Creditors settle for 2c on the dollar in Aussie booze giant Proof & Company collapse

Creditors caught up in the multimillion-dollar collapse of an Australian spirit company have been forced to settle for just a sliver of what they are owed.

Creditors caught up in the collapse of Proof & Company have been forced to settle for just a sliver of what they are owed. Picture: Proof & Company

Creditors caught up in the collapse of an Australian booze giant have been forced to settle for just a sliver of what they are owed.

Proof & Company, one of Asia Pacific’s biggest independent spirits companies, announced its decision to place its Australian arm into administration earlier this year.

The business, housed in a company called Sa’Pere Drinks, collapsed owing unsecured and secured creditors over $13m and $1.5m respectively, with total liabilities – including employee entitlements – standing at about $15m, reports lodged with the corporate watchdog reveal.

Corporate records show unsecured creditors were forced to accept a settlement deal put forward by parent company Proof & Company Spirits Singapore, which returned them just 2c on the dollar.

The deal, known as a deed of company arrangement (DOCA), was opposed by the tax office which was listed as an unsecured creditor owed $7.5m.

A vote on the deal resulted in a deadlock, handing power to Rodgers Reidy administrator Shane Cremin to cast a deciding vote.

Mr Cremin passed the settlement, saying unsecured creditors ran a real risk of getting nothing if the company was tipped into liquidation.

A vote on a settlement resulted in a deadlock. Picture: Proof & Company

“Four unrelated unsecured creditors have voted in favour of the DOCA with one unrelated unsecured creditor voting against the DOCA,” he said.

“As such, the majority of unrelated creditors voting in favour would suffer a detriment in the event the company was wound up.”

While Mr Cremin acknowledged that the tax office was the largest value creditor, he said the benefits to all creditors, including former employees who are likely to be paid out in full under the deal, needed to be considered.

The funds paid to creditors under the DOCA consisted of a cash contribution of $150,000, net proceeds from the sale of the company’s assets including inventory, plant and equipment, repaid debt from finance business Octet, and cash at bank held by the business.

Mr Cremin said all related party creditors, including Proof & Company Spirits Singapore, which were owed debts totalling $4.1m, would not receive a dividend from the deal.

He said employees would be paid in full for wages and superannuation and would likely receive full payment for other employee entitlements including unpaid bonus payments, leave, payment in lieu of notice and redundancy.

A total of 13 employees have now been sacked as a result of the collapse, with workers listed as being owed more than $400,000.

Control and day to day management of the Proof & Company Australia has now been returned to the directors, Mr Cremin said, noting that it had ceased trading and would not hold any assets.

News Corp previously revealed Husk Farm Distillery had been caught up in the fallout. Picture: Supplied

News Corp previously revealed popular New South Wales distillery Husk Farm Distillery had been caught up in the fallout, with their stock being held ransom at the spirit giant’s warehouse facilities.

Proof & Company Australia’s stock is stored at two Mainfreight warehouse facilities located in Derrimut and Epping in Victoria.

Mr Cremin has been urgently trying to resolve the dispute with the logistics company – who say they are owed money – about the release of stock.

Husk chief executive Paul Messenger told News Corp at the time that the company was working to resolve the matter “as quickly as possible”.

The distillery, nestled in the Northern Rivers in North Tumbulgum, announced last year that Proof & Company had assumed exclusive distributorship for their esteemed range of spirits, including their unique Australian rums and iconic Ink Gin.

In the most recent creditor meeting, Mr Cremin said insufficient funding was available to pay off this debt owed to Mainfreight and that he had no other alternative than to “cease accepting orders” on May 14.

The distillery is nestled in the Northern Rivers in North Tumbulgum. Picture: Nigel Hallett

He said the administrators had located further stock stored across several additional sites which have been secured and would be included in the stock offered for sale.

An urgent expression of interest campaign for the restructure or sale of the company’s business assets has been undertaken, Mr Cremin said.

“To date several offers have been received to purchase the stock in bulk and for specific quantities of stock,” he said.

An updated stock listing has recently been circulated to interested parties with revised offers due at the end of last month.

Originally published as Creditors settle for 2c on the dollar in Aussie booze giant Proof & Company collapse