Call for Gunns directors to be pursued
In a detailed report, PPB Advisory said Gunns directors may have misused harvest proceeds owing to the "growers", investors in its managed investment schemes, worth up to $11.2 million, as well as $27.6 million in sale proceeds from its Green Triangle estate, and another $1.2 million in grower premiums owed to insurer Agricola.
Gunns may have had solvency concerns six months before it entered administration on September 25 last year.
"As we are yet to form a conclusive view on the date of insolvency we are unable to state definitively whether the Gunns Group traded whilst insolvent," the report said.
"Additional investigations will be required by a liquidator (if appointed) before a view may be formed."
The administrator's "preliminary view" is that Gunns was insolvent from "at least" September 21.
But the report says solvency concerns could have existed when a prospective partner in the company's proposed northern Tasmanian pulp mill, the Chandler Corporation, pulled out in March last year.
PPB said there were also concerns in July, when Gunns announced it was relying on the support of lenders, and September 12 when lenders knocked back a request for funding. The report concluded Gunns has debts of about $3 billion and recommended the company be liquidated.
It said lenders owed $446 million are unlikely to be paid in full and unsecured creditors owed $2.4 billion will not see any return.
Workers' entitlements totalling $10 million will be met, the report said, but the timing of payments remains uncertain.
A second meeting of creditors in Launceston on Tuesday will determine whether the company should be wound up.
Frequently Asked Questions about this Article…
PPB Advisory told creditors it believes the directors of failed Tasmanian exporter Gunns should be investigated for potential breaches, including insolvent trading and misuse of third‑party monies to fund the company's operations. The report says additional investigations would be required by a liquidator (if appointed) before a definitive view can be reached.
Yes. PPB Advisory reported that Gunns may have misused harvest proceeds owing to 'growers' (investors in its managed investment schemes) worth up to $11.2 million, $27.6 million in sale proceeds from its Green Triangle estate, and about $1.2 million in grower premiums owed to insurer Agricola.
Gunns entered administration on September 25 last year. The administrator's preliminary view is that Gunns was insolvent from at least September 21, and PPB said solvency concerns could have existed much earlier — for example when prospective partner Chandler Corporation pulled out in March, and again in July and on September 12 when lenders refused a funding request.
PPB Advisory concluded Gunns has debts of about $3 billion. It said lenders owed $446 million are unlikely to be paid in full, and unsecured creditors owed about $2.4 billion will not see any return, according to the report.
Yes. The PPB Advisory report recommended that the company be liquidated, based on its assessment of the company's financial position and creditor prospects.
The report said workers' entitlements totaling about $10 million will be met, but it also noted the timing of those payments remains uncertain.
A second meeting of creditors in Launceston will decide whether the company should be wound up. If a liquidator is appointed, further investigations will be carried out to form a conclusive view on insolvency timing and any director breaches.
Investors labelled as 'growers' should know the PPB report alleges possible misuse of harvest proceeds owing to them (up to $11.2 million) and that outcomes are uncertain. The situation is subject to creditor meetings, potential liquidation and further investigations, so any recovery or final outcome remains unclear at this stage.
Call 1300 880 160
Start a chat
Schedule a call
