Perth printer Picton Press is teetering on the edge, as its own administrator is requesting a creditors meeting, with the number one item being to terminate the controversial DOCA which has kept the company going, and liquidate the business.
Cor Cordis is saying Picton “does not appear to have the financial capacity to continue trading solvently, and as a going concern”, and is calling creditors to a meeting a week on Monday, where it will ask them to agree to liquidate the company. The administrator says, "We do not consider that it would be in the creditors' interest for the DOCA to proceed."
Cor Cordis, and Picton directors Gary Kennedy and Dennis Hague, have been at increasing odds with each other all year. The two parties, both of whom are named as defendants along with Picton itself in the case the ATO is pursuing against it to overturn the DOCA, are now laying accusations at each other's door.
Cor Cordis is accusing the directors of “unauthorised” activities in its report to creditors in seeking the winding up meeting, while Gary Kennedy told Print21, “We refute a number of allegations and assertions made in the report, which fails to mention the administrators' own shortcomings in the process and pending result.”
Cor Cordis is blaming the duo for a $348,000 trading shortfall during the administration period, and has been demanding they inject the cash; Kennedy and Hague have been rejecting the demand, finally saying no in writing on 1 July.
Kennedy told Print21, “We are very disappointed with respect to comments made by the administrator in their latest report.”
The directors also advised Cor Cordis that the company traded at a loss during the administration period due to its inability to move into the Creditors Trust (delayed as the ATO was seeking to overturn the DOCA) and due to the costs incurred defending itself against the ATO.
Cor Cordis says it holds “serious concerns” about the ability of the two directors to make the second DOCA contribution of $279,000, due on 29 November.
According to Cor Cordis the directors issued “unauthorised purchase orders” to the tune of $100,000 just prior to the DOCA being issued last November, and "overstated sales by $248,000, which also led to incorrect GST accounting" and it says the directors were issuing “unauthorised credit notes”.
Commenting to Print21, Kennedy said, “Our lawyers are preparing a detailed response to the report.”
The date of the proposed creditors meeting is 22 July, three days before the next scheduled appearance in the WA Federal Court between the ATO, which has been battling to have the DOCA overturned, and defendants Picton, its directors, and the two administrators from Cor Cordis Jeremy Nipps and Cliff Rocke.
Cor Cordis is also telling the company's creditors owed less than $10,000 who were originally promised they would get 100c in the dollar if they voted for the DOCA that they will not now get that, saying "unsecured creditors are no longer expected to receive a dividend." Staff will not receive their super. Other staff entitlements will be covered under the government's Feg scheme,
The ATO has been taking the case to court ever since the DOCA was voted through last year, a deal which would see the taxpayer receive just $13,000 to $26,000 for the $1.3m it is owed. The deal caused uproar in the Perth printing community and around the country, as rival printers realised that while they were having to pay 100c in the dollar to the ATO, as is the norm, Picton would be trading with only paying 1c-2c in the dollar.
Kennedy told Print21, “The DOCA we proposed was a legitimate restructure which should have provided one hundred per cent return to seventy-five per cent of our creditors in number and protected the jobs and entitlements of our employees.”
News of the latest move by Cor Cordis to have the company wound up has been greeted with relief by the rest of the Perth printing community, who have been calling Print21 saying they are grateful it looks like it is all over. Picton has been kept going by having paper shipped in from an as yet unknown supplier, thought to be from the east coast, with the major merchants all refusing supply.
Picton hit trouble five years ago when it installed its new B1 ten-colour perfector at the same time as the WA economy collapsed. The press was bought on the basis of an $11m turnover, but turnover went from $12.5m in 2011 to $7m in 2017.
Debts owed by Picton include $3.56m to unsecured creditors, of which $663,500 is owed to employees; and $6.8m to secured creditors, of which $5m is owed to the primary creditor Westpac against the directors’ property, $1.46m owed to the secondary creditor NAB against the KBA ten-colour, and $382,000 owed to the third creditor, the CBA, against the company’s two Kodak Nexpresses.
Of the unsecured creditors, the ATO is owed $1.3m, with paper merchant Ball & Doggett owed several hundred thousand dollars, although the merchant was insured. Total amount owed to unsecured creditors owed more than $10,000 apart from the ATO is $884,000, with $94,000 in total owed to those with less than $10,000 due. Related parties are owed $1.27m, with Dennis Hague in for $800,000 of that.
Picton has been trading since it went into administration in May last year, and has been embroiled in the court battle with the ATO, which is trying to overturn the DOCA, since December.
Administrators’ costs have totalled $612,000, of which $477,000 was for the administration period and $135,000 during the DOCA.
The creditors meeting will take place Monday 22 July 9.30am at Cor Cordis offices in Perth CBD.