Mining Management Group Pty Limited ACN 112 172 022 … · 2019-10-20 · MMG Drill & Blast Pty Limited ACN 122 840 582 (Administrators Appointed) (“Mining Management Group” or

Mining Management Group Pty Limited ACN 112 172 022 (Administrators Appointed) MMG Drill & Blast Pty Limited ACN 122 840 582 (Administrators Appointed)

(“Mining Management Group” or “the Companies”)

Circular to Creditors

29 June 2015

I refer to the appointments of my partner, Rob Kirman and I as Joint and Several Administrators of Mining

Management Group on 1 June 2015.

The purpose of this circular is to provide creditors with information about the business, property, affairs and

financial circumstances of the Companies in preparation for the second statutory meeting of creditors.

The concurrent meetings of the Companies are to be held at the Francis Phillip Motor Inn,

18 Maitland Road, Singleton, NSW at 12:00 PM (AEST) on Monday, 6 July 2015.

The following documents are attached:

Administrators’ Report to Creditors pursuant to Section 439A of the Corporations Act 2001;

Notice convening the meetings of creditors (Form 529);

Proof of debt form (Form 505) along with an information sheet to assist you in completing the proof of debt; and

Proxy form (Form 532) along with the information sheet to assist you in completing the proxy form.

At the meeting, creditors will be entitled to vote on whether:

the Companies should execute a Deed of Company Arrangement; 1.

the administration should end; 2.

the Companies be wound up; or 3.

the meeting be adjourned. 4.

Creditors who intend to vote at either of the meetings must lodge a formal proof of debt with the Administrators prior to the meetings. If you have already lodged a proof of debt, you are not required to do so again.

0001 Circular to creditors-TD

Creditors who are unable to attend the meetings and wish to be represented should ensure that either a proxy form, power of attorney, or evidence of appointment of a company representative pursuant to Section 250D of the Act is validly completed and provided to the Administrators prior to the meetings.

Documents may be lodged with me prior to the meetings or may be brought to the meetings.

If a faxed copy of a proxy or power of attorney is provided prior to the meeting, the original of the instrument must be received by me either prior to or at the meeting.

Creditors who wish to discuss any aspects of the above should please contact Timothy Duncan on (02) 9248 9913.

Dated 29 June 2015

Jason Preston

Joint and Several Administrator

Enclosure(s): Administrators’ Report to Creditors Notice of Meeting Proof of Debt form(s) 535 Instructions for completion of Proof of Debt Proxy Form(s) 532 Instructions for completion of Proxy Form Information for attendance at meeting

Page 2

Mining Management Group Pty Limited (Administrators Appointed) and MMG Drill & Blast Pty Limited (Administrators Appointed) (“the Companies”) Report to creditors pursuant to Section 439A of the Corporations Act 2001 29 June 2015

Contents

Executive summary ........................................................................................................................................................................................................ 2 1

Introduction ...................................................................................................................................................................................................................... 3 2

Administrators’ prior involvement ......................................................................................................................................................................... 4 3

Overview and statutory information .................................................................................................................................................................... 6 4

Administrators’ actions to date ............................................................................................................................................................................ 12 5

Books and records ...................................................................................................................................................................................................... 13 6

Historical financial position .................................................................................................................................................................................... 15 7

Report as to Affairs and net asset position ................................................................................................................................................... 19 8

Explanation for difficulties ...................................................................................................................................................................................... 27 9

Offences, insolvent trading and voidable transactions ............................................................................................................................ 28 10

Estimated return in a Liquidation ....................................................................................................................................................................... 34 11

Deed of Company Arrangement proposal ..................................................................................................................................................... 36 12

Alternative courses of action ................................................................................................................................................................................ 46 13

Creditors information on remuneration .......................................................................................................................................................... 48 14

Administrators’ remuneration ............................................................................................................................................................................... 49 15

Estimated Deed Administrators’ Remuneration ........................................................................................................................................... 63 16

Estimated Liquidators’ remuneration ................................................................................................................................................................ 67 17

Receipts and payments ............................................................................................................................................................................................ 73 18

Committees of Inspection ...................................................................................................................................................................................... 74 19

Creditor meetings details ........................................................................................................................................................................................ 75 20

1

Executive summary 1

Introduction 1.1

On 1 June 2015, Jason Preston and Rob Kirman were appointed to act as Joint and Several Voluntary Administrators of Mining Management Group Pty Limited (“MMG”) and MMG Drill & Blast Pty Limited (“MMG D&B”) (jointly referred to as “the Companies”) by resolution of the Companies’ Director pursuant to section 436A of the Corporations Act 2001 (“the Act”).

This is the Administrators report to creditors pursuant to section 439A of the Act.

You have been provided with a copy of this Report in your capacity as a person who claims to be a creditor of the Companies.

Purpose of this Report 1.2

The purpose of this Report is to provide creditors with details about the Companies’ business, property, affairs and financial circumstances in preparation for the upcoming second creditors meetings.

The Report also informs creditors on the findings of the investigations undertaken by the Administrators and the Administrators’ opinion about each of the options available to creditors at the second creditors’ meetings, together with the course of action that the Administrators recommend is in the best interests of creditors.

Results of investigations 1.3

The Administrators have undertaken preliminary investigations into the affairs of the Companies with a view to identifying possible recoveries that may be available for creditors in a liquidation.

These investigations have concluded that the Companies may have been insolvent for a period prior to the Administrators’ appointment. Further investigations and analysis will be required in order to firm up a view regarding the Companies’ position, however our initial investigations indicate the Companies were insolvent by late February 2014.

The Administrators have identified potential recovery claims that may be available to liquidators which could increase the funds available to cover the costs of a winding up and return to creditors.

Further investigation of these claims will need to be undertaken by liquidators including an assessment of the commerciality of incurring costs to recover, including pursuing Court action should that become necessary.

Recommendations 1.4

Having regard to the matters set out in this report, the Administrators recommend that out of the available options which include:

control of the Companies be returned to the Director;

the Companies enter into a Deed of Company Arrangement; or

the Companies enter into liquidation;

it is in the best interest of creditors to vote to place the Companies into liquidation.

2

Introduction 2

Appointment 2.1

On 1 June 2015, Phillip Gunter, the Director of the Companies appointed Jason Preston and Rob Kirman as Joint and Several Administrators of the Companies pursuant to section 436A of the Act 2001.

Object of administration 2.2

In an administration, the Administrators are empowered by the Act to assume control of an insolvent company, superseding the powers of the directors and officers, to manage a company’s affairs and deal with its assets in the interests of its creditors and members.

The intention of Voluntary 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 a better return to creditors and members than would be achieved by its immediate liquidation. During an administration, there is a moratorium over most pre-administration creditor claims.

Administrators are required to investigate a company’s affairs and report to creditors on the Administrators’ opinion as to which outcome of the administration process is in the best interest of creditors, so as to inform creditors prior to voting at the second meeting.

First Meetings 2.3

Section 436E of the Act requires the Administrators to conduct the First Meeting of Creditors within eight business days of being appointed.

The First Meeting of Creditors of the Companies was held on Friday, 12 June 2015 and there were no nominations to appoint an alternative administrator. Creditors did not appoint a Committee of Creditors, and therefore no committee meetings have been held.

Second Meetings 2.4

The purpose of the second meetings is for creditors to:

Resolve the future of the Companies. In this regard, the options available include whether:

a. control of the Companies be returned to its Director; or

b. the Companies enter into a Deed of Company Arrangement (“DOCA”); or

c. the Companies enter into liquidation.

If creditors do not wish to make an immediate decision, they may also resolve to adjourn the meeting for a period of up to 45 business days;

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

If the Companies are to be wound up:

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

b. to consider the appointment of Committee of Inspections;

c. to consider authorising the Liquidators to compromise debts of the Companies under Section 477(2A) of the Act; and

d. to 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 Second Meeting of Creditors for the Companies has been convened to be held at the Francis Phillip Motor Inn, 18 Maitland Road, Singleton, NSW at 12:00 PM (AEST) on Monday, 6 July 2015.

The formal notice of the Second Meeting of creditors of the Companies is included with this Report.

3

Administrators’ prior involvement 3

In accordance with section 436DA of the Act and the ARITA Code of Professional Practice, a Declaration of Independence, Relevant Relationships and Indemnities (“DIRRI”) dated 4 June 2015 for the Companies was included with the Administrators’ first report to creditors. There is no change to the information provided in the DIRRI.

Independence 3.1

We, Jason Preston and Rob Kirman of the firm McGrathNicol, have undertaken a proper assessment of the risks to our independence prior to accepting the appointments as Administrators of the Companies in accordance with the law and applicable professional standards. This assessment identified no real or potential risks to our independence. We are not aware of any reasons that would prevent us from accepting this appointment.

Prior personal or professional relationships 3.2

Name Nature of relationship Reasons

Dermott McVeigh

Avior Consulting

Avior Consulting acted as financial advisors to the Companies and referred the Companies to McGrathNicol in order to discuss insolvency options, resulting in our appointment as Voluntary Administrators.

Rob Kirman of McGrathNicol has a professional relationship with Dermott McVeigh, a director of Avior Consulting. This is the first referral McGrathNicol has received from Avior Consulting.

We believe this relationship does not result in a conflict of interest or duty because:

McGrathNicol has not undertaken any previous engagement for Avior Consulting in respect of the Companies.

The relationship with Dermott McVeigh and Avior Consulting is a professional relationship.

The referral is unconditional.

Professional relationships between business advisors are common practice and there are no arrangements between McGrathNicol or its partners, Avior Consulting or Dermott McVeigh that impact our independence in carrying out our duty as administrators.

Given these factors, our independence in acting as Voluntary Administrators of the Companies has not been affected.

Westpac Banking Corporation

(‘Westpac”)

Westpac holds a circulating and non-circulating security interest over the whole or substantially the whole of the property of MM Group.

McGrathNicol undertakes corporate recovery and advisory work from time to time on instructions from Westpac.


Each professional engagement undertaken for Westpac in relation to a particular entity or group of entities is conducted on an entirely separate basis which has no bearing on this appointment.

These engagements are only commenced after full regard is given to potential conflicts of interest in relation to all interested stakeholders.

McGrathNicol has not undertaken an engagement for Westpac in relation to the Companies previously.

Given these factors, our independence in acting as Voluntary Administrators of MM Group has not been affected.

4

Bank of Queensland (“BOQ”)

BOQ holds a circulating and non-circulating security interest over the whole or substantially the whole of the property of MMG Drill & Blast.

McGrathNicol undertakes corporate recovery and advisory work from time to time on instructions from BOQ.


Each professional engagement undertaken for BOQ in relation to a particular entity or group of entities is conducted on an entirely separate basis which has no bearing on this appointment.

These engagements are only commenced after full regard is given to potential conflicts of interest in relation to all interested stakeholders.

McGrathNicol has not undertaken an engagement for BOQ for MMG Drill & Blast previously.

Given these factors, our independence in acting as Voluntary Administrators of MMG Drill & Blast has not been affected.

Prior professional services to the insolvent 3.3

Neither the Administrators, nor McGrathNicol, have provided any professional services to the Companies within the previous 24 months.

Indemnities and up-front payments 3.4

We have not been indemnified in relation to this administration, other than any indemnities that we may be entitled to under statute and we have not received any up-front payments in respect of our remuneration or disbursements.

Appointments to members of a corporate group 3.5

The Voluntary Administrators are of the view that the appointment to the Companies will have significant benefits to the conduct of the Administrations, particularly in that this will provide for cost-savings and enable an accurate as possible view to be obtained of the activities and financial position of the Companies as a whole. The Voluntary Administrators are aware that there may be inter-company transactions between the Companies but at this time are not aware of any potential conflicts of interest arising from the appointments over the Companies. However, to the extent it becomes apparent that pre-appointment dealings between the Companies may give rise to a conflict which may impact the outcome for creditors of either company, then the Voluntary Administrators undertake to disclose any such conflicts to the creditors and if appropriate, seek Court directions as to the means of resolving the potential conflict.

Ongoing assessment 3.6

We, Jason Preston and Rob Kirman of McGrathNicol, undertook a proper assessment of the risks to our independence prior to accepting the appointment as Administrators of the Companies in accordance with the law and applicable professional standards. This assessment identified no real or potential risks to our independence. We are not aware of any reasons that would prevent us from acting as Administrators.

Our opinion as to our independence has not changed in the period since our DIRRI was tabled at the first meetings of creditors.

We remain of the view that our prior professional relationships as outlined in the DIRRI do not create or give rise to any potential conflict of interest.

5

Overview and statutory information 4

Business activity 4.1

We understand the following in respect of the Companies:

Mining Management Group Pty Limited (“MMG”) 4.1.1

MMG was incorporated on 13 December 2004 and commenced its operations thereafter.

MMG was mainly involved in the business of plant hire and contract mining in New South Wales.

MMG trades from leased premises in Singleton, NSW and employed up to 58 staff at the height of its activity. Currently, MMG employs six staff members including the Director, Phillip Gunter.

MMG’s principle contract was with Anglo Coal and it derived a large part of its revenue from this contract. MMG transferred the Anglo Coal contract to Mayfield Operations Pty Limited (“Mayfield”) in March 2015 largely due to a lack of readily available cash to be able to continue operating the contract. The majority of employees were transferred to Mayfield along with the contract.

MMG continues to operate a dry hire business providing its only customer, Mayfield with a number of pieces of equipment.

MMG Drill & Blast (“MMG D&B”) 4.1.2

MMG D&B was incorporated on 24 November 2006 to compliment the growth of MMG.

MMG D&B’s main activity was in the business of blast-hole drilling however it is not currently operating as there are no current customers or contracts.

MMG D&B’s principle contract was with Xstrata and derived a large part of its revenue from this contract.

In order to reduce the Companies’ debt, MMG D&B sold the majority of its assets in July 2014 and transferred its only contract with Xstrata to the Wolff Group, a mining company based in Queensland.

MMG D&B’s assets consist of one drill and four light vehicles.

General comments 4.1.3

The Companies were operating at a loss for a period prior to the appointment of the external administrators. Our appointment appears to be a result of the business not being able to service the debt on its leased equipment and meet their financial commitments.

The leased equipment is made up of a fleet of heavy and light motor vehicles which include several dozers, excavators, dump trucks and light vehicles.

Set out below is a summary of the Companies’ net asset position as at 31 May 2015, as indicated by management, discussions with third parties, and set out in available company records.

MMG - estimated realisable value

$ Estimated net realisable value

Total assets 658,207

Total liabilities (16,353,393)

Net assets / (liabilities) (15,695,186)

Source: Unaudited management accounts as at 31 May 2015; discussions with MMG's Director/management and Tiger; and ATO proof of debt

6

As outlined in section 8 of this Report, various loans have been made to and from the Companies. We note that the loans are undocumented and we have not been provided with any supporting documentation to date. Accordingly, we have excluded these loans from the above analysis given the uncertainty around their collection.

As outlined in section 10.5 of this Report, in the event that the loans are deemed to be uncommercial transactions, they could theoretically be ‘reversed’ by a liquidator (if appointed). We note that various defences would be available to the Director and third parties in these circumstances.

We note that our investigations to date are preliminary. If the Companies are wound up, further investigations and a cost benefit analysis of pursuing recovery action will need to be undertaken.

Organisational structure 4.2

The shareholding structure of MMG and MMG D&B as at the date of our appointment is illustrated in the diagram below.

As previously mentioned, MMG is the main trading entity whilst MMG D&B no longer operates and has no current customers, contracts or employees.

Phillip Gunter acts as both the Director and Secretary for both Companies.

The ownership structure of the share capital for both Companies is identical.

Each company is comprised of 1,000 A Class shares owned by Phillip Gunter, 1,000 B Class Shares owned by Leona Gunter and 500 C Class Shares owned by Brian Francis.

All shares are fully paid.

MMG D&B - estimated realisable value

$ Estimated net realisable value

Total assets 59,011

Total liabilities (1,503,259)

Net assets / (liabilities) (1,444,248)


7

Timeline of key events 4.3

A timeline of key events in the history of the Companies is set out below:

Year Description

December 2004 MMG incorporated.

November 2006 MMG D&B incorporated.

July 2014 MMG D&B sold the majority of its asset portfolio and transferred its contract with Xstrata to Wolff Group.

October 2014 The Companies entered into a Deed of Forbearance with Westpac where amongst other conditions, the Director agreed to sell some personal property to reduce Westpac’s debt.

February 2015 The Director of MMG sent a letter to Rodgers Reidy, advisor to Westpac, advising of the Companies’ net cash shortage.

March 2015 MMG transferred its only operating contract with Anglo Coal to Mayfield.

April 2015 The Director of MMG sent letters to creditors advising of the Companies inability to repay outstanding invoices.

June 2015 Appointment of Jason Preston and Rob Kirman as Joint and Several Administrators of the Companies on 1 June 2015.

