whether present or future, certain or contingent, ascertained or sounding only in damages, the circumstances giving rise to which occurred on or before 24 September 2013.


6.2 “Priority Creditor” means:

Participating Creditor with a debt payable by or claim against the Company as at the Relevant Date which, had the Company been wound up with the Relevant Date being the day on which the winding up was taken to have begun, would have been a debt or claim which must be paid in priority to all other unsecured debts or claims in accordance with section 556 or section 560 of the Act; and

the Administrators, the Deed Administrators and any person who is not already a person falling within the definition of “Priority Creditor’s Claim” with a debt payable by or claim against the Company properly incurred by the Administrators or the Deed Administrators;

6.3 “Class A Creditor” means each person who is a Creditor of the Company but excludes:

a Priority Creditor under the DOCA; and

Class B Creditors.

6.4 “Class B Creditors” means all creditors identified in Schedule 1 of this proposal for their claims against the Company as adjudicated by the Company’s Administrators.

7. Application of proceeds 7.1 The Administrators’ remuneration and expenses for administering their duties as Administrators and Deed Administrators will be approved by the Company’s creditors at duly convened meetings as set out in the Act and such remuneration and expenses will afforded the same priority out of the Available Property as would be available to the Administrators in a winding up on the Company pursuant to s556 of the Act.

7.2 The Company’s creditors participating in distributions will be paid as follows:

Firstly, a distribution will be made to Class A creditors;

After payment of the Class A creditors in full, Class B creditors will be entitled to the same priority of payment from the DOCA as would be afforded them in a winding up of the Company pursuant to section 556 of the Act.

8. New Directors: 1.1 The Deed Administrators will remove any directors from the Company’s board of directors and appointment new directors to the Company’s board of Directors as instructed by the Proponent.

9. Creditors’ Committee: 9.1 In order to advise and assist the Deed Administrators there may be a committee of inspection.

9.2 For the purpose of determining whether there is to be a committee of inspection, and, if so, the conduct of proceedings of the committee of inspection, the following provisions apply to the DOCA

Sections 548 to 551 inclusive of the Act;

Regulations 5.6.12 to 5.6.36A inclusive of the Corporations Regulations.

10. Administrators’ / Deed Administrator’s Lien:

10.1 Subject to the rights of the secured creditor, the Administrators and Deed Administrators are entitled to be indemnified out of the Available Property and have a lien over the assets of the Company for their remuneration, costs, fees and expenses for work done in the performance of their duties as Administrators and Deed Administrators.

10.2 The Administrators and Deed Administrators are not entitled to an indemnity out of the Available Property or any other property of the


Company against any Claims arising out of, in connection with or incidental to any fraudulent or negligent act, omission or any act done outside the DOCA by the Deed Administrators, Administrators or their staff.

10.3 The Administrators’ and Deed Administrators’ right of indemnity has priority as a Priority Creditor’s Claim and are entitled to exercise the right of indemnity whether or not the Claims have been paid or satisfied.

11. Members rights exercisable by Deed Administrators

11.1 Until the DOCA terminates, for the purpose of administering the DOCA or fulfilling the arrangement effect by the DOCA, the Deed Administrator has all the rights and powers of the Company’s members in general meeting to the exclusion of the Company’s members.

12. Moratorium against the Company in relation to winding up:

12.1 During the period of operation of the DOCA, the Company, any officer or member of the Company or any creditor bound by the provisions of the DOCA:

a. may take any recovery action or pursue any claim against the Company though the resulting claim is expected to be subject to the DOCA; and

b. must not make any application to wind up the Company, continue any such application or commence or continue any enforcement process in relation to the property of the Company.

1.2 This limitation does not affect the ability of the Secured Creditors to enforce their security against the Company.

13. Termination of DOCA: 13.1 The DOCA automatically terminates when any of the following conditions are met:

The Deed Administrators distribute the Available Property to the Company’s creditors in accordance with the DOCA.

The Court makes an order terminating the DOCA.

The Company’s creditors pass a resolution terminating the DOCA at a meeting convened pursuant to section 445F of the Act.

13.2 If the Deed Administrators have distributed the Available Property, then the Deed Administrators must, within 5 business days after distribution, lodge a written notice with the Australian Securities and Investments Commission in the prescribed form.

13.3 On termination of the DOCA, the Deed Administrators must deliver all of the Company’s books and records in their possession to the Company, other than those that were created after the Relevant Date.

13.4 The termination of the DOCA will not affect:

The previous operation of the DOCA; or

The enforceability of any accrued obligations under the DOCA.

14. Release of claims

14.1 On termination of the DOCA, the Company is released from all Participating Creditors’ Claims and it is agreed that there is no consideration payable in respect of the releases provided.

14.2 The Company may plead the DOCA in bar to any action, proceeding or suit brought by a Participating Creditor in respect of that claim.

14.3 Where there have been mutual creditors, mutual debts or other mutual dealings between the Company and a Participating Creditor, then the sum due from one party is entitled to be set off against any sum due from the other party with the balance released if in favour of the Participating Creditor or the balance payable to the Company if in favour of the Company.

14.4 A Participating Creditor will not be entitled to the benefit of any set off if, at


the time of giving credit to the Company, it had notice of the fact that the Company was insolvent and Section 553C of the Act will apply to any inconsistencies.

14.5 Each Participating Creditor accepts the Participating Creditor’s entitlement under the DOCA in full satisfaction of the Participating Creditor’s Claim.

14.6 If the Deed Administrators request Participating Creditors to do so, each Participating Creditor must, within 7 days after the making of the request, execute and deliver to the Company a written release of the Participating Creditor’s Claim in the form the Deed Administrators reasonable require fulfilling the arrangement effected by the DOCA. Any such release will not take effect unless and until the DOCA terminates.

14.7 Each Participating Creditor irrevocably appoints the Deed Administrators to be the attorney of the Participating Creditor with full power for and on behalf of and in the name of the Participating Creditor to do all acts and things and sign and execute all deeds, documents and notices as may be necessary or convenient for the purpose of the execution and delivery to the Company of the written release of the Participating Creditor’s Claim.

15. Abandonment by creditors who do not prove

15.1 A Creditor is taken to have abandoned the Creditor’s Claim if, before the declaration of a final dividend to Participating Creditors in accordance with the DOCA, the Creditor:

Fails to submit a formal proof of debt or claim in respect of the Creditor’s Claim; or

Having submitted a formal proof of debt or claim in respect of the Creditor’s Claim which is rejected, fails to appeal to the Court against the rejection, within the time allowed for such an appeal under the Act or Corporations Regulations.

16. Remuneration of the Deed Administrators

16.1 The Deed Administrators’ remuneration for the Deed Administrators’ services as administrators of the Deed is fixed at an amount calculated at time x agreed firm rates and is not to exceed any amount as is approved from time to time under Section 449E of the Act.

16.2 The Deed Administrators may draw the Deed Administrators’ remuneration from the Available Property, or, if the Available Property is insufficient, from any other property of the Company.

16.3 The Deed Administrators are entitled to be reimbursed from the Available Property for the whole of the costs, charges and expenses incurred by the Deed Administrators in connection with or incidental to the Deed Administrators’ administration of the DOCA.

16.4 The Deed Administrators may draw the Deed Administrators’ remuneration and reimbursement at the end of each month.

17. Costs and Outlays 17.1 The costs and outlays connected with the negotiation, preparation and execution of the DOCA for the Company and Deed Administrators are taken to be costs, charges and expenses incurred by the Deed Administrators in connection with or incidental to the Deed Administrators’ administration of the DOCA.

17.2 The Proponents costs and outlays connected with the negotiation, preparation and execution of this Deed are his own.

17.3 The Company must pay all duty and other government imposts payable in connection with the DOCA and all other documents and matters referred to in the DOCA when due or earlier if requested in writing by the Deed Administrator.


18. Other terms: 18.1 The terms and conditions as contained in Schedule 8A of the Corporations Regulations (excluding regulations 3(c)) will otherwise be excluded into the DOCA unless expressly included.

18.2 Each party must promptly at its own cost do all things (including executing and if necessary delivering all documents) necessary or desirable to give full effect to the DOCA.

18.3 The law of Western Australia will govern the DOCA.

18.4 The parties submit to the exclusive jurisdiction of the Court and agree that

any lawsuit must be heard, if at all, in the Court.

Proposed Monitoring and Reporting Arrangements Should it appear that the terms of the DOCA are not capable of being fulfilled, we will write to advise creditors as soon as practicable, and may convene a further meeting to terminate the DOCA. Prospects of DOCA Success The DOCA is based upon a payment of an Equity Investment to the Company in the amount of $250,000 payable by 28 February 2014. We received confirmation that the Proponent wishes to put forward the DOCA proposal on 21 October 2013. Given the significantly short period of time between that time of receipt of the DOCA and the date of this report, we have requested that the proponent provide a statement evidencing their capacity to pay by the stipulated date (i.e. 28 February 2014) and will report further to creditors at the forthcoming second meeting of creditors to be held on 30 October 2013.

9.3 Prospective Financial Information The DOCA proposal is not based upon future profits of the Company in the way that a series of DOCA payments from the company would be. Accordingly, it is not entered into in reliance upon any prospective financial information.


10 Creditors’ options, dividends estimates & cost estimates

Pursuant to Section 439A(4)(b) of the Act, we are required to provide creditors with a statement setting out our opinion on whether it is in the creditors’ interests for the: Administration to end;

Company to be wound up; or,

Company to execute a DOCA; or

For the second meeting of creditors to be adjourned for a period not exceeding forty-five (45) business days

In forming our opinion, we considered an estimate of the dividend creditors might expect, and the likely costs, under each option.

10.1 Administration to end

Creditors may resolve that the administration should end if it appears the Company is solvent or, for some other reason, control of the Company should revert to its directors. Based on our preliminary investigations and analysis of the Company’s financial information, the Company is insolvent. There appears to be no valid commercial reason why control of the Company should revert to its directors. If the administration were to end, there is no mechanism controlling an orderly realisation of assets and distribution to creditors. In those circumstances, we are unable to say what the Company might ultimately pay creditors or what costs it might incur. Therefore, our opinion is that it is not in the creditors’ interest for the administration to end. It is appropriate that the Company’s affairs be dealt with under Part 5.3A of the Act under one of the options detailed in Section 10.2 or 10.3 below.

