Mickim Investments Pty. Ltd. (Administrators Appointed) ACN … · 2019-10-20 · Mickim Investments Pty. Ltd.(Administrators Appointed) ACN 602 922 172 Trading as “XCEL Real Estate

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Mickim Investments Pty. Ltd. (Administrators Appointed)

ACN 602 922 172

Trading as “XCEL Real Estate – Everton Park”

(Mickim)

Circular to Creditors

William Harris and I were appointed Administrators of Mickim on 7 March 2019.

The purpose of this circular is to provide you with information about the second statutory meeting of creditors. At

the meeting, creditors will be entitled to vote on whether Mickim should enter a Deed of Company Arrangement,

whether the administration should end, or whether Mickim should be wound up.

The second meeting of creditors will be held as follows:

Date: 5 April 2019

Time: 11:30 AM

Address: Level 7, 175 Eagle Street, Brisbane Qld 4000

To enable creditors to make an informed decision about the future of Mickim, we enclose our Administrators’

Report about the company’s business, property, affairs and financial circumstances, including our opinion as to

which outcome of the administration process is in the creditors’ best interests.

We enclose a notice of meeting. To participate in this meeting, you must submit a proof of debt and information

to substantiate your claim. If you have already lodged a proof of debt, you are not required to do so again. If

the creditor is a person and will attend the meeting, this is all that is required. However, if the creditor is another

type of entity (such as a company), they must also appoint a person – a “proxy” or person authorised under a

power of attorney – to vote on behalf of the creditor at the meeting. A proxy should also be appointed if the

creditor is a person, but is not available to attend the meeting.

You can appoint the chairperson of the meeting as your proxy and direct the chairperson how you wish your vote

to be cast. If you choose to do this, the chairperson must cast your vote as directed. Proxy forms lodged by

creditors for the first meeting cannot be used for the second meeting.

Proof of debt and proxy forms are enclosed, together with guidance notes to assist you when you complete them.

To ensure that the meeting is conducted as efficiently as possible, completed proof of debt and, if applicable, proxy

forms must be returned to my office by post, fax or email by 4 April 2019.

We also enclose general information for attending and voting at meetings of creditors.

Remuneration

We will seek your approval of our remuneration at this meeting. Detailed information about what tasks we have

undertaken and the costs of those tasks are provided in our Remuneration Approval Report (enclosed).

What you should do next

You should:

read the enclosed information;

decide whether you are going to participate in the second meeting; and if so

complete and return your proof of debt and proxy form (if required) by 4 April 2019.

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If you have any queries, please contact Jacinta Robinson on (07) 3333 9813.

Dated: 29 March 2019

Anthony Connelly

Joint & Several Administrator

Enclosures:

Administrators’ Report to Creditors

Remuneration Approval Report

Notice of Meeting

Proof of Debt Form (Form 535)

Proof of Debt Guidance Notes

Proxy Form

Proxy Form Guidance Notes

General information for attending and voting at meeting of creditors

Mickim Investments Pty. Ltd. (Administrators Appointed) ACN 602 922 172 Trading as “XCEL Real Estate – Everton Park” (Mickim) Report to creditors pursuant to Insolvency Practice Rules (Corporations) 75-225

29 March 2019

2-190326-MICKINV01-Administrators Report-JR 2

Contents

Introduction ...................................................................................................................................................................................................................... 5

Appointment .................................................................................................................................................................................................. 5

Purpose of this report ............................................................................................................................................................................... 5

Object of Administration ......................................................................................................................................................................... 5

First meeting .................................................................................................................................................................................................. 5

Second meeting ........................................................................................................................................................................................... 5

Executive summary ........................................................................................................................................................................................................ 7

Administrators’ prior involvement ......................................................................................................................................................................... 9

Ongoing assessment ................................................................................................................................................................................. 9

Background and statutory information ............................................................................................................................................................ 10

Background ................................................................................................................................................................................................. 10

Statutory details, officers and shareholders ................................................................................................................................ 10

Security interests ...................................................................................................................................................................................... 10

Background to the appointment of Administrators ............................................................................................................... 11

Books and records ...................................................................................................................................................................................................... 12

Historical financial performance and position .............................................................................................................................................. 13

Financial performance ............................................................................................................................................................................ 14

Financial position...................................................................................................................................................................................... 15

Financial position based on ROCAP .................................................................................................................................................................. 17

Explanation for difficulties ...................................................................................................................................................................................... 18

Director’s reasons for failure .............................................................................................................................................................. 18

Administrators’ view ............................................................................................................................................................................... 18

Outstanding winding up applications ............................................................................................................................................ 18

Offences, insolvent trading and voidable transactions ............................................................................................................................ 19

Offences ........................................................................................................................................................................................................ 19

Insolvent trading .................................................................................................................................................................... 19

Director defences .................................................................................................................................................................. 19

Voidable transactions .......................................................................................................................................................... 20

Breach of directors’ duties ................................................................................................................................................ 20

Funding to pursue insolvent trading and voidable transactions ................................................................... 20

Insolvent trading ....................................................................................................................................................................................... 21

Tests of insolvency ................................................................................................................................................................ 21

Administrators’ conclusions regarding solvency .................................................................................................... 22

Voidable transactions ............................................................................................................................................................................. 23

Unfair preference claims .................................................................................................................................................... 23

Uncommercial transactions .............................................................................................................................................. 23

Unfair loans .............................................................................................................................................................................. 23

Breach of Director’s duties .................................................................................................................................................................. 23

Director’s asset position ....................................................................................................................................................................... 23

Administrators’ actions to date ............................................................................................................................................................................ 24

Tasks undertaken by Administrators .............................................................................................................................................. 24


DOCA ................................................................................................................................................................................................................................ 25

Overview ....................................................................................................................................................................................................... 25

Key terms of the DOCA Proposal .................................................................................................................................................... 25

Advantages of the DOCA Proposal ................................................................................................................................................. 27

Anticipated return to creditors............................................................................................................................................................................. 28

Basis and assumptions .......................................................................................................................................................................... 28

Liquidation scenario ............................................................................................................................................................. 28

DOCA Proposal scenario .................................................................................................................................................... 28

Estimated return to unsecured creditors ...................................................................................................................................... 29

Summary of estimated returns ....................................................................................................................................... 29

Alternative courses of action ................................................................................................................................................................................ 31

Administration to end ............................................................................................................................................................................ 31

Deed of Company Arrangement ...................................................................................................................................................... 31

Mickim be wound up ............................................................................................................................................................................. 31

Opinion summary ..................................................................................................................................................................................... 32

Creditor information on remuneration ............................................................................................................................................................ 33

COI ..................................................................................................................................................................................................................................... 34

Creditor meeting details .......................................................................................................................................................................................... 35

Annexures

1. Deed of Company Arrangement Proposal

2. Remuneration Approval Report – Mickim Investments Pty. Ltd. (Administrators Appointed)


Glossary

Glossary

Abbreviation Description

Act Corporations Act 2001 (Cth)

Administrators Anthony Connelly and Jamie Harris

ARITA Australian Restructuring, Insolvency & Turnaround Association

ASIC Australian Securities and Investments Commission

COI Committee of Inspection

Director David Fenwick

DIRRI Declaration of Independence, Relevant Relationships and Indemnities

DOCA Deed of Company Arrangement

FY Financial year

FY16 Financial results for the period 1 July 2015 to 30 June 2016



GST Goods and Services Tax

IBR Independent Business Review

IPR Insolvency Practice Rules (Corporations)

k Thousand

m Million

Mickim Mickim Investments Pty. Ltd.

PAYG Pay As You Go

POD Proof of Debt

PPSA Personal Property Securities Act 2009

PPSR Personal Property Securities Register

ROCAP Report On Company Activities and Property

ROT Retention of Title

WIP Work in progress

Xero Xero Accounting Software

YTD Year to date


Introduction

Appointment

Anthony Connelly and Jamie Harris were appointed Administrators of Mickim on 7 March 2019 by resolution of the

Director pursuant to Section 436A of the Act.

Purpose of this report

The purpose of this report is to provide creditors with details about Mickim’s business, assets, affairs and financial

circumstances in preparation for the upcoming second meeting of creditors.

This report also informs creditors about the investigations undertaken by the Administrators and the Administrators’

opinion about each of the options available to creditors at the second meeting of creditors, together with the

Administrators opinion as to the course of action that is recommended in creditors’ best interests.

This report has been prepared in accordance with Insolvency Practice Rules (Corporations) 75-225. It has been prepared

pursuant to the regulations found in the Insolvency Law Reform Act 2016, which substantially commenced on

1 September 2017.

Object of Administration

In an administration, administrators are empowered by the Act to assume control of a company that is insolvent or likely

to become insolvent, superseding the powers of its directors and officers, to manage the company’s affairs and deal with

its assets in the interests of its creditors.

The intention of administration is to maximise the prospects of a company, or as much as possible of its business,

continuing in existence or, if that is not possible, to achieve better returns to creditors than would be achieved by its

immediate liquidation. During an administration there is a moratorium over most pre-administration creditor claims.

The administrators are required to investigate the company’s affairs and report to creditors on the administrators’ opinion

as to which outcome of the administration process is in the creditors’ best interests so as to inform creditors prior to

voting at the second meeting.

First meeting

Section 436E of the Act required the Administrators to convene the first meeting of creditors within eight business days of

being appointed.

The first meeting of creditors of Mickim was held on 18 March 2019. There were no nominations to appoint alternative

administrators or to appoint a COI.

Second meeting

Pursuant to the Act, the second meeting is required to be held on or before 11 April 2019 unless an extension to the

convening period has been sought from the Court. The Administrators have not applied to the Court for an extension to

the convening period.

The purpose of the second meeting is for creditors to:

1. resolve the future of Mickim. In this regard, the options available include whether Mickim should:

be returned to the control of the Director; or

execute a DOCA; or

enter into Liquidation; or

adjourn the meeting for a period of up to 45 business days;

2. consider and, if thought fit, approve the Administrators’ remuneration;


3. if Mickim is to enter into a DOCA:

consider and, if thought fit, approve the deed administrators’ future remuneration; and

4. if Mickim is to be wound up:

a. consider and, if thought fit, approve the liquidators’ future remuneration;

b. consider authorising the liquidators to compromise debts of Mickim under Section 477(2A) of the Act;

and

c. consider authorising the liquidators to enter into agreements that may take longer than three months to

complete under Section 477(2B) of the Act.

The upcoming second meeting of creditors for Mickim has been convened to be held on 5 April 2019 at McGrathNicol,

Level 7, 175 Eagle Street, Brisbane QLD 4000 at 11:30 AM (AEST).

Additional details with respect to the second meeting are included at section 16 of this report.


Executive summary

Summary

A DOCA has been proposed for Mickim.

The Administrators recommend that creditors of Mickim vote that Mickim enter into the proposed DOCA at the

second meeting of creditors to be held on 5 April 2019.

The Administrators’ assessment is that the proposed DOCA will provide a better return to Mickim’s unsecured

creditors than what would be received in a liquidation scenario. The Administrators anticipate that preferred

creditors (i.e. employee entitlements) would be paid in full under both scenarios.

We do not consider it likely that there would be any recoveries for creditors resulting from claims for insolvent

trading or voidable transaction if Mickim was wound up. Such recoveries are only available if Mickim is found to

have been insolvent prior to the Administrators’ appointment.

Mickim operates a real estate business, including the management of rental properties and sale of residential

properties in Brisbane.

In June 2018, Mickim identified that its target market was changing and it decided to no longer operate under a

franchised agency banner. The business rebranded as an independent real estate agency. That change resulted

in a reduction in its sales agents and the leased premises was surplus to the business’ ongoing needs. In 2019,

the rent associated with the leased premises had become onerous and was impacting the long term viability of

Mickim’s business.

On 7 March 2019, the Director appointed the Administrators to Mickim pursuant to Section 436A of the Act due

to concerns Mickim may become insolvent for reasons that included the now disproportionate cost of the leased

premises, compared to its revenues.

