Grain company Sapphire (SA) has collapsed, leaving creditors owed $13 million

MURRAY Bridge grain trader Brenton Jeffrey Strauss has an obvious fascination with gemstones.

MURRAY Bridge grain trader Brenton Jeffrey Strauss has an obvious fascination with gemstones.

Most of the companies that form part of his network have the names of precious stones.

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But as a couple of hundred creditors of one of those companies — Sapphire (SA) Pty Ltd — found during the past few weeks, gemstones can be quite worthless.

Mr Strauss plunged Sapphire (SA) into administration early last month, with the company buckling under net debts of about $10 million.

Sapphire (SA) was trading in four states as either Rivercity Grain Co or River City Grain Co.

But just days before placing Sapphire (SA) into administration, another company Whites Hill (SA) Pty Ltd began operating out of the same office, with a new business trading name of River City Grain.

This removed the “Co” from the business name.

Whites Hill (SA) has as its sole owner and director Peter Edwards Jacobs, a long-time associate of Mr Strauss.

Mr Strauss said he was employed by the new company.

Tensions ran hot at a creditors meeting on March 25 when some who were owed money raised issues about the operation of Whites Hill (SA).

The minutes of the meeting show Mr Strauss told one of the inquisitors “not to be a smart a---” for asking questions about the new business. He later withdrew the remark.

A report by administrator Anthony Matthews, of Anthony Matthews & Associates, said the new business entities appeared to have the characteristics of a “phoenix company” — one that rises from the ashes of another.

The report shows Sapphire (SA) might have been trading while insolvent from September 30, 2011, onwards.

It also shows that Sapphire’s net liabilities exceeded net assets from 2011 until it collapsed.

It shows there was a deficiency in working capital every year since 2010.

The report shows that in the financial year ending September 30, 2013, more than $3.3  million in bad debts had been written off by Sapphire (SA).

Convector Grain, which collapsed that year, accounted for nearly $215,000 of that list of bad debts, while $3.1 million had been written off from companies in Mr Strauss’s network.

These included $1.37 million from Moonstone (SA) Pty Ltd, $442,000 from Diamond (SA) Pty Ltd and $367,000 in Amethyst (SA) Pty Ltd.

Creditors said Mr Strauss allowed Sapphire (SA) to go into administration but wanted the other companies to continue.

Mr Strauss has offered unsecured creditors two payments of 10 cents in the dollar over the next 18 months as part of a deed of company arrangement but they have to agree to drop all claims against Sapphire (SA).

Mr Matthews has recommended creditors accept the DOCA.

A meeting is scheduled for next Monday to determine whether or not to accept the DOCA offered by Mr Strauss.

A number of creditors who spoke to The Weekly Times said they were likely to vote against accepting the DOCA.

As Burumbeet grain grower Stuart Ellis said: “His (Mr Strauss’) standard of living is fine while we eat baked beans.

“It’s just cruel”.

A NSW creditor, who did not wish to be named, said Mr Strauss should come up with a “fair dinkum DOCA”.

Mr Strauss told The Weekly Times that he was working very hard in the best interests of all unsecured creditors, but would not comment further until after the creditors meeting next week.

“Everybody is trying to do the right thing,” he said.