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10.2 Winding up of Company Based upon the information in this report, where the Company is wound up, we estimate a dividend to creditors as follows: Description Liquidation Liquidation

High Return ($) Low Return ($)

Assets Subject to Circulating Charges Cash at bank Nil Nil Debtors - pre-24 September 2013 952,655 707,070 Debtors - Sales post 24 September 2013 214,652 178,877 Stock 9,182 4,455

Total Assets Subject to Circulating Charge 1,176,489 890,401

Less: Cost of receivership (KPMG) Receivers Fees and Disbursements (200,000) (250,000)

Cost of receivership (trading liabilities etc) (75,000) (100,000)

Total Cost of Receivership (275,000) (350,000)

Assets available to Priority Creditors 901,489 540,401

Total Employee Entitlements (494,973) (494,973)

Surplus/(Deficiency) after priority claims 406,516 45,428 Amounts owing secured creditor - NAB - overdraft (303,061) (303,061) Equity /(Shortfall) from NAB HP (see below) 37,600 (247,728)

Total Estimated surplus/(shortfall) to NAB 141,055 (505,361)

Total Circulating assets available after payment to secured creditors 141,055 Nil

Contribution from DOCA Proponent N/A N/A

141,055 Nil Less costs in preserving the assets / priority cost (FH)

Surplus/(Shortfall) funds held by FH 60,784 60,784

Administrators fees to 20.10.2013 (169,635) (169,635)

Administrators’ fees up to end of VA (35,000) (45,000)

Administrators' Disbursements (estimated) (10,000) (12,000)

Liquidators Fees (120,000) (200,000)

Liquidators Disbursements (10,000) (80,000)

Legal Fees (60,000) (10,000)

Surplus/(Deficiency) after payment of VA liabilities (202,795) (455,850)

Assets Subject to Non-Circulating Charges

Unencumbered Plant and Equipment (incl vehicles) 322,273 218,182


NAB - HP equipment 856,477 659,228

Less: Cost of realisation of P&E (122,026) (90,323)

Less: Estimated payout to NAB (1,060,634) (1,060,634)

Equity /(Shortfall) from NAB HP 37,600 (247,728)

Encumbered equipment to other financiers 1,030,421 741,921

Less: Estimated Payout to relevant financiers (1,030,421) (741,921)

Total Non-Circulating Charges Assets available 37,600 Nil

Insolvent Trading Claim Unascertained Nil

Voidable transactions (i.e. preference) 200,000 Nil

Total voidable transactions & other recoveries Unascertained Nil

Total funds available to ordinary unsecured creditors Unascertained Nil Total Non- Related Party Debt

(4,162,649) (4,948,758)

Total Related Party Debt (3,615,254) (3,615,254)

Total Unsecured Creditors (7,327,903) (8,114,012) Estimated dividend to ordinary unsecured creditors (cents in $) Unascertained Nil


The above analysis provides creditors with a snapshot of the potential high and low estimate of the realisable value of the assets if the Company were wound up. For the purpose of this report, we have made to make broads estimates as to the returns available to creditors that there would a minimal return to unsecured creditors due to: The amount owed to the secured creditor, The extent of employee claims; and The current estimated costs of the Administration and the Liquidation. We note that at present, we are not able to estimate the likely return from potentially voidable transactions with any degree of certainty. We further note that the above calculations are an estimate only and may vary due to: the actual amounts realised from the sale of the Company’s plant, equipment and stock;

the ultimate amount recoverable from debtors;

the amounts owing to the secured creditors and the professional cost of Receivership;

total liabilities once proofs of debt are lodged and adjudicated upon;

costs of litigation (for example, in recovering assets, debtors and voidable transactions); and

any future costs of either the Administration and/or Liquidation arsing due to some unforeseen circumstances.

Given the appointment of R&M and that the control the assets of the Company generally, we have requested that they provide us with (amongst other things) an analysis of the estimated assets available (if any) to the Company after the satisfaction of the NAB’s debt and associated fees and charges. Accordingly, we do not recommend this course of action for the following reasons: We are not able to estimate the likely return from potentially voidable transactions with any

degree of certainty, as we have not been able to ascertain the net asset position of the Directors and their ability repay any claims against them;

Certain estimates have been made as to the ERV of debtors and for the plant, equipment and stock subject to the Receiver’ control.

For completeness, we note that there is a possibility that employees may benefit from a slightly quicker return from a FEG scheme distribution (in relation to non-superannuation entitlements) in the event that the Company is placed immediately into liquidation. However, we also note that a distribution under the FEG scheme is likely to take the full estimated timeframe of sixteen weeks (four months) to advance funds to a liquidator, and we therefore would not expect to be able to distribute a return to employees prior to late February 2014 at the earliest. The cost of winding up the Company’s affairs are estimated at $120,000, though these cost would be considerably higher in the event that the potential claims referred to above at Section 8.7 of this report are pursued.


10.3 Execution of Proposed DOCA Based on the funds to be made available under the DOCA, we estimate a dividend to creditors as follows: Description DOCA DOCA

High Return ($) Low Return ($)

Assets Subject to Circulating Charges

Cash at bank Nil Nil

Debtors - pre-24 September 2013 952,655 707,070

Debtors - Sales post 24 September 2013 214,652 178,877

Stock 9,182 4,455

Total Assets Subject to Circulating Charge 1,176,489 890,401

Less: Cost of receivership (KPMG)

Receivers Fees and Disbursements (200,000) (250,000)

Cost of receivership (trading liabilities etc) (75,000) (100,000)

Total Cost of Receivership (275,000) (350,000)

Assets available to Priority Creditors 901,489 540,401

Total Employee Entitlements (494,973) (494,973)

Surplus/(Deficiency) after priority claims 406,516 45,428 Amounts owing secured creditor - NAB - overdraft (303,061) (303,061) Equity /(Shortfall) from NAB HP (see below) 37,600 (247,728)

Total Estimated surplus/(shortfall) to NAB 141,055 (505,361)

Total Circulating assets available after payment to secured creditors 141,055 Nil

Contribution from DOCA Proponent 250,000 250,000

391,055 250,000 Less costs in preserving the assets / priority cost (FH)

Surplus/(Shortfall) funds held by FH 60,784 60,784

Administrators fees to 20.10.2013 (169,635) (169,635)

Administrators’ fees up to end of VA (35,000) (45,000)

Administrators' Disbursements (estimated) (10,000) (12,000)

Deed Administrators Fees (75,000) (75,000)

Deed Administrators Disbursements (10,000) (80,000)

Legal Fees (15,000) (15,000)

Surplus/(Deficiency) after payment of VA liabilities 137,205 (85,850)

Assets Subject to Non-Circulating Charges

Unencumbered Plant and Equipment (incl vehicles) 322,273 218,182


NAB - HP equipment 856,477 659,228

Less: Cost of realisation of P&E (122,026) (90,323)

Less: Estimated payout to NAB (1,060,634) (1,060,634)

Equity /(Shortfall) from NAB HP 37,600 (247,728)

Encumbered equipment to other financiers 1,030,421 741,921

Less: Estimated Payout to relevant financiers (1,030,421) (741,921)

Total Non-Circulating Charges Assets available 37,600 0

Total voidable transactions & other recoveries N/A N/A

Total funds available to ordinary unsecured creditors 174,804 (85,850) Total Non- Related Party Debt

(4,162,649) (4,948,758)

Total Related Party Debt N/A N/A

Total Unsecured Creditors (4,162,649) (4,948,758) Estimated dividend to ordinary unsecured creditors (cents in $) 4.20 Nil


It is proposed that a dividend to creditors (if any) under the DOCA be paid in or around April 2014. This is subject to:

The ultimate timing of the Equity Investment of $250,000 by the DOCA proponents.

The timing of the realisation of the Company’s assets by the R&M and their subsequent retirement (as appropriate).

The costs of administering the future DOCA are estimated at $75,000 (excluding GST).

Unsecured creditors are slightly different in the DOCA to the liquidation, as the DOCA entails the subornation of the debt from Class B creditors which is made up of the amounts owed to the Silverthorne Trust and A&L Woods Loan account. The subordination of this related party debt potentially removes approximately 40% of the creditors’ claims (on a dollar value basis) that would otherwise be entitled to claim in a liquidation scenario, and the position is summarised below.

Administrators’ ERV for DOCA

High Low

Unsecured Creditors $ $

Trade Creditors (2,952,444) (2,952,444)

Australian Taxation Office (930,966) (930,966)

Estimated shortfall to nab N/A (505,361)

Estimated shortfall to HP creditors (49,605) (330,353)

Excluded employees entitlements over capped amount (229,634) (229,634)

Total Non- Related Party Debt (4,162,649) (4,948,758)

Loan - The Silverthorne Trust N/A N/A

Loan - A L Woods N/A N/A

Total Related Party Debt N/A N/A

Total Unsecured Creditors (4,162,649) (4,948,758)

We also note that the above dividend calculations to ordinary unsecured creditors are an estimate only and may change due to one or more of the following: the final amount claimed by creditors once proofs of debt are received and adjudicated upon.

changes in the estimated costs of the DOCA resulting from issues not presently known.

compliance with all provisions of the DOCA.

the actual amounts realised from the sale of the Company’s plant, equipment and stock;

the ultimate amount recoverable from debtors; and

the amounts owing to the secured creditors and the professional cost of Receivership

We have conducted an assessment of the DOCA proposal put forward by the directors (attached in Annexure 4) and have attempted to provide an analysis on the likely potential returns to creditors; however, we do not recommend this course of action for the following reasons:


We received confirmation the DOCA was to be put forward for creditors’ consideration on 21 October 2013. In the time available (1 business-day) and having not received a copy of the Directors’ Statement (see Section 5) and not having the 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.

We are not able to estimate the likely return from potentially voidable transactions with any

degree of certainty, as we have not been able to ascertain the net asset position of the Directors and their ability repay any claims against them,

Certain estimates have been made as to the ERV of debtors and for the plant, equipment and

stock subject to the Receiver’ control hence we are presently unable to provide a meaningful analysis of the likelihood of the returns to creditors with any certainty.

10.4 Adjournment of Second Meeting

In view of our comments in Section 10.1, 10.2 and 10.3 above, 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

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.

It is difficult to estimate the cost of adjourning the meeting of creditors. During the period of the adjournment, some costs will be incurred in continuing investigations that would otherwise be undertaken in a liquidation, while other costs will relate more specifically reporting to creditors on the outcome of the investigation and to re-convening the second meeting of creditors (in the event that creditors resolve to adjourn the forthcoming meeting). Our estimate of the marginal costs is $25,000 (plus GST), upon which we would report to creditors in a supplementary report pursuant to section 439A of the Act in order that approval of such costs may then be considered by creditors.


11 Administrators’ opinion

As stated in section 10.1 above, the option of the administration ending is clearly not viable. The only remaining option available to creditors is to wind up the Company or accept the proposed DOCA, or alternatively to adjourn the second meeting of creditors for a period of not more than forty-five (45) business days. From the information set out in sections 8 and 10.2 of this report, we are unable to estimate the likely return to creditors should the Company be wound up immediately, though we note there is a real possibility that the return will be nil. Accordingly, based upon the above, it is our opinion that creditors should resolve to adjourn the second meeting of creditors for a period not exceeding forty-five (45) business days.

12 Administrators’ remuneration request approval report

Pursuant to Section 446E of the Act, we enclose as Annexure 1 the Administrators’ Remuneration Request Approval Report. At the second meeting of creditors, we intend seeking approval of the remuneration set out in the remuneration report. Details of disbursements incurred are also included in the remuneration report.

13 Further queries

We will advise creditors in writing, if practicable, of any additional matter that comes to our attention after the dispatch of this report that, in our view, is material to creditors’ deliberations. In the meantime, should creditors have any queries, please do not hesitate to contact either Jason Soo or Yvonne Liew of this office. DATED this 22nd day of October 2013. Martin Jones Joint and Several Administrator

Annexure 1

Administrators’ Remuneration Request

Approval Report

Corporations Act 2001

Section 449E

A L LOGISTICS PTY LTD (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) (THE COMPANY) ACN 103 870 622 REMUNERATION REQUEST APPROVAL REPORT

Part 1: Declaration

We, Martin Jones, Andrew Saker and Darren Weaver of Ferrier Hodgson, have undertaken a proper assessment of this remuneration claim for our appointment as Joint and Several Administrators of the Company in accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed is in respect of necessary work, properly performed, or to be properly performed, in the conduct of the administration. Part 2: Executive Summary

To date, no remuneration has been approved and paid in this administration. This remuneration report details approval sought for the following fees:

Period Report

Reference

Amount (ex GST)

$

Current remuneration approval sought: Voluntary Administration Resolution 1: 24 September 2013 to 20 October 2013

5.1

$169,636

Resolution 2 21 October 2013 to 29 October 2013

5.2

$45,000

Total – Voluntary Administration* $214,636 Deed of Company Arrangement (DOCA) Resolution 3: 30 October 2013 to execution of DOCA* 5.3 $15,000 Resolution 4: Execution of DOCA to termination of DOCA* 5.4 $60,000 Liquidation Resolution 5: Commencement of Liquidation to conclusion of liquidation*

5.5

$120,000

* Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of the administration. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors.