The Administrators are continuing to trade the real estate business and have engaged a real estate broker to sell

the rent roll. The Administrators have entered into an agreement with the Director regarding his ongoing

employment during the administration.

The Administrators have conducted preliminary investigations in relation to the conduct of the Director and

whether there are any amounts that could be recovered in a liquidation of Mickim. We consider that Mickim was

not likely to have been insolvent prior to our appointment and, therefore, if Mickim is wound up, there is not

likely to be any return from pursuing claims for insolvent trading or voidable transactions.

Although the Administrators consider Mickim may not have been insolvent prior to the Administrators’

appointment, it is now likely that Mickim is insolvent due to it leaving the leased premises and the landlord’s

resulting claim against Mickim, which is currently unquantified.

The second meeting of creditors of Mickim will be held on 5 April 2019 at McGrathNicol, Level 7,

175 Eagle Street, Brisbane QLD 4000 at 11.30 AM (AEST).

The purpose of the second meeting is for creditors to:

resolve the future of Mickim;

consider and, if thought fit, approve the remuneration of the Administrators;

if Mickim is to enter into a DOCA, consider and, if thought fit:

＞ approve the deed administrators’ future remuneration;

＞ consider the appointment of a COI;

if Mickim is to be wound up, consider and, if thought fit:

＞ approve the liquidators’ future remuneration;

＞ consider the appointment of a COI;

＞ consider authorising the liquidators to compromise debts of Mickim under Section 477(2A) of

the Act; and


＞ consider authorising the liquidators to enter into agreements that may take longer than three

months to complete under Section 477(2B) of the Act.

Having considered all of the options available for creditors, the Administrators recommend that Mickim

should enter into the proposed DOCA.

Further information regarding the Administrators’ recommendations is outlined at section 13.


Administrators’ prior involvement

In accordance with Section 436DA of the Act and the ARITA Code of Professional Practice, a DIRRI dated 12 March 2019

for Mickim was enclosed with the Administrators’ first communication to creditors, which was the notice convening the first

meeting of creditors.

Ongoing assessment

The Administrators undertook a proper assessment of the risks to their independence prior to accepting the appointment

as Administrators of Mickim in accordance with the law and applicable professional standards. This assessment identified

no real or potential risks to the Administrators independence. The Administrators are not aware of any reasons that would

prevent us from acting as Administrators.

At the date of this report, the opinion as to the Administrators’ independence has not changed. The Administrators

remain of the view that their prior professional relationships as outlined in the DIRRI do not create or give rise to any

conflict of interest.


Background and statutory information

Background

A brief overview of the background of Mickim is as follows:

The principal activity of Mickim is the provision of real estate services, including the management of rental

properties and sale of residential properties in Brisbane.

Mickim commenced as a branded franchise in March 2015 and signed a lease for premises in Everton Park,

Brisbane with the capacity to accommodate approximately 10 sales agents.

By June 2018, Mickim found it difficult to maintain the size of the business due to a changing market and the

Director decided to no longer operate under the franchised banner and the business rebranded as an

independent real estate agency.

The change resulted in a reduction of Mickim’s sales agents and the leased premises became surplus to the

business’ ongoing needs. The rent associated with the leased premises had become onerous on the business and

was impacting the long term viability of Mickim.

In March 2019, the Director made the decision to place Mickim in administration.

Statutory details, officers and shareholders

A search of the records maintained by ASIC at the date of the Administrators’ appointment revealed the following

statutory details:

Company name ACN Registered office Incorporation date

Mickim Investments Pty. Ltd. 602 922 172 Level 1

55A Old Cleveland Road

Stones Corner Qld 4120

18 November 2014

Source: ASIC company search

Set out below is Mickim’s current and historical office holder as at the date of the Administrators’ appointment:

Name Role Appointment date Cease date

David Fenwick Director 18 November 2014 N/A – current


Set out below is Mickim’s current shareholder as at the date of the Administrators’ appointment:

Shareholder Number of ordinary shares % Total

David Fenwick 100 100


Security interests

A search of the PPSR database as at the date of the Administrators’ appointment identified the following security interests

held over Mickim:

Secured party Type of security

Toyota Finance Australia Ltd ACN 002 435 181 Lease of motor vehicle

Konica Minolta Business Solutions Australia Pty Ltd ACN 001 065 096 Photocopier

Source: PPSR searches


Background to the appointment of Administrators

A brief background to the appointment is as follows:

Anthony Connelly was contacted by Lucas Hewlett, a lawyer, on 1 March 2019.

Anthony Connelly met with the Director and Lucas Hewlett on 4 March 2019 to discuss Mickim’s financial position

and provide a high level explanation of general turnaround and/or insolvency options available to Mickim.

On 7 March 2019, the Director appointed Anthony Connelly and Jamie Harris as administrators of Mickim

pursuant to section 436A of the Act.


Books and records

The Administrators are required to provide an opinion on whether Mickim’s books and records were maintained in

accordance with the requirements of Section 286 of the Act.

This section of the Act requires that a company must keep written financial records that:

correctly record and explain its transactions and financial position and performance; and

would enable true and fair financial statements to be prepared and audited.

Failure to maintain books and records in accordance with Section 286 of the Act provides a presumption of insolvency.

This presumption can be relied upon by a Liquidator in an application for compensation for insolvent trading and other

actions for recoveries pursuant to the Act from directors and other related parties.

Mickim operated a paperless office and there were no physical books and records to collect. The Director has provided

the Administrators with access to all relevant electronic information and provided the Administrators with login details to

enable access to all electronic data.

The Administrators consider that a company operating the type of business undertaken by Mickim in order to comply with

Section 286 of the Act should, as a minimum:

maintain readily accessible electronic accounting and financial records;

maintain its real estate trust accounts in accordance with the requirements of the Office of Fair Trading;

have on hand employee and other payroll information; and

have tax lodgements up to date with copies of lodgements readily available.

It appears that Mickim has maintained records in accordance with Section 286 of the Act that correctly record and explain

its transactions, financial position and financial performance. The Administrators are of the opinion that the financial

statements and electronic records provide an accurate records of Mickim’s financial position and financial performance.


Historical financial performance and position

This section of the report sets out Mickim’s historical financial information.

The summarised financials set out in this section are presented pursuant to a requirement of the ARITA Code of

Professional Practice.

Historical financial information has been sourced as follows:

FY16 and FY17: Mickim’s externally prepared financial statements; and

FY18: Mickim’s management accounts obtained from its Xero database by the Administrators.

Creditors should note that the Administrators have not carried out an audit of the financial information, nor have the

Administrators verified the financial information presented in this section. Accordingly, the analysis set out below is for

illustrative purposes only and the Administrators do not provide any warranty as to its accuracy or reliability.


Financial performance

A summary of Mickim’s profit and loss statements for FY16, FY17 and FY18 is set out below:


Summarised profit and loss statement FY16 ($) FY17 ($) FY18 ($)

Income

Commissions - sales 268,019 250,590 -

Property management commissions 4,485 28,949 -

Letting fees 4,804 7,258 -

Admin Fees 391 924 -

Other PM income 1,717 4,012 -

Referral fees 2,223 1,934 -

Advertising recoveries 32,588 35,659 -

Insurance recoveries 2,307 - -

Other income 110 2,384 -

Gross commission and fees - - 229,169

Total income 316,644 331,710 229,169

Less: cost of sales - - (141,614)

Gross Profit 316,644 331,710 87,555

Expenses

Advertising and promotion (34,052) (40,481) -

Depreciation (7,117) (4,037) -

Franchise fees (27,040) (29,115) (33,479)

Rent on land & buildings (54,818) (72,324) (89,746)

Wages (125,416) (152,140) (54,139)

Other expenses (66,623) (96,041) (81,849)

Total expenses (315,066) (394,138) (259,213)

Non-Operating Expenses

Franchisee drawings - - (21,491)

Interest and tax expenses - - (866)

Total non-operating expenses - - (22,357)

Total comprehensive income 1,578 (62,428) (194,014)

Source: Accountant financial statements for FY16 and FY17

Source: Management financial statements for FY18


Financial position

A summary of Mickim’s balance sheets for FY16, FY17 and FY18 is set out below:


Summarised balance sheet FY16 ($) FY17 ($) FY18 ($)

Current assets

Bond held 1,600 1,600 1,600

Cash at bank 33,868 7,620 14,610

Cash on hand 1 1 -

GST payable control account - 223 -

Trade debtors 1,823 27,109 6,617

Total current assets 37,292 36,553 22,827

Non-current assets

General pool - SBE 3,184 2,229 -

Leasehold improvements 17,804 17,804 36,943

Less: Accumulated depreciation (546) (991) -

Total non-current assets 20,442 19,042 36,943

Total assets 57,734 55,595 59,770

Current liabilities

Amounts withheld from salary and wages (6,884) (3,669) -

ATO Integrated Client Account - (27,740) (192)

GST and PAYG W amendments - (8,593) -

GST payable control account (7,881) - (150)

PAYG withholdings payable - - (5,069)

Superannuation liability (2,947) (9,550) (6,016)

Trade creditors (1,012) (15,761) (12,408)

Wages Payable - - (1,313)

Total current liabilities (18,724) (65,313) (25,147)

Non-current liabilities

Loan - David Fenwick (119,236) (132,937) (370,705)

Total non-current liabilities (119,236) (132,937) (370,705)

Total liabilities (137,960) (198,250) (395,853)

Net assets/(liabilities) (80,226) (142,655) (336,082)

Equity

Issued & paid up capital 1 1

Retained profits/(accumulated losses) (80,227) (142,656) (336,082)

Total equity (80,226) (142,655) (336,082)

Source: Accountant financial statements for FY16 and FY17

Source: Management financial statements for FY18


The above table indicates that the company has maintained solvency due to funds injected by the company’s director,

David Fenwick. Those funds were provided as long term debt that was not due and payable. Accordingly, even though

the company reported negative equity, the Administrators do not consider the company was insolvent prior to the

appointment of administrators.

When the company first identified that it may experience financial difficulties, the director determined to appoint the

Administrators.


Financial position based on ROCAP

Pursuant to section 438B(2) of the Act, the Director submitted a ROCAP. A ROCAP is a report summarising the director’s

understanding of the financial position of a company as at the date of the appointment of administrators, as well as their

view on the reasons for the company’s financial failure.

It is the Administrators’ opinion that the ROCAP completed by the Director does not omit any material assets and provides

an accurate high level estimate of Mickim’s liabilities.


Explanation for difficulties

Director’s reasons for failure

The Director has advised the Administrators the key factor that caused Mickim’s current financial position was a changing

market that resulted in significant business contraction. Following a reduction in Mickim’s sales agents, the leased

premises became surplus to the business’ ongoing needs and the associated rent had become onerous on the business

and was impacting the long term viability of Mickim.

Administrators’ view

The Administrators have no basis to disagree with the Director’s reasons for failure based on our investigations to date.

Outstanding winding up applications

The Administrators are not aware of any outstanding winding up applications against Mickim.


Offences, insolvent trading and voidable transactions

David Fenwick was the director of Mickim noted on ASIC records at the time the Administration commenced.

Pursuant to the Act, a person may be considered to be a director of a company even if they are not appointed as director

if:

they act in the position of a director; or

the director(s) of the company are accustomed to act in accordance with the person's instructions or wishes.

The Administrators’ preliminary investigations have not identified any such person acting as a director of Mickim.

However, if further investigations determine that any person acted in the position of director, references to “director” and

“directors” in this section may also extend to those parties.

Offences

ARITA has issued an “Offences, Recoverable transactions and Insolvent trading” information sheet providing general

information for creditors about insolvent trading and voidable transactions.

This information sheet is available from the ARITA website (www.arita.com.au). If you are unable to access this website,

please contact Jacinta Robinson on (07) 3333 9813 to obtain a copy.

