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Mickim Investments Pty. Ltd. (Administrators Appointed)
ACN 602 922 172
Trading as “XCEL Real Estate – Everton Park”
(Mickim)
Circular to Creditors
William Harris and I were appointed Administrators of Mickim on 7 March 2019.
The purpose of this circular is to provide you with information about the second statutory meeting of creditors. At
the meeting, creditors will be entitled to vote on whether Mickim should enter a Deed of Company Arrangement,
whether the administration should end, or whether Mickim should be wound up.
The second meeting of creditors will be held as follows:
Date: 5 April 2019
Time: 11:30 AM
Address: Level 7, 175 Eagle Street, Brisbane Qld 4000
To enable creditors to make an informed decision about the future of Mickim, we enclose our Administrators’
Report about the company’s business, property, affairs and financial circumstances, including our opinion as to
which outcome of the administration process is in the creditors’ best interests.
We enclose a notice of meeting. To participate in this meeting, you must submit a proof of debt and information
to substantiate your claim. If you have already lodged a proof of debt, you are not required to do so again. If
the creditor is a person and will attend the meeting, this is all that is required. However, if the creditor is another
type of entity (such as a company), they must also appoint a person – a “proxy” or person authorised under a
power of attorney – to vote on behalf of the creditor at the meeting. A proxy should also be appointed if the
creditor is a person, but is not available to attend the meeting.
You can appoint the chairperson of the meeting as your proxy and direct the chairperson how you wish your vote
to be cast. If you choose to do this, the chairperson must cast your vote as directed. Proxy forms lodged by
creditors for the first meeting cannot be used for the second meeting.
Proof of debt and proxy forms are enclosed, together with guidance notes to assist you when you complete them.
To ensure that the meeting is conducted as efficiently as possible, completed proof of debt and, if applicable, proxy
forms must be returned to my office by post, fax or email by 4 April 2019.
We also enclose general information for attending and voting at meetings of creditors.
Remuneration
We will seek your approval of our remuneration at this meeting. Detailed information about what tasks we have
undertaken and the costs of those tasks are provided in our Remuneration Approval Report (enclosed).
What you should do next
You should:
read the enclosed information;
decide whether you are going to participate in the second meeting; and if so
complete and return your proof of debt and proxy form (if required) by 4 April 2019.
2
If you have any queries, please contact Jacinta Robinson on (07) 3333 9813.
Dated: 29 March 2019
Anthony Connelly
Joint & Several Administrator
Enclosures:
Administrators’ Report to Creditors
Remuneration Approval Report
Notice of Meeting
Proof of Debt Form (Form 535)
Proof of Debt Guidance Notes
Proxy Form
Proxy Form Guidance Notes
General information for attending and voting at meeting of creditors
Mickim Investments Pty. Ltd. (Administrators Appointed) ACN 602 922 172 Trading as “XCEL Real Estate – Everton Park” (Mickim) Report to creditors pursuant to Insolvency Practice Rules (Corporations) 75-225
29 March 2019
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Contents
Introduction ...................................................................................................................................................................................................................... 5
Appointment .................................................................................................................................................................................................. 5
Purpose of this report ............................................................................................................................................................................... 5
Object of Administration ......................................................................................................................................................................... 5
First meeting .................................................................................................................................................................................................. 5
Second meeting ........................................................................................................................................................................................... 5
Executive summary ........................................................................................................................................................................................................ 7
Administrators’ prior involvement ......................................................................................................................................................................... 9
Ongoing assessment ................................................................................................................................................................................. 9
Background and statutory information ............................................................................................................................................................ 10
Background ................................................................................................................................................................................................. 10
Statutory details, officers and shareholders ................................................................................................................................ 10
Security interests ...................................................................................................................................................................................... 10
Background to the appointment of Administrators ............................................................................................................... 11
Books and records ...................................................................................................................................................................................................... 12
Historical financial performance and position .............................................................................................................................................. 13
Financial performance ............................................................................................................................................................................ 14
Financial position...................................................................................................................................................................................... 15
Financial position based on ROCAP .................................................................................................................................................................. 17
Explanation for difficulties ...................................................................................................................................................................................... 18
Director’s reasons for failure .............................................................................................................................................................. 18
Administrators’ view ............................................................................................................................................................................... 18
Outstanding winding up applications ............................................................................................................................................ 18
Offences, insolvent trading and voidable transactions ............................................................................................................................ 19
Offences ........................................................................................................................................................................................................ 19
Insolvent trading .................................................................................................................................................................... 19
Director defences .................................................................................................................................................................. 19
Voidable transactions .......................................................................................................................................................... 20
Breach of directors’ duties ................................................................................................................................................ 20
Funding to pursue insolvent trading and voidable transactions ................................................................... 20
Insolvent trading ....................................................................................................................................................................................... 21
Tests of insolvency ................................................................................................................................................................ 21
Administrators’ conclusions regarding solvency .................................................................................................... 22
Voidable transactions ............................................................................................................................................................................. 23
Unfair preference claims .................................................................................................................................................... 23
Uncommercial transactions .............................................................................................................................................. 23
Unfair loans .............................................................................................................................................................................. 23
Breach of Director’s duties .................................................................................................................................................................. 23
Director’s asset position ....................................................................................................................................................................... 23
Administrators’ actions to date ............................................................................................................................................................................ 24
Tasks undertaken by Administrators .............................................................................................................................................. 24
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DOCA ................................................................................................................................................................................................................................ 25
Overview ....................................................................................................................................................................................................... 25
Key terms of the DOCA Proposal .................................................................................................................................................... 25
Advantages of the DOCA Proposal ................................................................................................................................................. 27
Anticipated return to creditors............................................................................................................................................................................. 28
Basis and assumptions .......................................................................................................................................................................... 28
Liquidation scenario ............................................................................................................................................................. 28
DOCA Proposal scenario .................................................................................................................................................... 28
Estimated return to unsecured creditors ...................................................................................................................................... 29
Summary of estimated returns ....................................................................................................................................... 29
Alternative courses of action ................................................................................................................................................................................ 31
Administration to end ............................................................................................................................................................................ 31
Deed of Company Arrangement ...................................................................................................................................................... 31
Mickim be wound up ............................................................................................................................................................................. 31
Opinion summary ..................................................................................................................................................................................... 32
Creditor information on remuneration ............................................................................................................................................................ 33
COI ..................................................................................................................................................................................................................................... 34
Creditor meeting details .......................................................................................................................................................................................... 35
Annexures
1. Deed of Company Arrangement Proposal
2. Remuneration Approval Report – Mickim Investments Pty. Ltd. (Administrators Appointed)
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Glossary
Glossary
Abbreviation Description
Act Corporations Act 2001 (Cth)
Administrators Anthony Connelly and Jamie Harris
ARITA Australian Restructuring, Insolvency & Turnaround Association
ASIC Australian Securities and Investments Commission
COI Committee of Inspection
Director David Fenwick
DIRRI Declaration of Independence, Relevant Relationships and Indemnities
DOCA Deed of Company Arrangement
FY Financial year
FY16 Financial results for the period 1 July 2015 to 30 June 2016
FY17 Financial results for the period 1 July 2016 to 30 June 2017
FY18 Financial results for the period 1 July 2017 to 30 June 2018
GST Goods and Services Tax
IBR Independent Business Review
IPR Insolvency Practice Rules (Corporations)
k Thousand
m Million
Mickim Mickim Investments Pty. Ltd.
PAYG Pay As You Go
POD Proof of Debt
PPSA Personal Property Securities Act 2009
PPSR Personal Property Securities Register
ROCAP Report On Company Activities and Property
ROT Retention of Title
WIP Work in progress
Xero Xero Accounting Software
YTD Year to date
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Introduction
Appointment
Anthony Connelly and Jamie Harris were appointed Administrators of Mickim on 7 March 2019 by resolution of the
Director pursuant to Section 436A of the Act.
Purpose of this report
The purpose of this report is to provide creditors with details about Mickim’s business, assets, affairs and financial
circumstances in preparation for the upcoming second meeting of creditors.
This report also informs creditors about the investigations undertaken by the Administrators and the Administrators’
opinion about each of the options available to creditors at the second meeting of creditors, together with the
Administrators opinion as to the course of action that is recommended in creditors’ best interests.
This report has been prepared in accordance with Insolvency Practice Rules (Corporations) 75-225. It has been prepared
pursuant to the regulations found in the Insolvency Law Reform Act 2016, which substantially commenced on
1 September 2017.
Object of Administration
In an administration, administrators are empowered by the Act to assume control of a company that is insolvent or likely
to become insolvent, superseding the powers of its directors and officers, to manage the company’s affairs and deal with
its assets in the interests of its creditors.
The intention of administration is to maximise the prospects of a company, or as much as possible of its business,
continuing in existence or, if that is not possible, to achieve better returns to creditors than would be achieved by its
immediate liquidation. During an administration there is a moratorium over most pre-administration creditor claims.
The administrators are required to investigate the company’s affairs and report to creditors on the administrators’ opinion
as to which outcome of the administration process is in the creditors’ best interests so as to inform creditors prior to
voting at the second meeting.
First meeting
Section 436E of the Act required the Administrators to convene the first meeting of creditors within eight business days of
being appointed.
The first meeting of creditors of Mickim was held on 18 March 2019. There were no nominations to appoint alternative
administrators or to appoint a COI.
Second meeting
Pursuant to the Act, the second meeting is required to be held on or before 11 April 2019 unless an extension to the
convening period has been sought from the Court. The Administrators have not applied to the Court for an extension to
the convening period.
The purpose of the second meeting is for creditors to:
1. resolve the future of Mickim. In this regard, the options available include whether Mickim should:
be returned to the control of the Director; or
execute a DOCA; or
enter into Liquidation; or
adjourn the meeting for a period of up to 45 business days;
2. consider and, if thought fit, approve the Administrators’ remuneration;
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3. if Mickim is to enter into a DOCA:
consider and, if thought fit, approve the deed administrators’ future remuneration; and
4. if Mickim is to be wound up:
a. consider and, if thought fit, approve the liquidators’ future remuneration;
b. consider authorising the liquidators to compromise debts of Mickim under Section 477(2A) of the Act;
and
c. consider authorising the liquidators to enter into agreements that may take longer than three months to
complete under Section 477(2B) of the Act.
The upcoming second meeting of creditors for Mickim has been convened to be held on 5 April 2019 at McGrathNicol,
Level 7, 175 Eagle Street, Brisbane QLD 4000 at 11:30 AM (AEST).
Additional details with respect to the second meeting are included at section 16 of this report.
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Executive summary
Summary
A DOCA has been proposed for Mickim.
The Administrators recommend that creditors of Mickim vote that Mickim enter into the proposed DOCA at the
second meeting of creditors to be held on 5 April 2019.
The Administrators’ assessment is that the proposed DOCA will provide a better return to Mickim’s unsecured
creditors than what would be received in a liquidation scenario. The Administrators anticipate that preferred
creditors (i.e. employee entitlements) would be paid in full under both scenarios.
We do not consider it likely that there would be any recoveries for creditors resulting from claims for insolvent
trading or voidable transaction if Mickim was wound up. Such recoveries are only available if Mickim is found to
have been insolvent prior to the Administrators’ appointment.
Mickim operates a real estate business, including the management of rental properties and sale of residential
properties in Brisbane.
In June 2018, Mickim identified that its target market was changing and it decided to no longer operate under a
franchised agency banner. The business rebranded as an independent real estate agency. That change resulted
in a reduction in its sales agents and the leased premises was surplus to the business’ ongoing needs. In 2019,
the rent associated with the leased premises had become onerous and was impacting the long term viability of
Mickim’s business.
On 7 March 2019, the Director appointed the Administrators to Mickim pursuant to Section 436A of the Act due
to concerns Mickim may become insolvent for reasons that included the now disproportionate cost of the leased
premises, compared to its revenues.
The Administrators are continuing to trade the real estate business and have engaged a real estate broker to sell
the rent roll. The Administrators have entered into an agreement with the Director regarding his ongoing
employment during the administration.
