Million dollar shortfall renders civil firm ‘insolvent’

A SEEMINGLY straightforward voluntary liquidation of a multimillion-dollar Toowoomba civil construction business has gone pear-shaped.

Hotshots Transport Queensland trading as HTQ Civil Pipe Mining is insolvent, says liquidator.

A SEEMINGLY straightforward voluntary liquidation of a multimillion-dollar Toowoomba civil construction business has gone pear-shaped.

Hotshot Transport Queensland Pty Ltd, which traded as HTQ Civil Pipe Mining, was placed in a member's voluntary liquidation on June 30 and Adam Ward of Worrells Solvency and Forensic Accountants was appointed liquidator.

Before placing the company in liquidation, directors Reuben Dolphin and Clint Kenny completed a statutory declaration of solvency, which according to Mr Ward's latest report to members and creditors, "states that it is the director's opinion that the company can pay its due and payable debts within 12 months of the commencement of the winding up".

This week however, Mr Ward informed creditors he had "formed the opinion that the company is not able to pay or provide for the payment of its debts in full within the period stated in the directors' declaration".

"This means it is my view that the company is insolvent and can no longer continue as a solvent members voluntary winding up."

Mr Ward said there were four main reasons for the change in the company's solvency status.

While Mr Ward said the directors declaration stated the company had $250,657 cash, "the company's bank account balance at appointment was $57,517, not $250,657".

"One of the directors removed $190,470 from the company's bank account just prior to my appointment advising that he was holding the funds on trust for the company," Mr Ward wrote in his report.

"Despite my request, this cash has not been made available to the company to form part of the asset pool to satisfy the debts of the company."

Mr Ward also wrote that a Caterpillar scraper with an estimated market value of $175,000 was included as an asset of the company, but had been taken possession of by a related company.

He also said assets that appear to be owned by a related company could not be sold and that assets of HTQ were "recorded at higher values than market value of the assets achievable at auction".

"If all assets included in the solvency declaration were made available to the company, it is likely that the company would be solvent, and the members voluntary liquidation would have continued, and all creditors paid in full," he said.

Mr Ward's summary of the company's financial position this week showed an almost $1 million gap between the directors' assessment of their total assets, which totalled almost $2.8 million, and his own assessment, which he put at $1.818 million.

While the directors, after taking into account their liabilities, put the company's net asset position at $400,441, Mr Ward said the company was actually $462,342 in the red.

Mr Ward is still collecting $147,000 owed to HTQ by trade debtors, while most of the company's plant and machinery has been sold via online public auction, resulting in a $316,762 shortfall owed to financiers.

The report said six employees had outstanding entitlements totalling $45,369.

Mr Dolphin's company DMW Industries (Qld) Pty Ltd is claiming $360,610.56 is owed to it in the form of an associated loan, while another $106,395 is claimed by R & C Dolphin.

Mr Kenny is claiming $10,483 is owed in the form of an associated loan.

Mr Ward said unsecured creditors are expected to receive between 15 and 60 cents in the dollar, depending on recoveries made.

A concurrent meeting of creditors and a general meeting of members of the company has been called for September 30 at 10.30am to discuss the asset and liability position of the company, a resolution that creditors may appoint a new liquidator, and the effect of the members voluntary liquidation converting to a creditors voluntary liquidation.

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