The Pialligo Estate property on the day the failed business’s financier took possession. Photo: Ian Bushnell.
Another Pialligo Estate company has been placed in liquidation, triggering a report to the corporate regulator that director John Russell has been involved in two failed businesses.
Liquidator Frank Lo Pilato from RSM Australia notified the winding up of Pialligo Markets Pty Ltd on 1 June.
The creditors report shows an overall debt of $571,202 owed to 50 businesses, including $279,000 to NAB.
Mr Russell is the director of 60 companies including the 10 Pialligo Estate companies associated with the failed hospitality, farm produce and tourism business at Kallaroo Road, Pialligo.
Pialligo Estate Operations Pty Limited went into liquidation on 8 April and the latest report from liquidators paints a damning picture of the business operation, concluding that it may have been trading while insolvent since 2018 and that its books do not accurately reflect its true financial position.
This potentially opens the way under the Corporations Act for an insolvent trading claim of about $8 million against Mr Russell, who the report says may have breached his duties as a director, but he disputes this and the liquidators doubt he would have the capacity to pay.
“We have conducted a computer database search to confirm whether the director holds any land or real property interests in the ACT and NSW,” the report says.
“The searches have not returned any positive results for properties held by the director in his own right.”
All up, Pialligo Estate Operations owes $10.5 million to more than 500 creditors, including $8.5 million to 319 unsecured creditors and $937,520 to secured creditors, but only $460,000 in assets have been identified.
The Australian Tax Office is the biggest creditor, owed more than $4 million.
Staff entitlements add up to $883,586 and 61 former employees have lodged Fair Entitlement Guarantee Claims with the Department of Employment and Workplace Relations.
There is also more than $200,000 in unpaid superannuation.
The liquidators say there is unlikely to be any dividend paid to unsecured creditors.
The 13 hectares of land on which the business operated is valued at $30m and is being sold by the mortgagee who took possession on 29 March, but none of the proceeds can be used to pay creditors.
The report says liquidators had also identified a number of transactions between the company and related parties involved in the running of the business that warrant further investigation.
But the liquidators have run out of funds and will only be able to continue their investigations if creditors can pay for them.
Mr Russell has said the business failed due to a combination of natural disasters, the COVID shutdown, staff shortages and interest rate rises.
The liquidators say these may have exacerbated the financial difficulties but were not the underlying reasons.
They acknowledge the COVID impact, but put the business failure down to an inability to manage taxation affairs effectively, a lack of working capital, a net asset deficiency, and accrued trading losses.
The report says there had been a lack of sufficient capital from 30 June 2019, trading losses from 30 June 2019 but as early as 30 June 2018 after excluding one-off non-recurring items and taxation debts outstanding from before 30 June 2018.
“In circumstances where a dividend of less than 50 cents in the dollar is expected to be paid to creditors, or we have identified that a director may have committed offences, we are obliged, pursuant to section 533 of the Act to refer the matter to ASIC for further enquiry and investigation,” the report says.
“A report will be lodged with ASIC shortly after the distribution of this report.”
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