Please refer to report section references detailed above for full details of the calculation and composition of the remuneration approval sought. This is consistent with the estimate of costs provided in the Initial Advice to Creditors dated 25 September 2013, which estimated a cost to completion of the Administration of between $200,000 and $250,000 (excluding GST). . Part 3: Schedule of Hourly Rates & General Guide to Staff Experience

Title Rate ($) Experience

Partner / Appointee

595 The Partner/Appointee is a registered liquidator and member of the ICAA and, generally,

the IPA, bringing specialist skills to the administration or insolvency task. For specific

experience and other details of the appointee/s, please visit our website at

www.ferrierhodgson.com

Director / Specialist 495 Generally, minimum of 12 years’ experience at least 2 years of which is to be at Manager

level. University degree; member of the ICAA and, generally, the IPA, with deep

knowledge and lengthy experience in relevant insolvency legislation and issues.

Senior Manager 455 Generally, more than 7 years’ experience with at least 2 years as a Manager. University

degree; member of the ICAA and, generally, the IPA; very strong knowledge of relevant

insolvency legislation and issues.

Manager 385 Generally, 5-7 years chartered accounting or insolvency management experience.

University degree; member of the ICAA and generally, the IPA; sound knowledge of

relevant insolvency legislation and issues.

Assistant Manager 345 Generally, 4-6 years chartered accounting or insolvency management experience.

University degree; member of the ICAA; completing IPAA Insolvency Education Program.

Good knowledge of relevant insolvency legislation and issues.

Senior Analyst 295 Generally, 2-4 years chartered accounting or insolvency management experience.

University degree; completing the ICAA’s CA program. Good knowledge of basic

insolvency legislation and issues.

Analyst 265 Generally, 2-3 years chartered accounting or insolvency management experience.

University degree, ICAA’s CA program commenced.

Accountant 225 0 to 2 years’ experience. Has completed or substantially completed a degree in

finance/accounting. Under supervision, takes direction from senior staff in completing

administrative tasks.

Junior Accountant 140 0 – 1 years’ experience. Undertaking a degree part-time in finance/accounting. Under

supervision, takes directions from senior staff in completing administrative tasks.

Personal / Team

Assistant

180 Appropriate skills including machine usage.

Administration

Supervisor/Assistant

115 Completed schooling and plans to undertake further studies. Required to assist in

administration and day to day field work under the supervision of more senior staff.

Notes: 1. The hourly rates are exclusive of GST. 2. The guide to staff experience is intended only as a general guide to the qualifications and experience of our staff engaged in the administration. Staff

may be engaged under a classification that we consider appropriate for their experience. 3. Time is recorded and charged in six-minute increments. 4. Rates are subject to change from time to time. The hourly rates reflect the total cost of providing professional services and should not be compared to

an hourly rate. See Part B1 for details of disbursements.

Part 4: Description of Work Completed / to be Completed

Resolution 1

Company: A L Logistics Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) Administration Type: Voluntary Administration Practitioners: Martin Jones, Andrew Saker and Darren Weaver of Ferrier Hodgson Period: 24 September 2013 to 20 October 2013

Task Area General Description Includes

Assets

86 hours $29,933

(excl GST)

Sale of business as a going concern

· Preparing advertisement for publication · Collating information and commence

preparation of Information Memorandum · Preparation of asset sale timetable · Liaising with valuers and interested parties · Reviewing asset listings

Plant and equipment · Liaising with valuers, auctioneers and interested parties

· Reviewing asset listings Debtors · Correspondence with debtors

· Reviewing and assessing receivables ledger · Liaising with management regarding

recoverability of debtors Asset subject to specific charges · Review of lease/rental contracts

· Preparing and comparing the fixed asset register with the hire purchase schedule

· Correspondence with various financier · Preparation of disclaimers

Leasing · Reviewing leasing documents · Liaising with owners/lessors · Tasks associated with disclaiming leases

Stock · Reviewing stock values · Liaising with potential purchasers and ROT

claimants. Other assets · Tasks associated with realising other assets

Creditors

160.6 hours $51,222

(excl GST)

Creditor enquiries · Receive and follow up creditor enquiries via telephone and email

· Maintaining creditor enquiry register · Review and prepare correspondence to

creditors and their representatives via facsimile, email and post

Creditor reports · Preparation of Circulars to Creditors · Preparation of reports to secured creditors - · Preparing section 439A report, investigations

into Company’s affairs including covering circular and remuneration reports

· Review draft DOCA proposal Dealing with proofs of debt · Receipting and filing proofs of debt when not

related to a dividend · Corresponding with OSR and ATO regarding

proofs of debt when not related to a dividend Retention of title claims · Receive initial notification of creditors’

intention to claim


· Provision of retention of title claim form to creditor

· Receive completed retention of title claim form

· Adjudicate retention of title claim Meeting of creditors · Preparation meeting notices, proxies and

advertisements · Forward notice of meeting to all known

creditors/stakeholders · Preparation of meeting file, including agenda,

certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting.

Employees

18.90 hours $5,349

(excl GST)

Employee enquiries

· Receive and follow up employee enquiries via telephone

· Review and prepare correspondence to creditors and their representatives via facsimile, email and post

Calculation of entitlements · Calculating employee entitlements · Reviewing employee files and Company’s

books and records · Reconciling superannuation accounts · Reviewing awards and contracts (as

applicable) Other employee issues · Correspondence with Child Support agency

Trade On

74.70 hours $28,931

(excl GST)

Trade-on management · Liaising with suppliers · Liaising with management and staff · Attendance on site at Hazelmere and Darwin · Authorising purchase orders · Maintaining purchase order registry · Preparing and authorising receipt vouchers · Preparing and authorising payment vouchers · Authorising and facilitating payment of wages · Liaising with OSR regarding payroll tax

issues Processing receipts and payments · Entering receipts and payments into

accounting system Budgeting & financial reporting · Reviewing the Company’s budgets and

financial statements · Preparing budgets and cash flow forecast · Meetings with management to discuss cash

flow forecast


Investigation

29.70 hours $8,449

(excl GST)

Conducting investigation · Collection of Company books and records · Reviewing Company’s books and records · Review and preparation of Company nature

and history · Conducting and summarising statutory

searches · Preparation of comparative financial

statements · Preparation of deficiency statement · Review of specific transactions and liaising

with directors regarding certain transactions · Liaising with directors regarding certain

transactions · Preparation of investigation file

Administration

149.90 hours $45,712

(excl GST)

Planning / review · Discussions regarding status / strategy of administration

Correspondence · General correspondence · Correspondence with R&M regarding conduct

of external administration Document maintenance / file review / checklist

· Filing of documents · File reviews · Updating checklists

Insurance · Identification of potential issues requiring attention of insurance specialists

· Correspondence with insurer broker regarding initial and ongoing insurance requirements

· Reviewing insurance policies · Correspondence with previous brokers · Completion of workers compensation wages

declaration Bank account administration · Preparing correspondence opening and

closing accounts · Requesting bank statements · Bank account reconciliations · Correspondence with bank regarding specific

transfers ASIC Form 524 and other forms · Preparing and lodging ASIC forms including

505, 524, 5011, etc. ATO and other statutory reporting · Notification of appointment to ATO

Resolution 2

Company: A L Logistics Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) Administration Type: Voluntary Administration Practitioners: Martin Jones, Andrew Saker and Darren Weaver of Ferrier Hodgson Period: 21 October 2013 to 29 October 2013


Assets

17.5 hours $5,778

(excl GST)

Plant and equipment · Liaising with valuers and interested parties · Reviewing asset register

Debtors · Reviewing and assessing of recoverability of debtors

Asset subject to specific charges · Review of lease/rental contracts · Preparing and comparing the fixed asset

register with the hire purchase schedule · Correspondence with various financier

Other assets · Tasks associated with realising other assets

Creditors

59.1 hours $20,020

(excl GST)

Creditor enquiries · Receive and follow up creditor enquiries via telephone and email

· Maintaining creditor enquiry register · Review and prepare correspondence to


Creditor reports · Preparing section 439A report, investigation, meeting and general reports to creditors

· Review draft DOCA proposal Retention of title claims · Receive initial notification of creditors’

intention to claim · Provision of retention of title claim form to

creditor · Receive completed retention of title claim

form · Adjudicate retention of title claim · Forward correspondence to claimant notifying

outcome of adjudication Dealing with proofs of debt · Receipting and filing proofs of debt when not


proofs of debt when not related to a dividend Meeting of creditors · Preparation meeting notices, proxies and


creditors · Preparation of meeting file, including agenda,


· Preparation and lodgement minutes of meetings with ASIC


Employees

15 hours $4,975

(excl GST)

Employee enquiries

· Receive and follow up employee enquiries via telephone




applicable) Other employee issues · Correspondence with Child Support agency

Trade On 14 hours $3,990

(excl GST)

Trade On Management · Liaising with suppliers. · Payment of Administrator accounts.

Processing receipts and payments · Entering receipts and payments into accounting system

Investigation

16 hours $4,600

(excl GST)

Conducting investigation · Review of the Company’s books and records and Report as to Affairs.

· Review and preparation of the Company’s nature and history.

· Liaising with directors regarding certain transactions.

· Preparation of investigation file. Litigation/Recoveries · Identification of potential voidable

transactions.

Administration

17.5 hours $5,638

(excl GST)


Correspondence · General correspondence Document maintenance / file review / checklist



· Correspondence with Blue Broking regarding initial and ongoing insurance requirements

· Reviewing insurance policies · Correspondence with previous brokers

Bank account administration · Preparing correspondence opening and closing accounts

· Requesting bank statements · Bank account reconciliations · Correspondence with bank regarding specific


505, 524, 5011, etc. · Correspondence with ASIC regarding

statutory forms ATO and other statutory reporting · Notification of appointment

· Preparing BAS

Resolution 3 Company: A L Logistics Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) Administration Type: Deed of Company Arrangement (DOCA) Practitioners: Martin Jones, Andrew Saker and Darren Weaver of Ferrier Hodgson Period: 30 October 2013 to execution of DOCA


Assets

9.6 hours $2,982

(excl GST)

DOCA · Liaising with solicitors and DOCA proponents to execute DOCA.

· Internal meetings to discuss / review offers received.

Plant and equipment · Liaising with valuers, auctioneers and interested parties (if applicable) and Receivers.

· Reviewing asset listings.

Creditors 21.4 hours

$6,369 (excl GST)

Creditor enquiries · Receive and follow up creditor enquiries via telephone and email.


· Correspondence with committee of creditors members (if any)

Meeting of creditors · Preparation and lodgement minutes of meetings with ASIC

Creditor reports/circulars · Preparing circular to creditors following the second meeting confirming the outcome.

Employees 8.5 hours

$1,993 (excl GST)

Employee enquiries · Receive and follow up employee enquiries via telephone

· Review and prepare correspondence to employees via facsimile, email and post

Trade On

4.5 hours $1,092

(excl GST)

Trade On Management · Liaising with suppliers. · Preparing and authorising receipt and

payment vouchers. Processing receipts and payments · Entering receipts and payments into

accounting system Investigations

4 hours $900 (excl GST)

Conducting investigations · Closing out investigation files and associated documentation.

