circular to creditors - pilot partners€¦ · circular to creditors bestjet travel pty ltd (in...

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CIRCULAR TO CREDITORS

Bestjet Travel Pty Ltd (In Liquidation) ACN 155 965 601

Formerly Trading as “Bestjet.com” We refer to our appointment as Liquidators of the Company on 31 January 2019 and our previous correspondence. This circular should be read in conjunction with our previous reports to creditors which can be found here: https://www.pilotpartners.com.au/bestjet-report-to-creditors/. The purpose of this circular is to provide creditors with a brief update on the status of the liquidation. A more detailed report to creditors outlining our investigations and actions will be issued in the coming months. 1. Creditor Claims We anticipate there will be sufficient funds available to enable a partial dividend to unsecured creditors and that employee entitlements will be paid in full. Over 7,200 creditors have advised of potential claims against the Company. We are in the process of reviewing and adjudicating on creditors’ claims. The exact amount owing to unsecured creditors and the quantum of the dividend cannot be determined until such time as all creditors have lodged a Proof of Debt with the Liquidators and the process of adjudication has been completed. Should you wish to make a claim in the administration (and if you have not already done so) we encourage you to lodge your proof of debt (refer Appendix A) electronically by registering on the creditors' portal located at https://creditors.accountants/Job/614/. Creditors will be notified when we are in a position to declare a dividend to creditors.

2. Appointment of Special Purpose Liquidator Wynyard Travel Pty Limited (In Liquidation) (“Wynyard”) has lodged a Proof of Debt (“POD”) in the Company’s liquidation in the amount of $8,389,957.59 for services and tickets purchased on the Company’s behalf that were never paid for by the Company. These tickets were supplied to the Company’s customers and the Company (not Wynyard) stood to receive (or did receive) payment from those customers for those tickets. Nigel Markey and Bradley Hellen of this office are also the Liquidators of Wynyard. To avoid any potential conflict of interest in adjudicating on this POD, the Liquidators of the Company applied to the Federal Court of Australia for an Order to appoint a Special Purpose Liquidator to adjudicate on Wynyard’s claim against the Company. On 23 July 2020, Orders were handed down appointing Mr David Clout as the Special Purpose Liquidator to adjudicate on Wynyard’s claim. Please find attached a copy the Court Order (refer Appendix B) and report required to be submitted by Mr Clout (refer Appendix C). Mr Clout’s function is very limited – his only role is to adjudicate upon this particular POD. Mr Markey and Mr Hellen continue to be responsible for all other matters associated with the liquidation of the Company.

Pilot is a trade mark of Pilot Partners Pty Ltd ACN 105 267 061 ABN 58 144 064 946 Liability limited by a scheme approved under Professional Standards LegislationNexia International is a worldwide network of independent accounting and consulting firms.

PILOT PARTNERSChartered Accountants

Level 10, Waterfront Place 1 Eagle St. Brisbane 4000

PO Box 7095 Brisbane 4001 Queensland Australia

P +61 7 3023 1300F +61 7 3229 1227

pilotpartners.com.au

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3. Committee of Inspection We have liaised with members of the Committee of Inspection throughout the administration to provide updates and seek their input on various matters concerning the administration. Six Committee of Inspection meetings have been convened to date. We thank all Committee members for their assistance to date. 4. Public Examinations Public examinations of relevant persons were conducted in order to assist with our investigations into any potential claims we may have for the benefit of creditors. In the course of the examinations 17 persons were examined and approximately 296,000 documents were produced by the examinees in relation to the Company. The persons examined included the director, former director, advisors to the director, major creditors and former employees. A summary of our investigations following the public examinations are outlined below. Further details will also be provided in our upcoming report. 5. Integrapay Pty Ltd (“Integrapay”)

Information obtained throughout the public examination confirmed our preliminary view that Integrapay Pty Ltd’s (“Integrapay”) Quistclose trust claim over the funds held by the Liquidators (totalling $3,607,779) was without merit.

