The administrators of Craftech Custodians are advising creditors to accept a DOCA, otherwise lose almost everything. In its report to creditors, O’Brien Palmer estimate that Craftech has been losing money since at least June 2018, and lack or orders during Covid sent them over the brink.
 |
| Craftech's now deserted Seven Hills, NSW factory - all equipment sold at auction |
The complex structure of Craftech, whose remaining printers cutters and other assets were successfully auctioned off by Liquid Assets last week, has been revealed in the administrators report to creditors.Stars of the auction were the Zund (Oce) flatbed cutters which went for over $100,000 each.
Craftech Custodians Pty Ltd was “the company” acting as "Trustee for the Craftech Unit Trust."
On August 25th, a secured creditor “Dreamy Parent Ptd Ltd” as Trustee for the Wighan Family Trust appointed Daniel Frisken and Christopher Palmer as joint and several administrators of “The company”. The sole director of Dreamy Parent Pty Ltd is Mary Friend-Ngui, Upon the administrators appointment, trading at Craftech ceased and all 14 employees were laid off. JobKeeper payments were being made to the sum of around $76,000 at the time of cessation of trading.
On 18th September, Mrs Friend-Ngui proposed a DOCA whereby unsecured creditors with legally binding guarantees against the Director, Mr Peter Friend-Ngui, will receive 50 cents in the dollar as full and final settlement if they vote for the DOCA and sign a Deed of Forebearance, while other unsecured creditors will receive 1 cent in the dollar. Unpaid employee entitlements would be paid in full.
The Director attributes the Craftech’s difficulties to a significant drop in business as a result of Covid-19. Craftech produced mainly point-of-sale materials used in the retail sector.
The administrators estimated a deficiency of a little over one million dollars in assets over liabilities. Major creditors include Canon Finance, the CBA, the ATO and the Landlord of the factory premises who is owed rent.
Between 1st July 2018 and 25 August 2020, Craftech, the company, incurred losses of around $855,000. It lacked liquidity and working capital.
Under the terms of the proposed DOCA, a Deed Fund would be established into which sums realised by the sale of assets, debtor amounts owing etc would be deposited. From this fund, would be paid the costs of administration, priority employee entitlements and the 50cents in the dollar to unsecured creditors holding personal guarantees againt The Director. Any surplus would be paid to the secured creditor who called in the administrators.
The administraors advocate acceptance of the DOCA in that it enables unpaid employee entitlements to be paid in full, without the need to use FEGS, and that, if the company is liquidated, the return would be zero. ‘Guarantee creditors’ get 50 cents in the dollar while the rest get 1 cent in the dollar.
The administrators could not find any recoverable personal property owned by the Director, and that legal efforts to force the guarantees would probably result in no return.
A second meeting of creditors was held on 29th September.
Craftech was acquired by the Friend-Nguis in 2017 for around $840,000.