Administration

4.5 hours $1,663

(excl GST)

Document maintenance / file review / checklist



· Requesting bank statements · Bank account reconciliations · Correspondence with bank regarding specific

transfers ASIC Form 524 and other forms · Preparing and lodging ASIC forms. ATO and other statutory reporting · Notification of appointment

· Preparing BASs Planning / review · Discussions regarding status / strategy of

administration

Resolution 4 Company: A L Logistics Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) Administration Type: Deed of Company Arrangement (DOCA) Practitioners: Martin Jones, Andrew Saker and Darren Weaver of Ferrier Hodgson Period: Execution of DOCA to termination of DOCA


Assets

21 hours $8,335

(excl GST)

Debtors · Liaising with R&M regarding collection of debtors

· Correspondence with debtors · Reviewing and assessing debtors ledgers · Liaising with debt collectors and solicitors

Other assets · Tasks associated with realising other assets

Creditors

54 hours $16,010

(excl GST)

Creditor enquiries

Receive and follow up creditor enquiries via telephone and email · Maintaining creditor enquiry register · Review and prepare correspondence to


· Correspondence with committee of creditors members (if any)

Creditor reports · Preparing general reports to creditors Dealing with proofs of debt · Receipting and filing proofs of debt when not


proofs of debt when not related to a dividend Meeting of creditors · Preparation meeting notices, proxies and


creditors · Preparation of meeting file, including agenda,


· Preparation and lodgement minutes of meetings with ASIC

· Respond to stakeholder queries and questions immediately following meeting

Employees

36.9 hours $9,251

(excl GST)

Employee enquiries · Receive and follow up employee enquiries via telephone




applicable) Employee dividend · Correspondence with employees regarding


dividend. · Correspondence with ATO regarding SGC

proof of debt. · Calculating dividend rate. · Preparing dividend file. · Advertising dividend notice. · Preparing distribution. · Receipting and adjudicating on proofs of debt.

Trade On

11 hours $2,635

(excl GST)

Trade on Management · Liaising with suppliers. · Maintaining purchase order registry. · Preparing and authorising receipt and

payment vouchers. Processing receipts and payments · Entering receipts and payments into

accounting system

Dividend

52 hours $14,720

(excl GST)

Processing proofs of debt · Preparation of correspondence to potential creditors inviting lodgement of POD.

· Receipt and adjudication of PODS. · Maintenance of POD register. · Request further information from claimants

regarding POD. · Preparation of correspondence to claimant

advising outcome of adjudication. Dividend procedures · Preparation of correspondence to creditors

advising of intention to declare dividend. · Advertisement of intention to declare

dividend. · Obtain clearance from ATO to allow

distribution of Company’s assets. · Preparation of dividend calculation. · Preparation of correspondence to announcing

declaration of dividend. · Advertise announcement. · Preparation of distribution and dividend file. · Preparation of payment vouchers to pay

dividend. · Preparation of correspondence to creditors

enclosing payment of dividend.

Administration

26.9 hours $9,051

(excl GST)

Correspondence · General correspondence Document maintenance / file review / checklist

· First month, then six monthly administration review



· Correspondence with insurer regarding initial and ongoing insurance requirements

· Reviewing insurance policies · Correspondence with previous brokers


· Requesting bank statements


· Bank account reconciliations · Correspondence with bank regarding specific


505, 524, 5011, etc. · Correspondence with ASIC regarding

statutory forms ATO and other statutory reporting · Notification of appointment

· Preparing BASs · Completing group certificates

Finalisation · Notifying ATO of finalisation · Cancelling ABN / GST / PAYG registration · Completing checklists · Finalising WIP


Books and records / storage · Dealing with records in storage · Sending job files to storage

Resolution 5

Company: A L Logistics Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) Administration Type: Creditors Voluntary Liquidation Practitioners: Martin Jones, Andrew Saker and Darren Weaver of Ferrier Hodgson Period: Commencement of Liquidation to completion of Liquidation


Assets

67 hours $22,215

(excl GST)

Plant and equipment · Liaising with valuers, auctioneers and interested parties.

· Reviewing asset listings. Debtors · Liaising with R&M on collection of debtors.

· Correspondence with debtors regarding payment to R&M.

Asset subject to specific charges · All tasks associated with realising a charged asset including liaising with financiers to determine strategy.

Creditors

74 hours $23,790

(excl GST)

Creditor enquiries · Receive and follow up creditor enquiries via telephone and email.

· Maintaining creditor enquiry register. · Review and prepare correspondence to

creditors and their representatives via facsimile, email and post.

· Correspondence with Committee of Creditors.

Secured creditor reporting · Preparing reports to secured creditor. · Responding to secured creditors’ queries.

Dealing with proofs of debt · Receipting and filing proofs of debt when not related to a dividend.

· Corresponding with OSR and ATO regarding proofs of debt when not related to a dividend.

Creditor reports/circulars · Prepare further reports to creditors.

Meeting of creditors · Preparation meeting notices, proxies and advertisements.

· Forward notice of meeting to all known creditors/stakeholders.

· Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting.

Employees

77 hours $24,465

(excl GST)

Employee enquiries

· Receive and follow up employee enquiries via telephone.

· Maintain employee enquiry register. · Review and prepare correspondence to

employees and their representatives via facsimile, email and post.

· Preparation of letters to employees advising of their entitlements and options available.

Calculation of entitlements · Calculating employee entitlements. · Reviewing employee files and Company’s

books and records. · Reconciling superannuation accounts. · Reviewing awards and contracts (as


applicable).

FEG · Correspondence with FEG.

Other employee issues · Correspondence with Child Support agency. · Correspondence with Centrelink.

Trade On

13 hours $3,765

(excl GST)

Trade-on management · Liaising with suppliers and closing accounts. · Closing out remaining purchase orders. · Preparing and authorising receipt vouchers. · Preparing and authorising payment vouchers.

Processing receipts and payments · Entering receipts and payments into accounting system.

Investigation

71.9 hours $24,178

(excl GST)

Conducting investigation · Collection of Company books and records. · Reviewing Company’s books and records. · Review and preparation of Company nature

and history. · Conducting and summarising statutory

searches. · Preparation of comparative financial

statements. · Preparation of deficiency statement. · Review of specific transactions and liaising

with directors regarding certain transactions. · Liaising with directors regarding certain

transactions. · Preparation of investigation file.

Examinations (if applicable) · Preparing brief to solicitor. · Liaising with solicitor(s) regarding

examinations. · Attendance at examination. · Reviewing examination transcripts. · Liaising with solicitor(s) regarding outcome of

examinations and further actions available. Litigation / recoveries · Internal meetings to discuss status of

litigation. · Preparing brief to solicitor(s). · Liaising with solicitor(s) regarding recovery

actions. · Attending to negotiations. · Attending to settlement matters.

ASIC reporting · Preparing statutory investigation reports. · Liaising with the ASIC.

Dividend

50 hours $14,790

(excl GST)

Processing proofs of debt · Preparation of correspondence to potential creditors inviting lodgement of PODs.

· Receipt and adjudication of PODS. · Maintenance of POD register. · Request further information from claimants

regarding POD. · Preparation of correspondence to claimant

advising outcome of adjudication. Dividend procedures · Preparation of correspondence to creditors

advising of intention to declare dividend. · Advertisement of intention to declare

dividend.


· Obtain clearance from ATO to allow distribution of Company’s assets.

· Preparation of dividend calculation. · Preparation of correspondence to

announcing declaration of dividend. · Advertise announcement. · Preparation of distribution and dividend file. · Preparation of payment vouchers to pay

dividend. · Preparation of correspondence to creditors

enclosing payment of dividend.

Administration

20 hours $6,800

(excl GST)

Planning / review · Discussions regarding status / strategy of administration.

Correspondence · General correspondence. · Correspondence with R&M regarding conduct

of external administration. Document maintenance / file review / checklist

· Filing of documents. · File reviews. · Updating checklists.

Insurance · Identification of potential issues requiring attention of insurance specialists.

· Correspondence with insurer broker regarding initial and ongoing insurance requirements.

· Reviewing insurance policies. · Correspondence with previous brokers. · Completion of workers compensation wages

declaration. Bank account administration · Preparing correspondence opening and

closing accounts. · Requesting bank statements. · Bank account reconciliations. · Correspondence with bank regarding specific

transfers . ASIC Form 524 and other forms · Preparing and lodging ASIC forms including

505, 524, 5011, etc. ATO and other statutory reporting · Notification of appointment to ATO.

Part 5: Calculation of Remuneration

Part 5.1: Resolution 1

Employee Position Rate Total Task Area

(ex

GST)

Assets Creditors Employees Trade On Investigation Dividend Administration

($/Hour

) (Hrs) ($) (Hrs) ($) (Hrs) ($) (Hrs) ($) (Hrs) ($) (Hrs) ($) (Hrs) ($) (Hrs) ($)

Martin Jones Partner 595 8.3

4,938

-

-

-

-

-

-

-

-

-

-

-

- 8.3 4,938

Andrew Saker Partner 595 1.0

595

-

-

-

-

-

-

0.6

357

-

-

-

- 0.4 238

Darren Weaver Partner 595 0.2

120

0.1

60

-

-

-

-

0.1

60

-

-

-

-

-

-

Malcolm Field Director 495 41.4

20,493

1.0

495

8.1

4,010

0.4

198

16.8

8,316

1.0

495

-

- 14.1 6,980

Kieran Chu Manager 385 152.2

58,597 29.7

11,434 40.5

15,592

5.8

2,233

44.3

17,056 9.6 3,696

-

- 22.3 8,586

Gordon Smith Manager 385 26.2

10,087 26.2

10,087

-

-

-

-

-

-

-

-

-

-

-

-

Yvonne Liew Assistant Manager 345 82.5

28,462 11.1

3,830 53.3

18,388

0.5

172

2.0

690.0

-

-

-

- 15.6 5,382

Ashleigh Weaver Analyst 265 2.8

742

-

-

-

-

-

-

-

-

-

-

-

-

2.8

742

William Hulmes Analyst 265 1.0

265

-

- 0.6 159

-

-

-

-

-

-

-

- 0.4 106

Jason Soo Accountant 225 136.9

30,803 17.4

3,915 42.0 9,450

5.6

1,260

9.2

2,070

19.1

4,298

-

- 43.6 9,810

Shaun Foley Accountant 225 3.0

675

-

-

-

-

-

-

-

-

-

-

-

- 3 675

Nirav Shah Accountant 225 52.2

11,743 0.5

112 16.1

3,622 6.6

1,485 1.7

382

-

-

-

- 27.3 6,142

Jacqui Titlestad Personal/Team

Assistant 180 11.1

1,998 11.1 1,998

Talia Newland Amin Supervisor/

Assistant 115 1.0

115 1.0 115

Total (excluding GST) 519.8 169,636 86 29,933 160.6 51,222 18.9 5,349 74.7 28,931 29.7 8,489 0 0 149.9 45,712

GST 16,964 ` 2,993 5,122 535 2,893 849 0 0 4,571

Total (including GST) 186,600 32,926 56,344 5,884 31,824 9,338 - - 50,283

Average Hourly Rate 326 0 348 319 283 387 286 - 305



(ex

GST)


($/Hour) (Hrs) ($) (Hrs) ($) (Hrs) ($) (Hrs) ($) (Hrs) ($) (Hrs) ($) (Hrs) ($) (Hrs) ($)


