Fighting for Subbies Rights
Cullen Group liquidator Menzies Advisory has released a report to creditors and have called a creditors meeting for 10 am, Friday 5th October to be held at:
- Christies Conference Centre, Room E, Level 1, 320 Adelaide Street Brisbane.
- If you cannot attend in person, you can attend by conference call.
- Call - 1800 062 923
- Password - 7848 5951 7874 and then press # key
All creditors should attend this meeting, it is of vital importance.
- Currently there are only 4 creditors on the Cullen Committee of Inspection (COI), this is an opportunity to become a committee member.
- Fulfilling an election promise, the Qld Labor Government is providing funds for a Public Examination of the Cullen Director and other people of interest involved in one of the largest builder liquidations in Queensland history.
- The funds are administered by the QBCC who want a representative on the COI, you need to vote on that because with this funding, I assume they become a creditor.
- Fair Entitlement Guarantee (FEG) are to provide funds to pursue alleged voidable unfair preference claims against our fellow subbies.
- You need to vote on that too, we do not want Federal funding to sue Qld subcontractors, especially when its unlikely that unsecured creditors will see a cent of any money clawed back from these subbies.
- In total there are 31 subbies being pursued for in excess of 4 million dollars.
- One subbie lost over 450k in the liquidation as an unsecured creditor and is now being sued for double that amount.
Voidable Unfair Preference Claims
For any subbie being sued for voidable unfair preference claims, it is of the utmost importance that you attend this meeting in person or on the phone and cast your vote.
- The FEG funding is provided to pursue subcontractors for preferential payment claims.
- Any money that is clawed back could severely hurt those subbies financially.
- It's unlikely that any money clawed back will find its way to unsecured creditors.
- The pecking order is secured creditors and Cullen staff who I assume FEG has paid.
- I would say FEG are offering to fund this to recoup the money they paid out in entitlements to Cullen staff.
- FEG are NOT providing funding to help unsecured creditors get a dividend.
- FEG are providing funding to recoup their outlay in staff entitlements at the expense of Qld subbies.
- How about FEG provide funding to pursue developers who owe many millions to Cullen Group.
- How about FEG provide funding for a Royal Commission into the gross inaction from ASIC and other regulators in regard to fraud of this type in the building and construction industry.
Resolutions to be voted on at this meeting
Resolutions 1 and 2 are related to the Liquidators remunerations.
Resolution 3 - I will vote NO.
- “That pursuant to section 477(2B) Corporations Act 2001, the Liquidator be permitted to enter into a Funding Agreement with The Commonwealth of Australia (acting through the Department of Jobs and Small Business ABN 54 201 218 474), with the performance terms of that agreement likely to last longer than 3 months.”.
I don't agree with Federal funding to pursue Queensland subcontractors for being smart enough, organised enough, lucky enough or being needed on site bad enough to extract payment from Cullen.
Most of them would have had no idea that Cullen was insolvent. After doing our due diligence, we signed a contract in good faith in late August 16. When our first payment was due and unpaid on 1st of October I had no idea Cullen was insolvent when I went to work to legitimately extract payment.
I just did what I have done 1000 times before, I went to work to collect outstanding money. We all do that on a daily basis in this industry but when it comes to a liquidator, we are just expected to say, "don't worry about payments, you keep it if you need it that bad mate". We might as well just let them have it because we cannot chase it without being sued later.
I know now what I should have said but even after almost 30 years in the industry, I wasn't aware 2 years ago that chasing a large sum of unsecured and overdue credit could have such serious ramifications.
An Example of a Cullen unfair voidable preference claim
Here is an example of a preference claim that the liquidator pursued to the bitter end. That end was a subcontractor liquidating his company and while I don't believe it was a direct result of the pursuit of this preference claim, it had a significant bearing on it.
- A subcontractor was owed 75k by Cullen from 2015 and went the legal way to recover funds.
- The subcontractor received a default judgement against Cullen Group in March 2016.
- Cullen withheld payment to the Subcontractor until October 2016, 7 months after the default judgement.
- Because that payment was made in the relation back period which is 6 months back from 22nd Dec 16, that payment was deemed a voidable unfair transaction and was vigorously pursued by the liquidator (when approached, the subbie told him to "F" off and that upset him).
- If Cullen had done the right thing and paid the subbie when the judgement was made, the payment would not have been a preference claim because it would have been outside the relation back period.
- Subcontractor liquidated company mid 2018 because of this and other financial pressures.
I agree 100%, that is unfair, completely, totally and categorically unfair to the subcontractor but under section 588 FA of the Corporations Act, its not. In my opinion, the ACT is a horses arse and needs changing urgently. There is nothing fair about it in its current form.
There would not be one subcontractor I know who would think that payment should have been chased even if they thought they would get something out of it by way of a dividend.
Subbies don't like seeing other subbies sued for preferential payments, even if it resulted in a few cents in the dollar return and that is doubtful here.
Resolution 4 - I will vote YES
- “That pursuant to section 477(2B) Corporations Act 2001, the Liquidator be permitted to enter into a Funding Agreement with the Queensland Building and Construction Commission (ABN 88 568 500 260), with the performance terms of that agreement likely to last longer than 3 months.
Its vitally important how Cullen Group established his intent to mislead creditors. and how he bought about this caused this catastrophic failure where 30 million of subbies and supplier money disappeared?
Resolution 4 - I will vote NO
- “That Mr Benjamin Carmody of The Commonwealth of Australia (acting through the Department of Jobs and Small Business ABN 54 201 218 474) be appointed as a member of the existing Committee of Inspection”.
We have a Major problem with FEG funding the pursuit of subbies and having a seat on the COI.
FEG is a Federal Government initiative and are proposing to fund the liquidators pursuit of Queensland subbies. We believe they will misuse a position on the COI to progress that end.
Resolution 5
“That Mr David Lonton of the Queensland Building and Construction Commission (ABN 88 568 500 260) be appointed as a member of the existing Committee of Inspection”.
I have a question, is the Qld Government funding reliant on a QBCC person being appointed to the COI?
If so I will vote yes, if not I will vote no.
Subbies, go to the meeting or get on the phone and use your vote.