Cocoon SDA Care parent company Horizon SolSolutions’ liquidator set to tap Fair Entitlements Guarantee scheme for $16m
In addition to unpaid staff entitlements, failed NDIS provider Cocoon has a huge debt of $64m, with the Australian Taxation Office owed $14m.
Exclusive: Taxpayers will have to stump up $16 million to cover entitlements owed to more than 1000 people employed by failed NDIS provider Cocoon.
In a further hit to the public purse, the full extent of the ATO’s Cocoon debt can be revealed for the first time and it tops $14m.
A new creditors’ report on the company behind Cocoon – Horizon SolSolutions – discloses the Australian Taxation Office is the largest of 360 unsecured creditors owed a combined $64m.
Just how much money can be raked in to cover some of these liabilities remains a mystery. It may be little more than $3m.
“We have refrained from disclosing specific asset values as we believe this may affect our ability to realise the assets for the best value and may prejudice interested parties when making their offers,” liquidators Deloitte’s Philip Robinson and David Mansfield say in their report, filed with ASIC.
The total amount owed to 1036 former employees is $15.99m.
That bill is likely to be initially covered by the taxpayer-funded Fair Entitlements Guarantee (FEG), which is a safety net providing money to liquidators to pay workers.
Once the FEG is activated, the Commonwealth becomes priority creditor, with first rights to proceeds from asset sales.
If taxpayers are left short-changed, it follows that there will be nothing for unsecured creditors who have claimed $64.1m, led by the ATO with a debt of $14.3m.
The ATO is already working on other ways to recoup some of what it is owed. The creditors’ report noted the tax office has slapped Horizon’s sole director Latif Muhammad with a director penalty notice of “at least $1 million.” The ATO declined to comment.
The penalty is one of several headaches for Auburn’s Mr Muhammad.
He is having to sell a property in Geelong after telling the liquidators that Horizon had advanced him an amount of $368,047 to fund the purchase in his own name.
The sale is laid out in the creditors’ report, which goes on to allege he may have breached laws prohibiting unfair preference payments and loans, unreasonable director-related transactions and insolvent trading.
In the report the liquidators say their investigations suggest Cocoon “corporate strategist” Zaffar Khan may have been a “shadow director” of Horizon.
The report refers to a May 2025 court judgement that said the National Disability Insurance Agency (NDIA) received “tip offs” which alleged Horizon was actually managed by someone other than Mr Muhammad.
“We understand this comment refers to Mr Khan,” the liquidators’ report said, adding that when they asked him about this he denied the allegations.
“We will conduct further investigations in this regard,” the liquidators say in the report. “Should our investigations result in us forming the view that Mr Khan was acting as a director of the Company, we will consider pursuing him”.
The liquidators also said they found about 200 blank medical prescription pads, which they destroyed after discussions with government agencies.
Repeated attempts to contact Mr Muhammad and Mr Khan for comment were unsuccessful.
Horizon went into liquidation in May, two months after the NDIA stopped automatic payment of Horizon invoices due to suspicions that claims were being made for services provided to people in jail or dead. Mr Muhammad has refuted these allegations, saying the claims were the result of coding errors.
In a statement, Deloitte said the next Horizon creditors’ report would say how asset values compare to debts. However it couldn’t say when that would be published.
