diploma group limited (receivers and managers … · diploma group limited diploma construction...
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© 2016 Grant Thornton Australia Ltd. All rights reserved.
DIPLOMA GROUP LIMITED
(RECEIVERS AND MANAGERS APPOINTED)
(ADMINISTRATORS APPOINTED)
Meeting of Creditors
6 January 2017
David Mark Hodgson – Joint and Several Administrator
Matthew James Donnelly – Joint and Several Administrator
Andrew Stewart Reed Hewitt – Joint and Several Administrator
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Agenda
1. Introduction
– Formal meeting requirements
– Nomination of alternate Administrator (if applicable)
2. Administrators' update
3. Questions
4. Committee of creditors
– Appointment of a committee of creditors (if required)
5. Closure
© 2016 Grant Thornton Australia Ltd. All rights reserved.
Introduction
1. Meeting of creditors in accordance with Section 436E of the
Corporations Act 2001 ("the Act").
• Purpose of meeting is to advise creditors generally about the Voluntary
Administration, confirm our appointment as Voluntary Administrators and, if
necessary, appoint a Committee of Creditors
2. Chairman
• David Hodgson in accordance with Regulation 5.6.17 of the Corporations
Regulations 2001 ("the Regulations")
3. Attendance and proxies
• Creditors in attendance must have signed the attendance register and
lodged with the Administrators a completed proxy form and proof of debt
• Observers present to sign the attendance register
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Introduction
4. Voting on resolutions
• A resolution put to the vote is decided on the voices unless a poll is
demanded before or on the declaration of the result of the voices in
accordance with Regulation 5.6.19(1) of the Regulations
5. Time and place convenient
• Notice of meeting (Section 436E(3) of the Act)
• Meeting is held at a time and place convenient to the majority of persons
entitled to receive notice of the meeting, in accordance with Regulation
5.6.14 of the Regulations
6. Quorum
• A quorum is present in accordance with Regulation 5.6.16 of the Regulations
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Introduction
7. Prior involvement of the Voluntary Administrators
• Declaration of Independence, Relevant Relationships and Indemnities
• Indemnities and up-front payments
– FPDL Investments Pty Ltd (a related party to the Company) provided an
up-front payment of $200,000 to meet our remuneration and expenses
associated with the administrations of the Company, DGX Construction
Pty Ltd and Diploma Construction (WA) Pty Ltd
– Held in our firm’s trust account and will not be drawn to meet our
remuneration until such time that it is approved by creditors.
– There are no conditions on the conduct or outcome of the administration
attached to the provision of these funds.
– If we form the view that we will recover sufficient funds from the assets of
the Company to pay any remuneration, fees and costs incurred by
ourselves, we will repay the trust funds to FPDL Investments Pty Ltd.
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Introduction
8. Confirmation or removal of the Administrators
• We have not received any nominations from any other party to act as an
alternate Administrator
• As a consequence our appointment as Administrators stands
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Administrators’ update
• Administrators appointed 22 December 2016 to:
• Diploma Group Limited ("the Company")
• Diploma Construction (WA) Pty Ltd
• DGX Construction Pty Ltd
• Receivers and Managers appointed to the above on 21 December 2016
• Control of the assets, undertakings and management of the companies is
now with the Receivers and Managers
• Deed of Indemnity and Guarantee
• The Company is the ASX listed parent company of the group.
© 2016 Grant Thornton Australia Ltd. All rights reserved.