8

Statutory details, shareholders and officers 4.4

A search of the records maintained by the ASIC database as at the date of the Administrators’ appointment reveals the following statutory details for the Companies:

The Companies’ office holders during the period leading up to the Administrators’ appointment are summarised below:

The Companies’ shareholders at the date of the Administrators’ appointment are shown below:

MMG and MMG D&B - Company details

Company Name ACN Place of business Registered office Registration date

Mining Management Group Pty Limited

112 172 0222/100 George Street, Singleton NSW 2330

29 Henry Street, Gunnedah NSW 2330

13/12/2004

MMG Drill & Blast Pty Limited 122 840 5822/100 George Street, Singleton NSW 2330

29 Henry Street, Gunnedah NSW 2330

24/11/2006

Source: ASIC Company Search

MMG and MMG D&B - Current and former office holders

Company Name Director Secretary Appointment date Cessation date

MMG Phillip Gunter Phillip Gunter 13/12/2004 n/a

MMG D&B Phillip Gunter Phillip Gunter 24/11/2006 n/a


Mining Management Group - Shareholder details

Class Number of shares held Amount paid ($) Paid up (%)

MMG

A A Class 1,000 1,000 100%

B Class B 1,000 1,000 100%

C Class C 500 500 100%

MMG D&B

A A Class 1,000 1,000 100%

B Class B 1,000 1,000 100%

C Class C 500 500 100%


9

Security interests 4.5

Our search of the Personal Property Securities Register (“PPSR”) database identified a number of security interests over the Companies’ assets as at the date of the Administrators’ appointment. Below is a schedule of the security interests for both of the Companies:

MMG 4.5.1

MMG - Security interests

Grantor Type

B61 Pty Limited All PAAP

Bradken Resources Pty Limited Other Goods

Bridgestone Earthmover Tyres Pty Limited Other Goods

BTP Parts Pty Limited Other Goods

Capital Finance Australia Limited Other Goods

Caps Australia Pty Limited Other Goods

Caterpillar Financial Australia Limited Motor Vehicle

CBFC Limited All PAAP

Coates Hire Operations Pty Limited Motor Vehicle, Other Goods

De Lage Landen Pty Limited Motor Vehicle, Other Goods

Esanda Finance Corporation Limited All PAAP

Esco Australia Holdings Pty Limited Other Goods

Fuji Xerox Australia Pty Limited Other Goods

Haulmax (Aust) Pty Limited Motor Vehicle, Other Goods

J. Blackwood & Son Pty Limited Other Goods

Liebherr-Australia Pty Limited Other Goods

Max Hire Pty Limited Motor Vehicle, Other Goods

Mayfield Operations Pty Limited Motor Vehicle

Meredith Distribution Pty Limited, Lawvale Pty Limited, Bullivants Pty Limited, J. Blackwood & Son Pty Limited, Protector Alsafe Pty Limited, Coregas Pty Limited

Other Goods

MMG Bucairn Pty Limited Motor Vehicle

Monadelphous Other Goods

National Australia Bank Limited All PAAP

Northern Managed Finance Pty Limited Other Goods

Sime Darby Fleet Services Pty Limited Motor Vehicle

Toyota Finance Australia Limited All PAAP

Westpac Banking Corporation All PAAP, Motor Vehicle, Other Goods

Source: ASIC PPSR SearchNote: All PAAP means all present and after-acquired property

10

MMG D&B 4.5.2

MMG D&B - Security interests

Grantor Type

BOQ Equipment Finance Limited Other Goods

Energy Power Systems Australia Pty Limited Other Goods, Motor Vehicle

MTU Detroit Diesel Australia Pty Limited Other Goods

Onsite Rental Group Operations Pty Limited, Redstar Equipment Pty Limited Other Goods

Sandvik Mining And Construction Australia Pty Limited Other Goods

Westpac Banking Corporation All PAAP, Other Goods

Source: ASIC PPSR SearchNote: All PAAP means all present and after-acquired property

11

Administrators’ actions to date 5

We set out below a summary of the matters attended to by the Administrators since our appointment to the Companies:

attended to meetings with the Companies’ management team to understand the background and financial position of MMG and MMG D&B;

issued notices of appointment;

attended to statutory duties including informing ASIC, the Australian Taxation Office and other relevant authorities of their appointment and advertising their appointment;

issued first Circular to Creditors for the Companies and convened the first meeting of creditors held on 12 June 2015;

attended and chaired the first meetings of creditors held on 12 June 2015 and lodged minutes of those meetings with ASIC;

issued written requests for the Director to complete a Report as to Affairs, Directors’ questionnaire and deliver any books and records to the Administrators;

conducted a preliminary review of the books and records made available to ascertain the Companies’ financial position, the key issues affecting the Companies and transactions potentially recoverable by a liquidator;

notified major financial institutions of our appointment, seeking to freeze bank accounts;

undertook PPSR and property searches and disclaimed certain leased assets;

liaised with key stakeholders, including:

− employees;

− landlord;

− secured creditors;

− unsecured creditors; and

− other stakeholders.

answered unsecured creditors’ enquiries in relation to the Administration;

reviewed the pre-appointment employee entitlement position;

continued the business operations and reviewed its trading practices and controls;

liaised with the Companies’ landlord in relation to the continuation of the current lease agreements;

conducted preliminary investigations in relation to the business, affairs and financial circumstances of the Companies;

considered the optimal method to realise the assets of the Companies;

undertook a sale and recapitalisation campaign for the Companies and their assets including: establishing a sale strategy, reviewing and supplementing the pre-appointment electronic data room, issuing confidentiality agreements and dealing with interested party enquiries;

liaised with equipment auctioneers regarding the valuation of the Companies’ asset base;

prepared and issued circulars to suppliers and creditors;

prepared and issued circulars to debtors;

instructed lawyers in relation to various legal matters;

prepared this detailed report to creditors pursuant to Section 439A of the Act and convening the second meetings of creditors to be held on 6 July 2015; and

attended to other general and statutory requirements.

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Books and records 6

The Administrators are required to provide an opinion as to whether the Companies’ books and records were maintained in accordance with Section 286 of the Act.

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 related parties.

The administrative functions of the Companies’, including the day to day accounting function and the maintenance of books and records, were performed internally by staff with specific responsibility for maintaining records.

The Companies also employed an external accountant whose role was to prepare and maintain the Financial Statements including the Companies journals, Balance Sheet and Profit and Loss statements as well as preparing all the statutory lodgements.

The Administrators have secured copies of the key books and records of the Companies’ from the Director and management, including copies of financial, banking, creditor and asset information.

The Administrators consider that a company operating MMG’s and MMG D&B’s businesses should, as a minimum, maintain the following books and records in order to comply with Section 286 of the Act:

Compliant books and records Administrators’ comments

Accounting files and associated working papers

Electronic accounting files were maintained.

Hard copy files are stored on site at Singleton and in external storage sheds.

Copies of bank statements and deposit books for the last 7 years

Bank statements for approximately the last 12 months have been obtained.

Management accounts Appropriate management accounts were prepared and kept at the Companies’ offices.

Reconciliation of bank accounts Reconciled monthly with appropriate supporting documents attached.

Supporting documentation for payments The Companies maintained appropriate supporting documents.

Payroll records and contracts of employment The Companies maintained appropriate payroll records and contracts of employment.

Board meeting minutes The Companies do not appear to have held board meetings.

Financial statements Unaudited yearly financial statements were prepared for the Companies. It appears that the financial statements for FY14 are in draft format; however the Companies’ accountant has advised that the majority of transactions have been included and finalised. Financial statements for FY15 had not been prepared prior to the Administrators’ appointment.

Taxation returns We understand that the FY14 taxation returns for the Companies had not been lodged at the date of the Administrators’ appointment. Taxation returns for FY15 had not been prepared prior to the Administrators’ appointment.

Debtor and creditor listings Listings have been obtained and were kept in an orderly manner.

13

Compliant books and records Administrators’ comments

Contracts / agreements / unit holder and trust documentation

This documentation was maintained in storage at Singleton.

Administrators’ opinions 6.1

Our initial view is that the Companies appear to have generally maintained the types of records one would expect of Companies of this size and nature. With the exception of certain items set out above including in relation to recent financial and taxation returns, the Administrators have formed a preliminary conclusion that the Companies maintained records in accordance with the requirements of Section 286 of the Act.

At this time, the Administrators do not believe they can rely on the presumption of insolvency based on a failure to maintain books and records in accordance with Section 286 of the Act.

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Historical financial position 7

This section of the Report sets out the historical financial position for the Companies.

Historical financial information for the years ended 30 June 2013 and 30 June 2014 has been sourced from the Companies’ unaudited financial accounts. Please note that the financial accounts for 30 June 2014 are currently in draft format, however the Companies’ accountant has advised the Administrators that the majority of transactions have been accounted for and finalised in the accounts.

In respect of the year to date ending 31 May 2015, unaudited management accounts have been used, as financial accounts had not been finalised prior to our appointment.

Creditors should note that the Administrators have not conducted an audit of the Companies’ financial records and accordingly, the Administrators are unable to comment on the accuracy or completeness of the information provided.

MMG - Financial position 7.1

A summary of the historical financial position of MMG is as follows:

Key points:

The main assets of MMG over the period examined are “property, plant and equipment” and “trade and other receivables” (largely represented by loans to related parties). The recoverability of loans to related parties is unlikely and is discussed further at section 8 of this Report.

The key driver of the net asset deficiency for the year ended 30 June 2014 and the year to 31 May 2015 were trading losses funded by “borrowings”, largely comprising of equipment financing and loans from related parties.

Historical statement of financial position

Management accounts

31 May 2015

UnauditedYear ended30 Jun 2014


Assets

Cash and cash equivalents 76,491 3,598 52,129

Trade and other receivables 3,171,330 4,062,744 1,759,342

Inventories 81,000 535,000 535,000

Property, plant and equipment 3,687,204 6,257,294 9,982,301

Other assets 605,980 884,362 1,077,189

Total assets 7,622,005 11,742,998 13,405,961

Liabilities

Trade and other payables (3,052,687) (2,934,407) (643,497)

Borrowings (9,444,856) (12,578,636) (12,498,086)

Total liabilities (12,497,543) (15,513,043) (13,141,583)

Net assets (4,875,538) (3,770,045) 264,378

Source: Unaudited management accounts as at 31 May 2015, 2014 (draft) and 2013 unaudited financial statements

15

MMG - Financial Performance 7.2

A summary of MMG’s statement of Financial Performance is set out below:

Key points:

MMG’s records indicate that the business traded at a loss throughout the period due to high costs of sales, operating expenses and financing costs.

MMG – Cash flow 7.3

A summary of management’s cash flow for MMG is set out below:

Key points:

The Company had a negative cash (overdraft) balance for the majority of the period from August 2013 to the date of Appointment and a negative net cash flow.

Historical statement of financial performance

Management accounts

31 May 2015



Income

Plant hire and contracting income 12,122,876 12,092,634 14,865,954

Other income 1,702,618 483,564 560,346

Total revenue 13,825,494 12,576,198 15,426,300

Expenses

Administration (inclu. compliance, rent and freight) (563,976) (877,599) (1,436,229)

Plant hire (3,757,279) (3,366,053) (1,909,392)

Amortisation, depreciation and interest (885,684) (3,206,206) (4,319,249)

On-charged costs (383,321) (1,721,355) (533,972)

Wages, employee benefits and subcontractors (8,258,388) (5,473,429) (5,572,717)

Professional fees (248,900) (878,648) (1,121,114)

Other (incl. motor vehicle and parts/repairs) (713,024) (1,087,331) (1,656,554)

Total expenses (14,810,573) (16,610,621) (16,549,227)

Operating profit / (Loss) (985,079) (4,034,423) (1,122,927)


Cash flow

11 month period ending

29 May 2015


30 June 2014


30 June 2013

Cash receipts

Plant hire and contracting income 15,647,656 21,122,733 34,029,235

Income from sale of equipment 3,278,266 1,100,936 1,367,366

Total receipts 18,925,923 22,223,669 35,396,601

Cash payments

Purchase of equipment (169,433) (59,283) -

Finance and rental costs (1,124,612) (3,007,505) (8,365,764)

Operating expenses (incl. wages, rent and compliance) (17,791,362) (20,186,654) (28,812,447)

Total payments (19,085,407) (23,253,442) (37,178,211)

Net increase/(decrease) in cash (159,484) (1,029,773) (1,781,610)

Opening cash balance (853,922) 175,851 1,957,460

Closing cash balance (1,013,407) (853,922) 175,851

Source: Cash flow prepared by management

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MMG’s cash inflows were predominately derived from equipment hire and contracting income.

MMG’s cash inflows declined substantially over the period reviewed, leading to the company becoming heavily reliant on overdraft accounts to meet ongoing funding needs.

MMG D&B – Financial Position 7.4

A summary of the historical financial position of MMG D&B is as follows:

Key points:

The main assets of MMG D&B over the period examined are “trade and other receivables” (largely represented by loans to related parties) and “property, plant and equipment”.

As previously mentioned in this Report, MMG D&B sold the majority of its assets in July 2014 to reduce its debt.

If loans to related parties are excluded from assets, MMG D&B would have a net asset deficiency for the period examined. The recoverability of related party loans is unlikely and is discussed further at section 8 of this Report.

Historical statement of financial position

Management accounts

31 May 2015



Assets

Cash and cash equivalents 86,469 375,709 209,709

Trade and other receivables 5,506,757 4,290,265 1,442,919

Property, plant and equipment 27,412 3,917,609 4,870,659

Other assets 38,194 691,845 866,269

Total assets 5,658,832 9,275,428 7,389,556

Liabilities

Trade and other payables (502,031) (1,543,141) (899,477)

Borrowings (772,752) (5,789,501) (6,253,815)

Total liabilities (1,274,783) (7,332,642) (7,153,292)

Net assets 4,384,049 1,942,786 236,264


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MMG D&B – Financial Performance 7.5

A summary of MMG D&B’s statement of Financial Performance is set out below:

Key points:

Although MMG D&B’s records indicate that the business traded at a profit for the eleven months to 31 May 2015, this is a result of a one off equity injection of $1.3m from the Director. If this equity injection is excluded from income (which in our opinion it should be), MMG D&B traded at a loss for the period to 31 May 2015.

MMG D&B - Cash flow 7.6

We have not been provided with a cash flow statement by management for MMG D&B.

Historical statement of financial performance

Management accounts

31 May 2015



Income

Contracting income and hire fees 882,183 10,453,013 12,527,396

Other income 1,409,849 214 49,595

Total revenue 2,292,032 10,453,227 12,576,991

Expenses

Administration (inclu. compliance, rent and freight) (35,622) (2,413,055) (2,476,651)

Plant hire (250) (3,372) (2,016,313)

Amortisation, depreciation and interest (103,767) (1,963,470) (1,883,877)

Wages, employee benefits and subcontractors (588,566) (2,094,265) (2,630,008)

Professional fees (20,653) (322,919) (743,558)

Other (inclu. motor vehicle and parts/repairs) (442,953) (1,949,625) (2,812,703)

Total expenses (1,191,811) (8,746,706) (12,563,110)

Operating profit / (Loss) 1,100,221 1,706,521 13,881


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Report as to Affairs and net asset position 8

As at the date of this Report, we have not received a Report as to Affairs for the Companies.

Our comments in relation to the below accounts are therefore based on the balance sheets prepared by the Companies for management accounting purposes as at 31 May 2015, discussions with the Companies’ Director, management and accountant and equipment valuation reports prepared by Tiger Asset Group (“Tiger”) for the Administrators.

MMG 8.1

A summary of MMG’s assets and liabilities as at 31 May 2015 is as follows:

Assets 8.1.1

Overall comments 8.1.1.1

Whilst the financial records of MMG disclose various assets, “cash and cash equivalents”, “property, plant and equipment” and the “life Insurance policy” represent the most significant assets of MMG that may generate a return to creditors.

Further detail on the assets of MMG are set out below.

Cash and cash equivalents 8.1.1.2

Although the management accounts as at 31 May 2015 showed available cash to be $76,491, at the date of our appointment MMG had credit funds in its bank account totalling $108,962. We have since secured these funds.

Separately, we have written to all major Australian banks to identify and secure any additional funds held by MMG (no additional funds have been located).

Net asset position

Notes Book value Estimated net

realisable value

Assets ($) ($)

Cash and cash equivalents 8.1.1.2 76,491 108,962

Trade debtors 8.1.1.3 534,571 127,500

Loans 8.1.1.4 2,636,759 -

Inventories 8.1.1.5 81,000 -

Property, plant and equipment 8.1.1.6 3,687,204 421,745

Life insurance policy 8.1.1.7 n/a Uncertain

Other assets 8.1.1.8 605,980 -

Total assets 7,622,005 658,207

Liabilities

Trade creditors 8.1.2.1 (2,199,177) (2,198,720)

Overdraft accounts 8.1.2.2 (677,410) (685,012)

Equipment finance 8.1.2.3 (2,934,120) (6,619,471)

Loans 8.1.2.4 (5,833,327) (5,833,573)

Employee liabilities 8.1.2.5 (103,400) (319,349)

Other liabilities 8.1.2.6 (750,111) (697,268)

Total liabilities (12,497,543) (16,353,393)

Net assets (4,875,538) (15,695,186)


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Trade debtors 8.1.1.3

MMG’s management accounts as at 31 May 2015 showed trade debtor amounts to be $534,571. However, subsequent supporting documents provided by management showed an unreconciled amount of $236,033.

With respect to the trade debtors the Administrators comment as follows:

MMG’s management disclosed $20,338 in debts owing from Doherty Heavy Equipment Repairs Pty Ltd (“Doherty”). We understand that Doherty is currently in voluntary administration. Accordingly, we do not expect any debts to be recoverable from Doherty.

MMG’s management disclosed $150,700 in debts owing from Mayfield Equipment Pty Ltd (“Mayfield Equipment”). The Administrators have been advised by Mayfield Equipment that the amount relates to an equipment sale to it by MMG that was not finalised. This amount is not recoverable.

MMG’s management disclosed a further $127,500 in debts owing from five other parties. The Administrators have written to these parties requesting they pay these amounts (or any undisputed amounts) into the administration bank account, and to provide us with details of any disputed amounts. We have not amended the estimated realisable value so as not to jeopardise any potential collections.

Loans 8.1.1.4

We have been advised by MMG’s management that the company made loans totalling $2.6m as set out in the table below:

The Administrators have not been provided with any documentation (other than the balance sheets as outlined in section 7.1 of this Report) in relation to these amounts and further work will need to be undertaken to verify the balances and recoverability.

Trade debtors

$ Book value Estimated realisable value

Doherty Heavy Equipment Repairs Pty Ltd 20,338 -

Gemhawk Pty Ltd 6,908 6,908

Hunter Valley Operations 45,226 45,226

Mayfield Equipment Pty Ltd 150,700 -

Minion Enterprises Pty Ltd 50,000 50,000

Ulan Coal Mines Limited 5,346 5,346

Warkworth Mining Limited 20,020 20,020

Unreconciled amount 236,033 -

Net assets 534,571 127,500

Source: MMG's management

Loans


PGI Money Transfer 1,202,170 -

Llanillo Stud & Winery Pty Ltd 1,139,501 -

Paul King 20,000 -

Keiran Hannah PAYG 4,725 -

MCM Money Transfer 246 -

MMG Bucairn Pty Ltd 292,215 -

Anthony Gunter 2,873 -

Unreconciled amounts (24,972)

Total 2,636,759 -


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We make the following comments however:

PGI Money Transfer and Llanillo Stud Winery Pty Ltd – These are loans to related entities of the Director.

Paul King – This was a loan to a former MMG employee several years ago. The company has not requested this be repaid despite it appearing in its accounts for approximately five years.

Keiran Hannah PAYG – This relates to an amount of PAYG that was directly paid to the employee that should have been withheld and paid to the ATO.

MCM Money Transfer – Management have been unable to provide further details in relation to this loan.

