Bentleys · office furniture, including student and staff desks, chairs and computers. Part of the equipment was owned by a related entity Golden Island International Pty. Ltd. (ln

Bentleys THINKING AHEAD

) Accountants ) Auditors ) Advisors

Statutory Report to Creditors as required under Insolvency Practice Rules (Corporations) 2016 Rule 70-40

27 June 2018

Viva College Pty Ltd (ln Liquidation) ACN 107 025 669 ABN 42 107 025 669

Formerly Traded as Viva International College of English

Brisbane

Bentleys Corporate Recovery Pty Ltd ABN: 44 129 017 189

Liquidators: Tracy Lee Knight

Damien Lee Hou Lau

Level 9, 123 Albert Street, Brisbane QLD 4000 GPO Box 740, Brisbane QLD 4001

Marco Bozzetto Tel: (07) 3222 9615 Fax: (07) 3221 9250

Email: [email protected]

#2306157


FILE INFORMATION Viva College Pty Ltd (ln Liquidation) Appointed: 27 March 2018

ELECTONIC COPIES OF REPORTS AND ATTACHMENTS

http://core.ips-docs.com:

Login Name: VIVAC01 Password: VIVABENT

OR

www.bentleys.com.au/viva-college/

CONTACT Marco Bozzetto Tel: (07) 3222 9615 Fax: (07) 3221 9250 Email: [email protected]

Act

APES

ARITA

ASIC

ASQA

ATO

Commissioner

Company

CRICOS

DIRRI

EOI

Golden Island

Grays

GST

Liquidators

POD

RATA

Regulations

RTO

TPS

GLOSSARY OF TERMS

The Corporations Act (2001) (Cth)

Accounting Professional and Ethical Standards Board

Australian Restructuring Insolvency and Turnaround Association

Australian Securities and Investments Commission

Australian Skills Quality Authority

Australian Taxation Office

The Deputy Commissioner of Taxation

Viva College Pty Ltd (ln Liquidation)

Commonwealth Register of Institutions and Courses for Overseas Students Declaration of Independence, Relevant Relationships and Indemnities

Expressions of Interest

Golden Island International Pty. Ltd.{ln Liquidation)

Grays Online Auctioneers

Goods and Services Tax

Tracy Lee Knight and Damien Lee Hou Lau

Proof of Debt Form

Report As To Affairs

Corporation Regulations 2001

Registered Training Organisation

Tuition Protection Services

Viva College Pty Ltd (ln Liquidation) ACN 107 025 669

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TABLE OF CONTENTS 1 Introduction 4 2 Statutory information 4 3 Update on the progress of the Liquidation .4 4 Assets 6 5 Liabilities 7 6 Receipts and payments 8 7 Investigations and recovery actions 8 8 Likelihood of a dividend 1 O 9 Cost of the liquidation 1 O 1 O What happens next with the liquidation 11 11 Further information 11

ANNEXURES

A Form 535 - Formal Proof of Debt or Claim Form

B Summary of Receipts and Payments


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1 Introduction We, Damien Lee Hou Lau and Tracy Lee Knight, refer to our initial notification to creditors dated 12 April 2018 in which we advised you of our appointment as Liquidators of the Company on 27 March 2018. The purpose of this report is to:

),,- provide you with an update on the progress of the liquidation;

>- provide you with the results of our investigations into the Company's affairs; and ),,- advise you of the likelihood of a dividend being paid in the liquidation.

This report should be read in conjunction with the information contained in the initial notification to creditors. ln accordance with the Australian Restructuring, Insolvency and Turnaround Association ("ARITA") Code of Professional Practice, a Declaration of Independence, Relevant Relationships, and Indemnities ("DIRR!") was enclosed with our circular to creditors dated 12 April 2018.