The Administrators have conducted preliminary investigations in relation to the conduct of the Director and
whether there are any amounts that could be recovered in a liquidation of Mickim. We consider that Mickim was
not likely to have been insolvent prior to our appointment and, therefore, if Mickim is wound up, there is not
likely to be any return from pursuing claims for insolvent trading or voidable transactions.
Although the Administrators consider Mickim may not have been insolvent prior to the Administrators’
appointment, it is now likely that Mickim is insolvent due to it leaving the leased premises and the landlord’s
resulting claim against Mickim, which is currently unquantified.
The second meeting of creditors of Mickim will be held on 5 April 2019 at McGrathNicol, Level 7,
175 Eagle Street, Brisbane QLD 4000 at 11.30 AM (AEST).
The purpose of the second meeting is for creditors to:
resolve the future of Mickim;
consider and, if thought fit, approve the remuneration of the Administrators;
if Mickim is to enter into a DOCA, consider and, if thought fit:
> approve the deed administrators’ future remuneration;
> consider the appointment of a COI;
if Mickim is to be wound up, consider and, if thought fit:
> approve the liquidators’ future remuneration;
> consider the appointment of a COI;
> consider authorising the liquidators to compromise debts of Mickim under Section 477(2A) of
the Act; and
2-190326-MICKINV01-Administrators Report-JR 8
> consider authorising the liquidators to enter into agreements that may take longer than three
months to complete under Section 477(2B) of the Act.
Having considered all of the options available for creditors, the Administrators recommend that Mickim
should enter into the proposed DOCA.
Further information regarding the Administrators’ recommendations is outlined at section 13.
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Administrators’ prior involvement
In accordance with Section 436DA of the Act and the ARITA Code of Professional Practice, a DIRRI dated 12 March 2019
for Mickim was enclosed with the Administrators’ first communication to creditors, which was the notice convening the first
meeting of creditors.
Ongoing assessment
The Administrators undertook a proper assessment of the risks to their independence prior to accepting the appointment
as Administrators of Mickim in accordance with the law and applicable professional standards. This assessment identified
no real or potential risks to the Administrators independence. The Administrators are not aware of any reasons that would
prevent us from acting as Administrators.
At the date of this report, the opinion as to the Administrators’ independence has not changed. The Administrators
remain of the view that their prior professional relationships as outlined in the DIRRI do not create or give rise to any
conflict of interest.
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Background and statutory information
Background
A brief overview of the background of Mickim is as follows:
The principal activity of Mickim is the provision of real estate services, including the management of rental
properties and sale of residential properties in Brisbane.
Mickim commenced as a branded franchise in March 2015 and signed a lease for premises in Everton Park,
Brisbane with the capacity to accommodate approximately 10 sales agents.
By June 2018, Mickim found it difficult to maintain the size of the business due to a changing market and the
Director decided to no longer operate under the franchised banner and the business rebranded as an
independent real estate agency.
The change resulted in a reduction of Mickim’s sales agents and the leased premises became surplus to the
business’ ongoing needs. The rent associated with the leased premises had become onerous on the business and
was impacting the long term viability of Mickim.
In March 2019, the Director made the decision to place Mickim in administration.
Statutory details, officers and shareholders
A search of the records maintained by ASIC at the date of the Administrators’ appointment revealed the following
statutory details:
Company name ACN Registered office Incorporation date
Mickim Investments Pty. Ltd. 602 922 172 Level 1
55A Old Cleveland Road
Stones Corner Qld 4120
18 November 2014
Source: ASIC company search
Set out below is Mickim’s current and historical office holder as at the date of the Administrators’ appointment:
Name Role Appointment date Cease date
David Fenwick Director 18 November 2014 N/A – current
Source: ASIC company search
Set out below is Mickim’s current shareholder as at the date of the Administrators’ appointment:
Shareholder Number of ordinary shares % Total
David Fenwick 100 100
Source: ASIC company search
Security interests
A search of the PPSR database as at the date of the Administrators’ appointment identified the following security interests
held over Mickim:
Secured party Type of security
Toyota Finance Australia Ltd ACN 002 435 181 Lease of motor vehicle
Konica Minolta Business Solutions Australia Pty Ltd ACN 001 065 096 Photocopier
Source: PPSR searches
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Background to the appointment of Administrators
A brief background to the appointment is as follows:
Anthony Connelly was contacted by Lucas Hewlett, a lawyer, on 1 March 2019.
Anthony Connelly met with the Director and Lucas Hewlett on 4 March 2019 to discuss Mickim’s financial position
and provide a high level explanation of general turnaround and/or insolvency options available to Mickim.
On 7 March 2019, the Director appointed Anthony Connelly and Jamie Harris as administrators of Mickim
pursuant to section 436A of the Act.
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Books and records
The Administrators are required to provide an opinion on whether Mickim’s books and records were maintained in
accordance with the requirements of Section 286 of the Act.
This section of the Act requires that a company must keep written financial records that:
correctly record and explain its transactions and financial position and performance; and
would enable true and fair financial statements to be prepared and audited.
Failure to maintain books and records in accordance with Section 286 of the Act provides a presumption of insolvency.
This presumption can be relied upon by a Liquidator in an application for compensation for insolvent trading and other
actions for recoveries pursuant to the Act from directors and other related parties.
Mickim operated a paperless office and there were no physical books and records to collect. The Director has provided
the Administrators with access to all relevant electronic information and provided the Administrators with login details to
enable access to all electronic data.
The Administrators consider that a company operating the type of business undertaken by Mickim in order to comply with
Section 286 of the Act should, as a minimum:
maintain readily accessible electronic accounting and financial records;
maintain its real estate trust accounts in accordance with the requirements of the Office of Fair Trading;
have on hand employee and other payroll information; and
have tax lodgements up to date with copies of lodgements readily available.
It appears that Mickim has maintained records in accordance with Section 286 of the Act that correctly record and explain
its transactions, financial position and financial performance. The Administrators are of the opinion that the financial
statements and electronic records provide an accurate records of Mickim’s financial position and financial performance.
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Historical financial performance and position
This section of the report sets out Mickim’s historical financial information.
The summarised financials set out in this section are presented pursuant to a requirement of the ARITA Code of
Professional Practice.
Historical financial information has been sourced as follows:
FY16 and FY17: Mickim’s externally prepared financial statements; and
FY18: Mickim’s management accounts obtained from its Xero database by the Administrators.
Creditors should note that the Administrators have not carried out an audit of the financial information, nor have the
Administrators verified the financial information presented in this section. Accordingly, the analysis set out below is for
illustrative purposes only and the Administrators do not provide any warranty as to its accuracy or reliability.
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Financial performance
A summary of Mickim’s profit and loss statements for FY16, FY17 and FY18 is set out below:
Mickim Investments Pty. Ltd. (Administrators Appointed)
Summarised profit and loss statement FY16 ($) FY17 ($) FY18 ($)
Income
Commissions - sales 268,019 250,590 -
Property management commissions 4,485 28,949 -
Letting fees 4,804 7,258 -
Admin Fees 391 924 -
Other PM income 1,717 4,012 -
Referral fees 2,223 1,934 -
Advertising recoveries 32,588 35,659 -
Insurance recoveries 2,307 - -
Other income 110 2,384 -
Gross commission and fees - - 229,169
Total income 316,644 331,710 229,169
Less: cost of sales - - (141,614)
Gross Profit 316,644 331,710 87,555
Expenses
Advertising and promotion (34,052) (40,481) -
Depreciation (7,117) (4,037) -
Franchise fees (27,040) (29,115) (33,479)
Rent on land & buildings (54,818) (72,324) (89,746)
Wages (125,416) (152,140) (54,139)
Other expenses (66,623) (96,041) (81,849)
Total expenses (315,066) (394,138) (259,213)
Non-Operating Expenses
Franchisee drawings - - (21,491)
Interest and tax expenses - - (866)
Total non-operating expenses - - (22,357)
Total comprehensive income 1,578 (62,428) (194,014)
Source: Accountant financial statements for FY16 and FY17
Source: Management financial statements for FY18
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Financial position
A summary of Mickim’s balance sheets for FY16, FY17 and FY18 is set out below:
Mickim Investments Pty. Ltd. (Administrators Appointed)
Summarised balance sheet FY16 ($) FY17 ($) FY18 ($)
Current assets
Bond held 1,600 1,600 1,600
Cash at bank 33,868 7,620 14,610
Cash on hand 1 1 -
GST payable control account - 223 -
Trade debtors 1,823 27,109 6,617
Total current assets 37,292 36,553 22,827
Non-current assets
General pool - SBE 3,184 2,229 -
Leasehold improvements 17,804 17,804 36,943
Less: Accumulated depreciation (546) (991) -
Total non-current assets 20,442 19,042 36,943
Total assets 57,734 55,595 59,770
Current liabilities
Amounts withheld from salary and wages (6,884) (3,669) -
ATO Integrated Client Account - (27,740) (192)
GST and PAYG W amendments - (8,593) -
GST payable control account (7,881) - (150)
PAYG withholdings payable - - (5,069)
Superannuation liability (2,947) (9,550) (6,016)
Trade creditors (1,012) (15,761) (12,408)
Wages Payable - - (1,313)
Total current liabilities (18,724) (65,313) (25,147)
Non-current liabilities
Loan - David Fenwick (119,236) (132,937) (370,705)
Total non-current liabilities (119,236) (132,937) (370,705)
Total liabilities (137,960) (198,250) (395,853)
Net assets/(liabilities) (80,226) (142,655) (336,082)
Equity
Issued & paid up capital 1 1
Retained profits/(accumulated losses) (80,227) (142,656) (336,082)
Total equity (80,226) (142,655) (336,082)
Source: Accountant financial statements for FY16 and FY17
Source: Management financial statements for FY18
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The above table indicates that the company has maintained solvency due to funds injected by the company’s director,
David Fenwick. Those funds were provided as long term debt that was not due and payable. Accordingly, even though
the company reported negative equity, the Administrators do not consider the company was insolvent prior to the
appointment of administrators.
When the company first identified that it may experience financial difficulties, the director determined to appoint the
Administrators.
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Financial position based on ROCAP
Pursuant to section 438B(2) of the Act, the Director submitted a ROCAP. A ROCAP is a report summarising the director’s
understanding of the financial position of a company as at the date of the appointment of administrators, as well as their
view on the reasons for the company’s financial failure.
It is the Administrators’ opinion that the ROCAP completed by the Director does not omit any material assets and provides
an accurate high level estimate of Mickim’s liabilities.
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Explanation for difficulties
Director’s reasons for failure
The Director has advised the Administrators the key factor that caused Mickim’s current financial position was a changing
market that resulted in significant business contraction. Following a reduction in Mickim’s sales agents, the leased
premises became surplus to the business’ ongoing needs and the associated rent had become onerous on the business
and was impacting the long term viability of Mickim.
Administrators’ view
The Administrators have no basis to disagree with the Director’s reasons for failure based on our investigations to date.
Outstanding winding up applications
The Administrators are not aware of any outstanding winding up applications against Mickim.
2-190326-MICKINV01-Administrators Report-JR 19
Offences, insolvent trading and voidable transactions
David Fenwick was the director of Mickim noted on ASIC records at the time the Administration commenced.
Pursuant to the Act, a person may be considered to be a director of a company even if they are not appointed as director
if:
they act in the position of a director; or
the director(s) of the company are accustomed to act in accordance with the person's instructions or wishes.
The Administrators’ preliminary investigations have not identified any such person acting as a director of Mickim.
However, if further investigations determine that any person acted in the position of director, references to “director” and
“directors” in this section may also extend to those parties.
Offences
ARITA has issued an “Offences, Recoverable transactions and Insolvent trading” information sheet providing general
information for creditors about insolvent trading and voidable transactions.
This information sheet is available from the ARITA website (www.arita.com.au). If you are unable to access this website,
please contact Jacinta Robinson on (07) 3333 9813 to obtain a copy.
The following sections provide an overview of potential recoveries or actions available in a liquidation and provide details
around key considerations. The Administrators specific commentary in relation to Mickim follows at section 9.2 onwards.
Insolvent trading
Other than in cases of fraud, the director of a company may only be sued for insolvent trading if the company is in
liquidation. Where an administrator has been appointed, assessment of the issue of insolvent trading can be important to
creditors if they are being asked to choose between a DOCA and a liquidation. In that instance, creditors have to assess
the advantages to them of a DOCA (which does not include proceeds from insolvent trading actions) compared to the
likely return to them in a liquidation (which could include the proceeds of any successful insolvent trading action). A
liquidation also preserves the possibility of individual creditors taking action in their own right.