MMG Bucairn Pty Ltd – We understand that this relates to money lent to a joint venture in which the Director has a 50% interest in.

Anthony Gunter – Anthony Gunter is the brother of the Director. The loan related to vehicle expenses separately incurred by Anthony but never repaid.

MMG’s management accounts as at 31 May 2015 showed loans made by the company to be $24,972 less than what was subsequently advised by management via supporting schedules.

We will further investigate the collectability of the loans and pursue repayment where it makes commercial sense to do so.

Inventories 8.1.1.5

MMG’s balance sheet as at 31 May 2015 discloses $81,000 of inventory. We have not been provided with any documentation in relation to this amount or sighted any inventory at MMG’s premises. The Director has advised that all inventory has been transferred/sold to Mayfield around the time that the Anglo contract was transferred.

Accordingly, we do not consider this amount to be a recoverable asset for creditors.

Property, plant and equipment 8.1.1.6

This amount relates to the mining equipment and vehicles owned by MMG. We note that the equipment and vehicles are funded through various financing arrangements.

The Administrators disclaimed equipment financed by Caterpillar Finance Australia Limited (“Caterpillar”), Westpac Banking Corporation (“Westpac”), BOQ Equipment Finance Limited (“BOQ”), Macquarie Finance (“Macquarie”) and Capital Finance (“Capital”) shortly after our appointment as it was surplus to our needs, was subject to specific security and based on independent valuations had negative equity.

MMG’s management accounts as at 31 May 2015 showed “property, plant and equipment” to be $3,687,204. The Administrators have been provided with a valuation of all of MMG’s equipment by Tiger.

We note the following in relation to the valuation:

the fair market valuation for all equipment totalled approximately $2.2m; and

the forced sale valuation for equipment not disclaimed by the Administrators totalled approximately $421,745 (net of realisation and payout costs).

The Administrators consider these assets to be the most likely to generate a return for creditors.

Life insurance policy 8.1.1.7

This is a company owned life insurance policy that may pay a lump sum of $1,912,272 if the Director is diagnosed with a terminal illness. We understand the Director is currently receiving treatment for cancer. We will investigate this policy further and if appropriate, make a claim on the policy for the benefit of creditors.

Other assets 8.1.1.8

MMG’s balance sheet as at 31 May 2015 discloses $605,980 of “other assets” comprising largely of capitalised costs (i.e. $586,930) relating to leasehold improvements. This amount does not represent an asset recoverable for creditors.

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Liabilities 8.1.2

Trade creditors 8.1.2.1

MMG’s management has disclosed unsecured creditor liabilities totalling $2,199,177 as at our appointment date, however management supporting schedules were slightly different by $457. The breakdown of the seven largest creditor amounts is set out below:

Overdraft accounts 8.1.2.2

This amount related to an overdraft account held with Westpac. We note that this amount is:

secured against all of the equipment financed by Westpac for the Companies; and

cross collateralised with other loans made to the Companies by Westpac.

The effect of Westpac’s charge means that it ranks ahead of ordinary unsecured creditors and will need to be paid out in full before funds are available for other unsecured creditors.

We note that Westpac’s debts are cross collateralised between both Companies.

MMG’s management accounts as at 31 May 2015 showed overdraft accounts to total $677,410. However, documents provided to us by Westpac showed the amount to be $685,012.

Equipment finance 8.1.2.3

We have been advised by MMG’s equipment financiers that the following amounts are owed by the company:

We have been advised by Graham Holley (the director of B61) that B61 is owed $2.3m from MMG in relation to equipment loans (although we have not received a proof of debt for this amount to date). Accordingly, we have included this amount as an equipment financier liability.

Trade creditors

$ Book value

Mining & Industrial Labour Hire Pty Ltd 493,327

Burns Equipment Group Pty Ltd 425,051

Doherty Heavy Equipment Repairs 341,111

Mayfield Operations Pty Ltd 260,684

Westrac 260,603

Wolff Mining Pty Ltd 203,517

Max Hire 148,828

Balance of trade creditors 65,600

Unreconciled amounts 457

Total 2,199,177


Equipment financiers

$ Book value

Westpac 1,459,033

B61 Pty Ltd ("B61") 2,300,000

Caterpillar Finance 2,794,554

BOQ Finance 39,829

Macquarie Finance 22,555

Capital Finance 3,500

Unreconciled amounts (3,685,351)

Total 2,934,120

Source: Equipment Financiers

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We note that B61 has a second ranking secured charge against MMG.

As mentioned above, financiers of the Companies will become unsecured creditors for the portion of their debt not repaid from the sale of their secured equipment.

As noted above, Westpac’s debts are cross collateralised between both Companies.

MMG’s management accounts as at 31 May 2015 showed $2,934,120 owing to equipment financiers. However, documents subsequently provided to us by the financiers showed this amount to be $6,619,471.

Loans 8.1.2.4

MMG’s management has disclosed an amount of $5,833,327 as at out appointment date owing to creditors as set out in the table below:

We have not received any proof of debts in relation to these claims to date.

In the event the company enters into liquidation, similarly to other unsecured creditors, we will adjudicate on these claims prior to paying a dividend.


MMG Transfer and MMG Assets Loans – We understand that these were loans made by related entities of the Director to MMG.

Loan P & L Gunter – This is a loan made by the Director and his wife.

Loan ELPH – We understand that this was a loan made by a friend of the Director.

Loans that have amounts receivable from corresponding parties may be able to be offset against each other.

We note that there is a slight reconciling difference of $246 difference between what management has advised and what was disclosed in the management accounts.

Employee liabilities 8.1.2.5

A summary of outstanding employee entitlements as at the date of our appointment is provided below:

We note the following:

MMG’s management accounts as at 31 May 2015 discloses an amount of $103,400 owing to employees. However, based on supporting schedules provided by MMG’s management, outstanding employee entitlements are $319,349.

Outstanding employee entitlements represent a preferential claim against MMG which are paid prior to distributions to ordinary unsecured creditors..

Loans

$ Book value

MMG Money Transfer 4,782,977

MMG Assets Loan 308

Loan P & L Gunter 1,026,288

Loan ELPH 24,000

Unreconciled amounts 246-

Total 5,833,327


Summary of employee entitlements

Employees (No.) Annual leave ($) Long service leave ($) Unpaid super ($) Redundancy ($) Total ($)

56 47,451 43,945 174,423 53,529 319,349


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The employee entitlements outlined above include circa $81k due to “excluded employees” under the Act (i.e. the Director and his wife). The preferential entitlements for these persons are capped at a maximum of $3,500 per person (i.e. $2,000 for unpaid wages and $1,500 for leave entitlements).

Other liabilities 8.1.2.6

MMG’s management accounts as at 31 May 2015 disclosed $750,111 of other liabilities comprising of GST payable to the ATO.

We have notified the ATO of our appointment and recently received a proof of debt for $697,268 in respect of business activity statement amounts. The ATO has also advised that MMG may be liable to pay superannuation guarantee charges in respect of unpaid employee entitlements.

Should MMG enter into liquidation, a liquidator would be required to adjudicate on this claim as with other unsecured creditor claims prior to distributing any dividend (if a distribution to unsecured creditors becomes available).

MMG D&B 8.2

A summary of MMG D&B’s assets and liabilities as at 31 May 2015 is as follows:

Assets 8.2.1

Overall comments 8.2.1.1

Whilst the financial records of MMG D&B disclose various assets, “cash and cash equivalents”, “property, plant and equipment” and the “life insurance policy” represent the most significant assets of MMG D&B that may generate a return to creditors.

Further details on the assets of MMG D&B are set out below.

Cash and cash equivalents 8.2.1.2

Although the management accounts as at 31 May 2015 showed available cash to be $86,469 at the date of our appointment, MMG D&D had credit funds in its bank account totalling $8,761. We have since secured these funds.

Separately, we have written to all major Australian banks to identify and secure any additional funds held by MMG D&B (no additional funds have been located).

Net asset position

Notes Book value Estimated net

realisable value

Assets ($) ($)

Cash and cash equivalents 8.2.1.1 86,469 8,761

Loans 8.2.1.3 5,506,757 -

Property, plant and equipment 8.2.1.4 27,412 50,250

Life insurance policy 8.2.1.5 n/a Uncertain

Other assets 8.2.1.6 38,194 -

Total assets 5,658,832 59,011

Liabilities

Trade creditors 8.2.2.1 (147,452) (150,537)

Equipment finance 8.2.2.2 (398,367) (569,928)

Overdraft account 8.2.2.3 (374,385) (409,417)

Employee liabilities 8.2.2.4 (354,579) (565)

Other liabilities 8.2.2.5 - (372,812)

Total liabilities (1,274,783) (1,503,259)

Net assets 4,384,049 (1,444,248)

Source: Unaudited management accounts as at 31 May 2015; discussions with MMG's Director/management and Tiger; and ATO

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Loans 8.2.1.3

MMG’s management accounts as at 31 May 2015 showed loans made by the company to be $5,506,757. However, subsequent supporting documents provided by management showed an unreconciled amount of $32,000.

The Administrators have not been provided with any documentation in relation to these amounts (other than the balance sheets as outlined in section 7.4 of this Report) and further work will need to be undertaken to verify the balances and recoverability.


PGI Money Transfer and Llanillo Stud & Winery Pty Ltd - These are loans to related entities of the Director.

MMG Money Transfer - We understand that an intercompany loan was made to MMG.

Loan to Paul King - This was a loan to a former MMG D&B employee several years ago.

Property, plant and equipment 8.2.1.4

This amount relates to the mining equipment and vehicles owned by MMG D&B. We note that the equipment and vehicles are financed through various financing arrangements.

The Administrators have been provided with a valuation of all of MMG D&B’s equipment by Tiger.

MMG D&B’s management accounts as at 31 May 2015 showed “property, plant and equipment” to be $27,412. However, the Administrators have been provided with a valuation of all of MMG D&B’s equipment by Tiger.

We note the following in relation to the valuation:

the market value valuation for the equipment totalled approximately $176,000; and

the forced sale valuation for the equipment not disclaimed by the Administrators totalled approximately $50,250 (net of realisation and payout costs).

The Administrators consider these assets to be the most likely to generate a return for creditors.

Life insurance policy 8.2.1.5

This is a company owned life insurance policy that may pay a lump sum of $819,545 if the Director is diagnosed with a terminal illness. We understand the Director is currently receiving treatment for cancer. We will investigate this policy further and if appropriate, make a claim on the policy for the benefit of creditors.

Other assets 8.2.1.6

MMG D&B’s balance sheet as at 31 May 2015 discloses $38,194 of “other assets” comprising of prepaid borrowing expenses. This amount does not represent an asset recoverable for creditors.

Liabilities 8.2.2

Trade creditors 8.2.2.1

MMG D&B’s management accounts disclosed unsecured creditor liabilities totalling approximately $147,452 as at 31 May 2015, however managements supporting schedules subsequently provided were slightly different by $3,085. The breakdown of the creditors is set out below:

Loans


PGI Money Transfer 205,307 -

MMG Money Transfer 4,944,688 -

Llanillo Stud & Winery Pty Ltd 319,762 -

Loan to Paul King 5,000 -

Unreconciled amounts 32,000

Total 5,506,757 -


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Equipment finance 8.2.2.2

We have been advised by MMG D&B’s equipment financiers that the following amounts are owed by the company:

As previously mentioned, financiers of the Companies will become unsecured creditors for the portion of their debt not repaid from the sale of their secured equipment.

As noted above, Westpac’s debts are cross collateralised between both Companies.

MMG D&B’s management accounts as at 31 May 2015 showed $398,367 owing to equipment financiers. However, documents subsequently provided to us by the financiers showed this amount to be $569,928.

Overdraft accounts 8.2.2.3

This amount related to an overdraft account held with Westpac. As outlined at section 8.1.2.2 of this Report, the amount is:

secured against all of the equipment financed by Westpac for the Companies; and

cross collateralised with other loans made to the Companies by Westpac.

The effect of Westpac’s charge means that it ranks ahead of ordinary unsecured creditors and will need to be paid out in full before funds are available for other unsecured creditors.

MMG D&B’s management accounts as at 31 May 2015 showed overdraft accounts to total $374,385. However, documents provided to us by Westpac showed the amount to be $409,417.

Employee liabilities 8.2.2.4

MMG D&B’s management accounts as at 31 May 2015 discloses an amount of $354,579 owing to employees. However, MMG D&B’s management have subsequently provided us with schedules showing the only outstanding employee entitlements total $565.

This amount relates to a small superannuation calculation adjustment required to be made for 18 employees, who were previously underpaid superannuation entitlements.

Other liabilities 8.2.2.5

MMG D&B’s management accounts as at 31 May 2015 showed no other liabilities owing by the company. However, we notified the ATO of our appointment and recently received a proof of debt for $372,812 in respect of business activity statement amounts. The ATO has also advised that MMG D&B may be liable to pay superannuation guarantee charges in respect of unpaid employee entitlements.

Should MMG D&B enter into liquidation, a liquidator would be required to adjudicate on this claim as with other unsecured creditor claims prior to distributing any dividend (if a distribution to unsecured creditors becomes available).

Trade creditors

$ Book value

Westrac Pty Ltd 144,928

Sandvik 5,609


Total 147,452


Equipment financiers

$ Book value

Westpac 495,880

BOQ Finance 74,047


Total 398,367

Source: Equipment Financiers

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Explanation for difficulties 9

Directors reasons for failure 9.1

The Director has attributed the failure of the Companies to the recent global downturn in mining activity and the businesses not being able to service the debt on its leased equipment and vehicles. The Companies had a range of assets that were not being utilised and was unable to find a buyer for those assets at a value required to retire the associated debt.

Administrators’ view 9.2

The Administrators acknowledge the circumstances facing the mining services sector. In addition, we note that there were a large amount of Director and related party loans (detailed in section 8) which have impacted the financial position and cash flow of the business.

Outstanding winding up applications 9.3

The Administrators are not aware of any demands for payment or winding up applications against the Companies.

Related entities 9.4

A creditor of a company may apply to the court to set aside or modify a resolution authorising the execution of a DOCA if the resolution was carried as a consequence of a related entity casting a vote. Similarly, a defeated resolution for the company to be wound up may be declared to have been carried, if it was defeated because of the vote cast by a related entity.

As at the date of this report, the Administrators have not received any claims from related parties:

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Offences, insolvent trading and voidable transactions 10

Offences 10.1

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 Timothy Duncan of my staff on (02) 9248 9913 to obtain a copy.

Insolvent trading 10.2

Other than in cases of fraud, the Directors of a company may only be sued for insolvent trading if the company is in liquidation. Where a Voluntary 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 or 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 debts 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.

MMG 10.2.1

In determining whether the Director traded MMG at a time when it was insolvent, we have considered both a net assets and cash flow assessment of MMG.

Net assets assessment 10.2.1.1

Considering the net asset position of a company requires a review of the assets and liabilities disclosed in its balance sheet. For the purposes of our preliminary investigations, we have examined FY13, FY14 and YTD15 (MMG’s summarised balance sheets for these periods are at Section 7.1 of this report).

Over the period examined, MMG reported a net asset deficiency for FY14 ($3.8m) and YTD15 ($4.9m). This was largely driven by loans to related parties, equipment financing and trade creditors.

The large decline in MMG’s net asset position from FY13 to YTD15 was largely caused by a reduction in MMG’s plant and equipment by $6.3m, additional loans to related parties by $3m and increases in trade creditors by circa $1.8m.

An important matter to have regard to when considering MMG’s net asset position is the loans it has made to and from related parties. Even if these loans are not taken into account, from our preliminary investigations it appears that MMG still had a net asset deficiency for FY14 and FY15.

Having regard to the above, we consider MMG may have been insolvent on a net asset basis some time during FY14. However, we consider that a cash flow assessment should also be undertaken to help determine the time of insolvency.

Cash flow assessment 10.2.1.2

Assessment of a company’s solvency position on a cash flow basis requires a review of the company’s ability to meet its ongoing liabilities from its available cash resources.

We comment as follows:

The Company had a negative cash balance for the majority of the period from August 2013 to the date of Appointment.

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During this period, MMG was relying on overdraft accounts to meet its operating expenses.

We have been provided with correspondence from MMG management which shows that MMG was attempting to enter into payment plans with creditors for invoices that had been raised in January and February 2015. In that correspondence, the Director states that MMG would have a cash flow shortage in late February 2015.

We also understand that MMG:

– had come to an arrangement with its secured creditors approximately six months prior to February 2015, which included interest only finance on equipment and overdraft facilities; and

– had entered into at least 5 separate payments plans with the ATO to defer tax payments. Based on information we have been provided, the first of these plans was entered into by the parties around June 2009.

Additionally, a number of payments that fell due in February 2015 were not paid.

Whilst there were no demands, or applications to wind-up MMG, our preliminary investigations reveal that, on balance, MMG may have been insolvent from February 2015 (and possibly earlier) when it may have been unable to pay its debts as and when they became due and payable.

MMG D&B 10.2.2

In determining whether the Director traded MMG D&B at a time when it was insolvent, we have considered both a net assets and cash flow assessment of MMG D&B.

Net assets assessment 10.2.2.1

For the purposes of our preliminary investigations, we have examined MMG D&B’s balance sheet for FY13, FY14 and YTD15 (MMG D&B’s summarised balance sheets for these periods are at Section 7.4 of this Report).

MMG D&B did not report a net asset deficiency for the period examined.

However, if loans to and from related parties are excluded from MMG D&B’s balance sheets, then it had a net asset deficiency over the period examined as follows:

– $696,000 for FY13;

– $1.1m for FY14; and

– $1.1m for YTD15.

If related party loans are excluded, the net asset deficiency:

– in FY13 and FY14 is largely driven by equipment finance costs; and

– in YTD15 is largely driven by a reduction in plant and equipment (noting MMG D&D sold off the majority of its equipment in July 2014 to reduce debt) and an increase in overdraft accounts.

Having regard to the above and if related party loans are excluded, we consider MMG D&B may have been insolvent on a net asset basis some time during FY13. However, we consider that a cash flow assessment should also be undertaken to help determine the time of insolvency.

Cash flow assessment 10.2.2.2

Assessment of a company’s solvency position on a cash flow basis requires a review of the company’s ability to meet its ongoing liabilities from its available cash resources.

Management have advised that MMG D&B did not prepare a standalone cash flow.