2 Statutory information

Company Name:

Former Trading Name:

Directors:

Shareholders:

Date of Incorporation:

Registered Office:

Principal Place of Business:

Viva College Pty Ltd {ln Liquidation)

Viva International College of English

Matthew Min-Chung Wu and Chia-Yang Kao

Shun-I Chen

Kaota Pty Ltd

13 November 2003

"Queen Adelaide Building"

Level 2, 90-112 Queen Street Mall, Brisbane, 4000, Qld

"Queen Adelaide Building"

Level 2, 90-112 Queen Street Mall, Brisbane, 4000, Qld

3 Update on the progress of the Liquidation

3.1 What happened to the business of the Company? The Company previously operated as Viva International College of English, providing English and vocational courses to overseas students. The college operated from the leased premises located at Level 2, 90/112 Queen Street, Brisbane OLD 4000. The business ceased trading on 27 March 2018. The Company's failure was due to a number of reasons, including:

),,- new regulations specifically relating to new standards for ELICOS (English Language Intensive Courses for Overseas Students) leading to a substantial increase in course costs;

~ increase in international colleges opening in an already competitive market; ),,- increasing entry of universities into the market; and ),,- insufficient operating cash flow to support the changes in the market.

Viva College Ply Ltd (ln Liquidation) ACN 107 025 669

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Since our appointment, we have assisted with the transfer of students to other education providers, including:

)o'- issue statements of attainment to students; )o'- provide the Australian Skills Quality Authority ("ASQA") access to student records; )o'- provide Tuition Protection Services ("TPS") with access to the college premises; and >" assist TPS with convening and holding several student meetings to enable TPS to

communicate details on student transfers and/or obtaining a refund for tuition fees.

3.2 Report as to Affairs Below is an analysis of the assets and liabilities of the Company, and comparison to the Report as to Affairs ("RA TA") as provided by the Directors on 4 April 2018:

Assets Trust Funds 4.1 13,571 Cash at Bank 4.1 64,348 64,348 51,985 Cash on Hand 4.2 4,300 4,300 4,347 Plant and Equipment 4.3 15,983 1,000 2,992 Other Assets 4.4 70,000 25,000 17,732 Total Assets 154,631 94,648 90,626

Liabilities Secured Creditors 5.2 Employees 5.1 Wages (135,000) (135,000) (115,190) Annual Leave (96,000) (96,000) (79,610) Long Service Leave (77,000) (77,000) (68,758) Redundancy (300,000) (300,000) (168,696) Payment ln Lieu of Notice (81,620) Other Liabilities (2,000) (2,000)

Preferential Creditors 5.1 (35,005) (35,005) Unsecured Creditors 5.3

Unrelated party (45,000) (45,000) (159,452) Related party (140,029) (140,029) (2,770,413)

Total Liabilities (830,034) (830,034) (3,443,739)

Total Surplus/ (Deficiency) (675,403) (735,386) (3,353,113)

Viva College Pty Ltd {ln Liquidation) ACN 107 025 669

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4 Assets

4.1 Pre-appointment bank account On appointment, we wrote to all major banking institutions to determine whether the Company held funds in any bank accounts. The Company held five (5) accounts with the Australian and New Zealand Banking Group Limited ("ANZ") with a combined balance of $65,582.40:

Business Cash Management Trust Account Online Saver Business One Visa OLL

107907294 107912624 480357884 4564807004322770 722096999

51,829.98 13,570.65

181.77 (7,725.39)

0.00 Total balance 65,582.40

The trust account x2624 relates to the upfront payment of tuition fees from students who had not yet commenced their course/s. We have been advised by the Director of TPS that these funds are held on trust and are 'protected amounts' pursuant to the Education Services for Overseas Student Act 2000. These funds are to be repaid to students who have paid fees into the account but have not yet commenced their course/s (and the funds have not been transferred to the Company's operating account). We are in the process of transferring the balance of funds held in trust to TPS. A total of $51,984.55 was transferred to the liquidation bank account relating to the business cash management and online saver accounts, less bank charges.

4.2 Cash on hand At the date of appointment, the Company held a total of $4,346.40 in petty cash at the Viva College premises which was used for general petty cash purposes, theme park tickets, and student activities. These funds were deposited into the liquidation bank account.