2,975 - -

3.0

1,785 - - - - - - - - 2.0 1,190


19,250

10.0

3,850

20.0

7,700

10.0

3,850

3.0

1,155

4.0

1,540 - - 3.0 1,155


11,075

2.0

690

20.1

6,935 - -

3.0

1,035

3.0

1,035 - - 4.0 1,380


8,100

5.0

1,125

15.0

3,375

4.0

900

5.0

1,125

4.0

900 - - 3.0 675


3,600

0.5

113

1.0

225

1.0

225

3.0

675

5.0

1,125 - - 5.5 1,238

Total (excluding GST) 139.1

45,000

17.5

5,778

59.1

20,020

15.0

4,975

14.0

3,990

16.0

4,600 - - 17.5 5,638

GST

4,500

578

2,002

498

399

460 - - 564

Total (including GST)

49,500

6,355

22,021

5,473

40

5,060 - - 6,201

Average Hourly Rate

324

330

339

332

285

288 - 322



(ex

GST)




1,785

1.0

595

1.0

595 - - - - - - - - 1.0 595


3,235

2.0

770

4.4

1,694

0.5

193

0.5

193 - - - - 1.0 385


2,105

1.1

380

4.0

1,380 - - - - - - - - 1.0 345


5,400

4.0

900

12.0

2,700

4.0

900 - -

3.0

675 - - 1.0 225


2,475

1.5

338 - -

4.0

900

4.0

900

1.0

225 - - 0.5 113


15,000

9.6

2,982

21.4

6,369

8.5

1,993

4.5

1,093

4.0

900 - - 4.5 1,663

GST

1,500

298

637

199

109

90 - - 166


16,500

3,280

7,006

2,192

1,202

990 - - 1,829

Average Hourly Rate

286

311

298

234 243

225 369



(ex

GST)




5,950

5.00

2,975

2.0

1,190 - - - - - -

2.0

1,190 1.0 595


17,325

8.00

3,080

12.0

4,620 - -

1.0

385 - -

12.0

4,620 12.0 4,620


10,625

4.00

1,380

10.0

3,450

7.9

2,726 - - - -

3.0

1,035 5.9 2,036


16,875

4.00

900

30.0

6,750

11.0

2,475

5.0

1,125 - -

20.0

4,500 5.0 1,125


9,225 - - - -

18.0

4,050

5.0

1,125 - -

15.0

3,375 3.0 675


60,000

21.00

8,335

54.0

16,010

36.9

9,251

11.0

2,635 - -

52.0

14,720 26.9 9,051

GST

6,000

834

1,601

925

264 - -

1,472 905


66,000

9,169

17,611

10,176

2,899 - -

16,192 9,956

Average Hourly Rate

297

397

296

251

240 -

283 336



(ex

GST)



Martin Jones Partner 595 10.0 5,950

2.0 1,190

2.0 1,190

2.0 1,190

-

- -

-

2.0

1,190 2.0 1,190

Kieran Chu Manager 385 126.0 48,510

25.0

9,625

25.0

9,625

25.0

9,625

-

-

35.0

13,475

10.0

3,850 6.0 2,310

Yvonne Liew Assistant Manager 345 102.0 35,190

20.0

6,900

20.0

6,900

20.0

6,900

7.0

2,415

20.0

6,900

10.0

3,450 5.0 1,725

Jason Soo Accountant 225 80.0 18,000

10.0

2,250

15.0

3,375

10.0

2,250

6.0

1,350

15.0

3,375

20.0

4,500 4.0 900

Nirav Shah Accountant 225 54.9 12,350

10.0 2,250

12.0

2,700

20.0

4,500

-

-

1.9

428

8.0

1,800 3.0 675

Total (excluding GST)

372.9 120,000 67.0 22,215 74.0 23,790 77.0 24,465 13.0 3,765 71.9 24,178 50.0 14,790 20.0 6,800

GST 12,000 2,222 2,379

2,447

377

2,418

1,479 680

Total (including GST) 132,000 24,437 26,169

26,912

4,142

26,595

16,269 7,480

Average Hourly Rate 322 332 321

318

290

336

296 340

Part 6: Statement of Remuneration Claim

Resolutions to be put to creditors at the meeting convened for 30 October 2013.

At the meeting of creditors convened for 30 October 2013, creditors will be asked to consider the following resolutions:

Resolution 1:

"That the remuneration of the Administrators, as set out in the Remuneration Request Approval Report dated 22 October 2013, for the period from 24 September 2013 to 20 October 2013 be fixed in the amount of $169,634.50 (plus GST)."

Resolution 2:

"That the further remuneration of the Administrators, as set out in the Remuneration Request Approval Report dated 22 October 2013, for the period from 21 October 2013 to 29 October 2013 be fixed at the Ferrier Hodgson scale of rates up to a maximum amount of $45,000 (plus GST) but subject to upward revision by resolution of creditors and that the Administrators be authorised to make monthly payments on account of such accruing remuneration as incurred."

Where Deed of Company Arrangement is accepted: Resolution 3:

"That the remuneration of the Deed Administrators, as set out in the Remuneration Request Approval Report dated 22 October 2013, for the period from 30 October 2013 to the execution of the Deed of Company Arrangement be fixed at the Ferrier Hodgson scale of rates up to a maximum amount of $15,000 (plus GST) and that the Administrators be authorised to make monthly payments on account of such accruing remuneration as incurred." Resolution 4:

"That the remuneration of the Deed Administrators, as set out in the Remuneration Request Approval Report dated 22 October 2013, for the period from the execution of the Deed of Company Arrangement be fixed at the Ferrier Hodgson scale of rates up to a maximum amount of $60,000 (plus GST) but subject to upward revision by resolution of creditors, or the Committee of Inspection should one be appointed, and that the Deed Administrators be authorised to make monthly payments on account of such accruing remuneration as incurred."

Where Liquidators are appointed: Resolution 5:

"That the remuneration of the Liquidators, as set out in the Remuneration Request Approval Report dated 22 October 2013, for the period from 30 October 2013 to the conclusion of Liquidation be fixed at the Ferrier Hodgson scale of rates up to a maximum amount of $120,000 (plus GST) but subject to upward revision by resolution of creditors, or the Committee of Inspection should one be appointed, and that the Liquidators be authorised to make monthly payments on account of such accruing remuneration as incurred."

Remuneration approved and drawn to date

Creditors have not previously approved any remuneration of the Administrators.

Part 7: Remuneration Recoverable from External Sources

The Administrators have not received, and are not entitled to receive, any funding from external sources in respect of the Administrators’ remuneration.

Part 8: Disbursements

Disbursements are divided into three types: A, B1, B2.

A disbursements are all externally provided professional services. These are recovered at cost. An example of an “A” disbursement is legal fees.

B1 disbursements are externally provided non-professional costs such as travel, accommodation and search fees. “B1” disbursements are recovered at cost.

B2 disbursements are internally provided non-professional costs such as photocopying, printing and postage. “B2” disbursements, if charged to the Administration, would generally be charged at cost; though some expenses such as telephone calls, photocopying and printing may be charged at a rate which recoups both variable and fixed costs. The relevant rates are set out below.

Disbursements Charges

(excluding GST)

Advertising At cost

Couriers At cost

Mileage Reimbursement $0.67 per kilometre

Photocopying (colour) 50 cents per copy

Photocopying (mono) 20 cents per copy

Disbursements Charges

(excluding GST)

Photocopying (outsourced) At cost

Printing (colour) 50 cents per copy

Printing (mono) 20 cents per copy

Printing (outsourced) At cost

Postage At cost

Searches At cost

Storage and Storage Transit At cost

Telephone Calls At cost

We have undertaken a proper assessment of disbursements claimed for the Company, and we are satisfied that the disbursements claimed are necessary and proper.

Disbursements incurred to date are shown in the summary of receipts and payments. Creditor approval for the payment of disbursements is not required. However, the Administrators must account to creditors. Creditors have the right to question the incurring of disbursements and can challenge disbursements in court. The disbursements incurred in the Administration for the period up to 20 October 2013 are detailed below:

Disbursements Classification Total ($)

(Excluding GST)

Facsimile B2 13.50

Photocopying B2 89.40

Postage B2 99.53

Printing B2 880.30

Searches B1 989.90

Stationery B1 12.60

Telephone Calls B2 11.23

Total 2,096.46

Part 9: Report on Progress of the Administration

The Remuneration Request Approval Report must be read in conjunction with the Administrator’s report to creditors dated 22 October 2013 which outlines the progress of the administration.

Part 10: Summary of Receipts and Payments

A summary of receipts and payments for the period 24 September 2013 to 20 October 2013 appears below:

Description Amount ($)

(Including GST)

Receipts:

Receipts from Debtors 376,585.01

Debtor Suspense Account 19,886.52

Total Receipts 396,471.53

Less Payments:

Employee Reimbursement (Car Rental) (138.67)

Child Support Agency (400.00)

Debtor Suspense (19,886.52)

Flights Expense (2,603.40)

Fuel and Oil Expense (10.00)

Insurance Expense (8,977.32)

Motor Vehicle Expense (5,358.00)

Printing and Stationery (1,515.69)

Subcontractors Payments (32,041.90)

Sundry Expenses (112.53)

Telephone and Fax Expense (198.12)

Wages and Salaries (net) (97,355.83)

Total payments (168,597.98)

Cash at Bank as at 20 October 2013 227,873.55

Part 11: Queries

If you require further information in respect of the above, or have any other queries, please contact either Yvonne Liew or Jason Soo of this office on 08 9214 1444.

Part 12: Information Sheet

The partners of Ferrier Hodgson are, generally, members of the Insolvency Practitioners Association of Australia (“IPA”). Ferrier Hodgson follows the IPA Code of Professional Practice. A copy of the Code of Professional Practice may be found on the IPA website at www.ipaa.com.au.

An information sheet concerning approval of remuneration in external administrations can also be obtained from the IPA website (http://www.ipaa.com.au/insolvency-you/insolvency-explained/insolvency-fact-sheets).

Dated: 22nd day of October 2013. Martin Jones Joint and Several Administrator A L Logistics Pty Ltd

Annexure 2

IPA – Creditor Information Sheet

Offences, Recoverable Transactions and Insolvent Trading

Insolvency Practitioners Association of Australia ABN 28 002 472 362

33 Erskine Street, GPO Box 3921, Sydney NSW 2001 P+61 2 9290 5700 F +61 2 9290 2820 www.ipaa.com.au

Creditor Information Sheet

Offences, Recoverable transactions and Insolvent Trading

Offences

A summary of offences that may be identified by the administrator:

180 Failure by officer to exercise a reasonable degree of care and diligence in the exercise of his powers and

the discharge of his duties.

181 Failure to act in good faith.

182 Making improper use of position as an officer or employee, to gain, directly or indirectly, an advantage.

183 Making improper use of information acquired by virtue of his position.

184 Reckless or intentional dishonesty in failing to exercise duties in good faith for proper purpose. Use of

position or information dishonestly to gain advantage or cause detriment.

206A Contravening an order against taking part in management of a corporation.

206A, B Taking part in management of corporation while being an insolvent under an administration.

206A, B Acting as a director or promoter or taking part in the management of a company within five years after

conviction or imprisonment for various offences.

209(3) Dishonest failure to observe requirements on making loans to directors or related companies.

254T Paying dividends except out of profits.

286 Failure to keep proper accounting records.

312 Obstruction of auditor.

314-7 Failure to comply with requirements for financial statement preparation.

437C Performing or exercising a function or power as officer while a company is under administration.

437D(5) Unauthorised dealing with company's property during administration.

438B(4) Failure by directors to assist administrator, deliver records and provide information.

438C(5) Failure to deliver up books and records to administrator.

590 Failure to disclose property, concealed or removed property, concealed a debt due to the company,

altered books of the company, fraudulently obtained credit on behalf of the company, material omission

from Report as to Affairs or false representation to creditors.