However, we make the following comments:

MMG D&B had entered into at least 10 separate payments plans with the ATO to defer tax payments. Based on information we have been provided, the first of these plans was entered into by the parties around June 2009.

We understand that MMG and MMG D&B often used funds from each other’s bank accounts to pay trading expenses and received revenue on behalf of each other. For example, the revenue from MMG’s contract with Mayfield (circa $200,000 per month) was paid into MMG D&B’s bank account and cash received from sale of MMG D&B’s equipment in July 2014 was used to pay down debt for both Companies.

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Accordingly, an assessment of MMG D&B’s cash flow solvency should be based on an assessment of MMG’s ability to meet its debts as and when they fell due as their cash is intermingled.

As our preliminary investigations reveal that, on balance, MMG may have been insolvent from February 2015 (and possibly earlier), we consider that MMG D&B may have also been insolvent from around February 2015.

Director defences 10.2.3

Section 588H of the Act sets out statutory defences available to the Director in respect of a 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.

The Director was ill at the time the debts were incurred and could not take part in the management of the company.

Reasonable steps were taken to prevent the incurring of debt.

Administrators’ conclusions regarding solvency 10.2.4

MMG 10.2.4.1

A stated above, solvency is a question of fact to be ascertained from a consideration of a company’s financial position as a whole.

From our analysis set out above, it appears that MMG may have been insolvent from around February 2015. This means that the Director may have caused MMG to incur new liabilities at a time when it was insolvent and may be personally liable for these amounts.

Although MMG had a net asset deficiency since FY14 and had entered into various payment arrangements with its financiers and the ATO, we do not consider that it was unable to meet its debts as and when they fell due prior to February 2015, as it was still meeting its trading obligations (largely from overdraft accounts).

In regards to insolvency, the Director is likely to argue a number of defences and, in particular, that he had reasonable grounds to expect that MMG would return to a cash flow positive position shortly after February 2015.

By way of context, we note that:

the Director had forecast the cash position of MMG to return to a positive position by the end of March 2015;

the return to positive cash flow was based on a potential increase in the Mayfield contract to the value of $500,000 per month; and

amongst other things, this prediction was based on indications MMG received from Mayfield in December 2014 that rehabilitation would commence in early in 2015 and MMG should prepare with equipment and operators.

Whilst it is possible MMG may have been insolvent from February 2015, our preliminary assessment is that a liquidator is unlikely to recover any significant sums in relation to insolvent trading for the following reasons:

the complex and difficult nature of pursuing insolvent trading actions including determining the timing of when a company becomes insolvent;

the reasonable steps taken by the Director in respect of MMG’s affairs;

the financial position of the director; and

the range of defences available to the Director.

In the event that we are appointed Liquidators, we will consider the issue further.

MMG D&B 10.2.4.2

From our analysis set out above, as with MMG it appears that MMG D&B may have been insolvent from around February 2015.

As both Companies often used funds from each other’s bank accounts to pay trading expenses and received revenue on behalf of each other, MMG D&B’s solvency position was reliant on MMG’s ability to meet it debts as and when they fell due (as MMG was the main trading entity).

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Voidable transactions 10.3

Corporations Regulation 5.3A.02 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 (these are known as ‘voidable transactions’). As with the insolvent trading analysis above, this issue is relevant to creditors if they are being asked to choose between a DOCA or a liquidation, because voidable transactions are only recoverable if a liquidation occurs.

Voidable transactions include:

unfair preference claims: transactions between the Companies and a creditor, resulting in the creditor receiving from the Companies, 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: being transactions which a reasonable person in the place of the Companies would not have entered into, taking into account the benefits and the detriment to the Companies, the respective benefits to the other parties involved and any other related matters;

unfair loans: being a loan agreement where the interest or charges are considered to be extortionate. Unfair loans made to the Companies any time prior to the appointment of the Administrator may potentially be overturned by a subsequently appointed Liquidator, whether or not the Companies’ were insolvent at the time that the loan was entered into; and

unreasonable director related transactions: being transactions which a reasonable person in the place of the Companies would not have entered into, taking into account the benefits and the detriment to the Companies, the respective benefits to the other parties involved and any other related matters and where the director or an associate of the director benefits from the transaction.

To the extent that information has been available, the Administrators have conducted the following preliminary investigations in relation to voidable transactions:

reviewed documentation provided to us by third parties;

reviewed the books and records to determine whether there have been any unfair loans made to or from the Companies; and

reviewed bank account statements and reconciliations for the period approximately 6 months prior to the appointment of the Administrators to determine whether any creditor has been preferred over the general body of creditors as a result of any transaction.

Unfair preference claims 10.4

The Administrators’ initial investigations have identified the following potentially voidable transactions:

MMG 10.4.1

Payments to suppliers 10.4.1.1

We have been provided with a report by management showing payments made to MMG’s suppliers (for the period 1 December 2014 to the Appointment date) and the ageing profiles of invoices the payments were allocated against.

The following table shows the value of these payments allocated against invoices that had aged by 30, 60, 90 and 120 days:

Whilst we have not been able to determine the terms of the specific invoices the payments were allocated against from information provided by management (and therefore unable to determine if any of the amounts were paid for overdue invoices), it appears that approximately $2.2m of payments have been allocated against invoices that were greater than 60 days old.

Payments to suppliers since 1 December 2014

$ Past 30 days Past 60 days Past 90 days Past 120 days

Total 5,049,176 2,233,498 306,485 10,167

Source: Management reports and Administrators' analysis

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Australian Taxation Office 10.4.1.2

We have reviewed a print out of MMG’s ATO running account balance (provided by management) which shows $665,063 of payments were made by MMG to the ATO from 1 December 2014 to the Appointment date.

We note that MMG’s ATO running account balance had a liability of approximately $274,719 early December 2014, which had increased to approximately $692,458 by 30 May 2015.

MMG’s management have advised that MMG had entered into various payment plans with the ATO from around June 2009 for the payment of outstanding tax liabilities.

MMG D&B 10.4.2

Payments to suppliers 10.4.2.1

We have been provided with a report by management showing payments made to MMG D&B’s suppliers (for the period 1 December 2014 to the Appointment date) and the ageing profiles of invoices the payments were allocated against.

The following table shows the value of these payments allocated against invoices that had aged by 30, 60, 90 and 120 days:

Whilst we have not been able to determine the terms of the specific invoices the payments were allocated against from information provided by management (and therefore unable to determine if any of the amounts were paid for overdue invoices), it appears that approximately $66,968 of payments have been allocated against invoices that were greater than 60 days old.

Australian Taxation Office 10.4.2.2

We have reviewed MMG D&B’s ATO running account balance (provided by management) which shows the only payment made by management in the period 1 December 2014 to the Appointment date was $115,000.

We note that the company’ ATO running account balance had a liability of $468,738 just prior to this payment.

MMG D&B’s management have advised that MMG had entered into various payment plans with the ATO from around June 2009 for the payment of outstanding tax liabilities.

Conclusion regarding preference claims for the Companies 10.4.3

We note that our preliminary investigations in relation to the potential unfair preference claims for the Companies are continuing and that the above transactions may not ultimately be transactions voidable as against the liquidator.

There are a range of defences that may be available to the parties involved in the above transactions that would need to be considered and investigated prior to commencing recovery action.

If the Companies are wound up, further investigations and a cost benefit analysis of pursuing recovery action will need to be undertaken in relation to the matters referred to above. Additionally, if proceedings are commenced, there is a risk that the claim will not be established or that a defence will be sustained. Further, even if a judgement is obtained, there is a risk that it may not be satisfied or that the amount recovered will not be sufficient to meet the costs of investigating and prosecuting the claim.

For the purposes of our realisable estimate we have attributed a value to preferences in a liquidation of $0 to $500,000.

Uncommercial transactions 10.5

As outlined in section 8 of this Report, various loans have been made to and from the Companies. We note that the loans are undocumented and we have not been provided with any supporting documentation to date (apart from balance sheets as outlined in section 7 of this Report).

In assessing the benefit and detriment to the Companies, we have considered the fact that some of these loans may have been used for trading purposes of the Companies.

Payments to suppliers since 1 December 2014

$ Past 30 days Past 60 days Past 90 days Past 120 days

Total 77,029 66,968 5,892 -

Source: Management reports and Administrators' analysis

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In the event that the loans are deemed to be uncommercial transactions, they could theoretically be ‘reversed’ by a liquidator (if appointed).

We note that our investigations to date are preliminary. If the Companies are wound up, further investigations and a cost benefit analysis of pursuing recovery action will need to be undertaken.

An overview of the loans is provided below:

MMG 10.5.1

As outlined at sections 8.1.1.4 and 8.1.2.4 of this Report, as at Appointment date MMG’s management had disclosed:

$2.7m of loans made largely to related parties; and

$5.8m of loans owing to largely related parties.

These loans need to be investigated further with the Director to determine the validity of the balances.

Our ability to recover these loans will in part be dependent upon the financial position of the Director and his related entities. We have sought a statement of financial position from the Director.

MMGDB 10.5.2

As outlined at section 8.2.1.3 of this Report, MMG D&B’s management has also disclosed $5.5m of loans made to largely related parties as at the Appointment date.

As with MMG, these loans need to be investigated further with the Director to determine the validity of the balances.

Our ability to recover these loans will in part be dependent upon the financial position of the Director and his related entities. We have sought a statement of financial position from the Director.

Breach of Directors’ duties 10.6

Sections 180 to 184 of the Act sets 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 the 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.

The Administrators will give further consideration to the Director’s discharge of his duties if either of the Companies are wound up.

Funding to pursue insolvent trading and voidable transactions 10.7

Insolvent trading and voidable transactions can only be pursued in a liquidation and further investigations and any subsequent proceedings will incur significant costs. Funding may be required from creditors or litigation funders should the Liquidators (if appointed) seek to commence such action.

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Estimated return in a Liquidation 11

The Administrators’ estimated return to creditors of the Companies in a Liquidation scenario is provided in the below tables. We draw creditors’ attention to the following:

We have attempted to ensure that the figures used in the estimate and the assumptions upon which the estimate is based, are reasonable. We note, however, that we have not audited the figures utilised in the analysis and that as they are estimated values rather than actual values, the final position may change materially.

For the purposes of the analysis, we have made assumptions regarding matters including, but not limited to:

– the recoverability of potential liquidator claims with respect to voidable transactions, unfair preferences and insolvent trading actions;

– the collectability of pre-appointment debtors;

– the profitability of trading during the administration; and

– the result of future auction sales for the equipment.

We note that the above and all other assumptions made for the purposes of this analysis are not final views of the Administrators. Each assumption is subject to further consideration, verification or change.

We also draw creditors’ attention to the notes to our estimates below.

MMG 11.1

Our current estimate of the return available to creditors on a “low” and “high” basis under a liquidation scenario is set out below.

MMG - Estimated return to creditors in a Liquidation

Item (Low) (High) Notes

Circulating (Floating) Assets

Cash at appointment 108,962 108,962 Cash at bank

Pre Appointment Debtors - Mayfield 215,035 215,035 These funds were paid in week 1 for pre appointment work

Pre Appointment Debtors - Other - 50,572 High value based on estimated returns as discussed with company management

Post Appointment trading - Mayfield - 10,000 Expected to be generated in the period from appointment to 15 July 2015

Total 323,997 384,569

Employee Entitlements (238,168) (238,168) As per books and records of the Company. Excluding excluded employees

Administrator/Liquidator Fees (Circulating) (81,070) (81,070) As per our remuneration requests detailed in this report

Legal Fees (Circulating) (10,000) (5,000) Estimate

Net Surplus/(deficit) from Circulating assets (5,242) 60,331

Non-Circulating (Fixed) Assets

Assets (various) 421,745 467,020 Net of sale agent commission, costs and financier payouts

Life Insurance (company policy) - 1,912,272 Collectability of the policy is uncertain at this stage

Total 421,745 2,379,292

Administrator/Liquidator Fees (Non-Circulating) (81,070) (81,070) As per our remuneration requests detailed in this report

Legal Fees (Non-Circulating) (40,000) (25,000) Estimate

Net Surplus/(deficit) from Non-Circulating assets 300,675 2,273,222

Net Creditor Return (before preference recoveries) 295,434 2,333,552

Secured Creditor (Westpac) return 295,434 2,333,552 Westpac has a first ranking charge over the assets of the Company

Westpac - Return in the Dollar 0.10 0.77

Other

Potential Liquidator preference recoveries - 500,000 Recoverability is currently uncertain

Unsecured Creditor return - 500,000

Unsecured Creditor claims 10,185,196 8,647,077 Estimate based on books and records of the company and creditor claims made to date.

Return in the dollar - 0.06The difference in unsecured creditor claims is due to the portion of Westpac's debt that is classified as an unsecured claim following the flow of funds from realisations

Source: McGrathNicol analysis

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Key points:

As Westpac has a first ranking fixed and floating charge over the assets of the Company, the only return to unsecured creditors will be from potential liquidator recoveries in the form of voidable transactions, unfair preferences and insolvent trading actions (detailed further in section 10).

There is a company owned life insurance policy in place that may pay a lump sum amount if the Director is diagnosed with a terminal illness. We understand the Director is currently receiving treatment for cancer and the amount able to be claimed will depend on the level of creditors of the company. We will investigate this further and if appropriate, make a claim on the policy for the benefit of creditors.

Creditors should note that the above estimates are preliminary only and are subject to change as creditor claims are considered and adjudicated and assets better understood. No warranty as to the accuracy or reliability of this estimate is provided.

MMG D&B 11.2

Our current estimate of the return available to creditors on a “low” and “high” basis under a liquidation scenario is set out below.

Key points:

As Westpac has a first ranking fixed and floating charge over the assets of the Company, the only return to unsecured creditors will be from potential liquidator recoveries in the form of voidable transactions, unfair preferences and insolvent trading actions (detailed further in section 10).

There is a company owned life insurance policy in place that may pay a lump sum amount if the Director is diagnosed with a terminal illness. We understand the Director is currently receiving treatment for cancer and the amount able to be claimed will depend on the level of creditors of the company. We will investigate this further and if appropriate, make a claim on the policy for the benefit of creditors.


MMG D&B - Estimated return to creditors in a Liquidation




Pre Appointment Debtors - - There are no debtors

Total 8,761 8,761

Employee Entitlements (565) (565) As per books and records of the Company

Administrator/Liquidator Fees (Circulating) (14,272) (14,272) As per our remuneration requests detailed in this report

Legal Fees (Circulating) (5,000) - Estimate

Net Surplus/(deficit) from Circulating assets (11,077) (6,077)



Life Insurance (company policy) - 819,545 Collectability of the policy is uncertain at this stage

Total 50,250 875,020

Administrator/Liquidator Fees (Non-Circulating) (14,272) (14,272) As per our remuneration requests detailed in this report


Net Surplus/(deficit) from Non-Circulating assets 25,978 858,748

Net Creditor Return (before preference recoveries) 14,901 852,671

Secured Creditor (Westpac) return 14,901 852,671 Westpac has a first ranking charge over the assets of the Company


Other

Potential Liquidator preference recoveries - 100,000 Recoverability is currently uncertain



Return in the dollar - 0.07The unsecured creditor claims may be significantly affected due to the cross collateralisation of Westpac's secured claim over both of the Companies and the flow of funds to repay Westpac's debt


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Deed of Company Arrangement proposal 12

Terms of DOCA proposal received 12.1

A Deed of Company Arrangement (“DOCA”) is a binding arrangement between a company and its creditors governing how a company’s affairs will be dealt with and is one of the three possible options for the future of the Companies (the other two options being liquidation and return of control of the Companies to the Director).

A DOCA aims to maximise the chances of a 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.

A creditors’ trust in a DOCA is a mechanism used to accelerate a company’s exit from external administration. Typically, a trust entity is created and the company’s obligations to creditors bound by the DOCA are compromised and transferred to the trust. The creditors will then become beneficiaries of the relevant trust. A trust fund is established, which the trustee will distribute to creditors (i.e. in their capacity as beneficiaries of the trust) in satisfaction of the creditors’ rights and claims against the company. Usually the DOCA will terminate upon the creation of the creditors’ trust, and the company will cease to be externally administrated.

The Administrators have been presented with one proposal, the Proposed DOCA.

A copy of the Proposed DOCA is enclosed at Appendix A, which creditors should closely read and, if a creditor considers necessary, obtain independent legal advice. While the Administrators anticipate the DOCA to be executed in substantially the same form as the version attached, there may be some minor amendments to the documents prior to them being executed.

Set out below is the Administrators’ summary of and view on key aspects of the Proposed DOCA pursuant to which the Trust Fund would be established.

The Proposed DOCA is only in relation to Mining Management Group and was received from Avior Consulting acting on behalf of Viento Group Limited (Administrators Appointed) (“Viento” or “the Proponent”) on 18 June 2015.

Key terms:

The Proponent will contribute a $150,000 equity investment payable within 30 days from the date the DOCA is approved

A Creditors Trust will be established

The assets of the Creditors Trust will compromise (“Available Property”):

− The balance of cash at bank that was held by the Administrators immediately prior to the date the DOCA terminates;

− Amounts payable to the Company from its customers that have accrued up to the date the DOCA terminates;

− The proceeds from any claim made within 6 months from the Termination Date (uncertain of exact timing as it is subject to a number of conditions precedents) against the insurance policy’s issued by Westpac in favour of the Company;

− The proceeds from the $150,000 equity investment;

− The proceeds from the sale of the Company’s light vehicles after the payment of amounts owing under valid security interests.

The Company’s creditors participating in distributions from the Creditors’ Trust will be distributed as follows:

− Firstly, all remuneration and expenses of the Administrators, Deed Administrators and Trustees will be paid in full;

− Secondly, a distribution will be made to Priority creditors (e.g. employees) who will be entitled to be paid in the same priority from the Creditors’ Trust as would be afforded them in a winding up of the Company pursuant to s556 of the Corporations Act 2001 (Cth); and

− Thirdly, a distribution to Westpac.

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− Lastly, if there are any remaining funds, a distribution to the remaining creditors.

