Huon Valley Seafoods: New report alleges company traded while insolvent for at least 12 months
A report filed with the corporate regulator has shed new light on the collapse of a well-regarded Huon Valley seafood processor, which collapsed after the founders handed over to interstate investors.
Tasmania
Don't miss out on the headlines from Tasmania. Followed categories will be added to My News.
The liquidator of a Huon Valley seafood processing company, which collapsed in July amid a multimillion-dollar debt, says she has formed a view that the company traded while insolvent for at least a year.
Huonville’s Huon Valley Seafood Pty Ltd, founded in 2000 by business partners Ambrose Coad and Stephen Oates, entered liquidation on July 24 amid a “significant falling out” between its founders and mainland investors that took over the company in 2022.
According to a new report filed with corporate regulator ASIC by Louisa Sijabat, the company liquidator, Huon Valley Seafoods’ debts were larger than first thought – $3,932,291, not the $3,161,544.01 originally estimated by company directors Yuan-Sheng (Kim) Xie and Ling Pu.
Significant additional debts identified in Ms Sijabat’s investigation include employee annual and long-service leave totalling $157,717.26; nearly $245,000 owed to car loan outfit Fundit Finance; and an additional $266,852 owed to secured creditor FIFO Capital Partners Pty Ltd.
On the other side of the leger, according to the report, the estimated value of the company assets has also crumbled.
The directors estimated their inventory was worth $334,889 – however, due to seafood’s perishable nature and the difficulties of its transport and storage, only $80,932 was able to be realised, according to the report.
According to Ms Sijabat’s report, the company made a profit of $938,898 before income tax in FY 2021–21, but lost $287,311 in FY 2021–22, a loss that would have been greater but for the receipt of government grants, and a further $1,472,050 in FY 2022–23.
Ms Sijabat said analysis of the company’s balance sheets suggested that in the 12–14 months
prior to her appointment, the company “heavily relied on short-term loan facilities to fund its business operations and trading losses”.
Ms Sijabat concluded that the company had likely been trading while insolvent “from a date between 30 June 2022 and 30 June 2023, or potentially earlier”.
Ms Sijabat said she had formed a preliminary view it would be “uncommercial” to pursue any action against Mr Xie and Ling Pu personally unless additional funding was provided by creditors. No action has been taken against any individuals.
“I am... advised that there are creditors who hold personal guarantees against them. Should these guarantees be valid and pursued, this would... reduce the amount of any of the personal assets available to meet any judgement against them,” she said.
Ms Sijabat said that it was likely that only one secured creditor – NAB – would receive a dividend, but it would not claw back the full amount it was owed, $896,099.
“There may also be some funds for the payment of some priority employee entitlements, however, this is yet to be confirmed,” she said.
“It does not appear likely that there will be sufficient recoveries made in the liquidation to enable a dividend to any remaining secured creditors and/or ordinary unsecured creditors.”
Attempts were made to contact the directors via Mr Xie’s company REC Capital – which is a secured creditor owed $1.04m by Huon Valley Seafoods, in addition to Mr Xie being personally owed $158,610 – but the Mercury did not receive a response.
Ms Sijabat has concluded a sale agreement for Huon Valley Seafoods’ assets, but it is yet to be finalised.
Taxpayers could be slugged for another month amid Spirit lease talks
The new Spirit of Tasmania IV, which is currently berthed in Scotland, may remain there for up to an additional month at a cost of more than $23,000 a week to taxpayers.
Shooters put rabbit fix on the menu
Hobart’s ballooning urban rabbit population would be managed as a sustainable food resource with a cull by shooters, the Shooters, Fishers and Farmers Party says. Here’s how.