The following sections provide an overview of potential recoveries or actions available in a liquidation and provide details

around key considerations. The Administrators specific commentary in relation to Mickim follows at section 9.2 onwards.

Insolvent trading

Other than in cases of fraud, the director of a company may only be sued for insolvent trading if the company is in

liquidation. Where an administrator has been appointed, assessment of the issue of insolvent trading can be important to

creditors if they are being asked to choose between a DOCA and a liquidation. In that instance, creditors have to assess

the advantages to them of a DOCA (which does not include proceeds from insolvent trading actions) compared to the

likely return to them in a liquidation (which could include the proceeds of any successful insolvent trading action). A

liquidation also preserves the possibility of individual creditors taking action in their own right.

Before a court will order that a person pay compensation in respect of insolvent trading, a liquidator must establish that:

the person was a director of the company at the time the company incurred the debt(s) that are the subject of

the claim;

the company was insolvent at that time or became insolvent by incurring the debt;

at that time, there were reasonable grounds for suspecting that the company was insolvent or would become

insolvent by incurring the debt; and

the debt the subject of the claim was wholly or partly unsecured and the creditors to whom debts are owed have

suffered loss and damage.

In determining whether the Director traded Mickim at a time it was insolvent, the Administrators have considered a range

of insolvency tests (refer to section 9.2 of this report).

Director defences

Section 588H of the Act sets out statutory defences available to the director in respect of any claim for insolvent trading.

These include:

at the time of incurring debts, the director had reasonable grounds to expect that the company was solvent;

the director relied on information provided by a competent and reliable person which concluded that the

company was solvent at the time debts were incurred; and

the director took reasonable steps to prevent the debt being incurred.

http://www.arita.com.au/


Voidable transactions

If Mickim is wound up, certain transactions that occurred prior to the appointment of the Administrators, and where the

property of Mickim was disposed of or dealt with, may be recovered by the liquidators under Part 5.7B of the Act. This

may result in, among other things, a requirement for a third party to return property and/or money to Mickim and thereby

increase the assets available to the liquidators and creditors. These are known as voidable transactions.

IPR 75-225(3)(b)(vi) requires an Administrator to specify whether there are any transactions that appear to the

administrator to be voidable transactions in respect of which money, property or other benefits may be recoverable by a

liquidator under Part 5.7B of the Act. As with the insolvent trading analysis above, this issue is relevant to creditors if they

are being asked to choose between a DOCA and a liquidation, because voidable transactions are only recoverable if a

liquidation occurs.

Voidable transactions include:

unfair preference claims: transactions between a company and a creditor, resulting in the creditor receiving from

the company, in relation to an unsecured debt owed to the creditor, a greater amount than it would have

received in relation to the debt in a winding up of the company;

uncommercial transactions: transactions which a reasonable person in the place of the company would not have

entered into, taking into account the benefits and the detriment to the company, the respective benefits to the

other parties involved and any other related matters; and

unfair loans: being a loan agreement where the interest or charges are considered to be extortionate. Unfair

loans made to the company any time prior to the appointment of the Administrators may potentially be

overturned by a subsequently appointed liquidator, whether or not the company was insolvent at the time the

loan was entered into.

The Administrators have reviewed the electronic records obtained from Mickim’s premises to determine the existence of

voidable transactions. The Administrators commentary on these initial investigations is set out at section 9.3 of this report.

Breach of directors’ duties

Sections 180 to 184 of the Act set out the duties, obligations and responsibilities imposed on directors, which are designed

to promote good governance and ensure that directors act in the interests of a company. These duties include:

duty of care and diligence;

duty of good faith;

duty not to make improper use of position; and

duty not to make improper use of information.

Funding to pursue insolvent trading and voidable transactions

Insolvent trading and voidable transactions can only be pursued in a liquidation and further investigation and any

subsequent proceedings may incur significant costs.

Funding may be required from creditors or litigation funders should the liquidators (if appointed) seek to commence such

action.


Insolvent trading

Tests of insolvency

There are a range of tests and indicators which can be considered to determine if and when Mickim became insolvent.

The Administrators examine a range of these tests and/or indicators below:

Tests of insolvency Administrators’ comments

Cash flow test – ongoing losses and

poor cash flow

Mickim’s externally prepared financial statements disclose an operating

profit of $1,578 in FY16 and an operating loss of $62,428 in FY17. The

management accounts disclose an operating loss of $194,014 in FY18.

Deteriorating profitability is not a sole indicator of insolvency and must

be considered in conjunction with other insolvency indicators.

As identified earlier in this report, the losses that Mickim suffered were

effectively funded by funds loaned to Mickim by the Director. That loan

was not due and payable by Mickim to the Director.

Balance sheet tests of insolvency Mickim did not own substantial assets due to the nature of its business.

The externally prepared financial statements for FY16 and FY17 disclose

net liability positions of $80,226 and $142,655 respectively. The

management accounts for FY18 disclose a net liability position of

$194,014.

The increasing net liability was funded by the increase in the Director’s

loan to Mickim. This demonstrates the Director was injecting his own

personal funds into Mickim and would likely be an effective defence to

any insolvent trading claim.

Absence of a business plan We have not been provided with a written business plan for Mickim.

This is not unusual for a real estate business, the aim of which is

reasonably simple. The Administrators do not consider any absence of a

written business plan negatively impacted on Mickim’s financial

performance.

Adequate financial records or

disorganised internal accounting

procedures

Mickim’s financial records and internal accounting procedures appear to

be adequate and well organised.

Lack of cash flow forecasts and other

budgets

Mickim did not appear to prepare cash flow forecasts and/or budgets.

This is not unusual for a real estate business and the Administrators do

not consider the absence of cash flow forecasts and/or budgets impacted

on Mickim’s financial performance.

Increasing debt, overdraft limit reached,

increased monitoring by financier and

inability to obtain finance

Mickim did not appear to have:

increased external debt levels;

reached an overdraft limit;

increased monitoring by financier; or

had any inability to obtain finance.

Problems selling stock or collecting

debts

Mickim had no stock to sell given the industry within which it operates.

Mickim did not appear to have difficulty collecting its debtors.


Tests of insolvency Administrators’ comments

Unrecoverable loans to related parties Mickim has no recorded loans to related parties. However, the Director

did loan significant personal funds to Mickim, which assisted to maintain

solvency.

Creditors unpaid outside usual terms,

special arrangements with creditors

and/or payments to creditors of

rounded sums

Based on the Administrators’ preliminary investigations, it appears all

outstanding creditors at the commencement of the administration were

within terms and not yet payable.

Solicitors’ letters, demands and other

judgements

The Administrators have not identified any solicitors’ letters, demands or

other judgements.

Suppliers placing the company on cash

on delivery terms and/or collecting

stock

The Administrators have not identified any suppliers placing Mickim on

cash on delivery terms.

Overdue taxes and superannuation

liabilities

Based on the Administrators’ preliminary investigations, it appears the

only overdue taxes and superannuation liabilities relate to the period

immediately prior to the administration that were not yet due and

payable.

Board disputes, Director resignations

and/or loss of management personnel

The Administrators have not identified any board disputes or director

resignations.

Administrators’ conclusions regarding solvency

Solvency is a question of fact to be ascertained from consideration of a company’s financial position as a whole.

Whilst Mickim’s profitability deteriorated since FY16, the Director injected his own personal funds into the company to

enable it to pay its debts as and when they fell due. The injection of the Director’s own personal funds into the company

has increased Mickim’s liability and therefore increased the company’s net liability position. However, that loan was not

due and payable.

Based on the Administrators’ analysis set out above, it appears that Mickim may not have been insolvent prior to the

appointment of Administrators. However, the Director had concerns regarding Mickim’s long term viability and considered

the company may become insolvent in the future due to significant overheads, in particular, the leased premises.

This initial assessment may be impacted by a further assessment of Mickim’s liabilities and available sources of funds to

meet those liabilities. If after more detailed investigations it was found Mickim was insolvent prior to the Administrators’

appointment, the Director may be liable for any fresh liabilities incurred by Mickim when Mickim was insolvent.

If Mickim was insolvent when debts were incurred, the Director may be personally liable for those amounts. The likely

maximum claim for damages in respect of insolvent trading would be the total amount of outstanding creditor accounts as

at the date of the Administrators’ appointment less the net realisations from Mickim’s assets. The quantum of any such

claim appears to be nil from the investigations undertaken to date. A liquidator would need to take into account the

prospects of success of prosecuting any claims as well as weigh up the costs of pursuing claims against the potential

recoveries from such claims (including resources available to the Director to meet any claims). Refer to Section 9.5 for

details of the Directors’ asset position.

After due consideration of all of the relevant issues, the Administrators’ preliminary assessment is that, on balance, a

liquidator would not successfully recover any amounts in relation to insolvent trading.

If the Administrators are appointed liquidators, the Administrators would conclude their views on this issue.


Voidable transactions

Unfair preference claims

In order for a payment to be considered an unfair preference, the company must have been insolvent at the time of the

payment or become insolvent as a result of that payment. As the Administrators’ preliminary investigations indicate that

Mickim was not insolvent prior to the administration, the Administrators have not identified any unfair preference claims.

If Mickim is wound up, Mickim’s affairs may be more thoroughly investigated to confirm whether any of Mickim’s

transactions are unfair preference transactions. However, any recovery would require a positive identification of insolvency,

which was discussed in the prior section.

Similar to insolvent trading actions, there are a range of defences that may be available to the parties involved in the

potential unfair preference claims that would need to be considered and investigated prior to commencing recovery

action.

Uncommercial transactions

In order for a payment to be considered an uncommercial transaction, the company must have been insolvent at the time

of the transaction or become insolvent as a result of that transaction. As the Administrators’ preliminary investigations

indicate that Mickim was not insolvent prior to the Administration, the Administrators have not identified any

uncommercial transactions.

If Mickim is wound up, further investigations and a cost benefit analysis of pursuing recovery action (including a

consideration of whether there are funds available to meet any claims) would be undertaken.

Unfair loans

The Administrators have identified one loan from the Director to Mickim. The Administrators’ preliminary investigations

indicate there was no interest or charges payable on the loan and therefore it does not constitute an unfair loan.

Breach of Director’s duties

The Administrators’ preliminary investigations have not identified any breach of the Director’s duties.

If the Director is found to have breached his duties, recovery proceedings for any losses may be pursued. The

Administrators are required to give further consideration to the discharge of duties by the Director if Mickim is wound up

and the Administrators are appointed as liquidators.

Director’s asset position

As the Administrators’ preliminary investigations have not indicated that any voidable transactions may be recoverable in a

liquidation, the Administrators have not conducted any searches to identify assets personally owned by the Director.

The Administrators would conduct investigations into the asset position of the Director if Mickim is wound up and if the

liquidators determine that recovery actions are warranted. As set out above, this is not considered a likely outcome.


Administrators’ actions to date

Tasks undertaken by Administrators

The Administrators and their staff have attended to the following key matters since the commencement of the

administration:

notified major financial institutions of the appointment and sought to freeze any bank accounts;

attended to statutory duties including informing the ATO, Office of State Revenue, and various other statutory

authorities of the appointment;

notified the Office of Fair Trading of the appointment and the Administrators’ intention to continue operating the

trust accounts operated by Mickim;

engaged Real Estate Agency Sales to sell the rent roll business;

attended meetings and liaised with the Director to understand the background, financial position and operations

of Mickim;

issued requests to the Director to complete the ROCAP and deliver the books and records of Mickim to the

Administrators;

secured electronic books and records;

reviewed the books and records of Mickim and undertook preliminary investigations to ascertain Mickim’s

financial position and any transactions that may be recoverable by a liquidator;

reviewed the pre-appointment accounting and other software systems;

vacated the former leased premises;

liaised with key stakeholders, including employees, suppliers and creditors;

prepared a preliminary calculation of outstanding employee entitlements;

prepared and issued circulars to suppliers and creditors;

processed the mid-month rental distribution to rental property owners;

entered into an agreement with the Director to formalise his employment with Mickim during the administration;

attended and chaired the first meeting of creditors held on 18 March 2019;

prepared and lodged the minutes of the first meeting of creditors with ASIC;

liaised with the Administrators’ insurance broker in relation to Mickim’s insurance policies and ongoing insurance

requirements;

prepared this statutory report to creditors and convened the second meeting of creditors to be held on

5 April 2019; and

attended to other general and statutory requirements.