Westpac will refinance its existing debt for $1,400,000. The balance of Westpac’s claim will become an unsecured claim against the Company and will be included in the Creditors Trust. $500,000 will be payable against the refinanced debt within 30 days following execution of the DOCA

Completion of the DOCA is subject to the following conditions precedent:

− The approval of the Company’s creditors of the DOCA at the Creditors’ Meeting;

− The consent of Westpac to the implementation of this proposal;

− The consent of B61 (a creditor with a second ranking security interest in the Company) to the implementation of this proposal;

− The approval of the Company’s shareholders of the proposal and to transfer all shares in the Company to Viento at the Shareholders’ Meeting;

− The approval of Viento’s creditors and shareholders to a DOCA in terms satisfactory to the Proponent;

− Confirmation from the ASX that Viento will not be required to re-comply with ASX listing rules 1 and 2 following the completion of the Viento DOCA.

− The premiums for the Life Insurance Policies being paid as they fall due;

− Written notice from the Proponent that it has conducted due diligence on the Company’s assets and is satisfied to proceed with the Equity Investment.

In the event that these conditions are not met, the Proposed DOCA will fail. In the absence of variations to the terms of the Proposed DOCA (agreed to by creditors), it is likely the DOCA will terminate and the Company will be placed into liquidation.

On termination of the DOCA, the Company is released from all creditors’ claims and it is agreed that there is no consideration payable in respect of the releases provided.

DOCA/Creditors Trust 12.2

The estimated return to creditors under the Proposed DOCA and the estimated return to creditors in liquidation are set out in section 12.6.

Advantages and disadvantages of DOCA 12.3

The key advantages of the Proposed DOCA as compared to liquidation are:

There will be $650,000 of new money injected into the business. This will result in the overall return to Westpac being superior to a liquidation scenario.

The Company will continue to trade during this period and any trading profits will be for the benefit of creditors.

The Company is able to trade going forward and employees will remain employed.

The key disadvantages of the Proposed DOCA as compared to liquidation are:

Any insolvent trading and/or voidable transactions (presently estimated to be anywhere from nil to $500,000) are not recoverable under the proposed DOCA;

On the successful completion of the Proposed DOCA, each of the creditors’ claim arising before the appointment date is extinguished and released and each Trust Creditor is entitled to make claim against the Trust Fund only. Creditors are effectively providing a release of their claim against MMG in return for compensation through the Proposed DOCA and the Trust Deed respectively; and

There is likely to be no return to unsecured creditors in the Proposed DOCA however there may be a chance of a return through liquidator recoveries (detailed in section 10.2) in a liquidation.

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Impact of the Proposed DOCA 12.4

Secured Creditors 12.4.1

For the Proposed DOCA to proceed, the two creditors holding General Security Agreements, B61 Pty Ltd and Westpac must approve and be bound by the Proposed DOCA.

Westpac will be classified as a non-participating creditor in the Proposed DOCA for an amount of $1,400,000 which will continue to be a secured liability of the Company following completion of the DOCA. The balance of its debt will become an unsecured claim against the proposed Creditors Trust. Westpac will receive first proceeds from the Creditors Trust.

As at the date of this report, Westpac have indicated they will not be support the Proposed DOCA because of the uncertainty regarding the achievability of the conditions precedent.

If B61 vote in favour of the DOCA and are bound by it, B61 will lose its priority as a second rankling charge holder and its debt will have a claim against the Creditors Trust.

Employees 12.4.2

The Proposed DOCA does not provide for any variation to current employment arrangements and employee entitlements will be preserved in full.

When a company is placed into liquidation, employee creditors may be entitled to make a claim under the Fair Entitlement Guarantee Scheme (“FEG”). This option will not be available under the proposed Creditors’ Trust, however, it is expected that preferential employee creditors will receive full payment of their debts under the proposed DOCA/Creditors’ Trust.

In the event the DOCA is terminated (due to the DOCA terms not being achieved), and the Company is placed into liquidation, employee creditors will be able to lodge a claim under FEG.

Trade creditors 12.4.3

Trade creditor claims will be transferred to a creditors trust on effectuation of the DOCA. Trade creditors claims against the Creditors Trust will rank behind Westpac.

Leases will continue in the ordinary course of business.

Shareholders 12.4.4

On the payment of the $150,000 equity investment, the Deed Administrators will cause a meeting of the Company’s shareholders to be convened for the purpose of transferring all of the existing shares in the Company to Viento and to cancel any existing options to acquire shares in the Company.

ASIC guide on creditors’ trusts 12.5

In May 2005, ASIC released a guide (Regulatory Guide 82) for administrators recommending the provision of certain information to creditors when they are considering recommending a DOCA which includes a creditors trust. A copy of the guidelines may be obtained from this office, or creditors may wish to download a copy from the ASIC website, under the ‘Insolvency and Liquidators homepage’.

To the extent not advised above, the Administrators have addressed the issues raised in the guide, together with an explanation of each of the issues as they relate to the Proposed DOCA, below.

Reasons for use of a creditors’ trust 12.5.1

The Proposed DOCA involving a creditors’ trust provides a mechanism whereby Viento can take control of the Company in the shortest possible timeframe and without waiting for the Deed Administrators to adjudicate claims. The Proposed DOCA still ensures that Creditors receive the entitlements that they would otherwise receive under a DOCA and within the same timeframes.

This is likely to save on costs as it will minimise the period in which the Deed Administrators remain in control of the Company.

Key events 12.5.2

The Proposed DOCA must be executed within 15 Business Days (as defined in the Proposed DOCA) of the Second Meeting in accordance with section 444B(2) of the Act (unless such period of time is extended by a court).

One instalment of $500,000 will be payable to Westpac within 30 days following execution of the DOCA.

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Within 30 days from the date the Proposed DOCA is approved by the creditors, the Proponent will pay $150,000 to the Deed Administrators.

The Proposed DOCA automatically terminates when any of the following conditions are met:

The Deed Administrators have transferred the Available Property to the Creditors’ Trust;

The Court makes an order terminating the DOCA;

The Conditions Precedent are not satisfied or waived on or before 30 September 2015 or such other date as agreed in writing between the Deed Administrators and the Proponent; or

The Company’s creditors pass a resolution terminating the DOCA at a meeting that was convened pursuant to section 445F of the Act.

The Available Property will be distributed to the beneficiaries of the Proposed DOCA (i.e. the Creditors (as defined in the Trust Deed)) once the relevant claims have been admitted by the Trustees within 5 business days of the date the $150,000 is paid.

Return to Creditors 12.5.3

Please refer to the table in section 12.6. Determination of claims under the Trust Deed is consistent with the determination

of claims under a standard deed of company arrangement which incorporates the standard provisions of the regulations

that apply to a liquidation.

Remuneration and expenses of Trustees 12.5.4

The remuneration of the Trustees will be sought at a meeting subsequent to the Second Meeting, if Creditors resolve that

the Company should execute the Proposed DOCA. The Administrators estimate the Trustees’ fees to be approximately

$100,000. Further information will be provided to Creditors in due course.

Indemnities 12.5.5

The Administrators, Deed Administrators and Trustees are entitled to be indemnified out of the Available Property for:

their remuneration and reimbursement under the DOCA;

all Claims arising out of, in connection with or incidental to any debts incurred by the Company, the Administrators, Deed Administrators or Trustees or their partners or employees in the course of the administration of the DOCA; and

all Claims, other than a Claim by the Company, against the Administrators, Deed Administrators or Trustees or their partners or employees, arising out of, in connection with or incidental to the administration of the DOCA.

The Administrators, Deed Administrators and the Trustees are not entitled to an indemnity out of the Available Property or any other property of the Company against any Claims arising out of, in connection with or incidental to:

any fraudulent or negligent act or omission by them or their partners or employees;

any act or omission done or omitted to be done by them or their partners or employees:

– in breach of good faith; or

– in contravention of any provision of sections 180 to 184 inclusive of the Act; or

any act done by them or their partners or employees outside the provisions of this Deed or the Act

Trustee particulars 12.5.6

Jason Preston and Rob Kirman, the Administrators, are proposed to be appointed as Trustees of the Creditors’ Trust. Both Mr Preston and Mr Kirman are Chartered Accountants and registered liquidators. The Administrators consider that they have the requisite skill and competencies to be the Trustees.

The powers of the Trustees are set out in section 5 of the Proposed DOCA. A copy is attached to this Report at Appendix A.

In summary, the Deed Administrators have all the powers specified in clause 2 of the provisions set out in Schedule 8A of the Corporations Act, and also (without limitation) the following powers:

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to realise and administer assets available for the payment of Creditors' Claims in accordance with the provisions of this proposal;

convening shareholders' meetings and issuing new shares (subject to shareholders' approval);

to remove from office a director of the Company and appoint a person as a director of the Company, whether to fill a vacancy or not;

to bring, prosecute and defend in the name and on behalf of the Company, or in the name of the Deed Administrators any action, suits or proceedings relevant to the obligations under this Deed;

to convene and hold meetings of the Creditors and members of the Company for any purpose authorised by the Deed Administrators;

to make interim or other distributions of property available for the payment of Creditors' Claims as provided in this Deed;

to appoint a solicitor, accountant or other professionally qualified person to assist the Deed Administrators;

to permit any person authorised by the Deed Administrators to operate any account in the name of the Company;

to liaise with any government or regulatory body (including the Australian Securities and Investments Commission) for any purpose associated with the business or affairs of the Company;

to do all things or execute all documents or deeds in the name of and on behalf of the Company;

to execute and do all things reasonably necessary or convenient to be done to give effect to this proposal; and

to do anything that is incidental to exercising a power set out in this proposal or the Act;

Pursuant to the Trust Deed, the Deed Administrators will become the Trustees. The comments in respect of the DIRRI in section 3.2 apply to Trustees.

Dealing with Creditors’ claims 12.5.7

The Trustees' role in dealing with Creditors’ claims is set out sections 11 and 12 of the Proposed DOCA.

Other creditors/beneficiary differences – a comparison of the protections and rights of creditors under the Act 12.5.8and beneficiaries under the Proposed DOCA

Although many of the provisions of the Act will be incorporated into the Trust Deed, as explained in this Report, the rights of Creditors under the Trust Deed will not be ‘statutory rights’ under the Act, but will instead be rights under the Trust Deed, in law or in equity.

The object of the Trust Deed is to facilitate payment to Creditors. However, the rights of Creditors are being fundamentally transformed (as explained below) and they should take this into account in assessing the resolutions being proposed.

Release of claims 12.5.9

The release of claims is set out in section 11 of the Trust Deed. On termination of the DOCA, the Company is released from all Participating Creditors' Claims and it is agreed that there is no consideration payable in respect of the releases provided. Creditors will become beneficiaries under the Trust Deed.

No liquidation actions can be pursued 12.5.10

The termination of the Proposed DOCA also means that all potential recovery actions which would have vested in, and been available to a liquidator of the Company would also be extinguished. These include the rights a liquidator may have had to:

take recovery action in relation to voidable transactions (including unfair preference claims, uncommercial transactions, unfair loans and voidable charges); and

pursue insolvent trading actions against the directors of the Company.

Creditor rights under the Act will no longer be available 12.5.11

Creditors of a company subject to a DOCA have rights under the Act to seek the assistance of the Court. This includes the right to apply for orders:

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to terminate a DOCA in certain circumstances;

regarding the validity of a DOCA or any of its provisions;

declaring a DOCA or a provision of a DOCA to be void or not void, or apply to the Court for the deed to be varied;

to protect creditors' interests;

regarding the actual or proposed conduct of a deed administrator that they consider prejudicial to the interests of all or some of the company's creditors or members;

regarding the validity of the appointment of a deed administrator;

to remove the existing deed administrator in certain circumstances;

to appoint a new deed administrator in certain circumstances; and

to appeal the Deed Administrators’ valuation of a claim against a company.

Creditors of a company subject to a DOCA also have rights to complain to ASIC about the conduct of the deed administrator, and rights under the Act to require a deed administrator to call a meeting of Creditors to put a resolution to vary or terminate the DOCA.

These rights will no longer be available to Creditors upon termination of the Proposed DOCA. However, as beneficiaries under the Proposed DOCA, Creditors may have rights enforceable under the general law and relevant legislation.

Trustees, as fiduciaries, are under strict duties, including the duty to, among other things:

act in accordance with the terms of the trust and in the best interests of all beneficiaries;

exercise the care of a prudent person in the position of the trustee when managing trust property;

avoid a conflict of interest;

keep accounts and render those accounts to beneficiaries upon request;

not to fetter their discretion under the trust; and

preserve trust property.

Beneficiaries have a right under general law to apply to the Court for relief if a trustee breaches its duties or the terms of the trust itself.

Creditors of a company subject to a DOCA are informed about the progress of the external administration through reports to creditors, meeting of creditors, and lodgement of documents with ASIC, including statements of receipts and payments.

Process of appealing the adjudication of a Claim of a Creditor/Beneficiary 12.5.12

Sections 11 and 12 of the Proposed DOCA set out the process to be followed, if a creditor/beneficiary wishes to appeal the adjudication of a claim under the Trust Deed. Certain provisions of the Act and Regulations will apply to the admission of claims, to the Trust Deed and to the Trustees as if the references to the liquidator were references to the Trustees and references to winding up were references to the Trust Deed, with such other modifications as are necessary to give effect to the Trust Deed.

A creditor will be taken to have abandoned all claims and entitlements which are not the subject of a proof of debt lodged with the Trustee and which has been rejected by the Trustee and is not the subject of any appeal or application to the court within 21 days of notification of rejection of the claim.

Where the Trustee proposes to reject a claim, notice will be given to the claimant of the intended rejection and the claimant will have 21 days in which to apply to the court to determine the questions relating to the claim.

We envisage that the final form of the proposed Trust Deed will be available to be inspected at the Second Meeting, or at the Administrators’ offices prior to the meeting.

Compliance opinion 12.5.13

The Administrators have made enquiries regarding the capability of Viento and the Proponent to comply with its obligations under the proposal.

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Viento is an ASX listed entity based in Perth. It was placed into Voluntary Administration by its directors on 22 April 2015. On 18 June 2015, Viento’s creditors resolved to accept a proposal for a DOCA. The Proponent wishes to vary the DOCA proposal so as to recapitalise Viento through a revised DOCA.

We have not been provided with any supporting information that would allow us to make a determination if Viento or the Proponent is capable of complying with its obligations under the proposal.

Solvency statement 12.5.14

We have not been provided with any supporting material that would allow us to form an opinion if the Company will be solvent at the date of effectuation of the DOCA, if the DOCA is wholly effectuated on the terms outlined.

Taxation 12.5.15

Creditors (and shareholders) should note that there may be income tax and stamp duty implications for the Company and the Trust associated with the above proposal. The Trust may be required to register for GST purposes and apply for a new tax file number. In addition, the Trustees may also be responsible for lodging income tax returns for the Trust with the ATO.

It should be noted that any carried forward income or capital losses in the Company will be unavailable for offset against any assessable income made by the Trust. Notwithstanding this, the Administrators do not anticipate any adverse taxation implications with respect to the above proposal (that is, any expected interest income will be less than the professional costs incurred in administering the Trust). It should be noted that this view is not free from doubt and there is always the potential that adverse taxation consequences may arise.

Taxation (creditors and beneficiaries) 12.5.16

Creditors should to be aware that they will be receiving distributions from a trust, rather than payment from the Company in their capacity as Creditors. Accordingly, Creditors ought to seek professional advice about their taxation circumstances.

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Estimated return in a DOCA scenario 12.6

MMG DOCA 12.6.1

Our current estimate of the return available to creditors on a “low” and “high” basis under a DOCA scenario is set out below. A full analysis of the DOCA proposal is contained in section 12.

Key points:

Westpac will be a non-participating creditor of the DOCA for $1.4m which will continue to be a liability of the Company following the DOCA. The balance of its liability will be as a creditor against the creditors trust with priority over all other creditors.

Surplus assets to the ongoing operation of the Company will be auctioned for the benefit of creditors.


DOCA vs Liquidation scenario 12.6.2

Below is a comparison of the Proposed DOCA scenario with a liquidation scenario. We have noted in this section the key matters we have taken into account in determining the variance between the estimated outcomes in a DOCA verses liquidation scenario.

In our analysis, we have:

used the anticipated variances between the relevant line items to calculate the funds available in both scenarios; and

estimated that fees associated with a DOCA will be circa $70,000 more than fees associated with a liquidation because:

− a Deed Administrator would not conduct insolvent trading or voidable transaction investigations or claims; but

MMG - Estimated return to creditors in a DOCA




Pre Appointment Debtors - Mayfield 215,035 215,035 These funds were paid in week 1 for pre appointment work

Pre Appointment Debtors - Other - 50,572 High value based on estimated returns as discussed with company management

Post Appointment trading - Mayfield - 20,000 Expected to be generated in the period from appointment to 31 August 2015

Total 323,997 394,569

Employee Entitlements (238,168) (238,168) As per books and records of the Company. Not including excluded employees

Less entitlements staying with NewCo 105,191 105,191 As per the DOCA proposal

Administrator Fees (Circulating) (66,070) (66,070) As per our remuneration requests detailed in this report

Legal Fees (Circulating) (10,000) (5,000) Estimate

Net Surplus/(deficit) from Circulating assets 114,950 190,522



Life Insurance (company policy) - 1,912,272 Collectability of the policy is uncertain at this stage

Total 188,995 2,123,267

Administrator Fees (Non-Circulating) (66,070) (66,070) As per our remuneration requests detailed in this report


Net Surplus/(deficit) from Non-Circulating assets 82,925 2,032,197

Other

DOCA Equity contribution 150,000 150,000 As per the DOCA proposal

Deed Administrator fees (100,000) (100,000) As per our remuneration requests detailed in this report

Legal fees DOCA (35,000) (25,000) Estimate

Net Creditor Return (before preference recoveries) 212,875 2,247,718

Secured Creditor (Westpac) return 212,875 1,649,343 Westpac has a first ranking charge over the assets of the Company




Return in the dollar - 0.08The difference in unsecured creditor claims is due to the portion of Westpac's debt that is classified as an unsecured claim following the flow of funds from realisations


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− the above cost savings would be offset to an extent by costs associated with preparation, negotiation and execution of a DOCA.

In addition to the secured creditor return, under the Proposed DOCA, $1.4m of Westpac debt remains secured against the recapitalised MMG entity.

Key points:

Under the low scenario, there will be no return for unsecured creditors.

Whilst the return to Westpac is lower under both the DOCA scenario’s, this does not take into account the $500,000 payment that the Proponent will make to them within 30 days following execution of the DOCA as well as meeting the ongoing financing costs for the continuing debt of $1.4m. Factoring this in makes the return under DOCA more favourable to Westpac.