Voidable Transactions

Preferences

A preference is a transaction such as a payment between the company and one or more of its creditors, in which the creditor receiving the payment is preferred over the general body of creditors. The relevant time

period is six months before the commencement of the liquidation. The company must have been insolvent at the time of the transaction, or become insolvent as a result of the transaction.

Where a creditor receives a preferred payment, the payment is voidable as against a liquidator and is liable to

be paid back to the liquidator subject to the creditor being able to successfully maintain any of the defences available to the creditor under either the Corporations Act.

Uncommercial Transaction

An uncommercial transaction is one that it may be expected that a reasonable person in the company's circumstances would not have entered into having regard to:

the benefit or detriment to the company;

the respective benefits to other parties; and,

any other relevant matter.

To be voidable, an uncommercial transaction must have occurred during the two years before the liquidation.

However, if a related entity is a party to the transaction, the time period is four years and if the intention of the transaction is to defeat creditors, the time period is ten years.

Insolvency Practitioners Association of Australia Creditor Information Sheet s439A report (2)Page 2

The company must have been insolvent at the time of the transaction, or become insolvent as a result of the

transaction.

Unfair Loan

A loan is unfair if and only if the interest was extortionate when the loan was made or has since become extortionate. There is no time limit on unfair loans – they only have to have been entered into any time on or before the day when the winding up began.

Arrangements to avoid employee entitlements

If an employee suffers loss because a person (including a director) enters into an arrangement or transaction to avoid the payment of employee entitlements, the liquidator or the employee may seek to recover

compensation from that person. It will only be necessary to satisfy the court that there was a breach on the balance of probabilities. There is no time limit on when the transaction occurred.

Unreasonable payments to directors

Liquidators have the power to reclaim "unreasonable payments" made to directors by companies prior to liquidation. The provision relates to transactions made to, on behalf of, or for the benefit of, a director or

close associate of a director. To fall within the scope of the section, the transaction must have been unreasonable, and have been entered into during the 4 years leading up to a company's liquidation, regardless of its solvency at the time the transaction occurred.

Voidable charges

Certain charges are voidable by a liquidator:

Floating charge created with six months of the liquidation unless it secures a subsequent advance;

Unregistered charges; and

Charges in favour of related parties who attempt to enforce the charge within 6 months of its creation.

Insolvent Trading

In the following circumstances, directors may be personally liable for insolvent trading by the company:

a person is a director at the time a company incurs a debt;

the company is insolvent at the time of incurring the debt or becomes insolvent because of incurring the

debt;

at the time the debt was incurred, there were reasonable grounds to suspect that the company was insolvent;

the director was aware such grounds for suspicion existed; and

a reasonable person in a like position would have been so aware.

The law provides that the liquidator, and in certain circumstances the creditor who suffered the loss, may

recover from the director, an amount equal to the loss or damage suffered. Similar provisions exist to pursue holding companies for debts incurred by their subsidiaries.

A defence is available under the law where the director can establish:

there were reasonable grounds to expect that the company was solvent and they actually did so

expect;

they did not take part in management for illness or some other good reason; or,

they took all reasonable steps to prevent the company incurring the debt.

The proceeds of any recovery for insolvent trading by a liquidator are available for distribution to the unsecured creditors before the secured creditors.

Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances.

Annexure 3

Declaration of Independence, Relevant Relationship and

Indemnities

A L Logistics Pty Ltd (Administrators Appointed)

ACN 103 870 622 (the Company)

Declaration of Independence, Relevant Relationships and Indemnities

This document requires the practitioner(s) appointed to an insolvent entity to make declarations as to:

A. their independence generally; B. relationships, including

(i) the circumstances of the appointment; (ii) any relationships with the Company and others within the previous 24

months; (iii) any prior professional services for the Company within the previous 24

months; (iv) that there are no other relationships to declare; and

C. any indemnities given or upfront payments made to the practitioner(s).

This declaration is made in respect of ourselves, our partners and Ferrier Hodgson.

A. Declaration of independence

We, Martin Jones, Andrew Saker, Darren Weaver and our firm, Ferrier Hodgson, have undertaken a proper assessment of the risks to our independence prior to accepting the appointment as Voluntary Administrators of the Company in accordance with the law, the Code of Pressional Practice (“the Code”) of the Insolvency Practitioners Association of

Australia (“IPA”) and applicable professional standards. This assessment identified no real or potential risks to our independence. We are not aware of any reasons that would prevent us from accepting this appointment.

B. Declaration of relationships

(i) Circumstances of appointment

We had a meeting with the Company’s advisors, Mr Dermott McVeigh of Avior Consulting Pty Ltd on 9 September 2013 and 20 September 2013 for the purpose of assessing the Company’s financial position, sale and restructure alternatives and the

consequences of any insolvency appointment. The nature of those discussions is consistent with our appointment and role as Administrators of the Company to understand the Company’s financial position and maximise the return to creditors.

We received no remuneration for this advice. These meetings do not affect our independence for the following reasons:

· Ferrier Hodgson’s role was limited to assessing the Company’s financial position and restructuring option, the consequences of a formal insolvency appointment. Very brief, high level information and advice was given to the Company;

· the Courts and the IPA’s Code of Professional Practice specifically recognise the need for practitioners to provide advice on the insolvency process and the options available and do not consider that such advice results in a conflict or is an impediment to accepting the appointment;

· the nature of the advice provided to the company is such that it would not be subject to review and challenge during the course of the Administration; and

· the pre-appointment advice will not influence our ability to be able to fully comply with the statutory and fiduciary obligations associated with the Administration of the company in an objective and impartial manner.

(ii) Relevant relationships (excluding professional services to the Company)

Neither we nor our firm have, or have had within the preceding 24 months, any relationships with:

· the Company; · an associate of the Company; · a former insolvency practitioner appointed to the Company; or · a person or entity that has a charge on the whole of or substantially the whole

of the Company’s property.

For the purposes of full disclosure, we note that we have had, a relationship with:

Name Nature of relationship Reasons why not an impediment or conflict

Andrew John Woods

Martin Jones and Phillip Rundell of Ferrier Hodgson were appointed Receivers and Managers of Andrew Woods Consultants Pty Ltd on 27 November 2002 a company in which Mr Andrew John Woods was a director and secretary.

The receivership of Andrew Woods Consultants Pty Ltd is completely unrelated to the affairs of the Company and was finalised on 19 February 2004.

Andrew Woods Consultants Pty Ltd (together with P. North Consultants Pty Ltd) previously traded a transport business known as “Frontline Transport”.

Andrew Woods Consultants Pty Ltd was also under the control of liquidators from PPB Ashton Read and have since been de-registred.

Ferrier Hodgson has never undertaken any work for Mr Andrew John Woods in his personal capacity or the Company. The work that Ferrier Hodgson undertakes will not influence our ability to fully comply with the statutory and fiduciary obligations associated with the Company’s voluntary administration in an objective and impartial manner

S&N Civil Constructions Creditors' Trust (S&N)

Martin Jones and Darren Weaver were appointed Voluntary Administrators of S&N Civil Construction Pty Ltd (S&N Civil) on 11 April 2012 and were subsequently appointed as Deed Administrators of the Company on 4 July 2012 and Trustees of the Creditors Trust on 3 September 2012.

It is noted that: 1. The Company is both

a trade debtor ($88,953.45) and a trade creditor of S&N ($972,654.65 per RATA).

2. One of the former shareholders

of the Company, Mr Steve Batchelor, was the sole director of S&N Civil.

The Company has previously submitted a formal proof of debt form for the amount of approximately $1.3M to the Trustees of S&N but the same has yet to be adjudicated as at to date. Based on the Trustees’ prelimininary assessment, it is expected that any dividends to be distributed by S&N to unsecured creditors will be minimal. The Trustees of S&N are still in the process of recovering pre-administration debts.

As a safeguard, and subject to the availability of funds for distribution to unsecured creditors, it is proposed that the Trustees may engage a third party to review the Company’s claim for adjudication purposes.

We believe the proposed safeguard would provide assurance on our independence and ability to fully comply with the statutory and fiduciary obligations associated with the Company’s voluntary administration in an objective and impartial manner.

(iii) Prior professional services to the Company

Neither we nor our firm have provided any professional services to the Company in the previous 24 months.

(iv) No other relevant relationships to disclose

There are no other known relevant relationships, including personal, business and professional relationships, within the previous 24 months with the Company, an associate of the Company, a former insolvency practitioner appointed to the Company or any person or entity that has a charge on the whole of or substantially the whole of the Company’s property that should be disclosed.

C. Indemnities and up-front payments

We have not been indemnified in relation to this administration, other than any indemnities that we may be entitled to under statute and we have not received any upfront payments in respect of my remuneration or disbursements. Dated: 7th day of October 2013 Martin Jones Andrew Saker Darren Weaver Administrator Administrator Administrator Note:

If circumstances change, or new information is identified, I am required under the IPA Code

of Professional Practice to update this declaration and provide a copy to creditors with my

next communication as well as table a copy of any replacement declaration at the next

meeting of the Company’s creditors

Any relationships, indemnities or up-front payments disclosed in the declaration must not be

such that the practitioner is no longer independent. The purpose of components B and C of

the declaration is to disclose relationships that, while they do not result in the practitioner

having a conflict of interest or duty, ensure that creditors are aware of those relationships and

understand why the practitioner nevertheless remains independent.

Annexure 4

Deed of Company Arrangement (“DOCA”)

Proposal

Dated 18 October 2013

Proposal for a deed of company arrangement to the creditors of

AL Logistics Pty Ltd

ACN: 103 870 622

2

Table of Contents

1.! Parties ................................................................................................................... 3!

2.! Introduction ........................................................................................................... 3!

3.! Definitions ............................................................................................................. 3!

4.! DOCA ................................................................................................................... 7!

5.! Appointment of Deed Administrator ...................................................................... 7!

6.! Available property ................................................................................................. 8!

7.! Equity investment ................................................................................................. 9!

8.! Termination ........................................................................................................... 9!

9.! Release of claims ............................................................................................... 10!

10.! Abandonment by creditors who do not prove ................................................... 12!

11.! Remuneration ................................................................................................... 12!

12.! Deed Administrators’ indemnity ........................................................................ 13!

13.! Members rights exercisable by Deed Administrators ....................................... 15!

14.! Committee of inspection ................................................................................... 15!

15.! Exclusion of Prescribed Provisions ................................................................... 16!

16.! Further assurance ............................................................................................. 16!

17.! Costs and outlays ............................................................................................. 16!

18.! Governing law and jurisdiction .......................................................................... 16!

Schedule 1 – Class B Creditors ................................................................................. 17!

3

1. Parties

1.1. Martin Jones, Darren Weaver and Andrew Saker, all of Ferrier Hodgson, Level

26 Bankwest Tower, 108 St Georges Terrace, Perth WA 6008

(Administrators).

1.2. AL Logistics Pty Ltd Administrators Appointed, ACN 103 870 622 (the

Company).

1.3. Nicholas John Silverthorne and Maureen Silverthorne as Joint Trustees for the

Silverthorne Trust (Proponent).

2. Introduction

2.1. On 24 September 2013 the Company’s directors resolved that, in their opinion,

the Company was insolvent or was likely to become insolvent at some future

time and that an administrators of the Company should be appointed pursuant

to section 436A of the Corporations Act 2001.

2.2. On 24 September 2013 the Administrators, having consented in writing to an

appointment as administrators of the Company and such consent not having

been withdrawn, pursuant to section 436A of the Corporations Act 2001, were

appointed Administrators of the Company.

2.3. On 2 October 2013, the Secured Creditor appointed Hayden Leigh White and

Damian John Templeton, both of KPMG, 235 St Georges Terrace, Perth as

Joint & Several Receivers & Managers of the Company (Receivers).

