CREDITORS of The Old Kiama Wharf Company Pty Ltd have placed the company into liquidation after a second creditors’ meeting last Wednesday (January 27).

The company operated Cargo’s Wharf Restaurant and Barnacles Seafood Take-Away and Bistro in Kiama and, according to the administrator’s report, has debts of $3.8 million – which includes money owed to suppliers, the Australian Taxation Office and former employees’ superannuation.

The Old Kiama Wharf Company director Christina Jackman placed the company into voluntary administration on December 10, 2009.

Creditors resolved to replace the appointed administrator with Peter Krejci, from BRI Ferrier, and he was appointed on December 22. After he made the recommendation for the company to go into liquidation, Mr Krejci became the liquidator.

In a report on the company dated January 19, Mr Krejci said the company’s failure was based on poor strategic management of the business, poor financial control, including lack of records, and trading losses. The report said the company was incorporated in 2001 and had been involved in a protracted dispute with Cliffshaw Pty Ltd, a major creditor.

Cliffshaw Pty Ltd had submitted a proof of debt for more than $1.75 million owed by The Old Kiama Wharf Company.

In November 2009, The Old Kiama Wharf Company sold its business and assets to Betohuwisa Investments Pty Ltd. The sole director of Betohuwisa Investments is Samantha Hamilton, the daughter of Warwick Colbron, who is Ms Jackman’s de facto partner.

Mr Colbron was legal adviser to The Old Kiama Wharf Company.

BRI Ferrier manager James Koutsoukos said Mr Krejci’s preliminary findings were that the company was probably insolvent for a number of years and that it appeared the company had not met its statutory obligations and liabilities for many years, including debts to the Australian Taxation Office (GST and PAYG withholding tax) and superannuation contributions.

Mr Koutsoukos said Mr Colbron had raised some issues at the meeting of creditors on Wednesday regarding the company’s solvency, which would be investigated further by Mr Krejci.

“It may be determined by the liquidator that the issues raised by Mr Colbron will alter Mr Krejci’s initial opinion that the company was insolvent for many years, but this is unlikely to be the case given the company has failed to pay superannuation contributions for many years,” Mr Koutsoukos said.

Mr Krejci also said in his report that the sale to Betohuwisa Investments was “certainly not at arm’s length transaction given the relationship between the proprietors” and noted that the business was not marketed or offered to the public.

However, it was later clarified that Mr Colbron was not a former or existing proprietor of the company or its business.

The business was valued and sold for $475,000 but, after his investigations, Mr Krejci thought $1 million was a more realistic figure.

In his report, Mr Krejci said he was of the opinion that the sale to Betohuwisa Investments was entered into to effectively retain control of the company’s business at a time when the company was insolvent.

“If the sale is determined to be an uncommercial transaction, then the liquidator will assess the commerciality of a number of avenues to recover a more appropriate (if the sale is deemed to be at an inappropriate value) value for the business sold to Betohuwisa,” Mr Koutsoukos said.

“The issue of whether the transaction is an uncommercial transaction is subject to gathering further evidence and legal advice.”

Mr Koutsoukos said that if the sale were found to be a commercial transaction it would not be challenged and, assuming Betohuwisa Investments paid all funds due under the sale agreement, the business (not the company) would remain with Betohuwisa Investments.

In the report, Mr Krejci said creditors had requested that he investigate whether Mr Colbron was a shadow director of the company.

Mr Krejci said it appeared Mr Colbron may have acted as director and it may be the case that Mr Colbron was also a shadow director of Betohuwisa Investments. Investigations are continuing.

Now The Old Kiama Wharf Company has gone into liquidation, Mr Koutsoukos said the creditors could be paid only from the company’s assets.

The report said the company’s liabilities included: $365,558 for employee entitlements; more than $1 million owed to the ATO and more than $500,000 owed to creditors/suppliers.

Mr Koutsoukos said the only asset the company had was the proceeds from the sale of the business to Betohuwisa Investments, which is due to be paid by July 2010.

“If insufficient funds are available in the liquidation, then there will not be a full return to the creditors and, unfortunately, their debts will need to be written off,” he said.

Restaurant to continue with eye to future

MARK BRANSDON

The Old Kiama Wharf Company’s former legal adviser, Warwick Colbron, could possibly still have an advisory capacity with the new company that owns Cargo’s On The Wharf Restaurant.

Mr Colbron said it would be business as usual at the restaurant, “but it is looking to develop the site, so they’ve told me, and they’ve indicated as obviously wanting to retain me to assist in the development aspect”.

The Kiama Independent was unable to contact former Old Kiama Wharf Company director Christina Jackman or Betohuwisa Invest­ments Pty Ltd director Samantha Hamilton.

When Mr Colbron spoke to the Independent, he “totally denied” that he was a shadow director of Old Kiama Wharf Company, as suggested by liquidator Peter Krejci.

“And that has been retracted by the administrator, who is now the liquidator,” Mr Colbron said. “He retracted that at the second creditors’ meeting, which was held on the Wednesday, the 27th of January.

“He also retracted any assertion that I was a proprietor, and he also retracted any assertion that I was a controller.”

Mr Colbron denied the company had not been sold “at arm’s length”.

“It was sold at a value which was determined by an independent, certified, expert valuer at arms’ length,” he said. “And that is an issue which, quite properly, is a matter for future determination.”

Mr Colbron said that as the former solicitor to the company, “who over the years acted in many, many matters on behalf of the company”, he was saddened to see it come to liquidation, but that “it was the only proper thing that could be done”.

He said there had been discussion about him assisting the new company in relation to a development aspect and he was considering whether he would be involved as a lawyer in that regard.