MMG - Estimated return to creditors in a DOCA compared with as Liquidation

ItemLiquidation

LowDOCA

LowLiquidation

HighDOCAHigh


Cash at appointment 108,962 108,962 108,962 108,962

Pre Appointment Debtors - Mayfield 215,035 215,035 215,035 215,035

Pre Appointment Debtors - Other - - 50,572 50,572

Post Appointment trading - Mayfield - - 10,000 20,000

Total 323,997 323,997 384,569 394,569

Employee Entitlements (238,168) (238,168) (238,168) (238,168)

Less entitlements staying with NewCo - 105,191 105,191

Administrator Fees (Circulating) (66,070) (66,070) (66,070) (66,070)

Legal Fees (Circulating) (10,000) (10,000) (5,000) (5,000)

Net Surplus/(deficit) from Circulating assets 9,759 114,950 75,331 190,522


Assets (various) 421,745 188,995 467,020 210,995

Life Insurance (company policy) - - 1,912,272 1,912,272

Total 421,745 188,995 2,379,292 2,123,267

Administrator Fees (Non-Circulating) (66,070) (66,070) (66,070) (66,070)

Legal Fees (Non-Circulating) (40,000) (40,000) (25,000) (25,000)

Net Surplus/(deficit) from Non-Circulating assets 315,675 82,925 2,288,222 2,032,197

Other

DOCA Equity contribution - 150,000 - 150,000

Deed Administrator/Liquidator fees (30,000) (100,000) (30,000) (100,000)

Legal fees DOCA - (35,000) - (25,000)

Net Creditor Return (before preference recoveries) 295,434 212,875 2,333,552 2,247,718

Secured Creditor (Westpac) return 295,434 212,875 2,333,552 1,649,343

Westpac - Return in the Dollar 0.10 0.07 0.77 0.54

Other -

Potential Liquidator preference recoveries - - 500,000 -

Unsecured Creditor return - - 500,000 598,376

Unsecured Creditor claims 10,185,196 8,867,755 8,647,077 7,431,287

Unsecured Creditor Return in the dollar - - 0.06 0.08


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Consideration of DOCA proposal 12.7

The Administrators are required to provide creditors with a statement of their opinion about each of the courses of action in respect of which creditors are entitled to vote at the meeting on 6 July 2015. We do not consider that the Proposed DOCA provides any material benefit to unsecured creditors. There is also considerable uncertainty regarding the necessary conditions precedents being met for the DOCA to be effectuated. If creditors approve the DOCA but the conditions precedent are not ultimately fulfilled, the costs of the Administration will be higher and the collection of any voidable transaction recoveries will be delayed.

Initial indications from Westpac suggest they will not support the DOCA. Without Westpac support the DOCA cannot be effectuated.

Voidable transaction recoveries available to a liquidator would not be available in a DOCA.

The financial improvement to unsecured creditors from the DOCA proposal based on our current estimates of assets and claims is minimal (6 cents to 8 cents in the dollar) in the high case scenario with no return in both the low case scenarios, as shown in the analysis in section 12.6.2.

The DOCA requires the release of claims against directors and the Company. While we have not formed a view at this stage as to whether any claims exist, surrendering rights the Company may have may impact the funds ultimately available to creditors.

A liquidator has extensive powers of review and Part 5.7B of the Act sets out various transactions which may be voidable as against a liquidator. Based on the information we have, we think there are a number of potential transactions which should be reviewed as potentially voidable transactions.

Claims made against the life insurance policy are restricted to 6 months from the date the DOCA is effectuated whereas under a Liquidation scenario, a claim may be able to be made for a longer period of time as long as premiums continue to be paid.

As a consequence of the factors outlined above, the Administrators’ do not recommend Creditors support the Proposed DOCA.

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Alternative courses of action 13

The Administrators are required to provide creditors with a statement of their opinion about each of the courses of action in respect of which creditors are entitled to vote at the meetings on 6 July 2015.

The matters requiring the Administrators’ opinion are:

whether it would be in the creditors’ interests for the Companies to execute a DOCA;

whether it would be in the creditors’ interests for the administrations to end with control of the Companies reverting to its Director; or

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

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

Deed of Company Arrangement 13.1

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 time that this report was prepared, a DOCA has been proposed which included the terms set out in section 12 of this Report.

As a consequence of the factors outlined in section 12 of this Report, in the Administrators’ opinion, it is not in the best interests of creditors of MMG to vote to enter into a DOCA as proposed.

Administrations to end 13.2

Creditors may consider ending the administrations and returning the control of the Companies to the Director. The Administrators do not believe this to be viable options given the Companies are insolvent.

In the Administrators’ opinion, it is not in the best interests of creditors to vote for the Administrations to end.

The companies to be wound up 13.3

An administrator would usually recommend that creditors vote for an insolvent company to be wound up 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 liquidation (e.g. voidable transaction recoveries) will improve the return to creditors in comparison to the return expected under a DOCA.

The liquidation of the Companies would involve:

the completion of a more detailed investigation into the affairs of the Companies and the conduct of its Director;

further enquiries with regard to potential insolvent trading and voidable transaction actions including taking legal action if necessary;

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

adjudication of creditor claims and payment of dividends (if sufficient funds are recovered).

The costs of administering the liquidations would depend to a large extent on the:

property realisation costs;

dispute related costs;

nature of further investigations in relation to voidable transactions and other recovery actions; and

whether funding was made available to conduct such investigations.

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Given that MMG is insolvent and that the DOCA proposed contains no material benefit to unsecured creditors in comparison to liquidation outcomes and it is unlikely the requisite conditions precedent will be met, the Administrators recommend that the Companies be wound up.

Given that MMG D&B is insolvent and that no DOCA has been proposed, the Administrators recommend that MMG D&B be wound up.

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Creditors information on remuneration 14

Sections 15 and 16 of this Report deal with remuneration incurred to date, remuneration required to deal with the remainder of the administrations and an initial remuneration estimate for the liquidations of the Companies (subject to the outcome of the meetings of creditors convened for 6 July 2015).

ARITA has issued an “Approving remuneration in external administrations” information sheet providing general information for creditors on the approval of an administrator’s fees in a liquidation, a voluntary administration or a deed of company arrangement.

This information sheet is available from the ARITA website (www.arita.com.au). If you are unable to access this website, please contact Timothy Duncan on (02) 9248 9913 to obtain a copy.

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

Administrators’ remuneration 15

An Administrator’s remuneration can only be fixed by resolution of a committee of creditors, the company’s creditors or by application to the Court.

In accordance with Section 449E of the Act and the ARITA Code of Professional Practice, a Schedule of Remuneration Methods and Hourly Rates was provided to creditors with the Administrators’ first circulars to creditors and tabled at the first creditors meeting held on 12 June 2015.

In this section, the Administrators outline the work undertaken by the Administrators and their staff for the period from 1 June 2015 to 19 June 2015. In addition, the Administrators will also seek creditor approval of their remuneration incurred and expected to be incurred over the period from 20 June 2015 to 6 July 2015.

The Administrators’ remuneration has been calculated in accordance with the Schedule of Remuneration Methods and Hourly Rates previously provided at the commencement of the administration less a discount that has subsequently been applied.

The remuneration the Administrators are seeking approval for has been discounted by 20%. The fee resolutions have been updated to reflect the discounted remuneration approvals required.

Remuneration incurred from 1 June 2015 to 19 June 2015 (actual) 15.1

The following resolution will be proposed at the meetings of creditors convened for 6 July 2015:

Resolution - MMG 15.1.1

“That the remuneration of the Administrators, their partners and staff, for the period from 1 June 2015 to 19 June 2015, calculated on hours spent at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors discounted by 20%, in the amount of $85,694.40 (exclusive of GST), is hereby approved for payment.”

Resolution – MMG D&B 15.1.2

“That the remuneration of the Administrators, their partners and staff, for the period from 1 June 2015 to 19 June 2015, calculated on hours spent at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors discounted by 20%, in the amount of $11,720.40 (exclusive of GST), is hereby approved for payment.”

Description of work completed 15.2

MMG 15.2.1

Task area General description Includes

Assets 37.80 hours $17,887.50 (ex GST)

Cash Assessed the pre-appointment cash position.

Wrote to major Australian banks to identify and freeze bank accounts held by MMG.

Assets Reviewed information relating to the group structure and asset ownership.

Reviewed historical company information to identify potential assets.

Discussions with the Director and other stakeholders in relation to assets.

Liaised with valuers in relation to valuation of asset portfolio.

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Leased property Identified leased equipment and conducted an assessment of ongoing requirements.

Identified leased equipment surplus to MMG’s requirements.

Issued notices not to exercise property rights over surplus leased property.

Issued notices advising of intention to exercise property rights over leased property in use.

Asset sale and Financiers

Considered the optimal method to realise the assets of the business.

Initiated a sale process for the business immediately following appointment.

Meeting and liaising with representatives from Tiger Asset Group regarding the valuation and sale process of assets.

Communicating with principal financiers advising of the position of MMG and the sale process.

Liaising with the Administrators’ legal advisors in relation to the sale process.

Communicating with interested parties.

Issuing Deeds of Confidentiality to interested parties.

Trading 59.80 hours $21,182.00 (ex GST)

Attending premises Attended MMG’s office in Singleton and met with the Director and key management staff.

Addressed MMG’s staff in relation to the administration process.

Appointment matters Preparation of circulars to employees, creditors and suppliers on appointment.

Suppliers Prepared and issued a circular to suppliers for key suppliers.

Reviewing and approving purchase orders for the continuation of ongoing services.

Receiving and reviewing post appointment invoices received from suppliers for payment.

Leases Wrote to the landlord in relation to the appointment of Administrators and advised of intentions going forward.

Employees Completing the weekly wage run ensuring ongoing payment of employees.

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Creditors 92.5 hours $39,037.00 (ex GST)

Secured creditors Undertook detailed discussions with Westpac regarding their facilities, the conduct of the Administration and their estimated return.

Discussions with Graham Holley (B61 - 2nd ranking charge holder) regarding his position as a creditor of MMG.

Various correspondences with Westpac.

Liaised with financiers to discuss MMG’s requirements going forward.

Creditor enquiries Liaised with creditors in relation to their claims and the administration generally.

Received and followed up creditor enquiries generally.

Reviewed and prepared correspondence to creditors and their representatives via facsimile, email and post.

Wrote to PPSR creditors requesting information regarding their claims.

Reviewing PPSR creditor claims.

Creditor reports Prepared creditor reports and notifications (including our initial circular to creditors and notice of first meeting of creditors, and DIRRI).

Commenced the preparation of the s439A report and notifications.

Dealing with proofs of debt

Reviewed proofs of debt received by the Administrators.

Meeting of creditors Convened the first meeting of creditors held on 12 June 2015.

Prepared for and attended the first meeting of creditors including preparing the meeting circular, notices, proxies, and advertisements and co-ordinating meeting logistics.

Prepared meeting file including: Chairman’s notes, agenda, certificate of postage, attendance register and list of creditors.

Responded to creditors’ queries and questions immediately following the meeting of creditors.

Prepared and lodged the minutes to the meeting of creditors to ASIC.

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Investigations 42.4 hours $17,485.50 (ex GST)

Conducting investigation Preparing this creditors report pursuant to Section 439A of the Act.

Various discussions with the Director and key management staff with respect to the financial position and history of MMG.

Reviewing potential liquidator recoveries including unfair preferences, insolvent trading and uncommercial transactions.

Reconstructing historical financial information of MMG.

Conducting further comprehensive investigations to enable the completion of the Section 439A report to creditors.

Statutory and administration 27.6 hours $11,526.00 (ex GST)

Dealing with Director and his advisor

Prepared the notice to Director and the relevant Director’s pack.

Liaised with the Director regarding the completion of the RATA.

Wrote to the Director advising of the Director’s obligations and granting extension of time to complete the RATA.

Liaised with the Director and his advisor regarding the administration.

Liaised with the Director and his advisor regarding DOCA proposal.

Books and records Attended MMG’s offices to obtain information in relation to the company’s books and records.

Reviewed and prepared an inventory of MMG’s books and records.

Insurance Attended to insurance coverage.

Liaised with the insurance broker regarding the pre-appointment insurance policy.

Ensured the continuation of the pre-appointment life insurance policies.

Wrote to Westpac requesting authority for disclosure in relation to MMG’s life insurance policies.

Statutory notices Prepared and lodged statutory lodgements with ASIC.

Prepared and sent notices to other statutory authorities (e.g. the ATO and State Revenue offices) and advised financial institutions of our appointment.

Banking Set up post-appointment bank accounts.

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MMG D&B 15.2.2


Assets 4.1 hours $1,676.50(ex GST)

Cash Assessed the pre-appointment cash position.

Wrote to major Australian banks to identify bank accounts held by MMG D&B.

Assets Reviewed information relating to the group structure and asset ownership.

Reviewed historical company information to identify potential assets.

Discussions with the Director and other stakeholders in relation to assets.

Liaised with valuers in relation to valuation of asset portfolio.

Leased property Identified leased equipment and conducted an assessment of ongoing requirements.

Identified leased equipment surplus to MMG D&B’s requirements.

Issued notices not to exercise property rights over surplus leased property.

Issued notices advising of intention to exercise property rights over leased property in use.

Asset sale and Financiers

Considered the optimal method to realise the assets of the business.

Initiated a sale process for the business immediately following appointment.

Meeting and liaising with representatives from Tiger Asset Group regarding the valuation and sale process of assets.

Communicating with principal financiers advising of the position of MMG D&B and the sale process.

Liaising with the Administrators’ legal advisors in relation to the sale process.

Communicating with interested parties.

Issuing Deeds of Confidentiality to interested parties.


Secured creditors Undertook detailed discussions with Westpac regarding their facilities, the conduct of the Administration and their estimated return.

Various correspondences with Westpac.

Liaised with financiers to discuss MMG D&B’s requirements going forward.

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Creditor enquiries Liaised with creditors in relation to their claims and the administration generally.

Received and followed up creditor enquiries generally.

Reviewed and prepared correspondence to creditors and their representatives via facsimile, email and post.

Wrote to PPSR creditors requesting information regarding their claims.

Reviewing PPSR creditor claims.

Creditor reports Prepared creditor reports and notifications (including our initial circular to creditors and notice of first meeting of creditors, and DIRRI).

Commenced the preparation of the s439A report and notifications.


Reviewed proofs of debt received by the Administrators.

Meeting of creditors Convened the first meeting of creditors held on 12 June 2015.

Prepared for and attended the first meeting of creditors including preparing the meeting circular, notices, proxies, and advertisements and co-ordinating meeting logistics.

Prepared meeting file including: Chairman’s notes, agenda, certificate of postage, attendance register and list of creditors.

Responded to creditors’ queries and questions immediately following the meeting of creditors.

Prepared and lodged the minutes to the meeting of creditors to ASIC.



Various discussions with the Director and key management staff with respect to the financial position and history of MMG D&B.


Reconstructing historical financial information of MMG D&B.


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Statutory and Administration 10.8 hours $3,857.00 (ex GST)

Dealing with Director and his advisor

Prepared the notice to Director and the relevant Director’s pack.

Liaised with the Director regarding the completion of the RATA.

Wrote to the Director advising of the Director’s obligations and granting extension of time to complete the RATA.

Liaised with the Director and his advisor regarding the administration.

Liaised with the Director and his advisor regarding DOCA proposal.

Books and records Attended MMG D&B’s offices to obtain information in relation to the company’s books and records.

Reviewed and prepared an inventory of MMG D&Bs company books and records.

Insurance Attended to putting in place insurance coverage.

Liaised with the insurance broker regarding the pre-appointment insurance policy.

Ensured the continuation of the pre-appointment life insurance policies.

Wrote to Westpac requesting authority for disclosure in relation to MMG D&B’s life insurance policies.

Statutory notices Prepared and lodged statutory lodgements with ASIC.

Prepared and sent notices to other statutory authorities (e.g. the ATO and State Revenue offices) and financial institutions of our appointment.

Banking Set up post-appointment bank accounts.

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Calculation of remuneration incurred 15.3

MMG 15.3.1

MMG D&B 15.3.2

MMG - remuneration for period 1 June 2015 to 19 June 2015 (actual)

Rate

Position Position $/hr (ex GST) Hours Amount Hours Amount Hours Amount Hours Amount Hours Amount Hours Amount

Rob Kirman Partner 690 5.00 3,450.00 - - - - 0.80 552.00 - - 4.20 2,898.00

Jason Preston Partner 690 5.90 4,071.00 2.00 1,380.00 - - 1.00 690.00 - - 2.90 2,001.00

Barry Kogan Partner 690 11.40 7,866.00 0.70 483.00 0.50 345.00 9.00 6,210.00 - - 1.20 828.00

Rosemary Winser Director Professional Practice 580 0.90 522.00 - - - - 0.90 522.00 - - - -

Charles Dickson Senior Manager 515 4.50 2,317.50 4.50 2,317.50 - - - - - - - -

Chris King Senior Manager 515 108.70 55,980.50 23.00 11,845.00 23.90 12,308.50 41.80 21,527.00 15.50 7,982.50 4.50 2,317.50

Andrew McEvoy Assistant Manager 370 23.30 8,621.00 - - - - - - 23.30 8,621.00 - -

Summer Nguyen Assistant Manager 370 0.80 296.00 - - - - 0.80 296.00 - - - -

Timothy Duncan Accountant 245 94.80 23,226.00 7.60 1,862.00 33.70 8,256.50 36.80 9,016.00 3.60 882.00 13.10 3,209.50

Various Client Admin/Treasury 160 4.80 768.00 - - 1.70 272.00 1.40 224.00 - - 1.70 272.00

Total (excluding discount) 260.10 107,118.00 37.80 17,887.50 59.80 21,182.00 92.50 39,037.00 42.40 17,485.50 27.60 11,526.00

Discount (20%) 21,423.60 3,577.50 4,236.40 7,807.40 3,497.10 2,305.20

Total (including discount) 85,694.40 14,310.00 16,945.60 31,229.60 13,988.40 9,220.80

Total (including GST) 94,263.84 15,741.00 18,640.16 34,352.56 15,387.24 10,142.88

Statutory and AdministrationTotal Assets Trading Creditors Investigations

MMG D&B - remuneration for period 1 June 2015 to 19 June 2015 (actual)

Rate

Position Position $/hr (ex GST) Hours Amount Hours Amount Hours Amount Hours Amount Hours Amount

Rob Kirman Partner 690 2.00 1,380.00 0.40 276.00 0.80 552.00 - - 0.80 552.00

Jason Preston Partner 690 2.10 1,449.00 - - 0.50 345.00 - - 1.60 1,104.00

Barry Kogan Partner 690 0.60 414.00 0.20 138.00 - - - - 0.40 276.00

Rosemary Winser Director Professional Practice 580 1.20 696.00 - - 1.20 696.00 - - - -

Chris King Senior Manager 515 3.10 1,596.50 1.50 772.50 1.10 566.50 - - 0.50 257.50

Andrew McEvoy Assistant Manager 370 8.90 3,293.00 - - 2.20 814.00 6.70 2,479.00 - -

Summer Nguyen Assistant Manager 370 0.80 296.00 - - 0.80 296.00 - - - -

Timothy Duncan Accountant 245 20.40 4,998.00 2.00 490.00 11.40 2,793.00 1.50 367.50 5.50 1,347.50

Various Client Admin/Treasury 160 3.30 528.00 - - 1.30 208.00 - - 2.00 320.00

Total (excluding discount) 42.40 14,650.50 4.10 1,676.50 19.30 6,270.50 8.20 2,846.50 10.80 3,857.00

Discount (20%) 2,930.10 335.30 1,254.10 569.30 771.40

Total (including discount) 11,720.40 1,341.20 5,016.40 2,277.20 3,085.60

Total (including GST) 12,892.44 1,475.32 5,518.04 2,504.92 3,394.16

Total Assets Creditors InvestigationsStatutory and Administration

Remuneration expected to be incurred from 20 June 2015 to 6 July 2015 (estimate) 15.4

At the meetings of creditors, the Administrators will propose that creditors approve Administrators’ remuneration based on an estimate of time for the period from 20 June 2015 to 6 July 2015, up to a specific limit.

