Lempriere Grain: Farmers may have to repay money after trader collapse

GRAIN growers who have been paid in the past six months by collapsed trader Lempriere Grain may be forced to repay tens of thousands of dollars.

Big player: Lempriere Grain traded between 250,000 tonnes and 500,000 tonnes of grain annually, according to Grain Trade Australia. Picture: Andy Rogers

GRAIN growers who have been paid in the past six months by collapsed trader Lempriere Grain may be forced to repay tens of thousands of dollars under “unfair preference” rules in the Corporations Act.

Lempriere Grain was placed in voluntary liquidation last week with debts expected to be in the millions of dollars. It is the third grain trader to fold in the past six months, after Special One Grain Accumulator collapsed last October and Queensland company All Commodities was placed in administration last month.

Special One Grain Accumulator is a subsidiary of Walgett Special 1 Co-operative.

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Creditors agreed to place it in liquidation two weeks ago, after it recorded debts of more than $17 million, including $6.1 million owed to National Australia Bank.

The failure of Lempriere Grain means that, in the past six years, more than nine grain traders have collapsed, collectively leaving debts of more than $65 million. Only a part of that debt has been recovered.

Insolvency specialists Andrew Spring and Trent Devine, of Jirsch Sutherland’s Melbourne office, were appointed as joint administrators of Lempriere Grain last Thursday.

According to Grain Trade Australia’s website, Lempriere Grain traded between 250,000 tonnes and 500,000 tonnes of grain annually.

Lempriere Grain made several payments to growers in recent weeks, some as partial payment on debts owed.

In a report on Special One Grain Accumulator sent to creditors last November, Spring said payments to creditors made by a company within six months of appointment of an administrator might be deemed an “unfair preference” if the company was insolvent or the creditor knew or ought to have known it was insolvent.

But the Australian Securities and Investments Commission said insolvency was not a prerequisite for an unfair preference payment.

Growers and other traders had become concerned during the past few weeks about slowness in payments for grain contracted to the Melbourne-based company.

One grower owed money had been told by Lempriere Grain it was expecting a cash injection of about $27 million by a third party.

Victorian Farmers Federation president David Jochinke said he knew of two farmers who were owed about $300,000 each.

Mr Jochinke said farmers should not be the creditors to receive funds last.

“They’re the ones the business relies on the most but yet, they’re the ones that receive the least funds,” he said.

Mr Jochinke said it was wrong for money already paid to farmers for their grain to be recouped under unfair preference rules.

“Anyone who has got the money in their account should never have to pay it back unless they were paid with criminal intent,” he said.

“But we are talking about farmers here who are in a tough year already and potentially having to pay funds back is completely wrong.”

ASIC documents show Lempriere Grain is half owned by Singapore company Starcom Resources Pte Ltd, with the other 50 per cent stake held by two companies owned by Toorak businessman, William Lempriere, of the well-known Lempriere wool trading family.

Lempriere Grain uses the Lempriere name under a licence agreement.

Rule's View. Cartoon: Chris Rule

In a statement to The Weekly Times, Lempriere Capital said neither it nor company principal William Lempriere had “any operational involvement whatsoever in Lempriere Grain”.

“The directors of Lempriere Grain have been sent a notice of revocation of the licence agreement,” the statement said.

Mr Lempriere had been a director of Lempriere Grain since its inception in 2003 until he resigned in January last year.

The other directors are Jon Holdsworth, who worked for the company, and Singapore-based Ajay Aggarwal.

Mr Aggarwal is the founder and managing director of Starcom Group, the parent company of Starcom Resources.

Starcom Resources was an international commodity trader regarded as the flagship company of the Starcom Group.

The Starcom Group traded in grain and nuts and had offices in India, Ukraine, Australia and South America.

Starcom Resources’ website has also recently been pulled down.

VFF Grains Group president Ash Fraser said farmers would be “absolutely gutted” by the collapse of Lempriere Grain, particularly after a drought and smaller crops.

Mr Fraser said grain traders should be required to undergo financial health checks and reporting on an annual basis.

“But the trade has been pushing back on that,” he said.

A meeting of creditors is scheduled for next Monday.

The Weekly Times has been unable to contact Mr Holdsworth or Lempriere Grain.