4.3 Sale of plant and equipment The Company held various plant and equipment at the college premises, largely consisting of office furniture, including student and staff desks, chairs and computers. Part of the equipment was owned by a related entity Golden Island International Pty. Ltd. (ln Liquidation) ("Golden Island"). We arranged for Grays Online Auctioneers ("Grays") to inspect the equipment and advise whether it was commercial for the Liquidators to realise the property after taking into account agents' commission, transportation and selling costs. Grays advised the costs of realisation would outweigh any resale value from the office equipment due to the age and condition of the assets. Grays also confirmed that we should contact education providers in Brisbane to gauge their level of interest.

We conducted an informal Expressions of Interest ("EOI") campaign targeting similar education providers around Brisbane and realised a total value of $6,760 (excluding GST) worth of equipment. The sold equipment consisted of:

~ $2,620 of computer equipment; and ~ $4, 140 of various furniture, fixtures and fittings.

The funds were initially deposited into the Company's bank account until we were in a position to review the asset schedules for the Company and Golden Island. On review of these records, it was difficult to individually identify the specific assets sold with any certainty on both schedules. We considered the various options available to the Liquidators and considered the most commercial and equitable approach was to apply a percentage of ownership between the companies against the value sold as follows:


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Viva College Golden Island

76% 24%

8% 92%

2,000.96 619.04

319.04 3,820.96

2,320.00 4,440.00

Total 100% 100% 2,620.00 4,140.00 6,760.00

The sum of $4,440 has now been transferred to Golden Island's liquidation bank account to account for funds received for the sale of office equipment owned by the Company. We have subsequently disclaimed all remaining assets on the premises as onerous property. We understand that the landlord of the property has destroyed these items. The Company also owned a server and a number of printers which were subject to security interests. These assets have been disclaimed as discussed in section 5.2 of this report below.

4.4 Refunds from pre-appointment upfront payments The Company paid various annual upfront costs relating to payroll tax, insurance premiums and educational fees and licences. These were cancelled as of the date of our appointment and refunds were requested. A summary is provided below:

Office of State Revenue - Payroll tax 85,817.00 1,754.86 WorkCover premium 17,073.05 6,074.07 Other insurance premiums 11,456.55 7,065.19 ASQA - RTO registration 6,975.00 1,744.00 ASQA - CRI COS registration 4,375.00 1,094.00 Dept of Education and Training - CRICOS registration 14,020.50 0.00 Tafe SA - English certificate licence fees 18,181.82 0.00

Total refund received to date 157,898.92 17,732.12

We are in discussions with the Department of Education and Training to recover the prepaid CRICOS registrations.

Tafe SA have indicated $13,897.88 will be returned to the Company. We expect to receive the funds within the coming weeks.

5 Liabilities

5.1 Priority creditors Employees

The Directors detailed in the RA TA that the Company has outstanding entitlements of approximately $610,000 which consists of unpaid wages, holiday pay, long service leave and redundancy entitlements.

On appointment, we wrote to all employees and advised them to lodge a claim with the Department of Jobs and Small Business ("Department") under the Fair Entitlements Guarantee Scheme ("FEG") if they have any outstanding entitlements with the Company. We have now verified claims from sixty one (61) employees and lodged verified employee data with the Department. As at the date of this report FEG has advised that claim assessments for fifty (50) employees has been completed and an additional five (5) are to be completed over the coming weeks. We will continue to work with the Department to progress any outstanding eligible


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employee claims. We note FEG have identified three (3) employees who are not eligible to participate in the FEG scheme. These employees should lodge their claim in the liquidation by completing a proof of debt form. Other Preferential Claims (Employee Superannuation)

The Directors detailed in their RATA that the Company has $35,005 in preferential claims. On our review we identified only $11,845 would constitute a preferential claim for outstanding superannuation entitlements. The ATO may lodge a claim on behalf of employees for any outstanding superannuation, including relevant superannuation guarantee and interest charges (if applicable). The remaining amount recorded as a preferential claim related to unpaid PAYG withholding which is not a preferential claim and has been recorded incorrectly on the RATA

5.2 Secured creditors A creditor must have their interest validly registered against the Company on the national Personal Property Securities Register ("PPSR") to enforce any security interest over the Company's assets. On appointment, we wrote to all registered parties listed in the Company search requesting details of their securities as detailed below. Pursuant to Section 568(1) of the Corporations Act 2001 ("Act"), we have disclaimed all of these assets as onerous property given there is unlikely to be surplus funds available after allowing for realisation costs and distribution of the net sale proceeds to secured creditors.