This approval is required to pay remuneration incurred to prepare this Report, carry out investigations, attend to any other matters, prepare for and attend the second meetings of creditors to be held on 6 July 2015.

In the event that costs incurred are less than this amount, only the incurred amounts will be paid. If costs incurred exceed the approved amount, further approvals for remuneration may be sought.

The following resolutions will be proposed at the meetings of creditors convened for 6 July 2015:

Resolution - MMG 15.4.1

“That the future remuneration of the Administrators, their partners and staff, for the period from 20 June 2015 to 6 July 2015, calculated on hours spent at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors discounted by 20%, in the amount of $45.361.60 (exclusive of GST), is hereby approved for payment.”

Resolution - MMG D&B 15.4.2

“That the future remuneration of the Administrators, their partners and staff, for the period from 20 June 2015 to 6 July 2015, calculated on hours spent at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors discounted by 20%, in the amount of $6,824.00 (exclusive of GST), is hereby approved for payment.”

Description of major tasks to be completed and explanation of estimated fees 15.5

MMG 15.5.1


Sale of business and assets 23.0 hours $11,020.00 (ex GST)

Asset realisation Ongoing correspondence with interested parties regarding the recapitalisation of MMG.

Attending to and executing documents as required.

Receive and review DOCA proposal.

Liaising with all relevant parties.

Preparation for auction for surplus assets including liaising with Tiger Asset Group.


Creditor enquiries Liaising with creditors in relation to their claims and the administration in general.

Receiving and following up creditor enquiries in general.

Reviewing and preparing correspondence to creditors and their representatives via facsimile, email and post.


Reviewing proofs of debt received by the Administrators.

Creditor reports Preparing and distributing the s439A report and notifications.

57


Meeting of creditors Convening the second meeting of creditors to be held on 6 July 2015.

Forwarding notice of second meeting to all known creditors.

Preparing for and attending the second meeting of creditors including preparing the meeting circular, notices, proxies, and advertisements.

Preparing meeting file including; Chairman’s notes, agenda, certificate of postage, attendance register, list of creditors, and advertisement of meeting.

Lodging minutes of meeting of creditors with ASIC.

Trading 13.7 hours $4,737.00 (ex GST)

Trade on matters Liaising with suppliers.

Communicating with management and staff and responding to requests.

Reviewing and authorising purchase orders.

Maintaining purchase order registry.

Completing the weekly wage run ensuring ongoing payment of employees.



Various discussions with the Director and key management staff with respect to the financial position and history of MMG.


Reconstructing historical financial information of MMG.


Strategy, statutory and administration 18.0 hours $6,385.00 (ex GST)

Planning / review Consider various pieces of information in relation to claims and disputes, set actions plans, agree priorities and deadlines.

Review project information, set strategy action plans, agree priorities, brief lawyers, meetings to instruct staff, meetings with stakeholders to source information.

Employees Completing the weekly employee wage run.

Investigating unpaid superannuation claims.

Dealing with Directors and their advisers

Ongoing correspondence with the Directors with respect to the Administration, including responding to queries.

Continuing to address queries with respect to preparation of the RATA.

58


Other Reviewing group structure, sourcing and reviewing background information on various transactions. Identifying issues relating to the administration, asset realisation and assessing impact on creditors.

Preparing and lodging statutory lodgements with ASIC.

Reviewing purchase orders and making payments to suppliers in the day-to-day business operations.

59

MMG D&B 15.5.2


Sale of business and assets 8.0 hours $3,755.00 (ex GST)

Asset realisation Ongoing correspondence with interested parties regarding the recapitalisation of MMG D&B.


Liaising with all relevant parties.

Preparation for auction for surplus assets including liaising with Tiger Asset Group.

Creditors 1 hour $245.00 (ex GST)

Creditor enquiries Liaising with creditors in relation to their claims and the administration in general.

Receiving and following up creditor enquiries in general.

Reviewing and preparing correspondence to creditors and their representatives via facsimile, email and post.


Reviewing proofs of debt received by the Administrators.

Creditor reports Preparing and distributing the s439A report and notifications.

Meeting of creditors Convening the second meeting of creditors to be held on 6 July 2015.

Forwarding notice of second meeting to all known creditors.

Preparing for and attending the second meeting of creditors including preparing the meeting circular, notices, proxies, and advertisements.

Preparing meeting file including; Chairman’s notes, agenda, certificate of postage, attendance register, list of creditors, and advertisement of meeting.

Lodging minutes of meeting of creditors with ASIC.



Various discussions with the Director and key management staff with respect to the financial position and history of MMG D&B.


Reconstructing historical financial information of MMG D&B.


60


Strategy, statutory and administration 3.5 hours $1,530.00 (ex GST)

Planning / review Consider various pieces of information in relation to claims and disputes, set actions plans, agree priorities and deadlines.

Review project information, set strategy action plans, agree priorities, brief lawyers, meetings to instruct staff, meetings with stakeholders to source information.

Employees Investigating unpaid superannuation claims.



Continuing to address queries with respect to preparation of the RATA.

Other Reviewing group structure, sourcing and reviewing background information on various transactions. Identifying issues relating to the administration, asset realisation and assessing impact on creditors.

Preparing and lodging statutory lodgements with ASIC.

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Calculation of estimated remuneration 15.6

MMG 15.6.1

MMG D&B 15.6.2

MMG - remuneration for period 20 June 2015 to 6 July (estimate)

Rate


Rob Kirman Partner 690 3.00 2,070.00 1.00 690.00 - - - - 1.00 690.00 1.00 690.00

Jason Preston Partner 690 10.00 6,900.00 2.00 1,380.00 4.00 2,760.00 1.00 690.00 1.00 690.00 2.00 1,380.00


Andrew McEvoy Assistant Manager 370 30.00 11,100.00 - - 10.00 3,700.00 - - 20.00 7,400.00 - -

Timothy Duncan Accountant 245 47.00 11,515.00 5.00 1,225.00 15.00 3,675.00 7.00 1,715.00 10.00 2,450.00 10.00 2,450.00

Various Client Admin/Treasury 160 5.70 912.00 - - 2.00 320.00 1.70 272.00 - - 2.00 320.00

Total (excluding discount) 142.70 56,702.00 23.00 11,020.00 46.00 18,180.00 13.70 4,737.00 42.00 16,380.00 18.00 6,385.00

Discount (20%) 11,340.40 2,204.00 3,636.00 947.40 3,276.00 1,277.00

Total (including discount) 45,361.60 8,816.00 14,544.00 3,789.60 13,104.00 5,108.00


Strategy, Statutory and AdministrationTotal

Sale of business and Assets TradingCreditors Investigations

MMG D&B - remuneration for period 20 June 2015 to 3 July (estimate)

Rate


Rob Kirman Partner 690 - - - - - - - - - -

Jason Preston Partner 690 2.00 1,380.00 1.00 690.00 - - - - 1.00 690.00

Chris King Senior Manager 515 8.00 4,120.00 5.00 2,575.00 - - 2.00 1,030.00 1.00 515.00

Andrew McEvoy Assistant Manager 370 4.00 1,480.00 - - - - 4.00 1,480.00 - -

Timothy Duncan Accountant 245 6.00 1,470.00 2.00 490.00 1.00 245.00 2.00 490.00 1.00 245.00

Various Client Admin/Treasury 160 0.50 80.00 - - - - - - 0.50 80.00

Total (excluding discount) 20.50 8,530.00 8.00 3,755.00 1.00 245.00 8.00 3,000.00 3.50 1,530.00

Discount (20%) 1,706.00 751.00 49.00 600.00 306.00

Total (including discount) 6,824.00 3,004.00 196.00 2,400.00 1,224.00

Total (including GST) 7,506.40 3,304.40 215.60 2,640.00 1,346.40

TotalSale of Business and

Assets Creditors InvestigationsStatutory and Administration

Estimated Deed Administrators’ Remuneration 16

Should creditors vote for the Companies to enter into Deeds of Administration, we will put the following resolutions to creditors for approval of the Deed Administrators’ remuneration in the amount of:

$100,000.00 (capped) (exclusive of GST) for MMG;

The Deed Administrators’ will only draw remuneration incurred up to a limit of $100,000 (exclusive of GST) for MMG.

The following resolution will be proposed at the forthcoming meetings:

Resolution MMG 16.1

“That the remuneration of the Deed Administrators for the period from execution of the Deed of Company Arrangement to the termination of the Deed of Company Arrangement shall be a sum equal to the cost of time spent by the Deed Administrators, partners and staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, to a capped amount of $100,000 (exclusive of GST).”


The remuneration being sought for the deed administrations of the Companies represents the current estimate of the work required to be undertaken during the administrations.

MMG 16.2.1


Assets 55.0 hours $23.435.00 (ex GST)

Asset realisation Ongoing correspondence with interested parties regarding the recapitalisation of MMG.


Liaising with the Administrators’’ legal advisors regarding matters in relation to the effectuation of the DOCA.

Finalise DOCA and creditors trust documentation

Debtors Correspondence with debtors.

Reviewing and assessing debtors’ ledgers.

Liaising with debt collectors and solicitors.


Creditor enquiries Receive and follow up creditor enquiries.

Review and prepare correspondence to creditors and their representatives via facsimile, email and post.

Correspondence with any committee of creditor members.

Creditor reporting Preparing reports to secured creditor.

Responding to secured creditor’s queries.

Preparing meeting and general reports to creditors.

Meeting of creditors Preparation meeting notices, proxies and advertisements.

Forward notice of meeting to all known creditors.

Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to

63


creditors, advertisement of meeting and draft minutes of meeting.

Preparation and lodgement minutes of meetings with ASIC.

Respond to stakeholder queries and questions immediately following meeting.

Trading 87 hours $28,230.00 (ex GST)

Trade on matters Liaising with suppliers.

Communicating with management and staff and responding to requests.

Reviewing and authorising purchase orders.

Maintaining purchase order registry.

Completing the weekly wage run ensuring ongoing payment of employees.

Liaising with Proponent Ensure DOCA conditions are being met.

Discussions with the Proponent in relation to due diligence requirements.

Monitoring progress of Viento conditions precedents.

Dividend 39.0 hours $13,325.00 (ex GST)

Processing proofs of debt Preparation of correspondence to potential creditors inviting lodgement of POD.

Receipt of PODs.

Maintain POD register.

Adjudicating PODs.

Request further information from claimants regarding POD.

Preparation of correspondence to claimant advising outcome of adjudication.

Dividend procedures Preparation of correspondence to creditors advising of intention to declare dividend.

Preparation of dividend calculation.

Preparation and distribution of dividend to creditors.

Statutory and Administration 42.0 hours $15,030.00 (ex GST)

Document maintenance and reviews

Updating checklists and undertaking file reviews.

Other Preparing and lodging ASIC forms.

Correspondence and statutory reporting to the ATO.

Finalising the administration including issuing statutory notification.


64


Liaising with employees regarding entitlements.

Planning and review Discussions regarding status of administration.

65

Calculation of estimated Deed Administrators Remuneration 16.3

MMG 16.3.1

MMG - Deed Administrators Remuneration (forecast)

Rate


Rob Kirman Partner 690 3.00 2,070.00 2.00 1,380.00 - - - - - - 1.00 690.00

Jason Preston Partner 690 12.00 8,280.00 4.00 2,760.00 3.00 2,070.00 2.00 1,380.00 1.00 690.00 2.00 1,380.00


Andrew McEvoy Assistant Manager 370 37.00 13,690.00 - - 20.00 7,400.00 5.00 1,850.00 5.00 1,850.00 7.00 2,590.00

Timothy Duncan Accountant 245 149.00 36,505.00 22.00 5,390.00 24.00 5,880.00 60.00 14,700.00 23.00 5,635.00 20.00 4,900.00

Various Client Admin/Treasury 160 4.00 640.00 - - 2.00 320.00 - - - - 2.00 320.00

Total (excluding GST) 285.00 102,385.00 55.00 23,435.00 62.00 22,365.00 87.00 28,230.00 39.00 13,325.00 42.00 15,030.00

GST 10,238.50 2,343.50 2,236.50 2,823.00 1,332.50 1,503.00


Total Assets TradingCreditorsStatutory and AdministrationDividend

Estimated Liquidators’ remuneration 17

Should creditors vote to place the Companies into liquidation at the second meetings of creditors, we will also put resolutions to creditors for approval of the Liquidators’ remuneration at a capped amount of:

$30,000.00 (exclusive of GST) for MMG; and

$10,000.00 (exclusive of GST) for MMG D&B.

Those estimates reflect the work likely to be undertaken by Liquidators which we anticipate will focus on:

working with equipment auctioneers to sell the Companies’ assets;

investigating claims and voidable transactions; and

statutory matters and reporting.

The Liquidators will only draw remuneration incurred. In the event that the Liquidators’ actual remuneration exceeds the amount approved, the Liquidators may seek further approval from creditors.

The following resolutions will be proposed at the forthcoming meetings:

Resolution - MMG 17.1

“That the remuneration of the Liquidators, for the period of the liquidation, shall be a sum equal to the time cost spent by the Liquidators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors discounted by 20%, in the amount capped at $30,000.00 (exclusive of GST).

Creditors acknowledge that if actual costs incurred are below the amount approved, the Liquidators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Liquidators will seek further approval from creditors.

The Liquidators are approved to draw their remuneration as and when it is incurred from funds under their control”.

Resolution - MMG D&B 17.2

“That the remuneration of the Liquidators, for the period of the liquidation, shall be a sum equal to the time cost spent by the Liquidators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors discounted by 20%, in the amount capped at $10,000.00 (exclusive of GST).

Creditors acknowledge that if actual costs incurred are below the amount approved, the Liquidators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Liquidators will seek further approval from creditors.

The Liquidators are approved to draw their remuneration as and when it is incurred from funds under their control”.


The remuneration being sought for the liquidation of the Companies represents the current estimate of the work required to be undertaken during the liquidations. At this stage it is difficult to predict the costs involved in dealing with the sale of the Companies’ assets, undertaking further investigations into potential liquidation recoveries and commencing recovery action (where it is commercially viable to do so). At this stage we have only included relatively minor costs surrounding these matters.

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MMG 17.3.1


Sale of Business and Assets 26.0 hours $9,865.00 (ex GST)

Asset realisation Liaising with interested parties.

Receiving, reviewing and responding to indicative offers from interested parties.

Ongoing correspondence with Financiers regarding the asset sale process.

Attending to executing documents as required.

Sale negotiation and completion

Communicating with the Administrators legal advisors regarding the sale of MMG.

Attending to sale completion matters.


Dealing with creditors and their claims

Liaising with creditors in relation to their claims and the administration generally.

Receiving and following up creditor enquiries generally.

Reviewing and preparing correspondence to creditors and their representatives.

Payment of any dividend.

Investigations and litigation 29.0 hours $10,315.00 (ex GST)

Conducting investigation Continuing investigations in relation to (potential) voidable transactions including seeking legal advice and liaising with (potential) defendants and their advisers.

Preparing and lodging report pursuant to Section 533 of the Act with ASIC.

Litigation / recoveries (where relevant)

Preparing briefs to solicitors.

Liaising with solicitors regarding recovery actions.

Attending to negotiations.

Attending to settlement matters.


Planning / review Attending internal discussions and planning in relation to the liquidation.

Document maintenance/file review/checklist

Filing of documents.

Conducting file reviews.

Updating checklists.

ASIC Form 524 and other forms

Preparing and lodging ASIC forms including 505, 524, 911 and other ASIC forms.

Corresponding with ASIC regarding statutory forms.

68



Liaising with the Directors in relation to the liquidation including requests for assistance/confirmation of background issues etc.

ATO & other statutory reporting

Notifying of appointment.

Preparing Business Activity Statements.

69

MMG D&B 17.3.2


Sale of Business and Assets 8.5 hours $3,290.00 (ex GST)

Asset realisation Liaising with interested parties.

Receiving, reviewing and responding to indicative offers from interested parties.

Ongoing correspondence with Financiers regarding the asset sale process.

Attending to executing documents as required.


Dealing with creditors and their claims

Liaising with creditors in relation to their claims and the administration generally.

Receiving and following up creditor enquiries generally.

Reviewing and preparing correspondence to creditors and their representatives.

Investigations and litigation 10.0 hours $3,490.00 (ex GST)

Conducting investigation Continuing investigations in relation to (potential) voidable transactions including seeking legal advice and liaising with (potential) defendants and their advisers.

Preparing and lodging report pursuant to section 533 of the Act with ASIC.

Litigation / recoveries (where relevant)

Preparing briefs to solicitors.

Liaising with solicitors regarding recovery actions.