Before a court will order that a person pay compensation in respect of insolvent trading, a liquidator must establish that:
the person was a director of the company at the time the company incurred the debt(s) that are the subject of
the claim;
the company was insolvent at that time or became insolvent by incurring the debt;
at that time, there were reasonable grounds for suspecting that the company was insolvent or would become
insolvent by incurring the debt; and
the debt the subject of the claim was wholly or partly unsecured and the creditors to whom debts are owed have
suffered loss and damage.
In determining whether the Director traded Mickim at a time it was insolvent, the Administrators have considered a range
of insolvency tests (refer to section 9.2 of this report).
Director defences
Section 588H of the Act sets out statutory defences available to the director in respect of any claim for insolvent trading.
These include:
at the time of incurring debts, the director had reasonable grounds to expect that the company was solvent;
the director relied on information provided by a competent and reliable person which concluded that the
company was solvent at the time debts were incurred; and
the director took reasonable steps to prevent the debt being incurred.
2-190326-MICKINV01-Administrators Report-JR 20
Voidable transactions
If Mickim is wound up, certain transactions that occurred prior to the appointment of the Administrators, and where the
property of Mickim was disposed of or dealt with, may be recovered by the liquidators under Part 5.7B of the Act. This
may result in, among other things, a requirement for a third party to return property and/or money to Mickim and thereby
increase the assets available to the liquidators and creditors. These are known as voidable transactions.
IPR 75-225(3)(b)(vi) requires an Administrator to specify whether there are any transactions that appear to the
administrator to be voidable transactions in respect of which money, property or other benefits may be recoverable by a
liquidator under Part 5.7B of the Act. As with the insolvent trading analysis above, this issue is relevant to creditors if they
are being asked to choose between a DOCA and a liquidation, because voidable transactions are only recoverable if a
liquidation occurs.
Voidable transactions include:
unfair preference claims: transactions between a company and a creditor, resulting in the creditor receiving from
the company, in relation to an unsecured debt owed to the creditor, a greater amount than it would have
received in relation to the debt in a winding up of the company;
uncommercial transactions: transactions which a reasonable person in the place of the company would not have
entered into, taking into account the benefits and the detriment to the company, the respective benefits to the
other parties involved and any other related matters; and
unfair loans: being a loan agreement where the interest or charges are considered to be extortionate. Unfair
loans made to the company any time prior to the appointment of the Administrators may potentially be
overturned by a subsequently appointed liquidator, whether or not the company was insolvent at the time the
loan was entered into.
The Administrators have reviewed the electronic records obtained from Mickim’s premises to determine the existence of
voidable transactions. The Administrators commentary on these initial investigations is set out at section 9.3 of this report.
Breach of directors’ duties
Sections 180 to 184 of the Act set out the duties, obligations and responsibilities imposed on directors, which are designed
to promote good governance and ensure that directors act in the interests of a company. These duties include:
duty of care and diligence;
duty of good faith;
duty not to make improper use of position; and
duty not to make improper use of information.
Funding to pursue insolvent trading and voidable transactions
Insolvent trading and voidable transactions can only be pursued in a liquidation and further investigation and any
subsequent proceedings may incur significant costs.
Funding may be required from creditors or litigation funders should the liquidators (if appointed) seek to commence such
action.
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Insolvent trading
Tests of insolvency
There are a range of tests and indicators which can be considered to determine if and when Mickim became insolvent.
The Administrators examine a range of these tests and/or indicators below:
Tests of insolvency Administrators’ comments
Cash flow test – ongoing losses and
poor cash flow
Mickim’s externally prepared financial statements disclose an operating
profit of $1,578 in FY16 and an operating loss of $62,428 in FY17. The
management accounts disclose an operating loss of $194,014 in FY18.
Deteriorating profitability is not a sole indicator of insolvency and must
be considered in conjunction with other insolvency indicators.
As identified earlier in this report, the losses that Mickim suffered were
effectively funded by funds loaned to Mickim by the Director. That loan
was not due and payable by Mickim to the Director.
Balance sheet tests of insolvency Mickim did not own substantial assets due to the nature of its business.
The externally prepared financial statements for FY16 and FY17 disclose
net liability positions of $80,226 and $142,655 respectively. The
management accounts for FY18 disclose a net liability position of
$194,014.
The increasing net liability was funded by the increase in the Director’s
loan to Mickim. This demonstrates the Director was injecting his own
personal funds into Mickim and would likely be an effective defence to
any insolvent trading claim.
Absence of a business plan We have not been provided with a written business plan for Mickim.
This is not unusual for a real estate business, the aim of which is
reasonably simple. The Administrators do not consider any absence of a
written business plan negatively impacted on Mickim’s financial
performance.
Adequate financial records or
disorganised internal accounting
procedures
Mickim’s financial records and internal accounting procedures appear to
be adequate and well organised.
Lack of cash flow forecasts and other
budgets
Mickim did not appear to prepare cash flow forecasts and/or budgets.
This is not unusual for a real estate business and the Administrators do
not consider the absence of cash flow forecasts and/or budgets impacted
on Mickim’s financial performance.
Increasing debt, overdraft limit reached,
increased monitoring by financier and
inability to obtain finance
Mickim did not appear to have:
increased external debt levels;
reached an overdraft limit;
increased monitoring by financier; or
had any inability to obtain finance.
Problems selling stock or collecting
debts
Mickim had no stock to sell given the industry within which it operates.
Mickim did not appear to have difficulty collecting its debtors.
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Tests of insolvency Administrators’ comments
Unrecoverable loans to related parties Mickim has no recorded loans to related parties. However, the Director
did loan significant personal funds to Mickim, which assisted to maintain
solvency.
Creditors unpaid outside usual terms,
special arrangements with creditors
and/or payments to creditors of
rounded sums
Based on the Administrators’ preliminary investigations, it appears all
outstanding creditors at the commencement of the administration were
within terms and not yet payable.
Solicitors’ letters, demands and other
judgements
The Administrators have not identified any solicitors’ letters, demands or
other judgements.
Suppliers placing the company on cash
on delivery terms and/or collecting
stock
The Administrators have not identified any suppliers placing Mickim on
cash on delivery terms.
Overdue taxes and superannuation
liabilities
Based on the Administrators’ preliminary investigations, it appears the
only overdue taxes and superannuation liabilities relate to the period
immediately prior to the administration that were not yet due and
payable.
Board disputes, Director resignations
and/or loss of management personnel
The Administrators have not identified any board disputes or director
resignations.
Administrators’ conclusions regarding solvency
Solvency is a question of fact to be ascertained from consideration of a company’s financial position as a whole.
Whilst Mickim’s profitability deteriorated since FY16, the Director injected his own personal funds into the company to
enable it to pay its debts as and when they fell due. The injection of the Director’s own personal funds into the company
has increased Mickim’s liability and therefore increased the company’s net liability position. However, that loan was not
due and payable.
Based on the Administrators’ analysis set out above, it appears that Mickim may not have been insolvent prior to the
appointment of Administrators. However, the Director had concerns regarding Mickim’s long term viability and considered
the company may become insolvent in the future due to significant overheads, in particular, the leased premises.
This initial assessment may be impacted by a further assessment of Mickim’s liabilities and available sources of funds to
meet those liabilities. If after more detailed investigations it was found Mickim was insolvent prior to the Administrators’
appointment, the Director may be liable for any fresh liabilities incurred by Mickim when Mickim was insolvent.
If Mickim was insolvent when debts were incurred, the Director may be personally liable for those amounts. The likely
maximum claim for damages in respect of insolvent trading would be the total amount of outstanding creditor accounts as
at the date of the Administrators’ appointment less the net realisations from Mickim’s assets. The quantum of any such
claim appears to be nil from the investigations undertaken to date. A liquidator would need to take into account the
prospects of success of prosecuting any claims as well as weigh up the costs of pursuing claims against the potential
recoveries from such claims (including resources available to the Director to meet any claims). Refer to Section 9.5 for
details of the Directors’ asset position.
After due consideration of all of the relevant issues, the Administrators’ preliminary assessment is that, on balance, a
liquidator would not successfully recover any amounts in relation to insolvent trading.
If the Administrators are appointed liquidators, the Administrators would conclude their views on this issue.
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Voidable transactions
Unfair preference claims
In order for a payment to be considered an unfair preference, the company must have been insolvent at the time of the
payment or become insolvent as a result of that payment. As the Administrators’ preliminary investigations indicate that
Mickim was not insolvent prior to the administration, the Administrators have not identified any unfair preference claims.
If Mickim is wound up, Mickim’s affairs may be more thoroughly investigated to confirm whether any of Mickim’s
transactions are unfair preference transactions. However, any recovery would require a positive identification of insolvency,
which was discussed in the prior section.
Similar to insolvent trading actions, there are a range of defences that may be available to the parties involved in the
potential unfair preference claims that would need to be considered and investigated prior to commencing recovery
action.
Uncommercial transactions
In order for a payment to be considered an uncommercial transaction, the company must have been insolvent at the time
of the transaction or become insolvent as a result of that transaction. As the Administrators’ preliminary investigations
indicate that Mickim was not insolvent prior to the Administration, the Administrators have not identified any
uncommercial transactions.
If Mickim is wound up, further investigations and a cost benefit analysis of pursuing recovery action (including a
consideration of whether there are funds available to meet any claims) would be undertaken.
Unfair loans
The Administrators have identified one loan from the Director to Mickim. The Administrators’ preliminary investigations
indicate there was no interest or charges payable on the loan and therefore it does not constitute an unfair loan.
Breach of Director’s duties
The Administrators’ preliminary investigations have not identified any breach of the Director’s duties.
If the Director is found to have breached his duties, recovery proceedings for any losses may be pursued. The
Administrators are required to give further consideration to the discharge of duties by the Director if Mickim is wound up
and the Administrators are appointed as liquidators.
Director’s asset position
As the Administrators’ preliminary investigations have not indicated that any voidable transactions may be recoverable in a
liquidation, the Administrators have not conducted any searches to identify assets personally owned by the Director.
The Administrators would conduct investigations into the asset position of the Director if Mickim is wound up and if the
liquidators determine that recovery actions are warranted. As set out above, this is not considered a likely outcome.
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Administrators’ actions to date
Tasks undertaken by Administrators
The Administrators and their staff have attended to the following key matters since the commencement of the
administration:
notified major financial institutions of the appointment and sought to freeze any bank accounts;
attended to statutory duties including informing the ATO, Office of State Revenue, and various other statutory
authorities of the appointment;
notified the Office of Fair Trading of the appointment and the Administrators’ intention to continue operating the
trust accounts operated by Mickim;
engaged Real Estate Agency Sales to sell the rent roll business;
attended meetings and liaised with the Director to understand the background, financial position and operations
of Mickim;
issued requests to the Director to complete the ROCAP and deliver the books and records of Mickim to the
Administrators;
secured electronic books and records;
reviewed the books and records of Mickim and undertook preliminary investigations to ascertain Mickim’s
financial position and any transactions that may be recoverable by a liquidator;
reviewed the pre-appointment accounting and other software systems;
vacated the former leased premises;
liaised with key stakeholders, including employees, suppliers and creditors;
prepared a preliminary calculation of outstanding employee entitlements;
prepared and issued circulars to suppliers and creditors;
processed the mid-month rental distribution to rental property owners;
entered into an agreement with the Director to formalise his employment with Mickim during the administration;
attended and chaired the first meeting of creditors held on 18 March 2019;
prepared and lodged the minutes of the first meeting of creditors with ASIC;
liaised with the Administrators’ insurance broker in relation to Mickim’s insurance policies and ongoing insurance
requirements;
prepared this statutory report to creditors and convened the second meeting of creditors to be held on
5 April 2019; and
attended to other general and statutory requirements.
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DOCA
Overview
A DOCA is a binding arrangement between a company and its creditors governing how the company’s affairs will be dealt
with. A DOCA is one of the three outcomes that creditors may resolve to occur at the end of the administration process,
provided a DOCA proposal has been made which forms part of the Administrators’ report to creditors.