HP Financial Services (Australia) Pty Ltd Dell Financial Services Pty Ltd Facilities Asset Advisors Pty Ltd on behalf of Capital Finance Australia

2 1

1

Printers Server

Printer

Disclaimed Disclaimed

Disclaimed

5.3 Unsecured creditors We estimate unsecured claims in the liquidation to be $2,929,864.63. Our estimate is based on the Company's books and records and proof of debts submitted to date.

We note the Director related claims lodged are for money lent to the Company in the amount of $2,770,413.07. The balance of unrelated unsecured claims in the amount of $159,451.56 relate to debts owed to trade creditors, students and employees.

Creditors are welcome to submit a proof of debt form to formally lodge their claim in the liquidation; however we note that it is unlikely that there will be a dividend to unsecured creditors. Enclosed as Appendix A is a blank proof of debt form.

6 Receipts and payments A summary of receipts and payments in the liquidation to date is enclosed as Annexure B.

7 Investigations and recovery actions We are required to prepare and lodge a report with ASIC setting out any contraventions identified under the Act. We intend on lodging this report shortly. The results of our preliminary investigations are outlined below.

7.1 Investigations undertaken We have undertaken the following investigations:

~ held discussions with the Directors and various former employees of the Company; ~ reviewed the MYOB accounting records of the Company;


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);,, reviewed physical books and records of the Company; and :¡;:. considered whether there may be any potential breaches of the Act.

7.2 Finding and possible recoveries To date, our investigations have not revealed any possible recovery actions for the Company.

7.2.1 Inadequate books and records Section 286 of the Act requires a company to keep written financial records that correctly record and explain transactions, its financial position and performance, and would enable true and fair financial statements to be prepared and audited. Contraventions of Section 286 of the Act can be used under Section 588E to establish a presumption of insolvency. We have reviewed the MYOB accounting records of the Company, and are of the view that the Company maintained adequate records for the purposes of Section 286 of the Act.

7.2.2 Insolvent trading Pursuant to Section 588G of the Act, a director has a duty to prevent a company from incurring debts when there are reasonable grounds for suspecting that the company will be able to pay its debt as and when they fall due.

Insolvent trading occurs when a Company continues trading and incurs further debts when it is deemed to be 'insolvent'. That is, when the Company is unable to pay its debts as and when they become due and payable. The director can face serious civil and criminal sanctions, including being personally liable for the new debts incurred. Based on our investigations, the Company traded whilst insolvent from at least February 2018, if not earlier. We are currently investigating this matter to determine whether there is any merit in pursing this claim, including quantifying the amount incurred after the date the Company became (or deemed to be) insolvent, whether the Directors have any assets of substance if the claim were pursued, the availability of defences for the Directors under section 588H of the Act, and the cost of pursuing such a claim.

Based on the information we have available, our preliminary views are we do not consider it likely that the insolvent trading claim would be material enough to pursue this matter any further. Notwithstanding, we intend on reporting potential insolvent trading contraventions to ASIC. Should any creditor be interested in funding an insolvent trading claim please contact our office.

7.2.3 Voidable transactions Certain transactions that occurred prior to liquidation, and where property of the Company has been disposed of or dealt with, may be recovered by us as Liquidators. This may result in, among other things, a requirement for a third party to return property to the Company and thereby increase the assets available to creditors. These are known as voidable transactions, and are discussed further below.