Diploma Group Limited
Diploma Construction (WA)
Pty Ltd
DGX Construction Pty Ltd
Diploma Properties Pty Ltd
Weststructure Pty Ltd
24 Flinders Lane Pty Ltd
Rockingham Waterfront Unit
Trust
176 Adelaide Tce Pty Ltd
176 Adelaide Tce Unit Trust
Rockingham Services Apartments
Pty Ltd
Chamlabs Emporium Pty Ltd
Chemlabs Unit Trust
Lot 101 Hay Street East Perth Pty Ltd
Lot 101 Hay Street East Perth Unit
Trust
Diploma TCO Holdings Pty Ltd
300 Lord St Pty Ltd
300 Lord St Unit Trust
The Highgate Joint Venture
303 Campbell St Pty Ltd
254 West Coast Hwy Pty Ltd
The West Coast Unit Trust
Subiaco Residential Apartments Pty Ltd
The Subiaco Residential
Apartments Unit Trust
Diploma Construction (NSW)
Pty Ltd
Diploma Capital Pty Ltd
Diploma Capital Securities Pty Ltd
Allegro Realty Holdings Pty Ltd
Allegro Realty Pty Ltd
Diploma Development
Management Pty Ltd
Group Structure
50%
50% Receivers and Managers Appointed
Administrators Appointed
Trustee capacity
50% ownership
Source: Australian Securities and Investments Commission database
Company Searches database
All other information available to the Administrators
as at the date of appointment
© 2016 Grant Thornton Australia Ltd. All rights reserved.
Diploma Group Limited
Diploma Construction (WA)
Pty Ltd
DGX Construction Pty Ltd
Diploma Properties Pty Ltd
Weststructure Pty Ltd
24 Flinders Lane Pty Ltd
Rockingham Waterfront Unit
Trust
176 Adelaide Tce Pty Ltd
176 Adelaide Tce Unit Trust
Rockingham Services Apartments
Pty Ltd
Chamlabs Emporium Pty Ltd
Chemlabs Unit Trust
Lot 101 Hay Street East Perth Pty Ltd
Lot 101 Hay Street East Perth Unit
Trust
Diploma TCO Holdings Pty Ltd
300 Lord St Pty Ltd
300 Lord St Unit Trust
The Highgate Joint Venture
303 Campbell St Pty Ltd
254 West Coast Hwy Pty Ltd
The West Coast Unit Trust
Subiaco Residential Apartments Pty Ltd
The Subiaco Residential
Apartments Unit Trust
Diploma Construction (NSW)
Pty Ltd
Diploma Capital Pty Ltd
Diploma Capital Securities Pty Ltd
Allegro Realty Holdings Pty Ltd
Allegro Realty Pty Ltd
Diploma Development
Management Pty Ltd
Group Structure
General Security Agreements
50%
50% Receivers and Managers Appointed
Administrators Appointed
Trustee capacity
50% ownership
Subject to General Security Agreement
Source: Australian Securities and Investments Commission database
Company Searches database
All other information available to the Administrators
as at the date of appointment
© 2016 Grant Thornton Australia Ltd. All rights reserved.
Diploma Group Limited
Diploma Construction (WA)
Pty Ltd
DGX Construction Pty Ltd
Diploma Properties Pty Ltd
Weststructure Pty Ltd
24 Flinders Lane Pty Ltd
Rockingham Waterfront Unit
Trust
176 Adelaide Tce Pty Ltd
176 Adelaide Tce Unit Trust
Rockingham Services Apartments
Pty Ltd
Chamlabs Emporium Pty Ltd
Chemlabs Unit Trust
Lot 101 Hay Street East Perth Pty Ltd
Lot 101 Hay Street East Perth Unit
Trust
Diploma TCO Holdings Pty Ltd
300 Lord St Pty Ltd
300 Lord St Unit Trust
The Highgate Joint Venture
303 Campbell St Pty Ltd
254 West Coast Hwy Pty Ltd
The West Coast Unit Trust
Subiaco Residential Apartments Pty Ltd
The Subiaco Residential
Apartments Unit Trust
Diploma Construction (NSW)
Pty Ltd
Diploma Capital Pty Ltd
Diploma Capital Securities Pty Ltd
Allegro Realty Holdings Pty Ltd
Allegro Realty Pty Ltd
Diploma Development
Management Pty Ltd
Group Structure
Deed of Indemnity and Guarantee
50%
50% Receivers and Managers Appointed
Administrators Appointed
Trustee capacity
50% ownership
Subject to Deed of Indemnity and Guarantee
in favour of Swiss Re International SE
Source: Australian Securities and Investments Commission database
Company Searches database
All other information available to the Administrators
as at the date of appointment
© 2016 Grant Thornton Australia Ltd. All rights reserved.
