Revolution Roofing sale price revealed ahead of second creditors meeting
The multimillion-dollar price secured by receivers for the sale of Revolution Roofing has been revealed, and it appears most creditors are set to miss out.
Administrators have revealed the multimillion-dollar price secured by receivers for the sale of embattled steel company Revolution Roofing, all but ending hopes of a dividend to unsecured creditors.
In a report to creditors ahead of a second meeting next week, administrator Glenn Franklin from PKF confirmed Victorian sheet metal conglomerate Design Group will pay $14.67m to take over the business and assets of Revolution Roofing following its $88m collapse in December.
The Federal Court approved the sale on May 19 following a dispute between secured creditors over claims to funds raised from the deal, which was announced by receivers at Grant Thornton in February.
The court’s decision enabled receivers to pay out an initial $5.5m from the sale proceeds to secured creditors including ASX-listed finance company Earlypay and NAB, with the balance held in a trust account pending the determination of priority claims from secured creditors.
With secured creditors owed a total of more than $55m, the sale price leaves suppliers and other unsecured creditors, whose $18.6m of debts rank below the secured claims, with little hope of a dividend.
Creditors will meet on June 28 to determine whether to wind up the company following the court’s approval of the sale to Design Group.
Mr Franklin is recommending shareholders vote him in as liquidator, promising to further investigate the conduct of director John Easling in the lead up to the company’s collapse.
Central to those investigations will be the findings of a forensic accountants’ report that claims more than $8.5m worth of false invoices could have been used by Revolution Roofing as part of a complex scheme to boost cash flow in the lead up to its collapse.
According to Mr Franklin the scheme, known as the COM (Customer Owned Materials) arrangement, was implemented around June last year.
“The commencement of the COM invoice arrangement indicates that the company was insolvent and required urgent cash-flow at the time,” Mr Franklin says in his report to creditors.
“It appears the COM arrangements undertaken by the company and PST were facilitated under the instruction of its director Mr Easling.
“Such conduct constitutes a breach of Mr Easling’s directors’ duties under the (Corporations) Act.”
Mr Franklin suggests claims resulting from Mr Easling’s potential breaches could include more than $8.5m relating to the COM invoicing scheme and $3.3m for insolvent trading since around June last year.
Potential unfair preference payments, including $1.96m in payments made to the Australian Taxation Office, will also subject to further investigation if the company is liquidated next week.
The collapse of Revolution Roofing and sister company Nexteel was the largest corporate insolvency in South Australia since the collapse of York Civil in 2018.
Design Group is due to make final payment for its purchase of the Revolution Roofing business by June 28, excluding a $1m sum that remains subject to ongoing litigation around access to intellectual property owned by Revolution Roofing’s sister company Nexteel.
Design Group has desires to take over the Nexteel brand but that business’s operations have already been shut down.
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