DOCA

Overview

A DOCA is a binding arrangement between a company and its creditors governing how the company’s affairs will be dealt

with. A DOCA is one of the three outcomes that creditors may resolve to occur at the end of the administration process,

provided a DOCA proposal has been made which forms part of the Administrators’ report to creditors.

If creditors vote in favour of a company entering into a DOCA, the company must sign the DOCA within 15 business days

of the creditors’ meeting, unless the Court allows a longer time. If this does not happen, the company will automatically

enter into liquidation, with the administrators becoming the liquidators.

The DOCA binds all unsecured creditors, even if they voted against the proposal. It also binds the owners of property,

those who lease property to the company and secured creditors, if they voted in favour of the DOCA.

The Director, in conjunction with the Administrators, has proposed a DOCA for creditors (DOCA Proposal).

Key terms of the DOCA Proposal

The DOCA Proposal has the following key features.

Key term Description

Proponent The Director (in conjunction with the Administrators)

Deed Administrators The Administrators will become the Deed Administrators under the DOCA. A key

objective of the Deed Administrators will be to sell the rent roll for the benefit of

creditors.

The Deed Administrators will also adjudicate on creditor claims and pay

distributions as soon as practicable.

Duration The DOCA will commence upon the execution of the DOCA.

The DOCA will end approximately:

three months following the sale of the rent roll; or

three months following the six month DOCA contribution period referred to

below, whichever is the later.

Deed Fund The Deed Administrators will establish a Deed Fund at the commencement of the

DOCA. All DOCA contributions will be paid into the Deed Fund.

The DOCA contributions will consist of:

the management fee payable to Mickim on each managed property until the

rent roll is sold;

the net settlement proceeds from the sale of the rent roll; and

commission on the sale of each property sold by Mickim during the first six

months of the DOCA:

＞ 50% on property sales where the appointment of Mickim occurred prior to

the voluntary administration (i.e. before 7 March 2019); and

＞ 20% on property sales where the appointment of Mickim occurred after

the commencement of the voluntary administration (i.e. 7 March 2019

onwards).

Mickim is required to pay the commission as set out above into the Deed Fund,

following the settlement of each sale, within a reasonable time after each

settlement.


Key term Description

Distribution of Deed

Fund

The Deed Fund will be distributed as follows:

First – to pay the remuneration and costs incurred by the Administrators to the

extent they are not already paid.

Second – to pay the remuneration and costs incurred by the Deed

Administrators to the extent they are not already paid.

Third – to pay all priority creditors as set out in section 556 of the Act,

including employee priority claims.

Fourth – the balance to be distributed pari passu to all admitted unsecured

creditors.

Surplus funds (if any) – to be remitted to Mickim.

Control of operations

and assets

Control of Mickim, excluding the rent roll, will return to the Director and all of the

Director’s statutory powers will be reinstated at the commencement of the DOCA.

A key objective of the DOCA will be to sell the rent roll. The Deed Administrators

will be the only party authorised to sell the rent roll.

The Director will continue to:

undertake the duties of the appointed letting agent pursuant to each Property

Occupations Form 6 for each managed property, including, but not limited to,

property inspections, property maintenance and trust accounting and

apply his efforts to sell each property as the appointed selling agent pursuant

to the Property Occupations Form 6 for each listing, other than those where

another agent is the cause of the listing.

In summary, the DOCA Proposal is designed to establish a Deed Fund that will be distributed amongst Mickim’s creditors

and provide a better return to creditors than would be obtained in a liquidation. There are two key reasons for the better

outcome, as follows:

the Director will provide services during the period of operation of the rent roll in his capacity as director of

Mickim. This will be a materially lower cost than if the Administrators or liquidators are required to undertake

that work with the assistance of a consultant; and

the Director will provide services to Mickim as a licensed real estate agent to maintain the opportunity to receive

material portions of each sale commission that may be earned from property sales during a six month period.

That opportunity would not be available in a liquidation, as Mickim would not have access to a licensed real

estate agent to provide those services.

Further details regarding each of those two points are set out below.

During the DOCA, control of Mickim will revert back to the Director, excluding the rent roll. However, the director will be

required to provide services to manage that rent roll until it is sold. The payments to the Director during that period for

those services will be limited to the payment of lease costs associated with the motor vehicle used in the business.

The Director will also be required to continue to provide services to Mickim to seek to sell properties where Mickim was

engaged as sale agent. The same would apply to the contracted sales agents who provide contract real estate services to

Mickim. The remuneration paid to the Director and contracted agents for those services will be a percentage of the

commission earned on each property sale, with the balance of commission being contributed to the Deed Fund.

If the Director did not provide those services (including if Mickim was wound up), the cost of managing the rent roll would

be materially higher. Further, there would be no proceeds from the commission on property sales as Mickim’s sales

business could not continue in the absence of a licensed real estate agent.

Following the sale of the rent roll, the balance of the Deed Fund will be applied to pay all priority creditors with the

balance to be distributed evenly to all admitted unsecured creditors. In a liquidation scenario, a return to any class of

creditors has significant risk and uncertainty, for the reasons identified above.

The draft DOCA will be available for download from http://www.mcgrathnicol.com/creditors/mickim-investments-pty-ltd/ at

least two business days prior to the second meeting of creditors. Creditors should be aware that the draft DOCA may

change prior to it being signed; however, the key terms (as set out above) will remain the same. A copy of the signed

http://www.mcgrathnicol.com/creditors/mickim-investments-pty-ltd/


DOCA will be available for download at the same location within 15 business days of the second meeting of creditors (if

creditors vote in favour of the DOCA Proposal and it is executed).

Advantages of the DOCA Proposal

If Mickim is wound up, the Director’s employment with Mickim would cease and the liquidators would only have one

realisable asset (i.e. the rent roll). The liquidators would then need to engage a consultant to provide the day to day

services required to maintain the rent roll business, at considerable cost. This would have a material effect on the likely

return to Mickim’s creditors. Set out below is a summary of the likely impact on the asset realisations in a DOCA Proposal

versus a liquidation scenario.

Asset realisation DOCA Proposal

Liquidation scenario

(assuming the Director’s

employment ceases)

Management fee payable to

Mickim on each managed property

until the rent roll is sold

Management fee continues to be

paid to Mickim.

The Director undertakes all work

associated with the rent roll.

The cost associated with that

work is the payments on the

motor vehicle lease that is used

in the business, including for

property inspections.

Management fee continues to be

paid to Mickim.

The Administrators will be

required to undertake all work

associated with the rent roll and

would engage a contractor to

undertake this work at a material

cost.

This net asset realisation may be

materially less in a liquidation

scenario due to the costs

associated with administering the

rent roll.

Net settlement proceeds from the

sale of the rent roll

Net settlement proceeds to be

paid to Mickim.

Net settlement proceeds to be

paid to Mickim.

Commission on the sale of each

property sold by Mickim

A percentage of the commission

would be paid to Mickim

following the successful

settlement of each sale.

No commissions would be paid

to Mickim, which will not have

access to any licensed real estate

agents.

This net asset realisation would

be nil in a liquidation scenario.


Anticipated return to creditors

Basis and assumptions

The following section sets out the estimated return to creditors of Mickim in a liquidation scenario versus the DOCA

Proposal.

Liquidation scenario

In a liquidation scenario, the estimated return to creditors has been prepared based on the following assumptions:

the Director’s employment would be terminated, all contracted real estate agents would be terminated and

Mickim would no longer have access to any licensed real estate agents;

the Administrators would sell the rent roll (assumed in June 2019) and engage a contractor to undertake the

duties of the appointed letting agent until the rent roll is sold;

the value of the rent roll (and commission on its sale) has been withheld in this analysis as it is sensitive and may

jeopardise the sale price. However, we consider it is likely to be similar in both scenarios in any event, it would

just be the management cost that would likely be different;

there would be no further property sales as Mickim would not have access to any licensed real estate agents to

sell the properties; and

recoveries from voidable transactions are not anticipated.

Creditors should note that the estimates provided in this section are preliminary only and are subject to change as creditor

claims are considered and adjudicated and the realisations and costs of a liquidation become more clear. No warranty as

to the accuracy or reliability of the estimates is provided.

DOCA Proposal scenario

In the DOCA Proposal scenario, the estimated return to creditors has been prepared based on the following assumptions:

the Director would remain employed by Mickim and continue to undertake the duties of the appointed letting

agent and apply his efforts to sell the listed properties pursuant to each Property Occupations Form 6. The same

would apply for each contracted real estate agent;

the Administrators would sell the rent roll in June 2019 and the Director would continue to undertake the duties

of the appointed letting agent until the rent roll is sold;

the value of the rent roll (and commission) has been withheld as it is sensitive and may jeopardise the sale price.

However, we consider it is likely to be similar in both scenarios in any event, it would just be the management

cost that would likely be different;

the Director is assumed to sell an estimated number of properties and a portion of the commission is payable to

Mickim; and

Mickim otherwise continues to trade.

Creditors should note that the estimates provided in this section are preliminary only and are subject to change as creditor

claims are considered and adjudicated and any change to the costs of the DOCA Proposal. No warranty as to the

accuracy or reliability of the estimates is provided.


Estimated return to unsecured creditors

A comparison of the estimated returns to creditors if Mickim was to be wound compared to the DOCA Proposal is set out

below, based on the assumptions set out in Section 12.1.

Creditors should note that the above estimates are preliminary only and are subject to change as creditor claims are

considered and adjudicated, asset realisations are completed, and investigations of any potential voidable transactions are

finalised. No warranty as to the accuracy or reliability of this estimate is provided.

Summary of estimated returns

The Administrators are unable to provide a summary of the estimated return to creditors under the liquidation scenario

and DOCA Proposal for the following reasons:

the value of the rent roll (and commission payable) has been withheld as it is commercially sensitive and may

prejudice the sale if disclosed; and

the total unsecured creditor claim cannot be estimated as the landlord of the former leased premises (a large

potential creditor) has not contacted the Administrators to discuss its claim against Mickim. Whilst the landlord is

able to claim for the balance of the lease term, the landlord also has an obligation to minimise its claim by

attempting to secure a new tenant as soon as possible.

What we can say from the above analysis is that:

the proceeds from the sale of the rent roll may likely be the same in all options;

at least some proceeds from commissions on sales may be recoverable in a DOCA scenario; and


$ (GST exclusive) Low scenario High scenario Low scenario High scenario

Asset realisations

Rent roll proceeds

Commission on currently listed property sales - - 30,000 60,000

Commission on future listed property sales - - - 11,000

Ongoing rental management fees 7,498 9,822 8,200 10,800

Total asset realisations 7,498 9,822 38,200 81,800

Realisation and administration costs

Contract services (rent roll) (15,000) (10,000) - -

Insurance (4,000) (2,000) (5,000) (3,000)

Administrators' professional fees (subject to creditor approval) (49,919) (49,919) (49,919) (49,919)

Liquidators' professional fees (subject to creditor approval) (40,000) (40,000) - -

Deed Administrators' professional fees (subject to creditor approval) - - (30,000) (30,000)

Subscriptions and car repayments (3,500) (2,500) (10,500) (7,500)

Total realisation and administration costs (112,419) (104,419) (95,419) (90,419)

Amount available for creditors > (104,921) > (94,597) > (57,219) > (8,619)

Known creditor claims

Preferred creditors (i.e. employee entitlements) (7,500) (4,500) (7,500) (4,500)

Unsecured creditors (excluding the landlord) (500,000) (425,000) (500,000) (425,000)

Total known creditor claims (507,500) (429,500) (507,500) (429,500)

The Administrators' estimate of unsecured creditor claims excludes the landlord's potential claim as the landlord has not yet

communicated with the Administrators and/or quantified its claim.