7.2.3.1 Unfair preference

Section 588FA of the Act gives the liquidator power to recover certain transactions that have had an effect that places a creditor in a more favourable position than other unsecured creditors, within six months of the commencement of the winding up (relation back period). From the information available to us, we have not identified any transactions which would constitute an unfair preference to the Company.


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7.2.3.2 Uncommercial transactions

Section 588FB of the Act requires the liquidator to investigate transactions which may be deemed uncommercial, having regard to the detriment to the company suffered as a consequence of the transaction in the period two years prior to the liquidator's appointment. ln addition, section 588FDA of the Act refers to "unreasonable director-related transactions" and requires the liquidator to investigate transactions made by the director, having regard to the detriment of the company suffered as a consequent of the transaction. From the information available to us, we have not identified any transactions which would constitute an uncommercial transaction (including director related) to the Company.

7.2.3.3 Unfair loans

Section 588FD of the Act requires the liquidator to investigate transactions which may be deemed to be unfair loans to the Company, such that the interest on the loan, or the charges in relation to the loan were extortionate. From the information available to us, we have not identified any transactions which would constitute an unfair loan to the Company.

7.3 Further enquiries to be undertaken We do not intend on undertaking further investigations other than those outlined in section 6.2 above.

8 Likelihood of a dividend The likelihood of a dividend being paid to creditors will be affected by a number of factors including:

;;,- the size and complexity of the administration; ;;,- the amount of assets realisable and the costs of realising those assets; ;;,- the statutory priority of certain claims and costs; ;;,- the value of various classes of claims including secured, priority and unsecured creditor

claims; and

;;,- the volume of enquiries by creditors and other stakeholders. As of the date of this report, it is not expected that there will be sufficient funds available to pay a dividend to unsecured creditors. However, if this changes and we do declare a dividend, any creditor whose claim has not yet been admitted will be contacted and asked to submit a proof of debt.

9 Cost of the liquidation As previously advised in our initial information to creditors, we have estimated that our total remuneration for the external administration is $116,605.00 (GST inclusive). Creditors have approved our remuneration up to this amount by resolutions through proposals without a meeting. To date, we have drawn $56,175.00 (GST exclusive) for our remuneration. Remuneration from external sources

Our professional fees for verifying employee claims lodged with FEG are capped by the Department at $245.00 (GST exclusive) per employee. We received $14,945.00 from the Department for services to verify data for sixty-one (61) employees of the Company.


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1 O What happens next with the liquidation We will proceed with the liquidation, including:

>- finalise our investigations and reporting to ASIC; >- complete recovery of debtors; >- liaise with TPS and ASQA to ensure the wind down is complete; >- liaise with FEG in relation to outstanding employee claims; and

>- liaise with and respond to any creditor queries. We expect to have completed this liquidation within six (6) months, if not earlier. We may write to you again with further information on the progress of the liquidation.

11 Further information The Australian Restructuring Insolvency and Turnaround Association ("ARITA") provides information to assist creditors with understanding liquidations and insolvency. This information is available from ARITA's website at arita.com.au/creditors. The Australian Securities and Investments Commission ("ASIC") also provide information sheets on a range of insolvency topics. These information sheets can be accessed on ASIC's website at asic.gov.au (search for "insolvency information sheets"). Copies of this report and the enclosed documents can be found on the Creditor Portal website:

Creditors Portal Web Address httQ://core.iQs-docs.com

Login Name VIVAC01

Password VIVABENT

Please contact Marco Bozzetto of our office by email at [email protected] should you require any further information.

DATED this 2J1h day of June 2018

Yours faithfully Viva College Pty Ltd

"C" ) TL Knig Joint and Several ·

Encl


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ANNEXURE A


FORM 535 CORPORATIONS ACT 2001

ACN 107 025 669 Subregulation 5.6.49(2)

FORMAL PROOF OF DEBT OR CLAIM (GENERAL FORM)

To the Joint and Several Liquidators of Viva College Pty Ltd {ln Liquidation)

1. This is to state that the company was, on 27 March 2018 (1) and still is, justly and truly indebted to(2l (full name):

('Creditor'}

of (full address)

for $ dollars and cents.

