Public examination wanted over Coast company's $6.5m collapse
LIQUIDATORS investigating the collapse of the administrative arm of SmartCity Vocational College Pty Ltd are now seeking funding for a public examination.
A lack of documentation from SC Admin Pty Ltd has prevented Worrells Sunshine Coast partner and liquidator Paul Nogueira from determining the cause of the company's collapse.
In his report to creditors dated November 10, Mr Nogueira said since his December 16, 2016 appointment they had been trying to secure the complete books and records of the company.
Solicitors engaged by former SC Admin director Jim Spong provided what they say are the company's records - a series of Excel spreadsheets and another document - which Mr Nogueira did not consider to be the complete records.
No original documents were provided for the company which employed more than 250 people around the country, including its Maroochydore headquarters, and operated from 18 different locations including Ipswich, Toowoomba, Hervey Bay, Gympie, Rockhampton, Bundaberg and Caloundra.
"These documents provide limited insight into the company's affairs and are insufficient for us to complete our investigations into its affairs," Mr Nogueira's report reads.
"No original records have been provided to verify the Excel documentation and I do not consider they consist of the entirety of the company's records."
The report said Mr Spong's legal representatives had to-date not provided contact details for the company's bookkeeper.
Mr Nogueira's limited investigations had so far revealed more than $46 million in payments made in the 12 months prior to his appointment, as well as a number of issues with unverifiable amounts in the company's balance sheet without proper documentation.
Among those was a software development pool containing more than $400,000.
A fleet of cars worth more than $275,000 had been ruled out as retrievable to pay creditors, given the security charges held over the cars by the Commonwealth Bank.
Potentially recoverable assets totalling about $555,000 had been identified, but unable to be investigated further.
Mr Spong did not respond to questions, while Mr Nogueira was unable to comment further without conducting deeper investigation of the company.
None of the documents provided had revealed any money owed to SC Admin by SmartCity Vocational College - the latter pocketed more than $80 million in two years through the Federal Government's higher education loan scheme.
Of the 233 students that started courses with SmartCity in 2013, only 38 had finished their course within three years.
The Federal Government did fork out more cash though, with almost $2.3 million in taxpayer funds used to cover outstanding employee entitlements unpaid by SC Admin.
Seventy creditors have provided proofs of debt to-date, totalling more than $6.5 million.
Among them, the Queensland and Tasmanian Office of State Revenue had filed claims, while multiple debtors claimed to be owed more than $100,000 each.
A number of secured creditors registered securities only days before SC Admin's collapse, but Mr Nogueira's report said legal advice was required to determine the validity of those claims.
The lack of funding meant he'd been unable to make that determination as yet.
"Based on the limited records provided to my office I do not consider the company has retained sufficient records pursuant to Section 286 of the Corporations Act 2001," the report reads.
The report identified the possibility of shadow directors operating in SC Admin, but investigations into insolvent trading, preferential payments, voidable transactions and potential offences had all been stalled.
The Australian Securities and Investments Commission had also been engaged to help recover the company documents, but those efforts were still ongoing.
"If no funding is provided by creditors these investigations will be closed and the administration finalised," Mr Nogueira's report said.
Liquidators had been notified of an invoice sent to SmartCity Vocational College by SC Admin for more than $855,000, as well as a loan ledger from SmartCity Vocational College.
That ledger detailed the transfer of cars from SC Admin to SmartCity Vocational College before liquidators were appointed.
The report said Mr Spong's legal team was unable to assist with further documentation about the loan and invoices, as it related to the provision of SmartCity Vocational College.
A report was sent by Mr Nogueira to ASIC, based on the limited documents provided.
"ASIC have decided not to commence an investigation into the matters," Mr Nogueira said.
Mr Nogueira recommended a public examination of relevant parties, in order to obtain more company records, investigate SC Admin's assets and other claims, gather information on its activities, investigate preferential payments, insolvent trading and other void transactions and possible offences.
Mr Nogueira estimated the examination would cost $60,000-$100,000.
Fairfax MP Ted O'Brien said he was aware of the funding request to creditors and he had contacted Queensland MP Karen Andrews, the Federal Assistant Minister for Vocational Education and Skills, to see whether assistance can be given to fund the examination.
"I will continue to leave no stone unturned myself," Mr O'Brien said, but added he was not in a position at this stage to give any guarantee to funding the examination.
"My primary focus on this moving forward is... to see what can be done to ensure creditors can be looked after."
In 2013 the Queensland Government committed to funding a full public examination of Walton directors following the construction company's dramatic $49 million collapse.
The Daily has contacted the Palaszczuk Government to inquire whether it will consider funding a public examination.