Withheld - refer to note Withheld - refer to note

Liquidation scenario DOCA Proposal

The Administrators have excluded the estimated realisable value of the rent roll and associated commission payable as this

information is commercially sensitive. In the DOCA Proposal the costs are materially lower; therefore, once they are paid there

will be a greater return to creditors irrespective of the rent roll's sale price.


the costs of the management of the rent roll in the DOCA scenario are likely to be materially less than in a

liquidation scenario.

Instead, the Administrators provide the following indicative summary of returns to creditors under a liquidation scenario

and the DOCA Proposal.

Creditor claims Liquidation scenario

(low or high)

DOCA Proposal

(low or high)

Preferred creditor claims

(i.e. employee entitlements)

Paid in full Paid in full

Unsecured creditor claims Not paid in full

(a lesser return than

in the DOCA Proposal)

Potentially paid in full

(a greater return than in

the liquidation scenario)

Source: McGrathNicol analysis

As set out in the above table, the DOCA Proposal is estimated to provide a better return to creditors than what would be

achieved in a liquidation scenario.


Alternative courses of action

Administrators are required to provide creditors with a statement of the Administrators’ opinion about each of the courses

of action in respect of which creditors are entitled to vote at the meeting on 5 April 2019.

The matters requiring the Administrators’ opinion are:

whether it would be in the creditors’ interests for the administration to end, with control of Mickim reverting to

the Director; or

whether it would be in the creditors’ interests for Mickim to enter into a DOCA; or

whether it would be in the creditors’ interests for Mickim to be wound up.

In addition, creditors are entitled to adjourn the meeting for up to 45 business days.

Administration to end

Creditors may consider ending the Administration and returning control of Mickim to the Director. The Administrators do

not consider this to be a commercially viable option, given Mickim is currently without sufficient funds to meet creditor

liabilities, and is therefore insolvent or likely to become insolvent.

In the Administrators’ opinion, it is not in the best interests of creditors to vote for the administration of Mickim to

end.

Deed of Company Arrangement

A DOCA is a binding arrangement between a company and its creditors governing how the company’s affairs will be dealt

with. It aims to maximise the chances of the company, or as much as possible of its business, continuing, or to provide a

better return for creditors than an immediate winding up. A DOCA binds all unsecured creditors, even if they voted

against the proposal. At the date of this report, the DOCA Proposal is the only proposal received.

For the reasons set out in section 12.2 of this report, the Administrators estimate that the DOCA Proposal will provide a

better return to creditors than in a liquidation scenario.

In the Administrators’ opinion, it is in the best interests of creditors to vote to enter into the DOCA Proposal.

Mickim be wound up

An administrator would usually recommend that creditors vote for the winding up of a company that is insolvent or likely

to become insolvent in the absence of an acceptable DOCA proposal. An administrator would also recommend liquidation

in preference to a DOCA if there is a strong likelihood that recoveries in a liquidation (for example, voidable transaction

recoveries) will improve the return to creditors in comparison to the return expected under a DOCA.

A liquidation of Mickim would involve:

realisation of the assets by the liquidators for the benefit of creditors;

the completion of final investigation into the affairs of Mickim and the conduct of the Director;

further enquiries regarding potential insolvent trading and voidable transaction actions;

reporting to ASIC in relation to offences (if any) committed by the Director; and

adjudicating creditor claims and payment of any dividends.

The costs of administering the liquidation would depend to a large extent on the realisation costs, nature of further

investigations in relation to voidable transactions and other recovery actions and whether funding was made available to

conduct such investigations.

Based on the Administrators’ assessment of a liquidation scenario, it is estimated that unsecured creditors would receive a

lesser return than what would be received in the DOCA Proposal.

In the Administrators’ opinion, it is not in the best interests of creditors to vote for Mickim to be wound up.


Opinion summary

The Administrators’ overall recommendation to the creditors of Mickim is that creditors should vote that Mickim enter

into the DOCA Proposal.


Creditor information on remuneration

Enclosed with this report is the Administrators’ Remuneration Report with respect to Mickim. This report deals with the

remuneration incurred to date and future remuneration required to deal with the remainder of the administration and the

future of Mickim (depending on the outcome of the meeting of creditors convened for 5 April 2019).

ARITA has issued an “Approving remuneration of an external administrator” information sheet providing general

information for creditors on the approval of an External Administrator’s fees in a liquidation scenario, a voluntary

administration or a DOCA.

This information sheet is available from the ARITA website (www.arita.com.au). If you are unable to access this website,

please contact Jacinta Robinson on (07) 3333 9813 to obtain a copy.

http://www.arita.com.au/


COI

In the event that creditors resolve that Mickim either be wound up or enter into a DOCA, the Act provides that a COI may

be formed.

In these circumstances, a COI would provide the Deed Administrators or liquidators with a sounding board as to likely

creditor views on any contentious issues, and may approve certain matters (for example, compromises of claims and

remuneration requests).

At the meeting of creditors convened for 5 April 2019, creditors will be invited to consider whether a COI should be

formed, and if so, to nominate members.


Creditor meeting details

The second statutory meeting of creditors has been convened to be held on 5 April 2019 at McGrathNicol, Level 7,

175 Eagle Street, Brisbane QLD 4000 at 11:30 AM (AEST).

Creditors who have already lodged a POD do not need to complete a new POD.

Under the Act, the proxy forms lodged by creditors for the first meeting cannot be used for the second meeting.

Accordingly, creditors who are unable to attend the meeting and wish to be represented should ensure that a proxy form,

power of attorney or evidence of appointment of a company representative is completed. Documents may be lodged with

our office prior to the meeting or may be brought to the meeting.

A formal notice of meeting, POD form and proxy form are enclosed with the accompanying circular to creditors.

If you have any queries in relation to this report or the administration, please contact Jacinta Robinson on (07) 3333 9813.


Anthony Connelly

Administrator

Mickim Investments Pty. Ltd. (Administrators Appointed) ACN 602 922 172 Trading as “XCEL Real Estate – Everton Park” (Mickim) Remuneration Approval Report

29 March 2019

3-190326-MICKINV01-Remuneration Report-JR 1

This remuneration approval report provides you with information to assist you to make an informed decision regarding the

approval of the Administrators proposed remuneration for undertaking the Voluntary Administration of Mickim Investments

Pty. Ltd (Administrators Appointed) (Mickim).

The report has the following information:

Declaration...................................................................................................................................................................................................... 3

Executive Summary .................................................................................................................................................................................... 4

Remuneration ................................................................................................................................................................................................ 5

Retrospective remuneration ................................................................................................................................................................... 5

Prospective remuneration ....................................................................................................................................................................... 9

Estimated future remuneration ......................................................................................................................................................... 13

Total remuneration reconciliation .................................................................................................................................................... 14

Likely impact on dividends .................................................................................................................................................................. 15

Disbursements ........................................................................................................................................................................................... 16

External disbursements.......................................................................................................................................................................... 16

Internal disbursements .......................................................................................................................................................................... 16

Future disbursements ............................................................................................................................................................................. 17

Summary of receipts and payments ............................................................................................................................................... 18

Queries .......................................................................................................................................................................................................... 18


What should you do next?

Please read this report and the accompanying information the Administrators have sent you and consider whether you will

attend the meeting of creditors to vote on the resolutions that will be put to that meeting. The meeting will also give you

an opportunity to ask any questions that you have.

Alternatively, you may appoint a representative to attend the meeting on your behalf, by lodging a proxy form. Lodging a

specific proxy form allows you to specify how your proxy must vote. Lodging a general proxy form allows your

representative to choose how to exercise your vote.

If you have any queries, please contact Jacinta Robinson on (07) 3333 9813.


Declaration

We, Anthony Connelly and Jamie Harris of McGrathNicol, have undertaken a proper assessment of this remuneration claim

for our appointment as Voluntary Administrators of Mickim in accordance with the law and applicable professional

standards. The Administrators are satisfied that the remuneration claimed is in respect of necessary work, properly

performed, or to be properly performed, in the conduct of this matter.


Executive Summary

To date, no remuneration or internal disbursements have been approved and paid in this Administration.

This remuneration approval report details approval sought for the following remuneration and internal disbursements (with

a profit element):

Approvals sought (if creditors vote for the DOCA) Report Reference Amount (ex GST)

Retrospective Remuneration Claim

Resolution 5: 7 March 2019 to 22 March 2019

3.1.1

$31,919.00

Prospective Remuneration Claim*

Resolution 6: 23 March 2019 to finalisation of the voluntary

administration

3.2.1

$18,000.00

Prospective Remuneration Claim (only to be drawn if creditors

vote to place Mickim into a DOCA)

Resolution 7: State date of DOCA to date of effectuation

3.2.2

$30,000.00

Estimated total remuneration (if creditors vote for DOCA)

$79,919.00

* Approval sought for future remuneration and internal disbursements (with a profit element) is based on an estimate of

the work necessary to the completion of the external administration. Should additional work be necessary beyond what

is contemplated, further approval may be sought from creditors.

Approvals sought (if creditors vote for liquidation) Report Reference Amount (ex GST)



3.1.1

$31,919.00

Prospective Remuneration Claim

Resolution 6: 23 March 2019 to finalisation of the voluntary

administration

3.2.1

$18,000.00


Resolution 8: State date of liquidation to date of finalisation

3.2.3

$40,000.00

Estimated total remuneration (if creditors vote for liquidation)

$89,919.00

* Approval sought for future remuneration and internal disbursements (with a profit element) is based on an estimate of

the work necessary to the completion of the external administration. Should additional work be necessary beyond what

is contemplated, further approval may be sought from creditors.

Please refer to the report section references detailed in the above table for full details of the calculation and composition

of the remuneration and internal disbursements for which approval is sought.


Remuneration

Retrospective remuneration

The Administrators will request that the following resolution be passed to approve the Administrators’ retrospective

remuneration. Details to support this resolution are included further below.

Retrospective remuneration resolutions Appointment Type Amount (ex GST)

Resolution 5: 7 March 2019 to 22 March 2019 Voluntary

Administration $31,919.00

Total retrospective remuneration resolution $31,919.00

Resolution 5: from 7 March 2019 to 22 March 2019

“That the remuneration of the Voluntary Administrators for the period 7 March 2019 to 22 March 2019, calculated at

hourly rates as detailed in the Initial Remuneration Notice dated 12 March 2019, is determined in the sum of $31,919.00,

exclusive of GST, and the Voluntary Administrators may pay the remuneration immediately or as otherwise determined by

the Voluntary Administrators.”

The Administrators will withdraw funds from the administration account in respect of the Voluntary Administrators’

remuneration immediately upon approval if funds are available. If funds are not available, the Administrators will withdraw

funds progressively over time as funds become available. This will likely be after the sale of Mickim’s rent roll business.

The below table sets out the time charged to each major task area by staff members working on the voluntary

administration for the period 7 March 2019 to 22 March 2019, which is the basis of Resolution 5. More detailed

descriptions of the tasks performed within each task area, matching the amounts below, are contained further below.


