Lempriere Grain may have traded while insolvent for years before 2019 collapse

Failed grain trader Lempriere may have traded while insolvent for years before its 2019 collapse — and that’s not all a court has heard.

Lempriere Grain may have been insolvent for much of the past decade.

Failed grain trader Lempriere Grain Pty Ltd may have been trading while insolvent for much of the past decade, a Federal Court examination has heard.

And the company may have delayed payments to grain growers to prop up its financial accounts to avoid scrutiny by the Australian Taxation Office.

Lempriere Grain liquidators Trent Devine and Andrew Spring have taken the company’s current directors Ajay Aggarwal and Jonathan Holdsworth and former director Will Lempriere to court to ascertain why the company collapsed.

Will Lempriere.

Lempriere Grain was placed in administration in March 2019, with 144 unsecured creditors owed $19.37 million.

Many of those creditors were grain growers who had committed various quantities of grain on the back of the Lempriere name, which had a solid reputation built up over decades in the wool industry.

A July 2019 report by the liquidators said it was “evident that the company was insolvent from at least 31 December 2018, if not earlier”.

The report said that “further investigation would be required to determine if the company was insolvent prior to Mr Lempriere’s resignation (as a board director in January, 2018) and the value of debts incurred between the date of insolvency and the date of resignation”.

It said the potential claim against Mr Aggarwal and Mr Holdsworth could be about $19 million, and less for Mr Lempriere, if breaches of directors’ duties were proven, such as trading while insolvent.

Barrister Anthony Cheshire SC, for the liquidators, questioned Mr Aggarwal in a virtual examination in the Federal Court yesterday.

Mr Aggarwal, a half owner of Lempriere Grain, said he was also the founder and managing director of Singapore business Starcom Resources Pte.

It was a subsidiary of the Starcom Group, but all Starcom companies were now awaiting to be wound up.

Mr Aggarwal was now working as a consultant based in London and gave evidence from Romania.

He told the court Starcom was the funder of grain sourced in Australia by Lempriere Grain.

Starcom Resources claimed to be the largest creditor of Lempriere Grain, with $9.9 million owing.

Mr Cheshire presented financial reports of Lempriere Grain which showed from about 2010 until its collapse in 2019, it only made a profit in one year: 2016, of $2.27 million.

The following year, Lempriere Grain suffered a loss of $6.1 million.

Mr Cheshire said company balance sheets showed the net assets were in a deficit every year since 2010, and had reached a net deficit of $8.9 million in 2017.

“Isn’t it the case from what I have shown you that right from 2010 onwards there were problems paying (grain) suppliers right through until 2019?” Mr Cheshire asked.

“I don’t know,” Mr Aggarwal replied.

“If you were unable to pay suppliers, doesn’t that suggest there may be a problem with insolvency?” Mr Cheshire asked.

“Yes, but they were paid,” Mr Aggarwal replied.

Mr Cheshire: “How do you know that?”

Mr Aggarwal: “It’s an assumption.”

Mr Cheshire produced an email from Mr Holdsworth to Mr Aggarwal dated December 19, 2012.

In it, Mr Holdsworth told Mr Aggarwal Lempriere Grain had to liquidate more than 5000 tonnes of grain that afternoon to generate cash to improve its cash flow.

“At that time, we will still be $2.2 million short to be able to pay all our suppliers & this excludes $1.8 million of accrual invoices that will become due & may need to be paid by 11 Jan,” Mr Holdsworth said.

“So will have to stop paying growers for a while.

“We will also need to find an alternate long term solution to our cashflow issues.”

The court examination continues this week.

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