If creditors vote in favour of a company entering into a DOCA, the company must sign the DOCA within 15 business days
of the creditors’ meeting, unless the Court allows a longer time. If this does not happen, the company will automatically
enter into liquidation, with the administrators becoming the liquidators.
The DOCA binds all unsecured creditors, even if they voted against the proposal. It also binds the owners of property,
those who lease property to the company and secured creditors, if they voted in favour of the DOCA.
The Director, in conjunction with the Administrators, has proposed a DOCA for creditors (DOCA Proposal).
Key terms of the DOCA Proposal
The DOCA Proposal has the following key features.
Key term Description
Proponent The Director (in conjunction with the Administrators)
Deed Administrators The Administrators will become the Deed Administrators under the DOCA. A key
objective of the Deed Administrators will be to sell the rent roll for the benefit of
creditors.
The Deed Administrators will also adjudicate on creditor claims and pay
distributions as soon as practicable.
Duration The DOCA will commence upon the execution of the DOCA.
The DOCA will end approximately:
three months following the sale of the rent roll; or
three months following the six month DOCA contribution period referred to
below, whichever is the later.
Deed Fund The Deed Administrators will establish a Deed Fund at the commencement of the
DOCA. All DOCA contributions will be paid into the Deed Fund.
The DOCA contributions will consist of:
the management fee payable to Mickim on each managed property until the
rent roll is sold;
the net settlement proceeds from the sale of the rent roll; and
commission on the sale of each property sold by Mickim during the first six
months of the DOCA:
> 50% on property sales where the appointment of Mickim occurred prior to
the voluntary administration (i.e. before 7 March 2019); and
> 20% on property sales where the appointment of Mickim occurred after
the commencement of the voluntary administration (i.e. 7 March 2019
onwards).
Mickim is required to pay the commission as set out above into the Deed Fund,
following the settlement of each sale, within a reasonable time after each
settlement.
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Key term Description
Distribution of Deed
Fund
The Deed Fund will be distributed as follows:
First – to pay the remuneration and costs incurred by the Administrators to the
extent they are not already paid.
Second – to pay the remuneration and costs incurred by the Deed
Administrators to the extent they are not already paid.
Third – to pay all priority creditors as set out in section 556 of the Act,
including employee priority claims.
Fourth – the balance to be distributed pari passu to all admitted unsecured
creditors.
Surplus funds (if any) – to be remitted to Mickim.
Control of operations
and assets
Control of Mickim, excluding the rent roll, will return to the Director and all of the
Director’s statutory powers will be reinstated at the commencement of the DOCA.
A key objective of the DOCA will be to sell the rent roll. The Deed Administrators
will be the only party authorised to sell the rent roll.
The Director will continue to:
undertake the duties of the appointed letting agent pursuant to each Property
Occupations Form 6 for each managed property, including, but not limited to,
property inspections, property maintenance and trust accounting and
apply his efforts to sell each property as the appointed selling agent pursuant
to the Property Occupations Form 6 for each listing, other than those where
another agent is the cause of the listing.
In summary, the DOCA Proposal is designed to establish a Deed Fund that will be distributed amongst Mickim’s creditors
and provide a better return to creditors than would be obtained in a liquidation. There are two key reasons for the better
outcome, as follows:
the Director will provide services during the period of operation of the rent roll in his capacity as director of
Mickim. This will be a materially lower cost than if the Administrators or liquidators are required to undertake
that work with the assistance of a consultant; and
the Director will provide services to Mickim as a licensed real estate agent to maintain the opportunity to receive
material portions of each sale commission that may be earned from property sales during a six month period.
That opportunity would not be available in a liquidation, as Mickim would not have access to a licensed real
estate agent to provide those services.
Further details regarding each of those two points are set out below.
During the DOCA, control of Mickim will revert back to the Director, excluding the rent roll. However, the director will be
required to provide services to manage that rent roll until it is sold. The payments to the Director during that period for
those services will be limited to the payment of lease costs associated with the motor vehicle used in the business.
The Director will also be required to continue to provide services to Mickim to seek to sell properties where Mickim was
engaged as sale agent. The same would apply to the contracted sales agents who provide contract real estate services to
Mickim. The remuneration paid to the Director and contracted agents for those services will be a percentage of the
commission earned on each property sale, with the balance of commission being contributed to the Deed Fund.
If the Director did not provide those services (including if Mickim was wound up), the cost of managing the rent roll would
be materially higher. Further, there would be no proceeds from the commission on property sales as Mickim’s sales
business could not continue in the absence of a licensed real estate agent.
Following the sale of the rent roll, the balance of the Deed Fund will be applied to pay all priority creditors with the
balance to be distributed evenly to all admitted unsecured creditors. In a liquidation scenario, a return to any class of
creditors has significant risk and uncertainty, for the reasons identified above.
The draft DOCA will be available for download from http://www.mcgrathnicol.com/creditors/mickim-investments-pty-ltd/ at
least two business days prior to the second meeting of creditors. Creditors should be aware that the draft DOCA may
change prior to it being signed; however, the key terms (as set out above) will remain the same. A copy of the signed
2-190326-MICKINV01-Administrators Report-JR 27
DOCA will be available for download at the same location within 15 business days of the second meeting of creditors (if
creditors vote in favour of the DOCA Proposal and it is executed).
Advantages of the DOCA Proposal
If Mickim is wound up, the Director’s employment with Mickim would cease and the liquidators would only have one
realisable asset (i.e. the rent roll). The liquidators would then need to engage a consultant to provide the day to day
services required to maintain the rent roll business, at considerable cost. This would have a material effect on the likely
return to Mickim’s creditors. Set out below is a summary of the likely impact on the asset realisations in a DOCA Proposal
versus a liquidation scenario.
Asset realisation DOCA Proposal
Liquidation scenario
(assuming the Director’s
employment ceases)
Management fee payable to
Mickim on each managed property
until the rent roll is sold
Management fee continues to be
paid to Mickim.
The Director undertakes all work
associated with the rent roll.
The cost associated with that
work is the payments on the
motor vehicle lease that is used
in the business, including for
property inspections.
Management fee continues to be
paid to Mickim.
The Administrators will be
required to undertake all work
associated with the rent roll and
would engage a contractor to
undertake this work at a material
cost.
This net asset realisation may be
materially less in a liquidation
scenario due to the costs
associated with administering the
rent roll.
Net settlement proceeds from the
sale of the rent roll
Net settlement proceeds to be
paid to Mickim.
Net settlement proceeds to be
paid to Mickim.
Commission on the sale of each
property sold by Mickim
A percentage of the commission
would be paid to Mickim
following the successful
settlement of each sale.
No commissions would be paid
to Mickim, which will not have
access to any licensed real estate
agents.
This net asset realisation would
be nil in a liquidation scenario.
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Anticipated return to creditors
Basis and assumptions
The following section sets out the estimated return to creditors of Mickim in a liquidation scenario versus the DOCA
Proposal.
Liquidation scenario
In a liquidation scenario, the estimated return to creditors has been prepared based on the following assumptions:
the Director’s employment would be terminated, all contracted real estate agents would be terminated and
Mickim would no longer have access to any licensed real estate agents;
the Administrators would sell the rent roll (assumed in June 2019) and engage a contractor to undertake the
duties of the appointed letting agent until the rent roll is sold;
the value of the rent roll (and commission on its sale) has been withheld in this analysis as it is sensitive and may
jeopardise the sale price. However, we consider it is likely to be similar in both scenarios in any event, it would
just be the management cost that would likely be different;
there would be no further property sales as Mickim would not have access to any licensed real estate agents to
sell the properties; and
recoveries from voidable transactions are not anticipated.
Creditors should note that the estimates provided in this section are preliminary only and are subject to change as creditor
claims are considered and adjudicated and the realisations and costs of a liquidation become more clear. No warranty as
to the accuracy or reliability of the estimates is provided.
DOCA Proposal scenario
In the DOCA Proposal scenario, the estimated return to creditors has been prepared based on the following assumptions:
the Director would remain employed by Mickim and continue to undertake the duties of the appointed letting
agent and apply his efforts to sell the listed properties pursuant to each Property Occupations Form 6. The same
would apply for each contracted real estate agent;
the Administrators would sell the rent roll in June 2019 and the Director would continue to undertake the duties
of the appointed letting agent until the rent roll is sold;
the value of the rent roll (and commission) has been withheld as it is sensitive and may jeopardise the sale price.
However, we consider it is likely to be similar in both scenarios in any event, it would just be the management
cost that would likely be different;
the Director is assumed to sell an estimated number of properties and a portion of the commission is payable to
Mickim; and
Mickim otherwise continues to trade.
Creditors should note that the estimates provided in this section are preliminary only and are subject to change as creditor
claims are considered and adjudicated and any change to the costs of the DOCA Proposal. No warranty as to the
accuracy or reliability of the estimates is provided.
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Estimated return to unsecured creditors
A comparison of the estimated returns to creditors if Mickim was to be wound compared to the DOCA Proposal is set out
below, based on the assumptions set out in Section 12.1.
Creditors should note that the above estimates are preliminary only and are subject to change as creditor claims are
considered and adjudicated, asset realisations are completed, and investigations of any potential voidable transactions are
finalised. No warranty as to the accuracy or reliability of this estimate is provided.
Summary of estimated returns
The Administrators are unable to provide a summary of the estimated return to creditors under the liquidation scenario
and DOCA Proposal for the following reasons:
the value of the rent roll (and commission payable) has been withheld as it is commercially sensitive and may
prejudice the sale if disclosed; and
the total unsecured creditor claim cannot be estimated as the landlord of the former leased premises (a large
potential creditor) has not contacted the Administrators to discuss its claim against Mickim. Whilst the landlord is
able to claim for the balance of the lease term, the landlord also has an obligation to minimise its claim by
attempting to secure a new tenant as soon as possible.
What we can say from the above analysis is that:
the proceeds from the sale of the rent roll may likely be the same in all options;
at least some proceeds from commissions on sales may be recoverable in a DOCA scenario; and
Mickim Investments Pty. Ltd. (Administrators Appointed)
$ (GST exclusive) Low scenario High scenario Low scenario High scenario
Asset realisations
Rent roll proceeds
Commission on currently listed property sales - - 30,000 60,000
Commission on future listed property sales - - - 11,000
Ongoing rental management fees 7,498 9,822 8,200 10,800
Total asset realisations 7,498 9,822 38,200 81,800
Realisation and administration costs
Contract services (rent roll) (15,000) (10,000) - -
Insurance (4,000) (2,000) (5,000) (3,000)
Administrators' professional fees (subject to creditor approval) (49,919) (49,919) (49,919) (49,919)
Liquidators' professional fees (subject to creditor approval) (40,000) (40,000) - -
Deed Administrators' professional fees (subject to creditor approval) - - (30,000) (30,000)
Subscriptions and car repayments (3,500) (2,500) (10,500) (7,500)
Total realisation and administration costs (112,419) (104,419) (95,419) (90,419)
Amount available for creditors > (104,921) > (94,597) > (57,219) > (8,619)
Known creditor claims
Preferred creditors (i.e. employee entitlements) (7,500) (4,500) (7,500) (4,500)
Unsecured creditors (excluding the landlord) (500,000) (425,000) (500,000) (425,000)
Total known creditor claims (507,500) (429,500) (507,500) (429,500)
The Administrators' estimate of unsecured creditor claims excludes the landlord's potential claim as the landlord has not yet
communicated with the Administrators and/or quantified its claim.
Withheld - refer to note Withheld - refer to note
Liquidation scenario DOCA Proposal
The Administrators have excluded the estimated realisable value of the rent roll and associated commission payable as this
information is commercially sensitive. In the DOCA Proposal the costs are materially lower; therefore, once they are paid there
will be a greater return to creditors irrespective of the rent roll's sale price.
2-190326-MICKINV01-Administrators Report-JR 30
the costs of the management of the rent roll in the DOCA scenario are likely to be materially less than in a
liquidation scenario.
Instead, the Administrators provide the following indicative summary of returns to creditors under a liquidation scenario
and the DOCA Proposal.