Calculation of Resolution 5: 7 March 2019 to 22 March 2019

Mickim Investments Pty. Ltd. (Administrators Appointed) - Net Administrators' WIP for the period 7 March 2019 to 22 March 2019

Staff Position $/hour (ex GST)Total actual hours Total

$ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST

Anthony Connelly Partner 630 6.6 4,158.00 3.00 1,890.00 0.70 441.00 - - 2.90 1,827.00 - - - -

Employee A Director 540 0.5 162.00 - - - - - - - - - - 0.50 162.00

Employee B Manager 460 35.5 15,824.00 2.60 1,196.00 5.10 2,346.00 2.60 1,196.00 16.30 6,992.00 0.20 92.00 8.70 4,002.00

Employee C Accountant 300 0.2 60.00 - - 0.20 60.00 - - - - - - - -

Employee D Accountant 300 30.5 9,150.00 1.60 480.00 12.40 3,720.00 1.70 510.00 7.10 2,130.00 - - 7.70 2,310.00

Employee E Administration 420 1.0 420.00 - - - - - - 1.00 420.00 - - - -

Employee F Administration 330 4.8 1,584.00 - - - - - - 1.40 462.00 - - 3.40 1,122.00

Employee G Administration 170 2.1 357.00 0.40 68.00 - - - - 0.20 34.00 - - 1.50 255.00

Employee H Administration 170 0.3 51.00 - - - - - - - - - - 0.30 51.00

Employee I Administration 170 0.9 153.00 - - 0.60 102.00 - - 0.20 34.00 - - 0.10 17.00

Total 82.40 31,919.00 7.60 3,634.00 19.00 6,669.00 4.30 1,706.00 29.10 11,899.00 0.20 92.00 22.20 7,919.00

GST 3,191.90 363.40 666.90 170.60 1,189.90 9.20 791.90

Total (incl GST) 35,110.90 3,997.40 7,335.90 1,876.60 13,088.90 101.20 8,710.90

Task areas

Assets Creditors Employees Trading of Business Investigations Administration


The below table sets out a detailed description of work undertaken on the voluntary administration for the period

7 March 2019 to 22 March 2019, which is the basis of Resolution 5.

Task Area General Description Includes

Assets

7.60 hours

$3,634.00

Bank accounts Secured bank accounts and trust accounts

Issued correspondence to all other banks to confirm

there were no other accounts

Worked with Commonwealth Bank of Australia (CBA)

to determine appropriate security measures to allow

ongoing trading with trust accounts

Plant and equipment Liaised with Grays Asset Services to assess the

estimated realisable value of plant and equipment

and whether it could be sold at auction

Leased premises Worked with the director to ensure the leased

premises could be vacated

Provided to landlord a notice of administrator’s

intention not to exercise property rights

Sale of rent roll Liaised with Real Estate Agency Sales (REAS)

regarding the sale of the rent roll

Reviewed and amended the Property Occupations

Form 6 to appoint REAS to sell the rent roll

Correspondence with REAS and the director

regarding the information required to market the

rent roll

Creditors

19.00 hours

$6,669.00

Creditor enquiries, requests &

directions

Reviewed company records to determine the

existence and contact details for creditors

Prepared initial correspondence to creditors

Liaised with creditors in relation to their claims and

the administration generally

First statutory meeting Convened and held the first statutory meeting of

creditors

Issued correspondence regarding that meeting

Prepared meeting pack

Prepared, reviewed, signed and lodged minutes of

that meeting

Secured creditor reporting Notified PPSR secured parties of appointment

Deal with proofs of debt (POD) Received PODs from claimants

Reviewed PODs received

Employees

4.30 hours

$1,706.00

Employee queries Received and followed up employee enquiries in

relation to entitlements

Prepared letter to employee advising of redundancy

Prepared letter to director confirming ongoing

employment arrangements during administration

Calculation of entitlements Met with employee to discuss administration

Calculated employee entitlements

Reviewed employee files and company’s books and

records

Other employee issues Corresponded with Child Support Agency to confirm

no involvement with this matter



Trade On

29.10 hours

$11,899.00

Trade on management Liaised with suppliers and arranged ongoing supply

of critical services

Liaised with director regarding the trading

requirements of the business

Attended site to oversee operations and review

information systems

Reviewed various Property Occupation Form 6s for

rental properties

Processed rent distributions to owners of rental

properties

Prepared budgets and financial

reports

Evaluated trading position and considered cashflow

requirements for a trade sale of the business

Proposed DOCA Considered key terms and available funds for

proposed DOCA

Liaised with the director regarding potential DOCA

and key terms

Investigation

0.2 hours

$92.00

Conducted investigations Obtained company books and records

Reviewed company books and records

Prepared solvency analysis

Considered existence of any other matters that could

be pursued by a liquidator if Mickim was to be

wound up

Administration

22.20 hours

$7,919.00

Document maintenance/file

review/checklist

Maintained physical and electronic engagement file

Updated checklists

Insurance Identified potential issues requiring attention of

Arthur J Gallagher (AJG)

Corresponded with AJG regarding initial and ongoing

insurance requirements, including professional

indemnity cover required for the professional services

undertaken by the business

Liaised with pre-appointment insurance broker

Bank account administration Liaised with Commonwealth Bank of Australia to

secure the pre-appointment accounts

Established a new general account

Advised Office of Fair Trading of the appointment

and ongoing use of company trust accounts

ASIC forms Sent initial request to director for Report on

Company Activities & Property (ROCAP)

Prepared and lodged ASIC forms

ATO and other statutory

reporting

Notified the ATO of the appointment and sought

details of outstanding liabilities

Reviewed correspondence from the ATO regarding

those outstanding liabilities

Planning/Review Discussed status and ongoing strategy of voluntary

administration

Books and records Reviewed electronic books and records

Copied electronic books and records from company

server


Prospective remuneration

If creditors vote for the DOCA, the Administrators will request that the following resolutions be passed to approve the

Administrators’ and Deed Administrators’ prospective remuneration. Details to support these resolutions are included

further below.

Prospective remuneration resolutions (if creditors vote for

DOCA) Appointment Type Amount (ex GST)

Resolution 6: 23 March 2019 to the finalisation of the voluntary

administration

Voluntary


Resolution 7: Start date of DOCA to date of effectuation Deed of Company

Arrangement $30,000.00

Total prospective remuneration (if creditors vote for DOCA) $48,000.00

If creditors vote for liquidation, the Administrators will request that the following resolutions be passed to approve the

Administrators’ and liquidators’ prospective remuneration. Details to support these resolutions are included further below.

Prospective remuneration resolutions (if creditors vote for

liquidation) Appointment Type Amount (ex GST)

Resolution 6: 23 March 2019 to the finalisation of the voluntary

administration

Voluntary


Resolution 8: Start date of liquidation to date of finalisation Liquidation $40,000.00

Total prospective remuneration (if creditors vote for liquidation) $58,000.00

Resolution 6: 23 March 2019 to the finalisation of the voluntary administration

“That the future remuneration of the Voluntary Administrators for the period 23 March 2019 to finalisation of the voluntary

administration, calculated at hourly rates as detailed in the Initial Remuneration Notice dated 12 March 2019, is approved

up to the capped amount of $18,000.00, exclusive of GST.”

The Administrators will withdraw funds from the administration account in respect of the Administrators’ remuneration

progressively over time as funds become available and only once it is incurred. If actual costs incurred are below the

capped amount, the Administrators are only authorised to draw the amount incurred. If actual costs incurred exceed the

amount approved, the Administrators would be required to seek further approval from creditors before that remuneration

could be paid.

The below table sets out the expected costs and a detailed description of the work by task area to be undertaken on the

voluntary administration for the period 23 March 2019 to finalisation of the voluntary administration, which is the basis of

Resolution 6.


Assets

$2,000

Sale of rent roll Liaise with REAS regarding the ongoing process for

the sale of the rent roll

Creditors

$5,000


directions

Receive and respond to creditor enquiries

Liaise with creditors in relation to their claims and


Deal with PODs Receive PODs from claimants

Review PODs received



Meeting of creditors Prepare and finalise the second report to creditors

Prepare and send meeting notice

Advertise notice of meeting

Prepare meeting file

Hold second meeting of creditors

Respond to stakeholder queries following second

meeting of creditors

Prepare and lodge minutes of second meeting of

creditors with ASIC

Employees

$1,000

Employee queries Receive and answer any employee enquiries

Notify employee creditors of the outcome of the

second meeting

Trade On

$7,000

Trade on management Liaise with suppliers and finalise setting up new

accounts

Liaise with director regarding ongoing trade

Authorise supplier payments

Review Property Occupation Form 6s for rental

properties

Process rent distributions to owners of rental

properties at the end of March and account for all of

those trust account transactions

Prepare budgets and financial

reports

Monitor cash flow

Evaluate trading position

Proposed DOCA Consider key terms and available funds for proposed

DOCA

Finalise terms of the draft DOCA with input from

legal adviser

Administration

$3,000


review/checklist

Conduct regular file reviews

Maintain physical and electronic engagement file

Update checklists

Insurance Correspond with AJG regarding ongoing insurance

requirements

Finalise insurance policies for voluntary

administration

Bank account administration Perform bank account reconciliations

Prepare and authorise receipt and payment vouchers

ASIC forms Prepare and lodge ASIC forms

Planning/Review Discuss status and ongoing strategy of voluntary

administration

Resolution 7: Start date of DOCA to the date of effectuation (only to be drawn if creditors vote to place Mickim

into a DOCA)

“That the future remuneration of the Deed Administrators from the start date of the DOCA to the date of its effectuation,

calculated at hourly rates as detailed in the Initial Remuneration Notice dated 12 March 2019, is approved up to the

capped amount of $30,000.00, exclusive of GST.”


The Deed Administrators will withdraw funds from the administration account in respect of the Deed Administrators’

remuneration progressively over time as funds become available and only once it is incurred. If actual costs incurred are

below the capped amount, the Deed Administrators are only authorised to draw the amount incurred. If actual costs

incurred exceed the amount approved, the Deed Administrators would be required to seek further approval from creditors

before that remuneration could be paid.

The below table sets out the expected costs and a detailed description of the work by task area to be undertaken from the

start date of the DOCA to the date of its effectuation, which is the basis of Resolution 7.


Assets

$8,000

Sales of rent roll Liaise with REAS regarding the sale of the rent roll

Provide information required by REAS to answer

queries from interested parties

Arrange a contract of sale to be prepared for the

rent roll and review that contract

Deal with various settlement matters when the rent

roll is sold

Creditors

$6,000


directions



Deal with PODs Receive PODs from claimants


Employees

$2,000

Employee queries Receive and follow up employee enquiries regarding

payment of entitlements

Employee entitlements Calculate employee entitlements

Employee distribution Correspond with ATO regarding Superannuation

Guarantee Charge

Calculate and prepare distribution

Trade On

$2,000

Trade on management Liaise with suppliers regarding the establishment and

payment of accounts

Arrange payment of final accounts when the rent roll

is sold

Proposed DOCA Monitor DOCA to ensure key terms are met

Dividend

$8,000

Process PODs Prepare correspondence to creditors inviting

lodgement of PODs

Maintain POD register

Adjudicate on all PODs received

Request further information from creditors regarding

their claims (as required)

Advise creditors of acceptance or rejection of their

claims

Dividend procedures Prepare correspondence to creditors advising them

of intention to declare a dividend

Prepare dividend calculation

Prepare distribution file

Arrange payment of dividend

Administration

$4,000


review/checklist

Conduct file reviews

Maintain physical and electronic engagement file





Request bank statements

Close bank accounts

Insurance Maintain insurance policies during trade period and

then cancel those insurance policies


Other statutory reporting Notify ATO of appointment as Deed Administrators

Lodge BASs

Finalisation Notify ATO of ceasing to act

Cancel GST/PAYG registrations

Complete internal checklists

Resolution 8: Start date of liquidation to the date of finalisation

“That the future remuneration of the liquidators from the start date of the liquidation to the date of its finalisation,

calculated at hourly rates as detailed in the Initial Remuneration Notice dated 12 March 2019, is approved up to the

capped amount of $40,000.00, exclusive of GST.”

We reiterate that this resolution will only be required if creditors do not vote for the proposed DOCA and instead vote to

place Mickim into liquidation.