Particulars of the debt are:

2. To my knowledge or belief the creditor has not, nor has any person by the creditor's order, had or received any manner of satisfaction or security for the sum or any part of it except for the following: . Insert particulars of all securities held. Where the securities are on the property of the company, assess the value of those securities. If any bills or other negotiable securities are held, specify them in a schedule in the following form:

___ , __ -- D I am not a related party creditor of the Company 10>

D I am a related party creditor of the Company l5J relationship: _

I am employed by the creditor and authorised in writing by the creditor to make this statement. I know that the debt was incurred for the consideration stated and that the debt, to the best of my knowledge and belief, still remains unpaid and unsatisfied. I am the creditor's agent authorised to make this statement in writing. I know that the debt was incurred and for the consideration stated and that the debt, to the best of my knowledge and belief, still remains unpaid and unsatisfied.

DATED this day of 2018

Signature of Signatory .

NAME IN BLOCK LETTERS .

Occupation .

Address .

See Directions overleaf for the completion of this form

(1)

(2)

(3)

(4)

(5)

(6)

Proof of Debt Form Directions

Strike out whichever is inapplicable.

Insert date of Court Order in winding up by the Court, or date of resolution to wind up, if a voluntary winding up.

Insert full name and address (including ABN) of the creditor and, if applicable, the creditor's partners. If prepared by an employee or agent of the creditor, also insert a description of the occupation of the creditor.

Under "Consideration" state how the debt arose, for example "goods sold and delivered to the company between the dates of ", "moneys advanced in respect of the Bill of Exchange".

Under "Remarks" include details of vouchers substantiating payment.

Related Party/ Entity: Director, relative of Director, related company, beneficiary of a related trust.

If the Creditor is a natural person and this proof is made by the Creditor personally. ln other cases, if, for example, you are the director of a corporate Creditor or the solicitor or accountant of the Creditor, you sign this form as the Creditor's authorised agent {delete item 3A). If you are an authorised employee of the Creditor (credit manager etc), delete item 3B.

Annexures

A. If space provided for a particular purpose in a form is insufficient to contain all the required information in relation to a particular item, the information must be set out in an annexure.

B. An annexure to a form must:

(a) have an identifying mark;

(b) and be endorsed with the words:

i) "This is the annexure of (insert number of pages) pages marked (insert an identifying mark) referred to in the (insert description of form) signed by me/us and dated (insert date of signing); and

(c) be signed by each person signing the form to which the document is annexed.

C. The pages in an annexure must be numbered consecutively.

D. If a form has a document annexed the following particulars of the annexure must be written on the form:

(a) the identifying mark; and

{b) the number of pages.

E. A reference to an annexure includes a document that is with a form.


ANNEXURE B

Summary of Receipts and Payments


Transactions from 27 March 2018 to 27 June 2018

Cash on Hand

Cash at Bank

Plant & Equipment

Pre-appointment Insurance Refund

Bank Interest

Funds from Department of Jobs and Small Business (FEG) to fund fees

CRICOS Registration Refund

QLD Payroll Tax Refund

Stamp Duty

Total Receipts

4,346.50

51,984.55

7,432.00

12,221.83

0.69

16,439.50

2,838.00

1,754.86

917.43

97,935.36

Wages & Salaries

Plant & Equipment- Transfer to Golden Island

Insurance

Legal Fees

Liquidators' Remuneration

Liquidators' Remuneration for FEG services

Liquidators' Expenses

Stamp Duty

IT Support

QLD WorkCover

Employee Superannuation

Total Payments

2,452.56

4,440.00

524.26

1,503.15

61,792.50

16,439.50

703.57

23.32

891.00

17.66

266.16

89,053.68

Cash at Bank as of 27 June 2018 8,881.68


Documents

Bentleys · office furniture, including student and staff desks, chairs and computers. Part of the equipment was owned by a related entity Golden Island International Pty. Ltd. (ln