2.4. The Proponent wishes to make a proposal to the Company’s creditors to

restructure the Company’s financial position through a deed of company

arrangement (DOCA) that will result in the continuation of the Company’s

business and provide a better return to the Company’s creditors than they

would receive if the Company is placed into liquidation.

3. Definitions

3.1. "Act" means the Corporations Act 2001 (Cth);

3.2. “Administrators” means Martin Jones, Darren Weaver and Andrew Saker, all

of Ferrier Hodgson, Level 26 Bankwest Tower, 108 St Georges Terrace, Perth

WA 6008

3.3. "Administration" has the same meaning ascribed to this term in section 9 of

the Act;

3.4. “Available Property” means the property that is to be available to pay

Creditors' Claims under this proposal as set out in clause 6 of this proposal;

4

3.5. “Business Day” means a day that is not a Saturday, Sunday or any other day

which is a public holiday or a bank holiday in the place where an act is to be

performed or a payment is to be made;

3.6. “Cash at Bank” means the actual positive cash figure as represents the

amount of money held by the Company or the Administrators for the purposes

of the administration of the Company In any and all bank accounts from time to

time;

3.7. “Claim” includes a claim, demand, debt, action, proceeding, suit, cost, charge,

expense, damage, loss and other liability;

3.8. “Class A Creditor” means each person who is a Creditor of the Company but

excludes:

3.8.1. a Priority Creditor under the DOCA; and

3.8.2. Class B Creditors.

3.9. “Class B Creditors” means all creditors identified in Schedule 1 of this

proposal for their claims against the Company as adjudicated by the

Company’s Administrators;

3.10. “Company” means AL Logistics Pty Ltd (Administrators Appointed) (ACN 103

870 622);

3.11. “Corporations Regulations” means the Corporations Regulations 2001 (Cth);

3.12. “Court” has the meaning set out in section 58AA of the Act (for the avoidance

of doubt being the definition attributed to the capitalised word “Court” in that

section);

3.13. “Creditor” means a person who has a debt payable by or claim against the

Company whether present or future, certain or contingent, ascertained or

sounding only in damages, the circumstances giving rise to which occurred on

or before the Relevant Date;

3.14. “Creditor's Claim” means, in relation to a Creditor, the Creditor's debt payable

by or claim against the Company whether present or future, certain or

contingent, ascertained or sounding only in damages, the circumstances giving

rise to which occurred on or before the Relevant Date;

3.15. “Directors” mean Nicholas John Silverthorne and Andrew Woods;

3.16. “DOCA” means the Deed of Company Arrangement proposed in this

document;

3.17. “Partially Secured Creditor” means Westpac Banking Corporation Limited;

3.18. “Partially Secured Creditor’s Claim” means the sum exceeding $900,000

owing by the Company to the Partially Secured Creditor in respect of the

5

Company’s equipment finance facility and secured by specific charges over

items of plant financed by the Partially Secured Creditor and granted by the

Company to the Partially Secured Creditor;

3.19. “Participating Creditors” means collectively Class A Creditors, Class B

Creditors, and Class C Creditors;

3.20. “Participating Creditor's Claim” means, in relation to a Participating Creditor,

the Participating Creditor's debt payable by or claim against the Company

whether present or future, certain or contingent, ascertained or sounding only

in damages, the circumstances giving rise to which occurred on or before the

Relevant Date, but, for the purpose of distribution of dividends to Participating

Creditors, excludes any part of that debt or claim that constitutes a Priority

Creditor's Claim;

3.21. “Party” means the Administrators, the Company or the Directors, according to

the context; and “Parties” has a corresponding meaning;

3.22. “Prescribed Provisions” means those provisions which are prescribed for the

purposes of section 444A(5) of the Act, namely, the provisions set out in

Schedule 8A of the Corporations Regulations;

3.23. “Priority Creditor” means:

3.23.1. a Participating Creditor with a debt payable by or claim against the

Company as at the Relevant Date which, had the Company been

wound up with the Relevant Date being the day on which the winding

up was taken to have begun, would have been a debt or claim which

must be paid in priority to all other unsecured debts or claims in

accordance with section 556 or section 560 of the Act; and

3.23.2. the Administrators, the Deed Administrators and any person who is

not already a person falling within the definition of “Priority Creditor’s

Claim” with a debt payable by or claim against the Company properly

incurred by the Administrators or the Deed Administrators;

3.24. “Priority Creditor's Claim” means:

3.24.1. in relation to a Priority Creditor within clause (a) of the definition of

“Priority Creditor” — the Priority Creditor's debt payable by or claim

against the Company as at the Relevant Date which, had the

Company been wound up with the Relevant Date being the day on

which the winding up was taken to have begun, would have been a

debt or claim which must be paid in priority to all other unsecured

6

debts or claims in accordance with section 556 or section 560 of the

Act;

3.24.2. in relation to a Priority Creditor within clause (b) of the definition of

“Priority Creditor” — the Priority Creditor's debt payable by or claim

against the Company which, had the Company been wound up with

the Relevant Date being the day on which the winding up was taken

to have begun, would have been a debt or claim within section

556(1)(a), (c), (dd) or (de) of the Act which must be paid in priority to

all other unsecured debts or claims in accordance with section 556 of

the Act;

3.25. “Receivers” means Hayden Leigh White and Damian John Templeton, both of

KPMG, 235 St Georges Terrace, Perth as Joint & Several Receivers &

Managers of the Company.

3.26. “Relevant Date” means 24 September 2013;

3.27. “Secured Creditor” means National Australia Bank Ltd;

3.28. “Secured Creditor’s Claim” means:

3.28.1. the sum exceeding $310,000 owing by the Company to the Secured

Creditor in respect of the Company’s overdraft facility; and

3.28.2. the sum exceeding $1.0 million owing by the Company to the

Secured Creditor in respect of the Company’s equipment finance

facility,

secured by inter alia a registered mortgage debenture on all of the Company’s

assets and specific charges over items of plant financed by the Secured

Creditor and granted by the Company to the Secured Creditor;

3.29. “Silverthorne Trust” means Nicholas John Silverthorne and Maureen

Silverthorne as Joint Trustees of the Silverthorne Trust.

3.30. “Termination Date” means the date on which this Deed terminates in

accordance with clause 8 of this proposal;

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4. DOCA

4.1. The Company’s Administrators will present this proposal for a Deed of

Company Arrangement (DOCA) to the Company’s creditors at a meeting

convened by the Administrators pursuant to section 439A of the Corporations

Act 2001 on or before 31 October 2013 (Creditors’ Meeting).

4.2. At the Creditor’s Meeting the Administrators will provide the Company’s

creditors with a copy of this proposal.

4.3. The Administrators will instruct their solicitors to prepare the DOCA.

4.4. The Administrators’ remuneration and expenses for administering their duties

as Administrators and Deed Administrators will be approved by the Company’s

creditors at duly convened meetings as set out in the Corporations Act 2001

and such remuneration and expenses will afforded the same priority out of the

Available Property as would be available to the Administrators in a winding up

on the Company pursuant to s556 of the Corporations Act 2001.

4.5. The Company’s creditors participating in distributions will be paid as follows:

4.5.1. Firstly, a distribution will be made to Class A creditors;

4.5.2. After payment of the Class A creditors in full, Class B creditors will be

entitled to the same priority of payment from the Creditors’ Trust as

would be afforded them in a winding up of the Company pursuant to

s556 of the Corporations Act 2001.

4.6. Within 15 business days of obtaining a resolution of the Company’s creditors at

the Creditors’ Meeting, the Proponent, the Company and the Administrators will

execute a DOCA in terms materially consistent with this proposal.

5. Appointment of Deed Administrator

5.1. The Company will appoint the Deed Administrators, and the Deed

Administrators will accept their appointment, as Deed Administrators of the

Company.

5.2. The Deed Administrators are and act as the agents of the Company.

5.3. For the purpose of administering this Deed the Deed Administrators have all

the powers specified in clause 2 of the Prescribed Provisions, and also (without

limitation) the following powers:

5.3.1. to realise and administer assets available for the payment of

Creditors' Claims in accordance with the provisions of this proposal;

8

5.3.2. to assist in the capital raising by the Company, including convening

shareholders' meetings and issuing new shares (subject to

shareholders' approval), removing directors and appointing directors;

5.3.3. to remove from office a director of the Company and appoint a person

as a director of the Company, whether to fill a vacancy or not;

5.3.4. to bring, prosecute and defend in the name and on behalf of the

Company, or in the name of the Deed Administrators any action, suits

or proceedings relevant to the obligations under this Deed;

5.3.5. to convene and hold meetings of the Creditors and members of the

Company for any purpose authorised by the Deed Administrators;

5.3.6. to make interim or other distributions of property available for the

payment of Creditors' Claims as provided in this Deed;

5.3.7. to appoint a solicitor, accountant or other professionally qualified

person to assist the Deed Administrators;

5.3.8. to permit any person authorised by the Deed Administrators to

operate any account in the name of the Company;

5.3.9. to liaise with any government or regulatory body (including the

Australian Securities and Investments Commission) for any purpose

associated with the business or affairs of the Company;

5.3.10. to do all things or execute all documents or deeds in the name of and

on behalf of the Company;

5.3.11. to execute and do all things reasonably necessary or convenient to

be done to give effect to this proposal; and

5.3.12. to do anything that is incidental to exercising a power set out in this

proposal or the Act.

5.4. Any debts payable by or Claims against the Company the circumstances giving

rise to which occur after the execution of the DOCA are not liabilities of the

Deed Administrator.

6. Available property

6.1. The assets of the Company (Available Property) will compromise:

6.1.1. Cash at Bank after retirement of the Receivers

6.1.2. All amounts payable to the Company from its trade debtors after

retirement of the Receivers

6.1.3. The proceeds from the Equity Investment

9

6.1.4. The proceeds from the sale of any equipment owned by the Company

after the retirement of the Receivers

6.1.5. The proceeds from any claim by the Company against the Secured

Creditor or the Receivers for any act or omission by them that

resulted in damage to the Company.

6.2. The Deed Administrators are open to conduct one or more bank accounts in

the Company’s name to hold the funds from the Available Property.

6.3. The Available may only be applied in accordance with the DOCA.

7. Equity investment

7.1. The Proponent will provide an Equity Investment to the Company in the amount

of $250,000 payable by 28 February 2014 (Equity Investment).

7.2. The Deed Administrators will be at liberty to amend the dates for payment of

the Equity Investment up to a maximum of 90 days without seeking approval

from the Company’s creditors.

7.3. In consideration for the Equity Investment, the Deed Administrators will either:

7.3.1. transfer all shares in the Company to the Proponent; or

7.3.2. if for any reason the Deed Administrator are unable to transfer all

shares to the Proponent, then the Deed Administrators will cause the

Company to issue new shares to the Proponent that will result in the

Proponent’s shareholding in the Company increasing to 99.999%.

7.4. The Deed Administrators will remove any directors from the Company’s board

of directors and appoint new directors to the Company’s board of directors as

instructed by the Proponent.

8. Termination

8.1. The DOCA automatically terminates when any of the following conditions are

met:

8.1.1. The Deed Administrators distribute the Available Property to the

Company’s creditors in accordance with the DOCA;

8.1.2. The Court makes an order terminating the DOCA;

8.1.3. The Company’s creditors pass a resolution terminating the DOCA at

a meeting that was convened pursuant to section 445F of the Act.