The liquidators will withdraw funds from the administration account in respect of the liquidators’ remuneration

progressively over time as funds become available and only once it is incurred. If actual costs incurred are below the

capped amount, the liquidators are only authorised to draw the amount incurred. If actual costs incurred exceed the

amount approved, the liquidators will seek further approval from creditors.

The below table sets out the expected costs and a detailed description of the work by task area to be undertaken on the

liquidation for the start date of the liquidation to the date of finalisation, which is the basis of Resolution 8.


Assets

$8,000

Sales of rent roll Liaise with REAS regarding the sale of the rent roll

Provide information required by REAS to answer

queries from interested parties

Arrange a contract of sale to be prepared for the

rent roll and review that contract

Deal with various settlement matters when the rent

roll is sold

Creditors

$6,000


directions



Deal with POD Receive PODs from claimants


Employees

$2,000

Employee queries Receive and follow up employee enquiries regarding

payment of entitlements

Employee entitlements Calculate employee entitlements

Employee distribution Correspond with ATO regarding Superannuation

Guarantee Charge

Calculate and prepare distribution



Trading of Business

$10,000

Trade on management Liaise with suppliers regarding the establishment and

payment of accounts

Arrange payment of final accounts when the rent roll

is sold

Dividend

$8,000

Process PODs Prepare correspondence to creditors inviting

lodgement of PODs

Maintain POD register

Adjudicate on all PODs received

Request further information from creditors regarding

their claims (as required)

Advise creditors of acceptance or rejection of their

claims

Dividend procedures Prepare correspondence to creditors advising them

of intention to declare a dividend

Prepare dividend calculation

Prepare distribution file

Arrange payment of dividend

Investigation

$2,000

Conduct investigations Conduct further investigations into specific

transactions regarding insolvent trading and voidable

transactions

Pursue voidable transactions (if identified and if

commercial)

Administration

$4,000


review/checklist

Conduct file reviews

Finalise physical and electronic engagement file

Insurance Maintain insurance policies during trade period and

then cancel those insurance policies



Request bank statements

Close bank accounts


Other statutory reporting Notify ATO of appointment as liquidators

Lodge BASs

Finalisation Notify ATO of ceasing to act

Cancel ABN/GST/PAYG registrations

Complete internal checklists

Estimated future remuneration

In preparing this report, the Administrators’ prospective remuneration approval is the Administrators’ best estimate of what

the Administrators believe the external administration will cost up to finalisation under the proposed DOCA and liquidation

scenario. Total future remuneration for:

the voluntary administration period from 23 March 2019 to finalisation will be capped at $18,000.00 (GST

exclusive); and

the period of the DOCA (if creditors vote in favour of entering into the proposed DOCA) is estimated to be

$30,000 (GST exclusive); or


the period of the liquidation (if creditors vote in favour of entering into liquidation) is estimated to be $40,000

(GST exclusive).

The Administrators will seek creditor approval to approve this remuneration at the second meeting of creditors.

Total remuneration reconciliation

At this point in time, the Administrators estimate that the total remuneration for Mickim will be:

$79,919.00 (GST exclusive) if creditors vote in favour of the proposed DOCA; or

$89,919.00 (GST exclusive) if creditors vote in favour of liquidation.

These calculation are shown in the table below.

This is subject to the following variables, which may have a significant effect on this estimate and that the Administrators

are unable to determine as yet:

the time spent preparing for and conducting the second meeting of creditors (both scenarios);

the time it will take to adjudicate on the PODs and pay the dividends (both scenarios);

the time it will take to finalise the statutory investigations and undertake any voidable transaction recoveries

(liquidation scenario);

the time it will take to calculate employee entitlements and distribute funds (both scenarios); and

the time it will take to sell the rent roll (both scenarios).

Estimated remuneration (if creditors vote for DOCA) Amount (ex GST)



$31,919.00


Resolution 6: 23 March 2019 to finalisation of the voluntary administration

$18,000.00


Resolution 7: State date of DOCA to date of effectuation

$30,000.00

Estimated total remuneration (if creditors vote for DOCA)

$79,919.00

The estimate of total remuneration for the voluntary administration of $49,919 differs to the estimate provided in the

Administrators’ Initial Remuneration Notice dated 12 March 2019, which estimated remuneration of $30,000.00 (excluding

GST) for the voluntary administration, for reasons that include the following:

the time it has taken to deal with suppliers to transition various pre-appointment supplier accounts to voluntary

administration accounts. The approach taken in this matter was different to the normal process as pre-

appointment amounts were required to be paid in a number of cases to maintain critical services;

the time it has taken to secure the pre-appointment trust accounts and update the account signatories. There

were significant discussions and investigation of options with CBA to maintain prudential security, while not

interrupting the business;

the time invested in trading operations. At the time of our initial estimate, we had not appreciated the amount of

time that would be required for these tasks, including mid-month and end-of-month trust account distributions;

and

the time invested in preparing the proposed DOCA, including liaising with the director and legal adviser.


Estimated remuneration (if creditors vote for liquidation) Amount (ex GST)



$31,919.00


Resolution 6: 23 March 2019 to finalisation of the voluntary administration

$18,000.00


Resolution 8: State date of liquidation to date of finalisation

$40,000.00

Estimated total remuneration (if creditors vote for liquidation)

$89,919.00

The Administrators have not previously provided an estimate of the total remuneration under a liquidation scenario.

Likely impact on dividends

It is both reasonable and appropriate for a professional service provider to be remunerated for their services. An external

administrator is entitled to be remunerated for necessary work that is reasonably performed. That work generates any

funds that may be recovered for the benefit of creditors and other stakeholders.

The impact of the approval of the external administrator’s remuneration is that the remuneration will then be paid if

sufficient funds are generated to enable it to be paid. The remuneration will be paid from those funds that are generated

prior to the payment of most other stakeholders in the external administration. It is noted that no funds would be

available for any stakeholder without the work necessarily undertaken by the external administrator.

If a dividend or distribution is to be paid to stakeholders, there is also necessary work that must be undertaken by the

external administrator to properly adjudicate on claims and distribute any available funds.

The outcome of a dividend or distribution to stakeholders will depend on the outcome on the second creditors’ meeting.

Based on the information that is available at this time, the Administrators consider it likely that there will be a dividend

payable to the unsecured creditors of Mickim in both the proposed DOCA scenario and a liquidation scenario. However,

the amount of that dividend is estimated to be higher in a DOCA scenario.


Disbursements

Disbursements are divided into three types:

Externally provided professional services – these are recovered at cost. An example of an externally provided

professional service disbursement is legal fees.

Externally provided non-professional costs – these are recovered at cost. Examples of externally provided non-

professional costs are travel, accommodation and search fees.

Internal disbursements such as photocopying, printing and postage. These disbursements, if charged to the

voluntary administration, would generally be charged at cost; though some expenses such as telephone calls,

photocopying, printing and data storage, may be charged at a rate which recoups both variable and fixed costs.

The recovery of these costs must be on a reasonable commercial basis. Details on the basis of recovery of each

of these costs is discussed below.

The Administrators have undertaken a proper assessment of disbursements claimed for the voluntary administration, in

accordance with the law and applicable professional standards. The Administrators are satisfied that the disbursement

claimed is necessary and proper.

External disbursements

External disbursements may be paid directly from the administration bank account, in which case they are included in

summarised form in the Summary of Receipts and Payments and are not itemised here.

External disbursements are recovered at cost. Creditors are not required to approve these types of disbursements, but

details are provided to account to creditors, including the basis of charging for these types of disbursements. Creditors

are entitled to question the incurring of the disbursements and can challenge the disbursements in Court.

The Administrators have incurred no external disbursements thus far in the voluntary administration. However, there will

be future external disbursements that are paid for by McGrathNicol until the finalisation of the external administration.

Internal disbursements

Internal disbursements are paid for by McGrathNicol and are recovered from the administration bank account. Creditors

are only required to approve these types of disbursements where there is an element of profit or advantage to the

external administrator or a related party of the external administrator.

Internal disbursements with no element of profit or advantage

The following internal disbursements have no element of profit or advantage. Details are provided to account to creditors,

including the basis of charging for these types of disbursements. Creditors are entitled to question the incurring of the

disbursements and can challenge the disbursements in Court.

This amount will be reimbursed to McGrathNicol at cost from the administration bank account shortly:

Internal disbursements at cost for the period ended 22 March 2019 Amount (ex GST)

Staff vehicle use ($0.63 per km)** $29.17

Total $29.17

** These rates are deemed reasonable by the Australian Taxation Office.

There will be ongoing internal disbursements with no element of profit or advantage that are paid for by McGrathNicol

until the finalisation of the external administration.


Future disbursements

Future disbursements provided by McGrathNicol will be charged to the external administration on the following basis:

Disbursement type Rate (GST exclusive)

Externally provided professional services At cost

Externally provided non-professional costs At cost

Internal disbursements (at cost)

Postage At cost

Stationery and other incidental disbursements At cost

Telephony – conference calls At cost

Searches At cost

Advertising At cost

Courier At cost

Staff per diem travel allowance* $89.00 per day**

Staff vehicle use $0.68 per km**

ASIC user pays levy At cost

Internal disbursements (that may have an element of profit or advantage)

Data hosting – data loading & processing fee $50-$100 per gigabyte (GB)***

Data hosting – monthly hosting fee (for matters where data is required to be hosted online for more than 1 month)

Standard monthly hosting fee of $2,000 per

month (for up to 500GB of information

loaded) plus $2,000 per month for every

additional 500GB block over and above

500GB

Printing – black and white $0.09 per page

Printing – Colour $0.28 per page

* Payable when partners or staff are required for business purposes to stay away from their usual place of residence

overnight.

** These rates are deemed reasonable by the Australian Taxation Office.

*** Depending on volume of data to be hosted.

Further explanation of data hosting disbursements

In the conduct of this administration, the Administrators may use McGrathNicol’s Forensic Technology team to extract,

aggregate, electronically process and/or host electronic data, which could be used for the:

trade or sale of the business or assets; and/or

investigations regarding transactions or potential recoveries available to creditors.

If data hosting is required and the Administrators choose not to use the services of McGrathNicol’s Forensic Technology

team, the Administrators will otherwise have to purchase those services from an alternative provider and/or use another

method to achieve the same end, which will not be as efficient as using these available internal services.

The Administrators note that the data hosting rates above are no more than our standard commercial pricing available for

the same services when they are provided to external parties.


Summary of receipts and payments

There were no receipts or payments in the Voluntary Administration for the period 7 March 2019 to 22 March 2019.

The Administrators note that rental payments were received from tenants in relation to properties managed by Mickim and

rental distributions were paid to the respective owners. As Mickim holds these funds on trust, they are not reported by

the Administrators as part of the administration.

Queries

If you have any queries regarding the information in this report, please contact Jacinta Robinson on (07) 3333 9813.

You can also access information that may assist you on the following websites:

ARITA at www.arita.com.au/creditors

ASIC at www.asic.gov.au (search for “fees of insolvency practitioner”).


Anthony Connelly

Voluntary Administrator

http://www.arita.com.au/creditors

http://www.asic.gov.au/

1

Notice of Meeting


ACN 602 922 172


(Mickim)

NOTICE OF MEETING OF CREDITORS OF COMPANY UNDER EXTERNAL ADMINISTRATION

1. Notice is now given that a meeting of the creditors of Mickim will be held at Level 7, 175 Eagle Street,

Brisbane Qld 4000 on 5 April 2019 at 11:30 AM (AEST).