Creditor claims Liquidation scenario
(low or high)
DOCA Proposal
(low or high)
Preferred creditor claims
(i.e. employee entitlements)
Paid in full Paid in full
Unsecured creditor claims Not paid in full
(a lesser return than
in the DOCA Proposal)
Potentially paid in full
(a greater return than in
the liquidation scenario)
Source: McGrathNicol analysis
As set out in the above table, the DOCA Proposal is estimated to provide a better return to creditors than what would be
achieved in a liquidation scenario.
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Alternative courses of action
Administrators are required to provide creditors with a statement of the Administrators’ opinion about each of the courses
of action in respect of which creditors are entitled to vote at the meeting on 5 April 2019.
The matters requiring the Administrators’ opinion are:
whether it would be in the creditors’ interests for the administration to end, with control of Mickim reverting to
the Director; or
whether it would be in the creditors’ interests for Mickim to enter into a DOCA; or
whether it would be in the creditors’ interests for Mickim to be wound up.
In addition, creditors are entitled to adjourn the meeting for up to 45 business days.
Administration to end
Creditors may consider ending the Administration and returning control of Mickim to the Director. The Administrators do
not consider this to be a commercially viable option, given Mickim is currently without sufficient funds to meet creditor
liabilities, and is therefore insolvent or likely to become insolvent.
In the Administrators’ opinion, it is not in the best interests of creditors to vote for the administration of Mickim to
end.
Deed of Company Arrangement
A DOCA is a binding arrangement between a company and its creditors governing how the company’s affairs will be dealt
with. It aims to maximise the chances of the company, or as much as possible of its business, continuing, or to provide a
better return for creditors than an immediate winding up. A DOCA binds all unsecured creditors, even if they voted
against the proposal. At the date of this report, the DOCA Proposal is the only proposal received.
For the reasons set out in section 12.2 of this report, the Administrators estimate that the DOCA Proposal will provide a
better return to creditors than in a liquidation scenario.
In the Administrators’ opinion, it is in the best interests of creditors to vote to enter into the DOCA Proposal.
Mickim be wound up
An administrator would usually recommend that creditors vote for the winding up of a company that is insolvent or likely
to become insolvent in the absence of an acceptable DOCA proposal. An administrator would also recommend liquidation
in preference to a DOCA if there is a strong likelihood that recoveries in a liquidation (for example, voidable transaction
recoveries) will improve the return to creditors in comparison to the return expected under a DOCA.
A liquidation of Mickim would involve:
realisation of the assets by the liquidators for the benefit of creditors;
the completion of final investigation into the affairs of Mickim and the conduct of the Director;
further enquiries regarding potential insolvent trading and voidable transaction actions;
reporting to ASIC in relation to offences (if any) committed by the Director; and
adjudicating creditor claims and payment of any dividends.
The costs of administering the liquidation would depend to a large extent on the realisation costs, nature of further
investigations in relation to voidable transactions and other recovery actions and whether funding was made available to
conduct such investigations.
Based on the Administrators’ assessment of a liquidation scenario, it is estimated that unsecured creditors would receive a
lesser return than what would be received in the DOCA Proposal.
In the Administrators’ opinion, it is not in the best interests of creditors to vote for Mickim to be wound up.
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Opinion summary
The Administrators’ overall recommendation to the creditors of Mickim is that creditors should vote that Mickim enter
into the DOCA Proposal.
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Creditor information on remuneration
Enclosed with this report is the Administrators’ Remuneration Report with respect to Mickim. This report deals with the
remuneration incurred to date and future remuneration required to deal with the remainder of the administration and the
future of Mickim (depending on the outcome of the meeting of creditors convened for 5 April 2019).
ARITA has issued an “Approving remuneration of an external administrator” information sheet providing general
information for creditors on the approval of an External Administrator’s fees in a liquidation scenario, a voluntary
administration or a DOCA.
This information sheet is available from the ARITA website (www.arita.com.au). If you are unable to access this website,
please contact Jacinta Robinson on (07) 3333 9813 to obtain a copy.
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COI
In the event that creditors resolve that Mickim either be wound up or enter into a DOCA, the Act provides that a COI may
be formed.
In these circumstances, a COI would provide the Deed Administrators or liquidators with a sounding board as to likely
creditor views on any contentious issues, and may approve certain matters (for example, compromises of claims and
remuneration requests).
At the meeting of creditors convened for 5 April 2019, creditors will be invited to consider whether a COI should be
formed, and if so, to nominate members.
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Creditor meeting details
The second statutory meeting of creditors has been convened to be held on 5 April 2019 at McGrathNicol, Level 7,
175 Eagle Street, Brisbane QLD 4000 at 11:30 AM (AEST).
Creditors who have already lodged a POD do not need to complete a new POD.
Under the Act, the proxy forms lodged by creditors for the first meeting cannot be used for the second meeting.
Accordingly, creditors who are unable to attend the meeting and wish to be represented should ensure that a proxy form,
power of attorney or evidence of appointment of a company representative is completed. Documents may be lodged with
our office prior to the meeting or may be brought to the meeting.
A formal notice of meeting, POD form and proxy form are enclosed with the accompanying circular to creditors.
If you have any queries in relation to this report or the administration, please contact Jacinta Robinson on (07) 3333 9813.
Dated: 29 March 2019
Anthony Connelly
Administrator
Mickim Investments Pty. Ltd. (Administrators Appointed) ACN 602 922 172 Trading as “XCEL Real Estate – Everton Park” (Mickim) Remuneration Approval Report
29 March 2019
3-190326-MICKINV01-Remuneration Report-JR 1
This remuneration approval report provides you with information to assist you to make an informed decision regarding the
approval of the Administrators proposed remuneration for undertaking the Voluntary Administration of Mickim Investments
Pty. Ltd (Administrators Appointed) (Mickim).
The report has the following information:
Declaration...................................................................................................................................................................................................... 3
Executive Summary .................................................................................................................................................................................... 4
Remuneration ................................................................................................................................................................................................ 5
Retrospective remuneration ................................................................................................................................................................... 5
Prospective remuneration ....................................................................................................................................................................... 9
Estimated future remuneration ......................................................................................................................................................... 13
Total remuneration reconciliation .................................................................................................................................................... 14
Likely impact on dividends .................................................................................................................................................................. 15
Disbursements ........................................................................................................................................................................................... 16
External disbursements.......................................................................................................................................................................... 16
Internal disbursements .......................................................................................................................................................................... 16
Future disbursements ............................................................................................................................................................................. 17
Summary of receipts and payments ............................................................................................................................................... 18
Queries .......................................................................................................................................................................................................... 18
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What should you do next?
Please read this report and the accompanying information the Administrators have sent you and consider whether you will
attend the meeting of creditors to vote on the resolutions that will be put to that meeting. The meeting will also give you
an opportunity to ask any questions that you have.
Alternatively, you may appoint a representative to attend the meeting on your behalf, by lodging a proxy form. Lodging a
specific proxy form allows you to specify how your proxy must vote. Lodging a general proxy form allows your
representative to choose how to exercise your vote.
If you have any queries, please contact Jacinta Robinson on (07) 3333 9813.
3-190326-MICKINV01-Remuneration Report-JR 3
Declaration
We, Anthony Connelly and Jamie Harris of McGrathNicol, have undertaken a proper assessment of this remuneration claim
for our appointment as Voluntary Administrators of Mickim in accordance with the law and applicable professional
standards. The Administrators are satisfied that the remuneration claimed is in respect of necessary work, properly
performed, or to be properly performed, in the conduct of this matter.
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Executive Summary
To date, no remuneration or internal disbursements have been approved and paid in this Administration.
This remuneration approval report details approval sought for the following remuneration and internal disbursements (with
a profit element):
Approvals sought (if creditors vote for the DOCA) Report Reference Amount (ex GST)
Retrospective Remuneration Claim
Resolution 5: 7 March 2019 to 22 March 2019
3.1.1
$31,919.00
Prospective Remuneration Claim*
Resolution 6: 23 March 2019 to finalisation of the voluntary
administration
3.2.1
$18,000.00
Prospective Remuneration Claim (only to be drawn if creditors
vote to place Mickim into a DOCA)
Resolution 7: State date of DOCA to date of effectuation
3.2.2
$30,000.00
Estimated total remuneration (if creditors vote for DOCA)
$79,919.00
* Approval sought for future remuneration and internal disbursements (with a profit element) is based on an estimate of
the work necessary to the completion of the external administration. Should additional work be necessary beyond what
is contemplated, further approval may be sought from creditors.
Approvals sought (if creditors vote for liquidation) Report Reference Amount (ex GST)
Retrospective Remuneration Claim
Resolution 5: 7 March 2019 to 22 March 2019
3.1.1
$31,919.00
Prospective Remuneration Claim
Resolution 6: 23 March 2019 to finalisation of the voluntary
administration
3.2.1
$18,000.00
Prospective Remuneration Claim
Resolution 8: State date of liquidation to date of finalisation
3.2.3
$40,000.00
Estimated total remuneration (if creditors vote for liquidation)
$89,919.00
* Approval sought for future remuneration and internal disbursements (with a profit element) is based on an estimate of
the work necessary to the completion of the external administration. Should additional work be necessary beyond what
is contemplated, further approval may be sought from creditors.
Please refer to the report section references detailed in the above table for full details of the calculation and composition
of the remuneration and internal disbursements for which approval is sought.
3-190326-MICKINV01-Remuneration Report-JR 5
Remuneration
Retrospective remuneration
The Administrators will request that the following resolution be passed to approve the Administrators’ retrospective
remuneration. Details to support this resolution are included further below.
Retrospective remuneration resolutions Appointment Type Amount (ex GST)
Resolution 5: 7 March 2019 to 22 March 2019 Voluntary
Administration $31,919.00
Total retrospective remuneration resolution $31,919.00
Resolution 5: from 7 March 2019 to 22 March 2019
“That the remuneration of the Voluntary Administrators for the period 7 March 2019 to 22 March 2019, calculated at
hourly rates as detailed in the Initial Remuneration Notice dated 12 March 2019, is determined in the sum of $31,919.00,
exclusive of GST, and the Voluntary Administrators may pay the remuneration immediately or as otherwise determined by
the Voluntary Administrators.”
The Administrators will withdraw funds from the administration account in respect of the Voluntary Administrators’
remuneration immediately upon approval if funds are available. If funds are not available, the Administrators will withdraw
funds progressively over time as funds become available. This will likely be after the sale of Mickim’s rent roll business.
The below table sets out the time charged to each major task area by staff members working on the voluntary
administration for the period 7 March 2019 to 22 March 2019, which is the basis of Resolution 5. More detailed
descriptions of the tasks performed within each task area, matching the amounts below, are contained further below.