Administrators’ update
• Tasks completed to date
• Preliminary review of financial positon of the Company
• Held discussions with key stakeholders, including Receivers and Managers,
secured creditors, ASX and ASIC
• Commenced investigation into related parties, including related party
transactions and directorship, shareholdings and property searches
• Commenced review of potential Preference Payments received by creditors
• Held discussions regarding a proposed Deed of Company Arrangement
• Notified all known creditors and statutory bodies of our appointment
• Dealt with queries from shareholders and creditors
• Requested a Report as to Affairs from the directors
• Prepared for first meeting of creditors
• Commenced discussions with litigation funders
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Administrators’ update - liabilities
• Total liabilities c.$15.0m
• Employee entitlements
• Secured creditors
• Unsecured trade creditors
• Intercompany Loans
• These amounts are based on the
Company's records and remain
subject to formal adjudication of
claims.
[P:\D\DIPLOMA
GROUP
LIMITED\MASTER\0
9 Statutory
meetings\First
Creditors
Meeting\First
Meeting
Slides\Diploma
Group First Meeting
Slides
Workings.xlsx]Credit
ors!$A$23:$C$24
Priority Creditors (Employ ees) $
2 Employ ees 28,887[P:\D\DIPLOMA
GROUP
LIMITED\MASTER\0
9 Statutory
meetings\First
Creditors
Meeting\First
Meeting
Slides\Diploma
Group First Meeting
Slides
Workings.xlsx]Credit
ors!$A$9:$C$10
Secured Creditors $ m
4 ALLPAAP Registrations Approx . 7.9
[P:\D\DIPLOMA
GROUP
LIMITED\MASTER\0
9 Statutory
meetings\First
Creditors
Meeting\First
Meeting
Slides\Diploma
Group First Meeting
Slides
Workings.xlsx]Credit
ors!$A$28:$C$32
Statutory Creditors $
OSR 49,673
ASIC 315
Australian Securities Ex change 1,868
Total 51,857
[P:\D\DIPLOMA
GROUP
LIMITED\MASTER\0
9 Statutory
meetings\First
Creditors
Meeting\First
Meeting
Slides\Diploma
Group First Meeting
Slides
Workings.xlsx]Credit
ors!$E$9:$G$14
Unsecured Trade Creditors No of creditors $
Ov er $100k 3 3,035,055
Ov er $50k 2 187,178
Ov er $20k 3 86,917
Less than $20k 10 68,174
Total 18 3,377,324
[P:\D\DIPLOMA
GROUP
LIMITED\MASTER\0
9 Statutory
meetings\First
Creditors
Meeting\First
Meeting
Slides\Diploma
Group First Meeting
Slides
Workings.xlsx]Credit
ors!$J$9:$L$20
[P:\D\DIPLOMA
GROUP
LIMITED\MASTER\0
9 Statutory
meetings\First
Creditors
Meeting\First
Meeting
Slides\Diploma
Group First Meeting
Slides
Workings.xlsx]Credit
ors!$J$9:$L$14
[P:\D\DIPLOMA
GROUP
LIMITED\MASTER\0
9 Statutory
meetings\First
Creditors
Meeting\First
Meeting
Slides\Diploma
Group First Meeting
Slides
Workings.xlsx]Credit
ors!$J$9:$L$13
Intercompany Loans $
Diploma Group / Dip Dev Mgt 1,000
Diploma Group / Dip Cap Sec 260,204
Diploma Group / Diploma Proper 3,453,026
Total 3,714,230
© 2016 Grant Thornton Australia Ltd. All rights reserved.
