To Privim Pty Ltd Creditors

The practice of a director of a company in trouble appointing an administrator or liquidator is flawed. To us its always a conflict of interest and needs to be challenged to ensure transparency.

Creditors should appoint a liquidator, the corporations act needs to be changed.

Its a lot of hard work to change a liquidator but we are in for the fight if thats what creditors want. Incumbents will come up with all sorts of tricks to stay in the job but we have removed them in the past and can do it again.

While all liquidators will chase preferential payments, few bother to investigate and follow the real money trail and thats what removing the director appointee is all about. That elusive investigation to ensure transparency to not just the secured creditors such as the banks, but all creditors.

Some make big mistakes. There was a liquidation in 2016 where the liquidator allowed the novation of contracts to a new entity which looked to us like a phoenix and 3 years later that new entity liquidated. It cost creditors in total, 50 million dollars. We don't want to ever see that mistake again.

I would assume that one of the main concerns of the company's creditors is how much information passed between the director and the current Administrators prior to the actual date of their appointment, being yesterday 17 November 2021.

Potential Conflict of Interest

If discussions only took place over a couple of days prior to their appointment, then I doubt there would be any genuine perception of a conflict of interest but that is doubtful considering we had prior knowledge that FTI Consulting were going to be appointed.

The perception of conflict becomes a concern to creditors when discussions with the director took place over several days or weeks. This is where creditors are conscious that there could be doubts due to the sheer amount of company information that could be provided by the director to the proposed Administrator prior to their appointment.

Alternative Administrator

The next issue that creditors usually consider is whether or not they want an alternative Administrators totally independent to take over the running of the administration. Someone who has had no contact with the director, their external solicitors or accountants prior to any appointment . 

Creditors are then comfortable in the knowledge that it is impossible for the replacement administrators to have any conflict of interest.

The other matter that creditors should give thought to is whether any proposed alternative Administrators are geographically disadvantaged or lack the necessary resources to take on such an appointment, especially when giving thought to the size of the company that has entered administration and that it operated in the 3 Eastern states.

We have a liquidator who have offices in 3 states prepared to take on the job if creditors decide they want a change.

We see no reason not to make a change from the director appointed administrator to a creditor appointed administrator.

The Cost of the Director appointed administrator V creditor appointed administrator

Is there any agreement or has there been a deed of indemnity by the Privium director as to fees for the appointed administrator prior to FTI's appointment? If so, what was the amount?

Creditors give some thought as to whether or not it may be more economical to deal with insolvency practices with fewer partners on the basis that the fees charged would be less than that of an insolvency practice with say 20 partners and 150 staff.

It is logical that an accounting firm or insolvency practitioner that has fewer partners can generally do the job far more economically than those practices with a large number of multiple partners and 150 hungry mouths to feed.

It's important that any replacement Administrator is not geographically disadvantaged and has sufficient staff and resources ready to conduct the appointment efficiently and quickly. It is also beneficial to have a fresh set of eyes to look over the books and records to see what really happened with Privium.

If you are a creditor and want to explore changing the administrator, soon to be liquidator, contact us at support@subbiesunited.com.au to ensure there is no conflict of interest, perceived or otherwise.

Subbies, there is pain on the way with predictions of mass liquidations and while we don't necessarily agree with that, we all know that a boom like this one is unsustainable, especially with rising costs and shortages of material and labor. With that in mind you should prepare yourself for some liquidation pain and potentially a lack of work over the next few years.

Subbies join here and access our private members forum, we offer two membership options, 6 or 12 months. We make exceptions for some suppliers that we trust and who call us first but in general, if you are not a subcontractor, don't bother joining. We have our ways of weeding you out before you can access the forum and we will not refund your membership fee.