China’s ban on Aussie timber has felled a Victorian export business

A Victorian timber export business has placed itself into voluntary administration, and says the blame largely lies with China.

China’s trade war against Australia has crippled a Victorian timber exporter which has collapsed owing creditors close to $3m.

Melbourne-based Rezex Timber, which specialised in exporting pine and hardwood logs to China, has placed itself in voluntary administration as out-of-pocket suppliers await a settlement offer from its owners.

The business, which employed 11 people, operated two sites in Port Melbourne and Tottenham and rented an office space in South Melbourne.

Rezex directors Laurence Cox and Zhuogang Zhou placed the company into voluntary administration in late February.

China’s trade war with China has hit timber exports.

In a report to creditors, administrator Stephen Dixon of insolvency specialists Hamilton Murphy said the trade embargo from China on Australian timber had brought the business to its knees.

Rezex was forced to scramble to find new buyers for a shipment of wood which was on its way to China when the Asian powerhouse nation announced the measures against beef, wine and timber late last year.

The shipment was ultimately sold in Vietnam and South Korea.

“As the company’s business was heavily reliant on its ability to export timber to China, the trading embargo imposed by the Chinese authorities has effectively stopped the company’s ability to trade,” Mr Dixon said.

“As such, the company was not able to generate cashflow to meet its ongoing obligations.”

While Mr Dixon highlighted the impact of China’s trade embargo, he points out the company had been struggling for a number of years and may have been insolvent as far back as 2018.

“Should the company be placed into liquidation… the appointed liquidator will undertake further investigations concerning any insolvent trading,” he said.

Seafood, beer, wine and timber have all been singled out by China.

Mr Dixon also notes the proceeds from the sale of the diverted shipment has not yet been accounted for, while Mr Zhou is yet to pay back a loan of $155,636 extended to him by the company.

Rezex had $817,267 in assets – including $350,536 of cash in the bank – and $2.79m in liabilities when it called in administrators.

Timber processing business AKD Timber is the largest secured creditor owed $1.11m, while particleboard manufacturer D&R Henderson is the second largest secured creditor owed $359,300.

There are around 36 unsecured creditors owed $1.62m, although around one-third of this is claims by related parties.

The creditors report says the directors are working on a proposed settlement with creditors but have not yet finalised it.

“The exact terms… are dependent upon the outcome of announcements relating to the current timber trade embargo imposed by China,” it says.