8.2. If the Deed Administrators have distributed the Available Property in

accordance with the DOCA, then the Deed Administrators must, within 5

business days after distribution, lodge a written notice with the Australian

Securities and Investments Commission in the following form:

10

AL Logistics Pty Ltd (Subject to Deed of Company Arrangement)

(ACN 103 870 622)

We, Martin Jones, Darren Weaver and Andrew Saker all of Ferrier

Hodgson, Level 26, Bankwest Tower, 108 St Georges Terrace, Perth,

Western Australia, Deed Administrators of the deed of company

arrangement executed by AL Logistics Pty Ltd (Subject to Deed of

Company Arrangement) (ACN 103 870 622) on [insert date] hereby

certify that the deed has been wholly effected and is terminated upon

lodgement of this notice with the Australian Securities and Investments

Commission.

8.3. On termination of the DOCA in accordance with clause 8.1.1 of this proposal,

the Deed Administrators must deliver to the Company all of the Company’s

books and records in the possession of the Deed Administrators other than

those books and records created after the Relevant Date, which the Deed

Administrators wish to retain.

8.4. The termination of the DOCA will not affect:

8.4.1. the previous operation of the DOCA; or

8.4.2. the enforceability of any accrued obligations under the DOCA. For

that purpose where the termination of this Deed is followed by the

winding up of the Company:

a) the liquidators may enforce any obligation under the DOCA

owed to the Deed Administrators; and

b) may do so as if the liquidators had been a party to the DOCA

at the execution of the DOCA in the place of the Deed

Administrators.

9. Release of claims

9.1. On termination of the DOCA, the Company is released from all Participating

Creditors' Claims and it is agreed that there is no consideration payable in

respect of the releases provided.

9.2. The Company may plead the DOCA in bar to any action, proceeding or suit

brought by a Participating Creditor in respect of that Participating Creditor's

Claim.

9.3. Where there have been mutual credits, mutual debts or other mutual dealings

between the Company and a Participating Creditor:

11

9.3.1. an account must be taken of what is due from the one party to the

other in respect of those mutual dealings;

9.3.2. the sum due from one party is to be set off against any sum due from

the other party;

9.3.3. only the balance of the account (if any) in favour of the Participating

Creditor as against the Company is to be released;

9.3.4. only the balance of the account (if any) in favour of the Company as

against the Participating Creditor, is payable by the Participating

Creditor to the Company.

9.4. A Participating Creditor will not be entitled to claim the benefit of any set-off if,

at the time of giving credit to the Company, or at the time of receiving credit

from the Company, it had notice of the fact that the Company was insolvent.

9.5. For the avoidance of doubt, the procedure set out in clause 9.4 is intended to

entitle a Participating Creditor to claim a set-off (if any) as may be available

pursuant to section 553C of the Act as against any liability to the Company as if

the Company was subject to a winding up so that the balance of the account (if

any):

9.5.1. in favour of the Participating Creditor is admissible to proof under the

Trust Deed without giving rise to any obligation on the Company

following the termination of this Deed to pay any monies to the

Participating Creditor; and

9.5.2. in favour of the Company is payable by the Participating Creditor to

the Company,

and to the extent that there may be any inconsistency between application of

the procedure set out in this proposal and the application of section 553C of

the Act, section 553C of the Corporations Act will prevail and will apply with

immediate and automatic effect in the manner provided for by that provision.

9.6. Each Participating Creditor accepts the Participating Creditor's entitlement

under the DOCA in full satisfaction of the Participating Creditor's Claim.

9.7. If the Deed Administrators request Participating Creditors to do so, each

Participating Creditor must, within 7 days after the making of the request,

execute and deliver to the Company a written release of the Participating

Creditor's Claim in the form the Deed Administrators reasonably require to fulfil

the arrangement effected by the DOCA, save to say that any such release will

not take effect unless and until the DOCA terminates.

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9.8. Each Participating Creditor irrevocably appoints the Deed Administrators to be

the attorney of the Participating Creditor with full power for and on behalf of and

In the name of the Participating Creditor to do all acts and things and sign and

execute all deeds, documents and notices as may be necessary or convenient

for the purpose of the execution and delivery to the Company of the written

release of the Participating Creditor’s Claim.

10. Abandonment by creditors who do not prove

10.1. A Creditor is taken to have abandoned the Creditor's Claim if, before the

declaration of a final dividend to Participating Creditors in accordance with the

DOCA, the Creditor:

10.1.1. fails to submit a formal proof of debt or claim in respect of the

Creditor's Claim; or

10.1.2. having submitted a formal proof of debt or claim in respect of the

Creditor's Claim which is rejected, falls to appeal to the Court against

the rejection, within the time allowed for such appeal under the Act

and the Corporations Regulations.

11. Remuneration

11.1. Subject to clause 18.2, the Deed Administrators’ remuneration for the Deed

Administrators’ services as administrators of this Deed Is fixed at the amount

calculated as follows:

Remuneration = Time x Firm Rates where:

Time means the time actually spent by the Deed Administrators and any of the Deed Administrators’ partners or employees in performance of the services (to be calculated in 6 minute units or part of them); and

Firm Rates means the following hourly rates for persons having the job description of the Deed Administrators and the Deed Administrators’ partners and employees performing the services;

Partner: $595

Director: $495

Senior Manager: $455

Manager: $385

Supervisor: $345

Senior 1: $295

13

Senior 2: $265

Intermediate 1: $225

Intermediate 2; $140

Senior Secretary: $180

Accounts Clerk: $115

Junior/Filing: $115

11.2. The Deed Administrators’ remuneration for the Deed Administrators’ services

as administrators of the DOCA is not to exceed $200,000 or such greater

amount as is approved from time to time under section 449E of the Act.

11.3. The Deed Administrators may draw the Deed Administrators’ remuneration

from the Available Property, or, if the Available Property is insufficient, from any

other property of the Company.

11.4. The Deed Administrators are entitled to be reimbursed from the Available

Property for the whole of the costs, charges and expenses incurred by the

Deed Administrators in connection with or incidental to the Deed

Administrators’ administration of the DOCA.

11.5. The Deed Administrators may draw the Deed Administrators’ remuneration and

reimbursement at the end of each month.

12. Deed Administrators’ indemnity

12.1. The Deed Administrators and the Administrators are entitled to be indemnified

out of the Available Property for:

12.1.1. as to the Deed Administrators:

a) the Deed Administrators’ remuneration and reimbursement

under the DOCA;

b) all Claims arising out of, in connection with or incidental to any

debts incurred by the Company, the Deed Administrators or the

Deed Administrators partners or employees in the course of the

administration of the DOCA; and

c) all Claims, other than a Claim by the Company, against the Deed

Administrators or the Deed Administrators’ partners or

employees, arising out of, in connection with or incidental to the

Deed Administrators’ administration of the DOCA; and

12.1.2. as to the Administrator:

14

a) the Administrators’ remuneration and reimbursement as

administrators of the Company pursuant to Part 5.3A of the Act;

b) all Claims arising out of, in connection with or incidental to any

debts incurred by the Company, the Administrators or the

Administrators’ partners or employees in the course of the

administration of the Company pursuant to Part 5.3A of the Act;

and

c) all Claims, other than a Claim by the Company, against the

Administrators or the Administrators’ partners or employees,

arising out of, in connection with or incidental to the

Administrators’ administration of the Company pursuant to Part

5.3A of the Act.

12.2. The Deed Administrators and the Administrators are not entitled to an

indemnity out of the Available Property or any other property of the Company

against any Claims arising out of, in connection with or incidental to:

12.2.1. any fraudulent or negligent act or omission by the Deed

Administrators or the Deed Administrators’ partners or employees

and the Administrators or the Administrators’ partners or employees;

12.2.2. any act or omission done or omitted to be done by the Deed

Administrators or the Deed Administrators’ partners or employees

and the Administrators or the Administrators’ partners or employees:

a) in breach of good faith; or

b) in contravention of any provision of sections 180 to 184 inclusive

of the Act; or

12.2.3. any act done by the Deed Administrators or the Deed Administrators’

partners or employees and the Administrators or the Administrators’

partners or employees outside the powers of the Deed

Administrators and the Administrators under this Deed or the Act.

12.3. The Deed Administrators’ and Administrators’ right of indemnity has priority as

a Priority Creditor's Claim.

12.4. The Deed Administrators and the Administrators are entitled to exercise the

Deed Administrators’ and Administrators’ right of indemnity conferred by the

DOCA whether or not the Deed Administrators or the Administrators have paid

or satisfied the Claims.

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12.5. The Deed Administrators and the Administrators are entitled to exercise a lien

on the Available Property to secure the Deed Administrators’ and the

Administrators’ right of indemnity.

12.6. Nothing in the DOCA affects or limits the operation of Subdivision B of Division

9 of Part 5.3A of the Act.

12.7. Nothing in the DOCA affects the Secured Creditor's priority in respect of its

Security, or its ability to enforce its Security.

13. Members rights exercisable by Deed Administrators

13.1. Until the DOCA terminates, for the purpose of administering the DOCA or

fulfilling the arrangement effected by the DOCA the Deed Administrator has all

the rights and powers of the Company's members in general meeting to the

exclusion of the Company's members.

13.2. For the purpose of the Deed Administrator exercising the rights and powers of

the Company's members in general meeting, until this Deed terminates each

member of the Company irrevocably appoints the Deed Administrators to be

the attorney of the member with full power for and on behalf of and in the name

of the member to do all acts and things and sign and execute all deeds,

documents and notices as may be necessary or convenient for the purpose of:

13.2.1. the Deed Administrators being appointed as the member's proxy to

attend and vote instead of the member at a meeting of the Company;

or

13.2.2. passing a resolution without a general meeting being held in

accordance with section 249A or section 249B of the Act.

14. Committee of inspection

14.1. In order to advise and assist the Deed Administrators there may be a

committee of inspection.

14.2. For the purpose of determining whether there is to be a committee of

inspection, and, if so, the conduct of proceedings of the committee of

inspection, the following provisions apply to the DOCA:

14.2.1. sections 548 to 551 inclusive of the Act; and

14.2.2. regulations 5.6.12 to 5.6.36A inclusive of the Corporations

Regulations.

16

15. Exclusion of Prescribed Provisions

15.1. Except where expressly included in this Deed the Prescribed Provisions are

excluded from the DOCA.

16. Further assurance

16.1. Each party must promptly at its own cost do all things (including executing and

if necessary delivering all documents) necessary or desirable to give full effect

to the DOCA.

17. Costs and outlays

17.1. The costs and outlays connected with the negotiation, preparation and

execution of the DOCA for the Company and the Deed Administrators are

taken to be costs, charges and expenses incurred by the Deed Administrators

in connection with or incidental to the Deed Administrators’ administration of

the DOCA.

17.2. The Proponent’s costs and outlays connected with the negotiation, preparation

and execution of this Deed are his own.

17.3. The Company must pay all duty and other government imposts payable in

connection with the DOCA and all other documents and matters referred to in

the DOCA when due or earlier if requested in writing by the Deed

Administrators.

18. Governing law and jurisdiction

18.1. The law of Western Australia will govern the DOCA.

18.2. The parties submit to the exclusive jurisdiction of the Court and agree that any

lawsuit must be heard, if at all, in the Court.

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Schedule 1 – Class B Creditors

Name Address City State Postcode Estimated debt

John Silverthorne Unit 1, 53 Bushland Ridge BIBRA LAKE WA 6163 Unknown

The Trustees for the Silverthorne Trust Unit 1, 53 Bushland Ridge BIBRA LAKE WA 6163 $3,503,795.00

Andrew Woods $206,981.00

Total $3,710,776.00

a l logistics pty ltd acn 103 870 622 (administrators … · 2013-10-24 · ferrier hodgson level...

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