Dire day for local creditors

ADMINISTRATORS for Tasmanian electrical company Russell-Smith believe it was trading while insolvent and owes creditors almost $9 million.

DEBTS: Almost $9 million is believed to be owed.

ADMINISTRATORS for Tasmanian electrical company Russell-Smith believe the company was trading while insolvent from at least January 1 this year, and owes creditors almost $9 million.

A creditors meeting will be held today, when administrators Jirsch Sutherland will recommend the company be placed into liquidation.

The Mercury reported in August that the company had been accused of not paying suppliers for between six and 12 months. Russell-Smith went into voluntary administration on September 22.

The administrators’ report to creditors said a potential insolvent trading claim against former company director Prasanga Shiromon Kingsley De Silva would be referred to the Australian Securities and Investments Commission, and could total $4 million.

The report found a number of “unreasonable director related transactions,” including the use of company credit cards to pay for travel expenses, gym fees, dry cleaning and traffic infringements. In August, $292,000 was withdrawn in cash or by cheque from one of Russell-Smith’s Westpac accounts.

Russell-Smith’s largest single debt was $3.2 million owed to the Australian Taxation Office. Claims for breaches of contract also had been lodged against Russell-Smith by construction company Fairbrother Pty Ltd for $1.2 million and others.

According to the administrators’ report, outstanding employee entitlements were estimated at $642,000. The company had 42 employees immediately before the appointment of administrators, with entitlements owing to another 64 former employees.

“The company was unable to produce accurate financial information from 1 July 2015 onwards,” the report said.

Many of the unsecured creditors are local companies. The Tasmania Fire Service, TasNetworks, the Department of State Growth and Hobart City Council are all on the list.

Originally published as Dire day for local creditors