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Calculation of Resolution 5: 7 March 2019 to 22 March 2019
Mickim Investments Pty. Ltd. (Administrators Appointed) - Net Administrators' WIP for the period 7 March 2019 to 22 March 2019
Staff Position $/hour (ex GST)Total actual hours Total
$ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST
Anthony Connelly Partner 630 6.6 4,158.00 3.00 1,890.00 0.70 441.00 - - 2.90 1,827.00 - - - -
Employee A Director 540 0.5 162.00 - - - - - - - - - - 0.50 162.00
Employee B Manager 460 35.5 15,824.00 2.60 1,196.00 5.10 2,346.00 2.60 1,196.00 16.30 6,992.00 0.20 92.00 8.70 4,002.00
Employee C Accountant 300 0.2 60.00 - - 0.20 60.00 - - - - - - - -
Employee D Accountant 300 30.5 9,150.00 1.60 480.00 12.40 3,720.00 1.70 510.00 7.10 2,130.00 - - 7.70 2,310.00
Employee E Administration 420 1.0 420.00 - - - - - - 1.00 420.00 - - - -
Employee F Administration 330 4.8 1,584.00 - - - - - - 1.40 462.00 - - 3.40 1,122.00
Employee G Administration 170 2.1 357.00 0.40 68.00 - - - - 0.20 34.00 - - 1.50 255.00
Employee H Administration 170 0.3 51.00 - - - - - - - - - - 0.30 51.00
Employee I Administration 170 0.9 153.00 - - 0.60 102.00 - - 0.20 34.00 - - 0.10 17.00
Total 82.40 31,919.00 7.60 3,634.00 19.00 6,669.00 4.30 1,706.00 29.10 11,899.00 0.20 92.00 22.20 7,919.00
GST 3,191.90 363.40 666.90 170.60 1,189.90 9.20 791.90
Total (incl GST) 35,110.90 3,997.40 7,335.90 1,876.60 13,088.90 101.20 8,710.90
Task areas
Assets Creditors Employees Trading of Business Investigations Administration
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The below table sets out a detailed description of work undertaken on the voluntary administration for the period
7 March 2019 to 22 March 2019, which is the basis of Resolution 5.
Task Area General Description Includes
Assets
7.60 hours
$3,634.00
Bank accounts Secured bank accounts and trust accounts
Issued correspondence to all other banks to confirm
there were no other accounts
Worked with Commonwealth Bank of Australia (CBA)
to determine appropriate security measures to allow
ongoing trading with trust accounts
Plant and equipment Liaised with Grays Asset Services to assess the
estimated realisable value of plant and equipment
and whether it could be sold at auction
Leased premises Worked with the director to ensure the leased
premises could be vacated
Provided to landlord a notice of administrator’s
intention not to exercise property rights
Sale of rent roll Liaised with Real Estate Agency Sales (REAS)
regarding the sale of the rent roll
Reviewed and amended the Property Occupations
Form 6 to appoint REAS to sell the rent roll
Correspondence with REAS and the director
regarding the information required to market the
rent roll
Creditors
19.00 hours
$6,669.00
Creditor enquiries, requests &
directions
Reviewed company records to determine the
existence and contact details for creditors
Prepared initial correspondence to creditors
Liaised with creditors in relation to their claims and
the administration generally
First statutory meeting Convened and held the first statutory meeting of
creditors
Issued correspondence regarding that meeting
Prepared meeting pack
Prepared, reviewed, signed and lodged minutes of
that meeting
Secured creditor reporting Notified PPSR secured parties of appointment
Deal with proofs of debt (POD) Received PODs from claimants
Reviewed PODs received
Employees
4.30 hours
$1,706.00
Employee queries Received and followed up employee enquiries in
relation to entitlements
Prepared letter to employee advising of redundancy
Prepared letter to director confirming ongoing
employment arrangements during administration
Calculation of entitlements Met with employee to discuss administration
Calculated employee entitlements
Reviewed employee files and company’s books and
records
Other employee issues Corresponded with Child Support Agency to confirm
no involvement with this matter
3-190326-MICKINV01-Remuneration Report-JR 8
Task Area General Description Includes
Trade On
29.10 hours
$11,899.00
Trade on management Liaised with suppliers and arranged ongoing supply
of critical services
Liaised with director regarding the trading
requirements of the business
Attended site to oversee operations and review
information systems
Reviewed various Property Occupation Form 6s for
rental properties
Processed rent distributions to owners of rental
properties
Prepared budgets and financial
reports
Evaluated trading position and considered cashflow
requirements for a trade sale of the business
Proposed DOCA Considered key terms and available funds for
proposed DOCA
Liaised with the director regarding potential DOCA
and key terms
Investigation
0.2 hours
$92.00
Conducted investigations Obtained company books and records
Reviewed company books and records
Prepared solvency analysis
Considered existence of any other matters that could
be pursued by a liquidator if Mickim was to be
wound up
Administration
22.20 hours
$7,919.00
Document maintenance/file
review/checklist
Maintained physical and electronic engagement file
Updated checklists
Insurance Identified potential issues requiring attention of
Arthur J Gallagher (AJG)
Corresponded with AJG regarding initial and ongoing
insurance requirements, including professional
indemnity cover required for the professional services
undertaken by the business
Liaised with pre-appointment insurance broker
Bank account administration Liaised with Commonwealth Bank of Australia to
secure the pre-appointment accounts
Established a new general account
Advised Office of Fair Trading of the appointment
and ongoing use of company trust accounts
ASIC forms Sent initial request to director for Report on
Company Activities & Property (ROCAP)
Prepared and lodged ASIC forms
ATO and other statutory
reporting
Notified the ATO of the appointment and sought
details of outstanding liabilities
Reviewed correspondence from the ATO regarding
those outstanding liabilities
Planning/Review Discussed status and ongoing strategy of voluntary
administration
Books and records Reviewed electronic books and records
Copied electronic books and records from company
server
3-190326-MICKINV01-Remuneration Report-JR 9
Prospective remuneration
If creditors vote for the DOCA, the Administrators will request that the following resolutions be passed to approve the
Administrators’ and Deed Administrators’ prospective remuneration. Details to support these resolutions are included
further below.
Prospective remuneration resolutions (if creditors vote for
DOCA) Appointment Type Amount (ex GST)
Resolution 6: 23 March 2019 to the finalisation of the voluntary
administration
Voluntary
Administration $18,000.00
Resolution 7: Start date of DOCA to date of effectuation Deed of Company
Arrangement $30,000.00
Total prospective remuneration (if creditors vote for DOCA) $48,000.00
If creditors vote for liquidation, the Administrators will request that the following resolutions be passed to approve the
Administrators’ and liquidators’ prospective remuneration. Details to support these resolutions are included further below.
Prospective remuneration resolutions (if creditors vote for
liquidation) Appointment Type Amount (ex GST)
Resolution 6: 23 March 2019 to the finalisation of the voluntary
administration
Voluntary
Administration $18,000.00
Resolution 8: Start date of liquidation to date of finalisation Liquidation $40,000.00
Total prospective remuneration (if creditors vote for liquidation) $58,000.00
Resolution 6: 23 March 2019 to the finalisation of the voluntary administration
“That the future remuneration of the Voluntary Administrators for the period 23 March 2019 to finalisation of the voluntary
administration, calculated at hourly rates as detailed in the Initial Remuneration Notice dated 12 March 2019, is approved
up to the capped amount of $18,000.00, exclusive of GST.”
The Administrators will withdraw funds from the administration account in respect of the Administrators’ remuneration
progressively over time as funds become available and only once it is incurred. If actual costs incurred are below the
capped amount, the Administrators are only authorised to draw the amount incurred. If actual costs incurred exceed the
amount approved, the Administrators would be required to seek further approval from creditors before that remuneration
could be paid.
The below table sets out the expected costs and a detailed description of the work by task area to be undertaken on the
voluntary administration for the period 23 March 2019 to finalisation of the voluntary administration, which is the basis of
Resolution 6.
Task Area General Description Includes
Assets
$2,000
Sale of rent roll Liaise with REAS regarding the ongoing process for
the sale of the rent roll
Creditors
$5,000
Creditor enquiries, requests &
directions
Receive and respond to creditor enquiries
Liaise with creditors in relation to their claims and
the administration generally
Deal with PODs Receive PODs from claimants
Review PODs received
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Task Area General Description Includes
Meeting of creditors Prepare and finalise the second report to creditors
Prepare and send meeting notice
Advertise notice of meeting
Prepare meeting file
Hold second meeting of creditors
Respond to stakeholder queries following second
meeting of creditors
Prepare and lodge minutes of second meeting of
creditors with ASIC
Employees
$1,000
Employee queries Receive and answer any employee enquiries
Notify employee creditors of the outcome of the
second meeting
Trade On
$7,000
Trade on management Liaise with suppliers and finalise setting up new
accounts
Liaise with director regarding ongoing trade
Authorise supplier payments
Review Property Occupation Form 6s for rental
properties
Process rent distributions to owners of rental
properties at the end of March and account for all of
those trust account transactions
Prepare budgets and financial
reports
Monitor cash flow
Evaluate trading position
Proposed DOCA Consider key terms and available funds for proposed
DOCA
Finalise terms of the draft DOCA with input from
legal adviser
Administration
$3,000
Document maintenance/file
review/checklist
Conduct regular file reviews
Maintain physical and electronic engagement file
Update checklists
Insurance Correspond with AJG regarding ongoing insurance
requirements
Finalise insurance policies for voluntary
administration
Bank account administration Perform bank account reconciliations
Prepare and authorise receipt and payment vouchers
ASIC forms Prepare and lodge ASIC forms
Planning/Review Discuss status and ongoing strategy of voluntary
administration
Resolution 7: Start date of DOCA to the date of effectuation (only to be drawn if creditors vote to place Mickim
into a DOCA)
“That the future remuneration of the Deed Administrators from the start date of the DOCA to the date of its effectuation,
calculated at hourly rates as detailed in the Initial Remuneration Notice dated 12 March 2019, is approved up to the
capped amount of $30,000.00, exclusive of GST.”
3-190326-MICKINV01-Remuneration Report-JR 11
The Deed Administrators will withdraw funds from the administration account in respect of the Deed Administrators’
remuneration progressively over time as funds become available and only once it is incurred. If actual costs incurred are
below the capped amount, the Deed Administrators are only authorised to draw the amount incurred. If actual costs
incurred exceed the amount approved, the Deed Administrators would be required to seek further approval from creditors
before that remuneration could be paid.
The below table sets out the expected costs and a detailed description of the work by task area to be undertaken from the
start date of the DOCA to the date of its effectuation, which is the basis of Resolution 7.
Task Area General Description Includes
Assets
$8,000
Sales of rent roll Liaise with REAS regarding the sale of the rent roll
Provide information required by REAS to answer
queries from interested parties
Arrange a contract of sale to be prepared for the
rent roll and review that contract
Deal with various settlement matters when the rent
roll is sold
Creditors
$6,000
Creditor enquiries, requests &
directions
Liaise with creditors in relation to their claims and
the administration generally
Deal with PODs Receive PODs from claimants
Review PODs received
Employees
$2,000
Employee queries Receive and follow up employee enquiries regarding
payment of entitlements
Employee entitlements Calculate employee entitlements
Employee distribution Correspond with ATO regarding Superannuation
Guarantee Charge
Calculate and prepare distribution
Trade On
$2,000
Trade on management Liaise with suppliers regarding the establishment and
payment of accounts
Arrange payment of final accounts when the rent roll
is sold
Proposed DOCA Monitor DOCA to ensure key terms are met
Dividend
$8,000
Process PODs Prepare correspondence to creditors inviting
lodgement of PODs
Maintain POD register
Adjudicate on all PODs received
Request further information from creditors regarding
their claims (as required)
Advise creditors of acceptance or rejection of their
claims
Dividend procedures Prepare correspondence to creditors advising them
of intention to declare a dividend
Prepare dividend calculation
Prepare distribution file
Arrange payment of dividend
Administration
$4,000
Document maintenance/file
review/checklist
Conduct file reviews
Maintain physical and electronic engagement file
3-190326-MICKINV01-Remuneration Report-JR 12
Task Area General Description Includes
Bank account administration Perform bank account reconciliations
Prepare and authorise receipt and payment vouchers
Request bank statements
Close bank accounts
Insurance Maintain insurance policies during trade period and
then cancel those insurance policies
ASIC forms Prepare and lodge ASIC forms
Other statutory reporting Notify ATO of appointment as Deed Administrators
Lodge BASs
Finalisation Notify ATO of ceasing to act
Cancel GST/PAYG registrations
Complete internal checklists
Resolution 8: Start date of liquidation to the date of finalisation
“That the future remuneration of the liquidators from the start date of the liquidation to the date of its finalisation,
calculated at hourly rates as detailed in the Initial Remuneration Notice dated 12 March 2019, is approved up to the
capped amount of $40,000.00, exclusive of GST.”
We reiterate that this resolution will only be required if creditors do not vote for the proposed DOCA and instead vote to
place Mickim into liquidation.
The liquidators will withdraw funds from the administration account in respect of the liquidators’ remuneration
progressively over time as funds become available and only once it is incurred. If actual costs incurred are below the
capped amount, the liquidators are only authorised to draw the amount incurred. If actual costs incurred exceed the
amount approved, the liquidators will seek further approval from creditors.
The below table sets out the expected costs and a detailed description of the work by task area to be undertaken on the
liquidation for the start date of the liquidation to the date of finalisation, which is the basis of Resolution 8.