Administrators’ update - assets
• Assets
• Control of the Company's assets is now with the Receivers and Managers
– Cash at bank
– Interest in subsidiaries
– Insurance claim
• There is unlikely to be any material benefit to unsecured creditors from
the known assets of the Company
• Any return to unsecured creditors is dependent upon:
– Terms of a Deed of Company Arrangement (if accepted by creditors); or
– Recovery of Antecedent Transactions (if creditors resolve to wind up the
Company)
© 2016 Grant Thornton Australia Ltd. All rights reserved.
Administration Timeline
[P:\D\DIPLOMA
GROUP
LIMITED\MASTER\0
9 Statutory
meetings\First
Creditors
Meeting\First
Meeting
Slides\Diploma
Group First Meeting
Slides
Workings.xlsx]Timeli
ne!$B$11:$S$28
06-Jan-17
Option 1Deed of Company
Arrangement
Option 2 Liquidation
Option 3 Administration Ends
22-Dec-16 by 8-Feb-2017
Second Creditors'
Meeting to decide on
Company's future
Appointment of
Administrators
First Creditors'
Meeting Administrators' Investigations and
Report to Creditors
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Administrators’ report
• Pursuant to Section 439A of the Act the Administrators are required to:
• Convene a second meeting of creditors at which creditors will vote on the
future of the Company with regard to the options available to them
• Report provided to creditors prior to the meeting, which includes details of:
– the Company's business, property, affairs and financial circumstances;
– DOCA proposal(s) received, including key terms and estimated return(s) to
creditors;
– Assets available to a liquidator, including estimated return(s) to creditors in
liquidation; and
– Administrators' recommendation to creditors as to which of the options
available to them is in their best interests.
• A resolution put to the vote is decided on the voices unless a poll is
demanded. Under a poll a resolution passes or fails on the majority of
creditors in number and value
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Option - DOCA
• Deed of Company Arrangement ("DOCA")
• Binding arrangement between a company and its creditors
• Aims to maximise the chances of the company, or as much as possible of its
business, continuing, or to provide a better return for creditors than an
immediate winding up of the company, or both
• Details of any DOCA proposals received will be provided by the
Administrators in their report to creditors issued prior to the second meeting
• The Administrators will provide their recommendation to creditors on any
DOCA proposals received
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Option - DOCA
• The Di Latte family have indicated there intention to propose a DOCA.
• Based on our preliminary discussions the proposal would:
• Encompass creditors from all 3 companies in administration;
• Provide for a debt to equity swap into Diploma Group Limited;
• Deal with the recapitalisation of the Company, including a possible merger
with a property focused business, which is unrelated to the current Group;
and
• Provide for a preferred dividend to unsecured creditors from one or more of
the Diploma property projects.
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Option - Liquidation
• Unlikely to be any material benefit to unsecured creditors from the
known assets of the Company at the date of our appointment
• Fair Entitlements Guarantee for Employees
• Antecedent transactions (Section 588FE and 588G of the Act)
– Uncommercial Transactions
– Unfair Preference Payments
– Unfair Loans
– Unreasonable Director-Related Transactions
– Insolvent Trading Claim
– NB. Recovery of antecedent transactions are only available to a
liquidator (if appointed). The recovery of such amounts are therefore
excluded from, and not available in, any DOCA approved by creditors
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Questions
• Questions to be addressed the Chairperson
• State name and the name of the creditor you are representing
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Committee of creditors
• Creditors have the opportunity to appoint one or more of their number to
form a committee of creditors ("the Committee")
• The purpose and function of the Committee is to consult with the
Administrators about matters relating to the Voluntary Administration,
receive and consider reports by the Administrator
• No nominations to be Committee members have been received:
• Resolution: (Insert Names) be appointed to the Committee of Creditors
of Diploma Group Limited (Receivers and Managers Appointed)
(Administrators Appointed)
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Closure
• Thank you for your attendance, no further business declare the meeting
closed
• Second creditors' meeting to be held on or before 8 February 2017.