The Liquidators have subsequently entered into an agreement with Integrapay Pty Ltd whereby Integrapay agreed to:

• Formally withdraw its Quistclose trust claim against funds in the liquidation totalling $3,607,779;

• Pay the Liquidators further funds totalling $30,765 which Integrapay had received from customers after 17 December 2018;

• Pay a contribution to cover the Liquidators’ legal fees in dealing with the matter; and • Reduce the quantum of their Proof of Debt or Claim in the liquidation by $2.5 million.

There is no further action required in relation to the Quistclose trust claim. In our view, this has been an excellent outcome for creditors. The Liquidators have been able to quickly obtain access to substantial funds for the benefit of creditors at minimal cost despite a serious challenge.

6. Bestjet Travel Pte Ltd (“Bestjet Singapore”) In April 2019 we commenced legal proceedings in Singapore against Bestjet Singapore to recover rebates received totalling approximately $3.2 million, which we allege were received as agent for the Company.

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Evidence obtained during the public examinations revealed these rebates were paid by Sabre Asia Pacific Pte Ltd (“Sabre”) to Bestjet Singapore shortly prior to the Liquidators’ appointment. These funds had not been remitted to the Company, even though the Company had generated the ticket sales to achieve the milestones which triggered the entitlement to the payment of the rebates. A summary of the rebates which the Liquidators asserted to be owing to the Company are as outlined below: Avenues of Recovery for Outstanding Rebates Approximate Amount (AUD$)Funds held in trust – not yet paid to Bestjet Singapore 340,000Funds paid already to Bestjet Singapore 3,200,000Total 3,540,000

Bestjet Singapore has strenuously defended our claim. Recently, Bestjet Singapore has agreed to engage in mediation in order to resolve the dispute and obtain a commercial outcome for creditors. The mediation was conducted by a former Judge of the Supreme Court of Singapore, Justice Andrew Ang, over 18 August 2020 and 19 August 2020. His Honour is an experienced and well-respected commercial judge. Despite our claim against Bestjet Singapore being a “claim” and not a debt, out of an abundance of caution, we sought approval from the Committee of Inspection pursuant to section 477(2A) of the Corporations Act 2001 to compromise a debt greater than $100,000. The Committee of Inspection provided that approval. The mediation was very productive and we remain in advanced settlement discussions with Bestjet Singapore. We will provide creditors with an update on the outcome of these discussions in our next report. Should you have any queries please contact [email protected]. Yours faithfully NIGEL MARKEY JOINT & SEVERAL LIQUIDATOR

Date: 20 August 2020

Appendix A

Australian Company Number: 155 965 601 Formerly Trading as “Bestjet.com”

Subregulation 5.6.49(2) FORM 535

Corporations Act 2001 FORMAL PROOF OF DEBT OR CLAIM (GENERAL FORM)

To the Liquidators of Bestjet Travel Pty Ltd (In Liquidation)

1. This is to state that the company was on 18 December 2018, and still is, justly and truly indebted

to ……………………………………..…………………………….……………… (name of creditor) for

$…………………………..……………………..(amount).

Particulars of the debt are:

Date Consideration (state how the debt rose) Amount ($)

Remarks (include details of voucher substantiating payment)

I am not a related creditor of the company.

I am a related creditor of the company. Relationship:

2. To my/our knowledge or belief the creditor has not, nor has any person by the creditor's order, had or received any satisfaction or security for the sum or any part of it except for the following:

Date Drawer Acceptor Amount ($) Due Date

3. Do not complete this section if this proof is made by the creditor personally.

I/We are employed by the creditor and authorised in writing by the creditor to make this statement. I/We know that the debt was incurred for the consideration stated and that the debt, to the best of my/our knowledge and belief, remains unpaid and unsatisfied.

I/We are the creditor's agent authorised in writing to make this statement in writing. I/We know that the debt was incurred for the consideration stated and that the debt, to the best of my/our knowledge and belief, remains unpaid and unsatisfied.