Task Area General Description Includes
Assets
$8,000
Sales of rent roll Liaise with REAS regarding the sale of the rent roll
Provide information required by REAS to answer
queries from interested parties
Arrange a contract of sale to be prepared for the
rent roll and review that contract
Deal with various settlement matters when the rent
roll is sold
Creditors
$6,000
Creditor enquiries, requests &
directions
Liaise with creditors in relation to their claims and
the administration generally
Deal with POD Receive PODs from claimants
Review PODs received
Employees
$2,000
Employee queries Receive and follow up employee enquiries regarding
payment of entitlements
Employee entitlements Calculate employee entitlements
Employee distribution Correspond with ATO regarding Superannuation
Guarantee Charge
Calculate and prepare distribution
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Task Area General Description Includes
Trading of Business
$10,000
Trade on management Liaise with suppliers regarding the establishment and
payment of accounts
Arrange payment of final accounts when the rent roll
is sold
Dividend
$8,000
Process PODs Prepare correspondence to creditors inviting
lodgement of PODs
Maintain POD register
Adjudicate on all PODs received
Request further information from creditors regarding
their claims (as required)
Advise creditors of acceptance or rejection of their
claims
Dividend procedures Prepare correspondence to creditors advising them
of intention to declare a dividend
Prepare dividend calculation
Prepare distribution file
Arrange payment of dividend
Investigation
$2,000
Conduct investigations Conduct further investigations into specific
transactions regarding insolvent trading and voidable
transactions
Pursue voidable transactions (if identified and if
commercial)
Administration
$4,000
Document maintenance/file
review/checklist
Conduct file reviews
Finalise physical and electronic engagement file
Insurance Maintain insurance policies during trade period and
then cancel those insurance policies
Bank account administration Perform bank account reconciliations
Prepare and authorise receipt and payment vouchers
Request bank statements
Close bank accounts
ASIC forms Prepare and lodge ASIC forms
Other statutory reporting Notify ATO of appointment as liquidators
Lodge BASs
Finalisation Notify ATO of ceasing to act
Cancel ABN/GST/PAYG registrations
Complete internal checklists
Estimated future remuneration
In preparing this report, the Administrators’ prospective remuneration approval is the Administrators’ best estimate of what
the Administrators believe the external administration will cost up to finalisation under the proposed DOCA and liquidation
scenario. Total future remuneration for:
the voluntary administration period from 23 March 2019 to finalisation will be capped at $18,000.00 (GST
exclusive); and
the period of the DOCA (if creditors vote in favour of entering into the proposed DOCA) is estimated to be
$30,000 (GST exclusive); or
3-190326-MICKINV01-Remuneration Report-JR 14
the period of the liquidation (if creditors vote in favour of entering into liquidation) is estimated to be $40,000
(GST exclusive).
The Administrators will seek creditor approval to approve this remuneration at the second meeting of creditors.
Total remuneration reconciliation
At this point in time, the Administrators estimate that the total remuneration for Mickim will be:
$79,919.00 (GST exclusive) if creditors vote in favour of the proposed DOCA; or
$89,919.00 (GST exclusive) if creditors vote in favour of liquidation.
These calculation are shown in the table below.
This is subject to the following variables, which may have a significant effect on this estimate and that the Administrators
are unable to determine as yet:
the time spent preparing for and conducting the second meeting of creditors (both scenarios);
the time it will take to adjudicate on the PODs and pay the dividends (both scenarios);
the time it will take to finalise the statutory investigations and undertake any voidable transaction recoveries
(liquidation scenario);
the time it will take to calculate employee entitlements and distribute funds (both scenarios); and
the time it will take to sell the rent roll (both scenarios).
Estimated remuneration (if creditors vote for DOCA) Amount (ex GST)
Retrospective Remuneration Claim
Resolution 5: 7 March 2019 to 22 March 2019
$31,919.00
Prospective Remuneration Claim
Resolution 6: 23 March 2019 to finalisation of the voluntary administration
$18,000.00
Prospective Remuneration Claim
Resolution 7: State date of DOCA to date of effectuation
$30,000.00
Estimated total remuneration (if creditors vote for DOCA)
$79,919.00
The estimate of total remuneration for the voluntary administration of $49,919 differs to the estimate provided in the
Administrators’ Initial Remuneration Notice dated 12 March 2019, which estimated remuneration of $30,000.00 (excluding
GST) for the voluntary administration, for reasons that include the following:
the time it has taken to deal with suppliers to transition various pre-appointment supplier accounts to voluntary
administration accounts. The approach taken in this matter was different to the normal process as pre-
appointment amounts were required to be paid in a number of cases to maintain critical services;
the time it has taken to secure the pre-appointment trust accounts and update the account signatories. There
were significant discussions and investigation of options with CBA to maintain prudential security, while not
interrupting the business;
the time invested in trading operations. At the time of our initial estimate, we had not appreciated the amount of
time that would be required for these tasks, including mid-month and end-of-month trust account distributions;
and
the time invested in preparing the proposed DOCA, including liaising with the director and legal adviser.
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Estimated remuneration (if creditors vote for liquidation) Amount (ex GST)
Retrospective Remuneration Claim
Resolution 5: 7 March 2019 to 22 March 2019
$31,919.00
Prospective Remuneration Claim
Resolution 6: 23 March 2019 to finalisation of the voluntary administration
$18,000.00
Prospective Remuneration Claim
Resolution 8: State date of liquidation to date of finalisation
$40,000.00
Estimated total remuneration (if creditors vote for liquidation)
$89,919.00
The Administrators have not previously provided an estimate of the total remuneration under a liquidation scenario.
Likely impact on dividends
It is both reasonable and appropriate for a professional service provider to be remunerated for their services. An external
administrator is entitled to be remunerated for necessary work that is reasonably performed. That work generates any
funds that may be recovered for the benefit of creditors and other stakeholders.
The impact of the approval of the external administrator’s remuneration is that the remuneration will then be paid if
sufficient funds are generated to enable it to be paid. The remuneration will be paid from those funds that are generated
prior to the payment of most other stakeholders in the external administration. It is noted that no funds would be
available for any stakeholder without the work necessarily undertaken by the external administrator.
If a dividend or distribution is to be paid to stakeholders, there is also necessary work that must be undertaken by the
external administrator to properly adjudicate on claims and distribute any available funds.
The outcome of a dividend or distribution to stakeholders will depend on the outcome on the second creditors’ meeting.
Based on the information that is available at this time, the Administrators consider it likely that there will be a dividend
payable to the unsecured creditors of Mickim in both the proposed DOCA scenario and a liquidation scenario. However,
the amount of that dividend is estimated to be higher in a DOCA scenario.
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Disbursements
Disbursements are divided into three types:
Externally provided professional services – these are recovered at cost. An example of an externally provided
professional service disbursement is legal fees.
Externally provided non-professional costs – these are recovered at cost. Examples of externally provided non-
professional costs are travel, accommodation and search fees.
Internal disbursements such as photocopying, printing and postage. These disbursements, if charged to the
voluntary administration, would generally be charged at cost; though some expenses such as telephone calls,
photocopying, printing and data storage, may be charged at a rate which recoups both variable and fixed costs.
The recovery of these costs must be on a reasonable commercial basis. Details on the basis of recovery of each
of these costs is discussed below.
The Administrators have undertaken a proper assessment of disbursements claimed for the voluntary administration, in
accordance with the law and applicable professional standards. The Administrators are satisfied that the disbursement
claimed is necessary and proper.
External disbursements
External disbursements may be paid directly from the administration bank account, in which case they are included in
summarised form in the Summary of Receipts and Payments and are not itemised here.
External disbursements are recovered at cost. Creditors are not required to approve these types of disbursements, but
details are provided to account to creditors, including the basis of charging for these types of disbursements. Creditors
are entitled to question the incurring of the disbursements and can challenge the disbursements in Court.
The Administrators have incurred no external disbursements thus far in the voluntary administration. However, there will
be future external disbursements that are paid for by McGrathNicol until the finalisation of the external administration.
Internal disbursements
Internal disbursements are paid for by McGrathNicol and are recovered from the administration bank account. Creditors
are only required to approve these types of disbursements where there is an element of profit or advantage to the
external administrator or a related party of the external administrator.
Internal disbursements with no element of profit or advantage
The following internal disbursements have no element of profit or advantage. Details are provided to account to creditors,
including the basis of charging for these types of disbursements. Creditors are entitled to question the incurring of the
disbursements and can challenge the disbursements in Court.
This amount will be reimbursed to McGrathNicol at cost from the administration bank account shortly:
Internal disbursements at cost for the period ended 22 March 2019 Amount (ex GST)
Staff vehicle use ($0.63 per km)** $29.17
Total $29.17
** These rates are deemed reasonable by the Australian Taxation Office.
There will be ongoing internal disbursements with no element of profit or advantage that are paid for by McGrathNicol
until the finalisation of the external administration.
3-190326-MICKINV01-Remuneration Report-JR 17
Future disbursements
Future disbursements provided by McGrathNicol will be charged to the external administration on the following basis:
Disbursement type Rate (GST exclusive)
Externally provided professional services At cost
Externally provided non-professional costs At cost
Internal disbursements (at cost)
Postage At cost
Stationery and other incidental disbursements At cost
Telephony – conference calls At cost
Searches At cost
Advertising At cost
Courier At cost
Staff per diem travel allowance* $89.00 per day**
Staff vehicle use $0.68 per km**
ASIC user pays levy At cost
Internal disbursements (that may have an element of profit or advantage)
Data hosting – data loading & processing fee $50-$100 per gigabyte (GB)***
Data hosting – monthly hosting fee (for matters where data is required to be hosted online for more than 1 month)
Standard monthly hosting fee of $2,000 per
month (for up to 500GB of information
loaded) plus $2,000 per month for every
additional 500GB block over and above
500GB
Printing – black and white $0.09 per page
Printing – Colour $0.28 per page
* Payable when partners or staff are required for business purposes to stay away from their usual place of residence
overnight.
** These rates are deemed reasonable by the Australian Taxation Office.
*** Depending on volume of data to be hosted.
Further explanation of data hosting disbursements
In the conduct of this administration, the Administrators may use McGrathNicol’s Forensic Technology team to extract,
aggregate, electronically process and/or host electronic data, which could be used for the:
trade or sale of the business or assets; and/or
investigations regarding transactions or potential recoveries available to creditors.
If data hosting is required and the Administrators choose not to use the services of McGrathNicol’s Forensic Technology
team, the Administrators will otherwise have to purchase those services from an alternative provider and/or use another
method to achieve the same end, which will not be as efficient as using these available internal services.
The Administrators note that the data hosting rates above are no more than our standard commercial pricing available for
the same services when they are provided to external parties.
3-190326-MICKINV01-Remuneration Report-JR 18
Summary of receipts and payments
There were no receipts or payments in the Voluntary Administration for the period 7 March 2019 to 22 March 2019.
The Administrators note that rental payments were received from tenants in relation to properties managed by Mickim and
rental distributions were paid to the respective owners. As Mickim holds these funds on trust, they are not reported by
the Administrators as part of the administration.
Queries
If you have any queries regarding the information in this report, please contact Jacinta Robinson on (07) 3333 9813.
You can also access information that may assist you on the following websites:
ARITA at www.arita.com.au/creditors
ASIC at www.asic.gov.au (search for “fees of insolvency practitioner”).
Dated: 29 March 2019
Anthony Connelly
Voluntary Administrator
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Notice of Meeting
Mickim Investments Pty. Ltd. (Administrators Appointed)
ACN 602 922 172
Trading as “XCEL Real Estate – Everton Park”
(Mickim)
NOTICE OF MEETING OF CREDITORS OF COMPANY UNDER EXTERNAL ADMINISTRATION
1. Notice is now given that a meeting of the creditors of Mickim will be held at Level 7, 175 Eagle Street,
Brisbane Qld 4000 on 5 April 2019 at 11:30 AM (AEST).