2. The purpose of the meeting is:

a. to receive the report by the Administrators about the operations, property, affairs and financial

circumstances of Mickim;

b. to receive a statement of the Administrators’ opinion and reasons for the opinion whether it would

be in the creditors’ best interests for Mickim:

(i) to be returned to the control of its director;

(ii) to execute a deed of company arrangement;

(iii) to enter into liquidation; or

(iv) to adjourn the meeting for a period of up to 45 business days;

c. to receive a statement of such other information known to the Administrators that will enable the

creditors to make an informed decision about the future of Mickim;

d. to receive details of any transactions that appear to the Administrators to be a voidable

transaction in respect of which money, property, or other benefits may be recoverable by a

liquidator under part 5.7B of the Corporations Act 2001 (Cth);

e. to receive details of the proposed deed of company arrangement;

f. for the creditors of Mickim to resolve that:

(i) the control be returned to its director;

(ii) Mickim executes a deed of company arrangement;

(iii) Mickim enters into liquidation; or

(iv) the meeting be adjourned.

g. to consider, and if thought fit, approve the Administrators’ remuneration;

h. to determine the remuneration of the Deed Administrators, if appointed; or

i. if Mickim is wound up:

(i) to determine the remuneration of the liquidators;

(ii) to consider the appointment of a Committee of Inspection; and

(iii) to consider the power exercisable by the liquidators.

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3. The effect of Insolvency Practice Rules (Corporations) section 75-85 (entitlement to vote as a creditor at

meetings of creditors) is:

a. a person other than a creditor (or the creditor’s proxy or attorney) is not entitled to vote at a meeting

of creditors;

b. subject to subsections (c) and (d), each creditor is entitled to vote and has one vote;

c. a person is not entitled to vote as a creditor at a meeting of creditors unless:

(i) his or her debt or claim has been admitted wholly or in part by the external administrator;

or

(ii) he or she has lodged, with the person presiding at the meeting, or with the person

named in the notice convening the meeting as the person who may receive particulars of

the debt or claim:

＞ those particulars; or

＞ if required—a formal proof of the debt or claim;

d. a creditor must not vote in respect of:

(i) an unliquidated debt; or

(ii) a contingent debt; or

(iii) an unliquidated or a contingent claim; or

(iv) a debt the value of which is not established;

unless a just estimate of its value has been made.

4. Proofs of Debt and Proxies must be submitted by 4:00 PM on 4 April 2019 and may be emailed to

Jacinta Robinson at [email protected].


Anthony Connelly

Administrator

mailto:[email protected]

1

Proof of Debt

Guidance Notes

(Please read carefully before filling in Form 535 or Form 536)

It is a creditor’s responsibility to prove their claim to our satisfaction.

When lodging claims, creditors must ensure:

the proof of debt form is properly completed in every particular; and

evidence, as set out under “Information to support your claim”, is attached to the Form 535 or Form 536.

Directions for completion of a Proof of Debt

1. Insert the full name and address of the creditor.

2. Under “Consideration” state how the debt arose, for example “goods sold to the company on

______________________”.

3. Under “Remarks” include details of any documents that substantiate the debt (refer to the section “Information

to support your claim” below for further information).

4. Where the space provided for a particular purpose is insufficient to contain all the information required for a

particular item, please attach additional information.

Information to support your claim

Please note that unless you provide evidence to support the existence of the debt, your debt is not likely to be

accepted. Detailed below are some examples of debts creditors may claim and a suggested list of documents that

should accompany a proof of debt to substantiate the debt.

Trade Creditors

Invoice(s) and statement(s) showing the amount of the debt; and

Advice(s) to pay outstanding invoice(s) (optional).

Guarantees/Indemnities

Executed guarantee/indemnity;

Notice of Demand served on the guarantor; and

Calculation of the amount outstanding under the guarantee.

Judgment Debt

Copy of the judgment; and

Documents/details to support the underlying debt as per other categories.

Deficiencies on Secured Debt

Security Documents (eg. mortgage);

Independent valuation of the secured portion of the debt (if not yet realised) or the basis of the creditor’s

estimated value of the security;

Calculation of the deficiency on the security; and

Details of income earned and expenses incurred by the secured creditor in respect of the secured asset since the

date of appointment.

Loans (Bank and Personal)

Executed loan agreement; and

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Loan statements showing payments made, interest accruing and the amount outstanding as at the date of

appointment.

Tax Debts

Documentation that shows the assessment of debts, whether it is an actual debt or an estimate, and separate

amounts for the primary debt and any penalties.

Employee Debts

Basis of calculation of the debt;

Type of Claim (eg. wages, holiday pay, etc);

Correspondence relating to the debt being claimed; and

Contract of Employment (if any).

Leases

Copy of the lease; and

Statement showing amounts outstanding under the lease, differentiating between amounts outstanding at the

date of the appointment and any future monies.

PROXY FORM


ACN 602 922 172


(Mickim)

APPOINTMENT OF PROXY

I/We (if a firm, strike out “I” and set out the full name of the firm) ______________________________________________________ of

_______________________________________________________________________________________________________________ (insert address)

a creditor of Mickim Investments Pty. Ltd. (Administrators Appointed) appoint

___________________________________________________________ (insert name, address and description of the person appointed)

or in his or her absence

___________________________________________________________ (insert name, address and description of the person appointed)

as my/our (choose one):

general proxy special proxy

to vote at the meeting of creditors to be held on 5 April 2019 at 11:30 AM (AEST) or at any adjournment of that

meeting.

Resolution (only complete where appointing a special proxy) For Against Abstain

1 “That the voluntary administration should end.”

2 “That Mickim enter into a Deed of Company Arrangement and Anthony

Connelly and Jamie Harris be appointed as Deed Administrators.” 3 “That Mickim be wound up and Anthony Connelly and Jamie Harris be

appointed as Liquidators.” 4 “That the second statutory meeting of creditors be adjourned for a period of

up to 45 business days.” 5 “That the remuneration of the Voluntary Administrators for the period

7 March 2019 to 22 March 2019, calculated at hourly rates as detailed in

the Initial Remuneration Notice dated 12 March 2019, is determined in the

sum of $31,919.00, exclusive of GST, and the Voluntary Administrators may

pay the remuneration immediately or as otherwise determined by the

Voluntary Administrators.”

6 “That the future remuneration of the Voluntary Administrators for the period

23 March 2019 to finalisation of the voluntary administration, calculated at

hourly rates as detailed in the Initial Remuneration Notice dated

12 March 2019, is approved up to the capped amount of $18,000.00,

exclusive of GST.”

7 “That the future remuneration of the Deed Administrators from the start

date of the DOCA to the date of its effectuation, calculated at hourly rates

as detailed in the Initial Remuneration Notice dated 12 March 2019, is

approved up to the capped amount of $30,000.00, exclusive of GST.”

8 “That the future remuneration of the liquidators from the start date of the

liquidation to the date of its finalisation, calculated at hourly rates as

detailed in the Initial Remuneration Notice dated 12 March 2019, is

approved up to the capped amount of $40,000.00, exclusive of GST.”

DATED this ___________ day of ________________________ 2019

Name ___________________________________________________

Signature ___________________________________________________

Select which of the below applies (choose one):

The creditor is a company and I am signing as

a director of the company

The creditor is a partnership and I am signing

as a partner of the partnership

The creditor is a company and I am signing as

an authorised representative/duly constituted

attorney of the company

I am signing in my personal capacity as a

member or contributory of Mickim Investments

Pty. Ltd. (Administrators Appointed)

I am an individual and I am signing in my

personal capacity (which includes employees) Other: ____________________________________________

The creditor is a sole trader and I am signing

as the proprietor

Proxy forms should be completed and returned by no later than 4:00 PM on 4 April 2019.

RETURN TO: Mickim Investments Pty. Ltd. (Administrators Appointed)

of care of McGrathNicol

Address: GPO Box 9986, Brisbane QLD 4001, Australia

Phone: +61 7 3333 9800

Fax: +61 7 3333 9899

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Proxy

Guidance Notes

Insert full name and address of creditor, contributory or member on the top line.

On the second line, insert the address of the creditor, contributory or member.

On the next line insert the name of the person you appoint as your proxy. You may insert “the

Chairperson of the meeting” if you wish.

You may appoint an alternate proxy on the fourth line who may act if your first appointed proxy cannot

attend the meeting. You may insert “the Chairperson of the meeting” if you wish.

Make sure you select whether the proxy is a general or special proxy.

A general proxy is where you leave it to the proxy to decide how to vote on each of the resolutions put

before the meeting.

A special proxy is where you specify how the proxy is to vote on each resolution and the proxy must vote

in accordance with that instruction.

If the proxy is a special proxy, the form must include details of each resolution and whether the proxy

holder is to cast their vote in favour or against each resolution or abstain from voting.

Date and sign the Proxy form, indicating in which capacity you are signing the form. The person signing

must be authorised to do so.

1


ACN 602 922 172


(Mickim)

General Information for Attending and Voting at Meetings of Creditors

Time and Place of Meeting

Pursuant to Insolvency Practice Rules (Corporations) (IPR) 75-30, a meeting of creditors must be convened at the

time and place the Chairperson believes are convenient for the majority of creditors entitled to receive notice of the

meeting.

Quorum

Pursuant to IPR 75-105, unless a quorum is present, a meeting must not act for any purpose other than:

the election of a chairperson; and

the proving of debts; and

the adjournment of the meeting.

A quorum is present if two (2) or more persons are entitled to vote and at least two (2) persons are present

at the meeting in person, by proxy or by power of attorney.

A quorum is present if only one (1) person is entitled to vote and that person is present at the meeting in

person, by proxy or by power of attorney.

A person who participates in the meeting using electronic facilities is taken to be present in person at the

meeting.

A meeting is sufficiently constituted if only one (1) person is present in person, if the person represents

personally or by proxy or otherwise a number of persons sufficient to constitute a quorum.

Chairperson

Pursuant to IPR 75-50, the external administrator is appointed Chairperson of the meeting. Alternatively, pursuant

to IPR 75-50 and IPR 75-152 the external administrator may appoint someone else to act as chairperson of the

meeting and authorise that person to use any proxies held by the external administrator on the external

administrator’s behalf.

For the second meeting of creditors in a Voluntary Administration, the Administrator must chair the meeting

pursuant to IPR 75-50.

Voting

Pursuant to IPR 75-85, creditors will not be eligible to vote at the meeting unless they have lodged

particulars of their debt or claim prior to or at the meeting.

Accordingly, creditors who intend to vote at the meeting should ensure that they lodge a formal proof of

debt with the external administrator prior to or at the meeting.

Pursuant to IPR 75-110, a resolution put to the meeting is to be decided on the voices or by a poll, if one

is requested.

A poll may be requested by:

the chairperson; or

a person participating and entitled to vote at the meeting.

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Pursuant to IPR 75-115, should a poll be requested:

a resolution is passed if a majority in number and a majority in value vote in favour of the

resolution; and

a resolution is not passed if a majority in number and a majority in value vote against the

proposed resolution.

In the event of a deadlock, the chairperson may exercise a casting vote. In such situations, the minutes of the

meeting must specify the chairperson’s reasons for exercising, or not exercising, their casting vote.

Proxies

Pursuant to IPR 75-150, a person entitled to vote at a meeting may, in writing, appoint an individual as

their proxy to attend and vote at the meeting on their behalf.

Accordingly, creditors who are unable to attend the meeting but who wish to be represented should ensure

that a validly executed proxy form is lodged with the external administrator prior to the meeting.

Corporate Creditors

Corporate creditors who wish to attend the meeting should note that an individual may only represent them if the

corporation validly grants that person a proxy or power of attorney.

Alternatively, section 250D of the Corporations Act provides that a corporation may, by resolution of its board,

provide a standing authority for a specified person to represent the corporation at a specified meeting of creditors.

A copy of any such resolution should be provided to the external administrator prior to attending the meeting.

Committee of Inspection

Pursuant to IPR 80-5, a person may only serve as a member of a Committee of Inspection if the person is:

a creditor of the company personally; or

the attorney of a creditor under a general power of attorney; or

authorised in writing by a creditor; or

a representative of the Commonwealth if a FEG claim has been, or the Commonwealth considers a claim is

likely to be, made in relation to unpaid employee entitlements.

Corporate creditors who are members of a Committee of Inspection may be represented by an individual authorised

in writing by the member to represent the member on the committee.