4. I/We have attached the following documents (tick as many as appropriate):

Invoices Letters of Demand Guarantee from company Monthly Statements Orders from company Credit Application Judgement from Court Statutory Demand Other documents

Date: …………/…………../…………

Name: …………………………………………………………………………………………………….………………………………

Address: …………………………………………………………………………………………………….………………………………

Phone: …………………………………………………………………………………………………….………………………………

Email: …………………………………………………………………………………………………….………………………………

Signature: …………………………………………………………………………………………………….………………………………

How to complete a Proof of Debt or Claim (Form 535)

It is a creditor’s responsibility to prove their claim to our satisfaction. When lodging a Proof of Debt, creditors should make sure that:

The Proof of Debt or Claim (Form 535) is fully completed; and Substantiating documents, as described below, are attached.

A. Directions for completing a Proof of Debt (Form 535)

1. Insert full name and the amount you are owed (inclusive of GST). Complete the table at 1. with the following information:

Table Heading Details Date Insert the date the debt arose Consideration Explain how the debt arose (e.g. “goods/services provided”) Amount Include the total amounts owed to you (inclusive of GST) Remarks Provide details of the substantiating documentation you have attached

(refer to 4. of the form for examples of documents)

Tick related creditor if you are the director, relative of director, related company, beneficiary of a related trust.

2. Leave this section blank, unless you are a secured creditor and hold security over the company’s asset(s).

3. If you are completing the Form 535 for a debt owed to you personally, do not complete this section. Proceed to 4.

If you are completing the Form 535 on behalf of a creditor, please mark where relevant.

4. Please mark where appropriate and ensure you attach full supporting documentation to prove your claim.

5. Date the form and complete your contact details on the form.

B. What do you need to attach?

Please provide sufficient documentary evidence to substantiate your claim. Outlined below are some examples of documents to attach to your Form 535:

Trade Creditors Employees Leases Guarantees/ Indemnities

Invoices/statements Purchase orders Delivery documents Agreements on terms of trade

Calculation of the debt Type of claim (wages, annual leave, superannuation, etc) Contract of employment (if any) Any relevant correspondence

Lease agreement Statement showing outstanding debt owed differentiating between amounts outstanding prior to the date of appointment and any amounts due in the future

Executed guarantee/indemnity Notice of Demand issued to the guarantor Calculation of the amount owed under the guarantee/indemnity

Loans Judgement Debt Deficiency on Secured Debt

Executed loan agreement Loan statements showing payments made, interest accrued and amount outstanding as at the date of appointment

Copy of the judgement Documents to support the debt owed

Security document(s) Basis of the creditor’s estimated value of the security or valuation Calculation of the deficiency on the security

Please return a copy of your completed Form 535 with substantiating documents to our office by email, facsimile or post.

Appendix B

Prepared in the Queensland District Registry, Federal Court of Australia Level 6, Harry Gibbs Commonwealth Law Courts, 119 North Quay, Telephone 07 3248 1100

Federal Court of AustraliaDistrict Registry: Queensland Division: General No: QUD170/2020

IN THE MATTER OF BESTJET TRAVEL PTY LTD (IN LIQUIDATION) ACN 155 965 601 & WYNYARD TRAVEL PTY LIMITED (IN LIQUIDATION) ACN 107 305 224

NIGEL ROBERT MARKEY AND BRADLEY VINCENT HELLEN IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF BESTJET TRAVEL PTY LTD (IN LIQUIDATION) ACN 155 965 601 & WYNYARD TRAVEL PTY LIMITED (IN LIQUIDATION) ACN 107 305 224Plaintiffs

BESTJET TRAVEL PTY LTD (IN LIQUIDATION) ACN 155 965 601 and another named in the schedule Defendant

ORDER

JUDGE: JUSTICE REEVES

DATE OF ORDER: 23 July 2020

WHERE MADE: Brisbane

THE COURT ORDERS THAT:

Appointment of Special Purpose Liquidator

1. Pursuant to s 90-15(1) of the Insolvency Practice Schedule (IPS), David Lewis Clout be appointed as the additional joint and several liquidator (Special Purpose Liquidator) of the first defendant, Bestjet Travel Pty Ltd (in liquidation) ACN 155 965 601 (Bestjet), for the purpose of exercising the following powers and performing the following functions and duties:

(a) adjudicating on any proof of debt which has been, or may be, submitted by the second defendant, Wynyard Travel Pty Ltd (in liquidation) ACN 107 305 224 (Wynyard) in the winding up of Bestjet (Wynyard Proof of Debt), in accordance with Part 5.6 of the Corporations Regulations 2001 (Cth) (Regulations);

(b) performing all of the functions and exercising all of the powers which are necessary for the purpose of that adjudication, including:

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(i) exercising any powers and complying with any obligations conferred on liquidators by rules 5.6.52 to 5.6.57 of the Regulations in relation to the Wynyard Proof of Debt;

(ii) conducting investigations into any of the matters which are necessary to adjudicate on the Wynyard Proof of Debt, including, if thought appropriate:

(A) inspecting the books and records of Bestjet;

(B) conducting examinations pursuant to sections 596A and 596B of the Corporations Act 2001 (Cth) (Act) and obtaining orders for production pursuant to sections 579(9) of the Act; and

(C) requiring statements to be provided pursuant to section 475(2) of the Act;

(c) exercising any powers and complying with any obligations conferred on liquidators by sections 477 and 506(1)(b) of the Act in relation to the adjudication of the Wynyard Proof of Debt, including the power to seek relief under section 588FF and 1317K of the Act, except for the powers contained in section 477(1)(a) and (2)(c), (ca), (f), (g) and (m) of the Act; and

(d) conducting any negotiations and defending any proceedings which arise in connection with the outcome of that adjudication, including as a result of the Wynyard Proof of Debt being accepted or rejected.

(Adjudication Functions).

2. Pursuant to section 90-15 of the IPS, the plaintiffs (in their capacity as primary liquidators of Bestjet):

(a) must refrain from exercising any of the Adjudication Functions specified in paragraph 1 above, except with the prior written consent of the Special Purpose Liquidator or by leave of this Court; and

(b) must use their reasonable endeavours to assist the Special Purpose Liquidator to exercise the Adjudication Functions, including by providing any documents or information previously prepared or obtained by them in investigating or pursuing any claim in relation to any of the matters.

3. Pursuant to section 90-15 of the IPS, the Special Purpose Liquidator:

(a) shall, in accordance with the requirements of the Act, report to creditors of Bestjet, and any liquidators of Bestjet then in office, on the terms of the Special

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Purpose Liquidator’s appointment and, subsequently, once every 6 months during the course of the Special Purpose Liquidator’s appointment; and

(b) must refrain from exercising any powers or performing any functions which are not Adjudication Functions specified in paragraph 1 above, except with the prior written consent of the plaintiffs or by leave of this Court; and

(c) must use his reasonable endeavours to assist the plaintiffs to exercise their powers and functions as the primary liquidators of Bestjet.

4. The plaintiffs and the Special Purpose Liquidator each have leave to apply in this proceeding with three days’ notice, including for the purposes of extending or restricting the scope of their functions pursuant to section 472(6) of the Act.

Remuneration of the Special Purpose Liquidator

5. Pursuant to 60-10(2) of the IPS, the remuneration of the Special Purpose Liquidator be approved in the Schedule of Hourly Rates attached to the Form 8 Consent of the Special Purpose Liquidator filed on 3 June 2020.

Costs

6. The plaintiffs’ costs of this application are to be costs shared equally in the liquidations of Bestjet and Wynyard.

Notice to Creditors and Leave to Apply

7. The plaintiffs provide a copy of these Orders as soon as practicable to:

(a) all known creditors of Bestjet and Wynyard by sending it to their last known postal or email addresses; and

(b) the ASIC.

8. The ASIC, and any creditor of Bestjet or Wynyard who may wish to be heard in relation to the matters which are the subject of these Orders, have leave to apply in this proceeding with three days’ notice.

Date that entry is stamped: 23 July 2020

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Schedule

No: QUD170/2020 Federal Court of Australia District Registry: Queensland Division: General

Second Defendant WYNYARD TRAVEL PTY LIMITED (IN LIQUIDATION) ACN 107 305 224

Appendix C