Encompass likely insolvent a year earlier than previously thought, directors asked to pay $1.65m

The directors of collapsed community organisation Encompass will be asked to repay $1.65m of debt incurred, as liquidators reveal the company was likely insolvent for a year longer than previously thought.

The directors of collapsed community organisation Encompass will be asked to repay $1.65m of debt incurred, as liquidators reveal the company was likely insolvent for a year longer than previously thought. Inset: Encompass board chair Alyson Miller.

Liquidators investigating collapsed community organisation Encompass will demand the company’s directors pay back $1.65m of debt the company incurred while trading insolvent.

In a bombshell report to creditors released on Tuesday, forensic accounting firm Worrells has revealed the company may have been insolvent for a year longer than initially suspected.

The Geelong Advertiser reported in February that Worrells was investigating whether the company had been trading insolvent since June 2022.

In May, the firm asked creditors to fund investigations into insolvent trading.

Now it can be revealed the company was likely insolvent since June 2021, according to the liquidator’s assessment.

Liquidator Nathan Deppeler said his investigations found Encompass took on debts of $1.654m between June 30, 2021 and Worrells’ appointment in early-2023.

“This is the potential value of the insolvent trading claim against the Board of Directors,” he wrote.

“While I am unaware of the financial capacity of each of the Directors on the board, I intend to issue a demand requesting payment of the insolvent trading claim against each of them.”

Encompass’ directors are Amanda Wilkens, Grace Brown, Gloria Jellef, Daniel Kovacev and board chair Alyson Miller, according to Worrells.

Mr Deppeler said Worrells did not intend to pursue further investigations of claims including misappropriation of funds, underpayment of wages and a lack of corporate governance at Encompass after receiving legal advice such as claims would be “difficult to establish” and costly to investigate.

“The costs to pursue same would be significant in comparison to the likely claims available,” he wrote.

“We do not consider it is likely to lead to a good commercial outcome for creditors.”

The report also revealed Worrells rejected multiple offers from the Deputy Commissioner of Taxation.

The Geelong Advertiser reported in November the firm was still locked in talks with the DCT, regarding $543,849 in tax payments by Encompass the firm believed to be recoverable.

According to the report, the DCT put forward an offer of $380,000 but disputed Encompass had been insolvent at the time it made the payments.

After a counteroffer from Worrells, the DCT put forward another offer of $400,000, which was rejected.

“In our view the settlement offer does not account for the overall strength of the claims,” Mr Deppeler wrote.

“We are considering further action as appropriate including potential legal proceedings.”

Thus far, Worrells has managed to recover more than $309,000 in money owed to Encompass.

The firm is seeking to recover an additional $13,186, while more than $62,000 of debt owed to Encompass has been deemed un-recoverable and written off.

Originally published as Encompass likely insolvent a year earlier than previously thought, directors asked to pay $1.65m