2. The purpose of the meeting is:
a. to receive the report by the Administrators about the operations, property, affairs and financial
circumstances of Mickim;
b. to receive a statement of the Administrators’ opinion and reasons for the opinion whether it would
be in the creditors’ best interests for Mickim:
(i) to be returned to the control of its director;
(ii) to execute a deed of company arrangement;
(iii) to enter into liquidation; or
(iv) to adjourn the meeting for a period of up to 45 business days;
c. to receive a statement of such other information known to the Administrators that will enable the
creditors to make an informed decision about the future of Mickim;
d. to receive details of any transactions that appear to the Administrators to be a voidable
transaction in respect of which money, property, or other benefits may be recoverable by a
liquidator under part 5.7B of the Corporations Act 2001 (Cth);
e. to receive details of the proposed deed of company arrangement;
f. for the creditors of Mickim to resolve that:
(i) the control be returned to its director;
(ii) Mickim executes a deed of company arrangement;
(iii) Mickim enters into liquidation; or
(iv) the meeting be adjourned.
g. to consider, and if thought fit, approve the Administrators’ remuneration;
h. to determine the remuneration of the Deed Administrators, if appointed; or
i. if Mickim is wound up:
(i) to determine the remuneration of the liquidators;
(ii) to consider the appointment of a Committee of Inspection; and
(iii) to consider the power exercisable by the liquidators.
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3. The effect of Insolvency Practice Rules (Corporations) section 75-85 (entitlement to vote as a creditor at
meetings of creditors) is:
a. a person other than a creditor (or the creditor’s proxy or attorney) is not entitled to vote at a meeting
of creditors;
b. subject to subsections (c) and (d), each creditor is entitled to vote and has one vote;
c. a person is not entitled to vote as a creditor at a meeting of creditors unless:
(i) his or her debt or claim has been admitted wholly or in part by the external administrator;
or
(ii) he or she has lodged, with the person presiding at the meeting, or with the person
named in the notice convening the meeting as the person who may receive particulars of
the debt or claim:
> those particulars; or
> if required—a formal proof of the debt or claim;
d. a creditor must not vote in respect of:
(i) an unliquidated debt; or
(ii) a contingent debt; or
(iii) an unliquidated or a contingent claim; or
(iv) a debt the value of which is not established;
unless a just estimate of its value has been made.
4. Proofs of Debt and Proxies must be submitted by 4:00 PM on 4 April 2019 and may be emailed to
Jacinta Robinson at jrobinson@mcgrathnicol.com.
Dated: 28 March 2019
Anthony Connelly
Administrator
1
Proof of Debt
Guidance Notes
(Please read carefully before filling in Form 535 or Form 536)
It is a creditor’s responsibility to prove their claim to our satisfaction.
When lodging claims, creditors must ensure:
the proof of debt form is properly completed in every particular; and
evidence, as set out under “Information to support your claim”, is attached to the Form 535 or Form 536.
Directions for completion of a Proof of Debt
1. Insert the full name and address of the creditor.
2. Under “Consideration” state how the debt arose, for example “goods sold to the company on
______________________”.
3. Under “Remarks” include details of any documents that substantiate the debt (refer to the section “Information
to support your claim” below for further information).
4. Where the space provided for a particular purpose is insufficient to contain all the information required for a
particular item, please attach additional information.
Information to support your claim
Please note that unless you provide evidence to support the existence of the debt, your debt is not likely to be
accepted. Detailed below are some examples of debts creditors may claim and a suggested list of documents that
should accompany a proof of debt to substantiate the debt.
Trade Creditors
Invoice(s) and statement(s) showing the amount of the debt; and
Advice(s) to pay outstanding invoice(s) (optional).
Guarantees/Indemnities
Executed guarantee/indemnity;
Notice of Demand served on the guarantor; and
Calculation of the amount outstanding under the guarantee.
Judgment Debt
Copy of the judgment; and
Documents/details to support the underlying debt as per other categories.
Deficiencies on Secured Debt
Security Documents (eg. mortgage);
Independent valuation of the secured portion of the debt (if not yet realised) or the basis of the creditor’s
estimated value of the security;
Calculation of the deficiency on the security; and
Details of income earned and expenses incurred by the secured creditor in respect of the secured asset since the
date of appointment.
Loans (Bank and Personal)
Executed loan agreement; and
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Loan statements showing payments made, interest accruing and the amount outstanding as at the date of
appointment.
Tax Debts
Documentation that shows the assessment of debts, whether it is an actual debt or an estimate, and separate
amounts for the primary debt and any penalties.
Employee Debts
Basis of calculation of the debt;
Type of Claim (eg. wages, holiday pay, etc);
Correspondence relating to the debt being claimed; and
Contract of Employment (if any).
Leases
Copy of the lease; and
Statement showing amounts outstanding under the lease, differentiating between amounts outstanding at the
date of the appointment and any future monies.
PROXY FORM
Mickim Investments Pty. Ltd. (Administrators Appointed)
ACN 602 922 172
Trading as “XCEL Real Estate – Everton Park”
(Mickim)
APPOINTMENT OF PROXY
I/We (if a firm, strike out “I” and set out the full name of the firm) ______________________________________________________ of
_______________________________________________________________________________________________________________ (insert address)
a creditor of Mickim Investments Pty. Ltd. (Administrators Appointed) appoint
___________________________________________________________ (insert name, address and description of the person appointed)
or in his or her absence
___________________________________________________________ (insert name, address and description of the person appointed)
as my/our (choose one):
general proxy special proxy
to vote at the meeting of creditors to be held on 5 April 2019 at 11:30 AM (AEST) or at any adjournment of that
meeting.
Resolution (only complete where appointing a special proxy) For Against Abstain
1 “That the voluntary administration should end.”
2 “That Mickim enter into a Deed of Company Arrangement and Anthony
Connelly and Jamie Harris be appointed as Deed Administrators.” 3 “That Mickim be wound up and Anthony Connelly and Jamie Harris be
appointed as Liquidators.” 4 “That the second statutory meeting of creditors be adjourned for a period of
up to 45 business days.” 5 “That the remuneration of the Voluntary Administrators for the period
7 March 2019 to 22 March 2019, calculated at hourly rates as detailed in
the Initial Remuneration Notice dated 12 March 2019, is determined in the
sum of $31,919.00, exclusive of GST, and the Voluntary Administrators may
pay the remuneration immediately or as otherwise determined by the
Voluntary Administrators.”
6 “That the future remuneration of the Voluntary Administrators for the period
23 March 2019 to finalisation of the voluntary administration, calculated at
hourly rates as detailed in the Initial Remuneration Notice dated
12 March 2019, is approved up to the capped amount of $18,000.00,
exclusive of GST.”
7 “That the future remuneration of the Deed Administrators from the start
date of the DOCA to the date of its effectuation, calculated at hourly rates
as detailed in the Initial Remuneration Notice dated 12 March 2019, is
approved up to the capped amount of $30,000.00, exclusive of GST.”
8 “That the future remuneration of the liquidators from the start date of the
liquidation to the date of its finalisation, calculated at hourly rates as
detailed in the Initial Remuneration Notice dated 12 March 2019, is
approved up to the capped amount of $40,000.00, exclusive of GST.”
DATED this ___________ day of ________________________ 2019
Name ___________________________________________________
Signature ___________________________________________________
Select which of the below applies (choose one):
The creditor is a company and I am signing as
a director of the company
The creditor is a partnership and I am signing
as a partner of the partnership
The creditor is a company and I am signing as
an authorised representative/duly constituted
attorney of the company
I am signing in my personal capacity as a
member or contributory of Mickim Investments
Pty. Ltd. (Administrators Appointed)
I am an individual and I am signing in my
personal capacity (which includes employees) Other: ____________________________________________
The creditor is a sole trader and I am signing
as the proprietor
Proxy forms should be completed and returned by no later than 4:00 PM on 4 April 2019.
RETURN TO: Mickim Investments Pty. Ltd. (Administrators Appointed)
of care of McGrathNicol
Address: GPO Box 9986, Brisbane QLD 4001, Australia
Phone: +61 7 3333 9800
Fax: +61 7 3333 9899
1
Proxy
Guidance Notes
Insert full name and address of creditor, contributory or member on the top line.
On the second line, insert the address of the creditor, contributory or member.
On the next line insert the name of the person you appoint as your proxy. You may insert “the
Chairperson of the meeting” if you wish.
You may appoint an alternate proxy on the fourth line who may act if your first appointed proxy cannot
attend the meeting. You may insert “the Chairperson of the meeting” if you wish.
Make sure you select whether the proxy is a general or special proxy.
A general proxy is where you leave it to the proxy to decide how to vote on each of the resolutions put
before the meeting.
A special proxy is where you specify how the proxy is to vote on each resolution and the proxy must vote
in accordance with that instruction.
If the proxy is a special proxy, the form must include details of each resolution and whether the proxy
holder is to cast their vote in favour or against each resolution or abstain from voting.
Date and sign the Proxy form, indicating in which capacity you are signing the form. The person signing
must be authorised to do so.
1
Mickim Investments Pty. Ltd. (Administrators Appointed)
ACN 602 922 172
Trading as “XCEL Real Estate – Everton Park”
(Mickim)
General Information for Attending and Voting at Meetings of Creditors
Time and Place of Meeting
Pursuant to Insolvency Practice Rules (Corporations) (IPR) 75-30, a meeting of creditors must be convened at the
time and place the Chairperson believes are convenient for the majority of creditors entitled to receive notice of the
meeting.
Quorum
Pursuant to IPR 75-105, unless a quorum is present, a meeting must not act for any purpose other than:
the election of a chairperson; and
the proving of debts; and
the adjournment of the meeting.
A quorum is present if two (2) or more persons are entitled to vote and at least two (2) persons are present
at the meeting in person, by proxy or by power of attorney.
A quorum is present if only one (1) person is entitled to vote and that person is present at the meeting in
person, by proxy or by power of attorney.
A person who participates in the meeting using electronic facilities is taken to be present in person at the
meeting.
A meeting is sufficiently constituted if only one (1) person is present in person, if the person represents
personally or by proxy or otherwise a number of persons sufficient to constitute a quorum.
Chairperson
Pursuant to IPR 75-50, the external administrator is appointed Chairperson of the meeting. Alternatively, pursuant
to IPR 75-50 and IPR 75-152 the external administrator may appoint someone else to act as chairperson of the
meeting and authorise that person to use any proxies held by the external administrator on the external
administrator’s behalf.
For the second meeting of creditors in a Voluntary Administration, the Administrator must chair the meeting
pursuant to IPR 75-50.
Voting
Pursuant to IPR 75-85, creditors will not be eligible to vote at the meeting unless they have lodged
particulars of their debt or claim prior to or at the meeting.
Accordingly, creditors who intend to vote at the meeting should ensure that they lodge a formal proof of
debt with the external administrator prior to or at the meeting.
Pursuant to IPR 75-110, a resolution put to the meeting is to be decided on the voices or by a poll, if one
is requested.
A poll may be requested by:
the chairperson; or
a person participating and entitled to vote at the meeting.
2
Pursuant to IPR 75-115, should a poll be requested:
a resolution is passed if a majority in number and a majority in value vote in favour of the
resolution; and
a resolution is not passed if a majority in number and a majority in value vote against the
proposed resolution.
In the event of a deadlock, the chairperson may exercise a casting vote. In such situations, the minutes of the
meeting must specify the chairperson’s reasons for exercising, or not exercising, their casting vote.
Proxies
Pursuant to IPR 75-150, a person entitled to vote at a meeting may, in writing, appoint an individual as
their proxy to attend and vote at the meeting on their behalf.
Accordingly, creditors who are unable to attend the meeting but who wish to be represented should ensure
that a validly executed proxy form is lodged with the external administrator prior to the meeting.
Corporate Creditors
Corporate creditors who wish to attend the meeting should note that an individual may only represent them if the
corporation validly grants that person a proxy or power of attorney.
Alternatively, section 250D of the Corporations Act provides that a corporation may, by resolution of its board,
provide a standing authority for a specified person to represent the corporation at a specified meeting of creditors.
A copy of any such resolution should be provided to the external administrator prior to attending the meeting.
Committee of Inspection
Pursuant to IPR 80-5, a person may only serve as a member of a Committee of Inspection if the person is:
a creditor of the company personally; or
the attorney of a creditor under a general power of attorney; or
authorised in writing by a creditor; or
a representative of the Commonwealth if a FEG claim has been, or the Commonwealth considers a claim is
likely to be, made in relation to unpaid employee entitlements.
Corporate creditors who are members of a Committee of Inspection may be represented by an individual authorised
in writing by the member to represent the member on the committee.
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