Creditors to vote on Forum Finance sale of solar firm Autonomous Energy

Forum Finance’s administrator and liquidator has agreed to sell Autonomous Energy as revelations emerge about leasing contracts offloaded to a relative of Bill Papas.

The Autonomous Energy sale agreement was proposed by entities associated with the current senior management team and a private investor. Picture: Stewart McLean

Forum Finance administrator and liquidator McGrathNicol has agreed a transaction to sell solar firm Autonomous Energy, as new revelations emerge about leasing contracts that were offloaded to a relative of Forum founder Bill Papas.

A creditor report has been dispatched and the deed of company arrangement for the sale of Autonomous Energy will need to be voted on at a meeting next week.

The proposed sale, to the firm’s existing management team and a private investor, is expected to see the majority of contracts for the solar company remain in place and staff keep their jobs.

The mooted sale of Autonomous Energy requires the approval of creditors, and is being recommended by McGrathNicol.

Autonomous Energy was acquired by a Forum entity in February, meaning it was caught up in the $400m of fraud court actions against the broader group, lodged separately by Westpac and two other banks.

Separate Federal Court civil actions against Forum, Mr Papas and his offsider Vincenzo Tesoriero have been launched by Westpac, Societe Generale and Japan’s SMBC Leasing and Finance in the past six weeks. The allegations relate to fraudulent activity and forged contracts for equipment leases.

As the court action plays out against Forum and Mr Papas - also the former president of Sydney Olympic Football Club - the solar firm is the only Forum entity that remains in administration, after about 24 others were tipped into liquidation.

Another Forum entity saw its equipment leases essentially sold last month as part of the administration process. That was the sale of part of the Forum Group leasing entity to Our Kloud – which is led by Eric Constantinidis – a cousin of Mr Papas.

Our Kloud has been in contact with large numbers of Forum customers this week, urging them to quickly switch over their account direct debits.

A letter sighted by The Weekend Australian, sent by Mr Constantinidis and former Forum manager Craig Rollinson, used heavy-handed language to encourage a printer management customer to set up its payments with the new owner of the lease.

“If you have a direct debit agreement in place, YOU MUST complete the new direct debit authority attached to this notice within two business days,” the letter said. “You MUST complete this as to not default on your contract. Failure to do so may incur penalty and default fees.”

Our Kloud did not respond to requests for comment. The letters also outlined the company would now service and manage Forum contracts and Mr Rollinson cites his title as general manager of print.

Documents filed with the corporate regulator, show Mr Constantinidis was a former shareholder and a director of Forum Group of companies between July and August 2011, just as the firm got started.

He founded technology and server group Our Kloud in 2015, and counted Forum as a large customer.

The Autonomous Energy sale attracted healthy interest in recent weeks with energy giant AGL among more than 13 parties that conducted due diligence and submitted an expression of interest in buying the firm. Final bids were due on July 30 and five non-binding indicative offers were tabled to McGrathNicol.

Autonomous Energy – which was acquired by the Iugis entity within Forum in February – had the advantage of being new to the broader stable, meaning its systems were not merged with those of the acquiring group.

Autonomous Energy’s projects include working with Lendlease on a solar car park shading system at Sunshine Plaza Shopping Centre in Queensland.

The company has also done work for Westpac, installing more than 7000 solar panels across two buildings in Sydney and Adelaide.

Creditors of Autonomous Energy have to decide whether to enter the deed of company arrangement to sell the company, return control to the directors or for it to be placed in liquidation.

The creditor report said based on Autonomous Energy’s assets and the proposed sale, McGrathNicol estimated unsecured creditors may receive between 55 to 78 cents in the dollar.

The Autonomous Energy sale agreement was proposed by entities associated with the current senior management team including Daniel Wright, Matthew Linney, Simon Mason and a private investor.

The deed of sale reflects a contribution of $975,000 plus a potential further $400,000, with the latter based on a binding contract for a subsequent sale of equity in Autonomous Energy being entered into within two months. The creditor report suggested Mr Papas and Iugis paid $3.5m for Autonomous Energy.

Westpac is also considering expanding its fraud actions against Forum and its directors, to capture other executives involved in running and overseeing the broader group of entities, according to sources. The bank is conducting tracing exercises of finances and bank accounts before it decides whether to add further defendants to the court action.

Separately, the court has ordered Pacific Blue Tax Services, which signed off on Forum Group Financial Services accounts, to hand over documents on the company.

Westpac is targeting Forum Group Financial Services, which is not formally part of the Forum group of companies corporate structure, alleging the company was used to funnel funds to other entities.

Pacific Blue Tax Services completed the Forum Group Financial Services‘ tax filings in June 2018, shortly after that entity was set up.

The Melbourne-based company’s boss Luigi Stefanetti has previously said he had only lodged the one tax filing for Forum Group Financial Services, although he noted he had acted for Mr Tesoriero “for over 10 years”.