Attending to negotiations.

Attending to settlement matters.


Planning / review Attending internal discussions and planning in relation to the liquidation.

Document maintenance/file review/checklist

Filing of documents.

Conducting file reviews.

Updating checklists.

ASIC Form 524 and other forms

Preparing and lodging ASIC forms including 505, 524, 911 and other ASIC forms.

Corresponding with ASIC regarding statutory forms.


Liaising with the Directors in relation to the liquidation including requests for assistance/confirmation of background issues etc.

70


ATO & other statutory reporting

Notifying of appointment.

Preparing Business Activity Statements.

71

Calculation of estimated remuneration 17.4

MMG 17.4.1

MMG D&B 17.4.2

MMG - Liquidators remuneration (forecast)

Rate


Rob Kirman Partner 690 3.00 2,070.00 1.00 690.00 - - 1.00 690.00 1.00 690.00

Jason Preston Partner 690 7.00 4,830.00 2.00 1,380.00 3.00 2,070.00 - - 2.00 1,380.00

Chris King Senior Manager 515 27.00 13,905.00 8.00 4,120.00 10.00 5,150.00 7.00 3,605.00 2.00 1,030.00

Andrew McEvoy Assistant Manager 370 9.00 3,330.00 - - - - 7.00 2,590.00 2.00 740.00

Timothy Duncan Accountant 245 54.00 13,230.00 15.00 3,675.00 15.00 3,675.00 14.00 3,430.00 10.00 2,450.00

Various Client Admin/Treasury 160 3.00 480.00 - - 2.00 320.00 - - 1.00 160.00


Discount (20%) 7,569.00 1,973.00 2,243.00 2,063.00 1,290.00




Assets CreditorsInvestigations and

litigationStatutory and Administration

MMG D&B - Liquidators remuneration (forecast)

Rate


Rob Kirman Partner 690 1.00 690.00 0.50 345.00 - - - - 0.50 345.00

Jason Preston Partner 690 2.50 1,725.00 1.00 690.00 0.50 345.00 - - 1.00 690.00

Chris King Senior Manager 515 8.00 4,120.00 2.00 1,030.00 2.00 1,030.00 2.00 1,030.00 2.00 1,030.00

Andrew McEvoy Assistant Manager 370 4.00 1,480.00 - - - - 4.00 1,480.00 - -

Timothy Duncan Accountant 245 18.00 4,410.00 5.00 1,225.00 5.00 1,225.00 4.00 980.00 4.00 980.00

Various Client Admin/Treasury 160 0.50 80.00 - - - - - - 0.50 80.00


Discount (20%) 2,501.00 658.00 520.00 698.00 625.00




Assets CreditorsInvestigations and

LitigationStatutory and Administration

Receipts and payments 18

Set out below is a summary of the Administrators receits and payments for the period from 1 June 2015 to 24 June 2015:

MMG 18.1

MMG D&B 18.2

Please note that MMG D&B is not currently trading, however Mayfield has deposited its pre appointment debts for MMG into the MMG D&B account.

MMG - Summary of receipts and payments (1 June 2015 to 26 June 2015)

Particulars Amount $

Receipts

Cash at Bank at appointment 108,961.92

Total receipts 108,961.92

Payments

Employee wages (15,341.38)

Advertising costs (2,831.75)

Total payments (18,173.13)

Net receipts / (payments) 90,788.79

Source: Administrators' bank accounts (inlcuding pre-appointment account)

MMG D&B - Summary of receipts and payments (1 June 2015 to 26 June 2015)

Particulars Amount $

Receipts

Cash at Bank at appointment 8,033.92

Mayfield Operations 215,035.23

Total receipts 223,069.15

Payments

- -

Total payments -

Net receipts / (payments) 223,069.15

Source: Administrators' bank accounts (inlcuding pre-appointment account)

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Committees of Inspection 19

In the event that creditors resolve that the Companies’ be wound up, the Act provides that Committee of Inspections (“COIs”) may be formed.

In these circumstances, COIs would provide the Liquidators with a sounding board as to likely creditor views on any contentious issues, and may approve certain matters which require authorisation by the committees, creditors or the Court.

At the meetings of creditors convened for 6 July 2015, creditors will be invited to consider whether COIs should be formed for the Companies, and if so, to nominate members.

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Creditor meetings details 20

The second statutory meetings of creditors have been convened to be held at the Francis Phillip Motor Inn, 18 Maitland Road, Singleton, NSW at 12:00 PM (AEST) on Monday, 6 July 2015.

Creditors who have already lodged a proof of debt do not need to complete a new proof of debt form.

Under the Act, the proxy forms lodged by creditors for the first meetings cannot be used for the second meetings. Accordingly, creditors who are unable to attend the second meetings of creditors 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 this office prior to the meeting or may be brought to the meeting.

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

If you have any further queries in relation to this report or the administration, please do not hesitate to contact Timothy Duncan of this office on (02) 9248 9913 or by email ([email protected]).

Dated Monday, 29 June 2015

Jason Preston Joint and Several Administrator

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APPENDIX A: Proposed DOCA

76

Dated 18 June 2015

Proposal for a deed of company arrangement to the creditors of

Mining Management Group Limited (Administrators Appointed)

ACN: 112 172 022

Table of Contents

1. Parties ................................................................................................................ 3

2. Introduction ........................................................................................................ 3

3. Definitions .......................................................................................................... 3

4. DOCA ................................................................................................................ 6

5. Appointment of Deed Administrator and Trustee of the Creditors’ Trust ............. 7

6. Available property .............................................................................................. 8

7. Restructure of Westpac debt .............................................................................. 9

8. Restructure of CAT debt ..................................................................................... 9

9. Equity investments and Conditions Precedent ................................................. 10

10. Termination .................................................................................................. 11

11. Release of claims ......................................................................................... 12

12. Abandonment by creditors who do not prove ................................................ 14

13. Remuneration ............................................................................................... 14

14. Deed Administrators’ indemnity .................................................................... 15

15. Members rights exercisable by Deed Administrators .................................... 16

16. Committee of inspection ............................................................................... 17

17. Exclusion of Prescribed Provisions ............................................................... 17

18. Further assurance ........................................................................................ 17

19. Costs and outlays ......................................................................................... 17

20. Governing law and jurisdiction ...................................................................... 17

Schedule 1 .............................................................................................................. 19

Schedule 2 .............................................................................................................. 20

Schedule 3 .............................................................................................................. 21

Schedule 4 .............................................................................................................. 22

Schedule 5 .............................................................................................................. 23

Schedule 6 .............................................................................................................. 24

2

1. Parties

1.1. Robert Michael Kirman and Jason Preston, both of McGrathNicol, Level 17, 37

St Georges Terrace, Perth WA 6008 (Administrators, Deed Administrators and Trustees of the Creditors’ Trust).

1.2. Mining Management Group Pty Ltd (Administrators Appointed), ACN: 112 172

022 (Company).

1.3. Avior Consulting Pty Ltd, ACN: 155 043 191 of Unit 3, 448 Roberts Road,

Subiaco WA 6008 (Proponent).

2. Introduction

2.1. On 1 June 2015 the Company’s director resolved that, in his opinion, the

Company was insolvent or was likely to become insolvent at some future time

and that administrators of the Company should be appointed pursuant to

section 436A of the Corporations Act 2001.

2.2. On 1 June 2015 the Administrators, having consented in writing to an

appointment as administrators of the Company and such consent not having

been withdrawn, pursuant to section 436A of the Corporations Act 2001, were

appointed Administrators of the Company.

2.3. The Proponent wishes to make a proposal to the Company’s creditors to

restructure the Company’s financial position through a deed of company

arrangement (DOCA) that will result in the continuation of the Company’s

business and provide a better return to the Company’s creditors than they

would receive if the Company is placed into liquidation.

3. Definitions

3.1. "Act" means the Corporations Act 2001 (Cth);

3.2. "Administration" has the same meaning ascribed to this term in section 9 of

the Act;

3.3. “Available Property” means the property that is to be available to pay

Creditors' Claims as set out in clause 6 of this proposal;

3.4. “B61” means B61 Pty Ltd, ACN: 128 373 544

3.5. “Business Day” means a day that is not a Saturday, Sunday or any other day

which is a public holiday or a bank holiday in the place where an act is to be

performed or a payment is to be made;

3

3.6. “Cash at Bank” means the actual positive cash figure as represents the

amount of money held by the Company or the Administrators for the purposes

of the administration of the Company In any and all bank accounts from time to

time;

3.7. “CAT” means Caterpillar Financial Australia Limited, ABN: 70 006 714 585.

3.8. “Claim” includes a claim, demand, debt, action, proceeding, suit, cost, charge,

expense, damage, loss and other liability;

3.9. “Class A Creditor” means each Priority Creditor Claim against the Company.

3.10. “Class B Creditor” means Westpac.

3.11. “Class C Creditor” means all creditors of the Company, excluding Class A

Creditors and Class B Creditors, for their claims against the Company as

adjudicated by the Company’s Administrators;

3.12. “Company” means Mining Management Group Pty Ltd (Administrators

Appointed), ACN: 112 172 022;

3.13. “Corporations Regulations” means the Corporations Regulations 2001 (Cth);

3.14. “Conditions Precedent” means the conditions precedent listed in clause 9.5;

3.15. “Court” has the meaning set out in section 58AA of the Act (for the avoidance

of doubt being the definition attributed to the capitalised word “Court” in that

section);

3.16. “Creditor” means a person who has a debt payable by or claim against the

Company whether present or future, certain or contingent, ascertained or

sounding only in damages, the circumstances giving rise to which occurred on

or before the Relevant Date;

3.17. “Creditor's Claim” means, in relation to a Creditor, the Creditor's debt payable

by or claim against the Company whether present or future, certain or

contingent, ascertained or sounding only in damages, the circumstances giving

rise to which occurred on or before the Relevant Date;

3.18. “Director” means Phillip John Gunter;

3.19. “DOCA” means the Deed of Company Arrangement proposed in this

document;

3.20. “Equity Investment” means the amount payable to the Deed Administrators by

the Proponent in accordance with paragraph 9 of this proposal;

3.21. “Excluded Assets” means:

3.21.1. The assets identified in Schedule 1;


4



3.21.5. The Company’s intellectual property including business names,

website, telephone and facsimile numbers and e-mail addresses.

3.21.6. Any amount payable to the Company by Minion Enterprises Pty Ltd

but specifically the amount of $50,000 recorded in the Company’s

receivables ledger;

3.21.7. Any claims that the Company may have against the Company’s

Directors.

3.22. “Participating Creditors” means collectively the Class A Creditors. Class B

Creditors and the Class C Creditors.

3.23. “Participating Creditors’ Claims” means in relation to a Participating Creditor,

the Participating Creditor’s debt payable by or claim against the Company

whether present or future, certain or contingent, ascertained or sounding only

in damages, the circumstances giving rise to which occurred on or before the

Relevant Date.

3.24. “Party” means the Administrators, the Company or the Director, according to

the context; and “Parties” has a corresponding meaning;

3.25. “Prescribed Provisions” means those provisions which are prescribed for the

purposes of section 444A(5) of the Act, namely, the provisions set out in

Schedule 8A of the Corporations Regulations;

3.26. “Priority Creditor” means a Participating Creditor with a debt payable by or

claim against the Company as at the Relevant Date which, had the Company

been wound up with the Relevant Date being the day on which the winding up

was taken to have begun, would have been a debt or claim which must be paid in

priority to all other unsecured debts or claims in accordance with section 556 or

section 560 of the Act; and

3.27. “Priority Creditor's Claim” means in relation to a Priority Creditor within the

definition of “Priority Creditor” — the Priority Creditor's debt payable by or claim

against the Company as at the Relevant Date which, had the Company been

wound up with the Relevant Date being the day on which the winding up was

taken to have begun, would have been a debt or claim which must be paid in

priority to all other unsecured debts or claims in accordance with section 556 or

section 560 of the Act;

3.28. “Relevant Date” means 1 June 2015;

5

3.29. “Termination Date” means the date on which this Deed terminates in

accordance with clause 8 of this proposal;

3.30. “Viento” means Viento Group Limited (Administrators Appointed), ACN: 000

714 054

3.31. “Westpac” means Westpac Banking Corporation Limited

4. DOCA

4.1. The Company’s Administrators will present this proposal for a DOCA to the

Company’s creditors at a meeting convened by the Administrators pursuant to

section 439A of the Act on or before 31 July 2015 (Creditors’ Meeting).

4.2. At the Creditors’ Meeting the Administrators will provide the Company’s

creditors with a copy of this proposal.

4.3. If this proposal is approved at the Creditors’ Meeting, the Administrators will

instruct their solicitors to prepare the DOCA and a trust deed (Trust Deed) for

the establishment of a Trust (Creditors’ Trust). 4.4. The beneficiaries of the Creditors’ Trust will be the Company’s creditors

classified as follows:

4.4.1. A class of creditors identified as ‘Class A Creditors’ to comprise the

Company’s Priority Creditors for each Priority Creditor’s Claim but

excluding the Creditor Claims identified in Schedule 5;

4.4.2. A class of creditors identified as ‘Class B Creditors’ including only

Westpac for the balance of its claim as calculated in accordance with

paragraph 7.5;

4.4.3. A class of creditors identified as ‘Class C Creditors’ to comprise all

creditors of the Company, excluding Class A Creditors and Class B

Creditors, for their claims against the Company as adjudicated by the

Company’s Administrators.

4.5. The Administrators’ remuneration and expenses for administering their duties

as Administrators, Deed Administrators and Trustees will be approved by the

Company’s creditors at duly convened meetings as set out in the Corporations

Act 2001 and such remuneration and expenses will afforded the same priority

out of the Available Property as would be available to the Administrators in a

winding up on the Company pursuant to s556 of the Corporations Act 2001.

4.6. The Company’s creditors participating in distributions from the Creditors’ Trust

will be paid as follows:

6

4.6.1. Firstly, all remuneration and expenses of the Administrators, Deed

Administrators and Trustees will be paid in full;

4.6.2. Secondly, a distribution will be made to Class A Creditors who will be

entitled to be paid in the same priority from the Creditors’ Trust as

would be afforded them in a winding up of the Company pursuant to

s556 of the Corporations Act 2001 (Cth); and

4.6.3. Thirdly, a distribution to the Class B Creditor.

4.6.4. Lastly, if there are any remaining funds, a distribution to Class C

Creditors.

4.7. Within 15 business days of obtaining a resolutions of the Company’s creditors

at the Creditors’ Meeting, the Proponent, the Company and the Administrators

will execute a DOCA in terms materially consistent with this proposal.

5. Appointment of Deed Administrator and Trustee of the Creditors’ Trust

5.1. The Company will appoint the Deed Administrators, and the Administrators will

accept their appointment, as Deed Administrators of the Company.

5.2. The Deed Administrators are and act as the agents of the Company.

5.3. The Deed Administrators will, upon satisfaction or waiver of the Conditions

Precedent, cause the establishment of the Creditors’ Trust and act as trustees

of the Creditors’ Trust.

5.4. For the purpose of administering this Deed the Deed Administrators have all

the powers specified in clause 2 of the Prescribed Provisions, and also (without

limitation) the following powers:

5.4.1. to realise and administer assets available for the payment of

Creditors' Claims in accordance with the provisions of this proposal;

5.4.2. convening shareholders' meetings and issuing new shares (subject to

shareholders' approval);

5.4.3. to remove from office a director of the Company and appoint a person

as a director of the Company, whether to fill a vacancy or not;

5.4.4. to bring, prosecute and defend in the name and on behalf of the

Company, or in the name of the Deed Administrators any action, suits

or proceedings relevant to the obligations under this Deed;

5.4.5. to convene and hold meetings of the Creditors and members of the

Company for any purpose authorised by the Deed Administrators;

5.4.6. to make interim or other distributions of property available for the

payment of Creditors' Claims as provided in this Deed;

7

5.4.7. to appoint a solicitor, accountant or other professionally qualified

person to assist the Deed Administrators;

5.4.8. to permit any person authorised by the Deed Administrators to

operate any account in the name of the Company;

5.4.9. to liaise with any government or regulatory body (including the

Australian Securities and Investments Commission) for any purpose

associated with the business or affairs of the Company;

5.4.10. to do all things or execute all documents or deeds in the name of and

on behalf of the Company;

5.4.11. to execute and do all things reasonably necessary or convenient to

be done to give effect to this proposal; and

5.4.12. to do anything that is incidental to exercising a power set out in this

proposal or the Act;

5.5. Any debts payable by or Claims against the Company the circumstances giving

rise to which occur after the execution of the DOCA are not liabilities of the

Deed Administrator.

6. Available property

6.1. The assets of the Creditors’ Trust (Available Property) will compromise:

6.1.1. The balance of cash at bank that was held by the Administrators

immediately prior to the Termination Date;

6.1.2. Amounts payable to the Company from its customers that have

accrued up to the Termination Date;

6.1.3. The proceeds from any claim made within 6 months from the

Termination Date against insurance policy numbers Y0772831 and

Y0772830 issued by Westpac in favour of the Company (Life Insurance Policies);

6.1.4. The proceeds from the Equity Investment;

6.1.5. The proceeds from the sale of the Company’s light vehicles as

identified in Schedule 6 after the payment of amounts owing under

valid security interests.

6.2. The Available Property does not include the Excluded Assets.

6.3. The Deed Administrators are open to conduct one or more bank accounts in

the name of the Creditors’ Trust to hold the funds from the Available Property.

6.4. The Available Property may only be applied in accordance with the DOCA.

8

7. Restructure of Westpac debt

7.1. The Administrators will sell the assets identified in Schedule 2 and apply the

proceeds to reduction of Westpac’s Debt. For the avoidance of doubt,

Westpac will be entitled to retain its security rights over the assets identified in

Schedule 2 until they have been sold.

7.2. Westpac will be classified as a non-participating creditor in the DOCA for an

amount of $1,400,000 (Westpac’s Continuing Debt) which will continue to be

a liability of the Company following completion of the DOCA;

7.3. Westpac will be entitled to hold specific security interests over the assets

identified in Schedule 1 in support of the Westpac Continuing Debt.

7.4. Westpac will enter into a new facility agreement with the Company in relation to

the Westpac Continuing Debt that will require the Westpac Continuing Debt to

be repaid on the following terms:

7.4.1. at an annual interest rate of 7.5%;

7.4.2. in 36 equal instalments of $27,995.60 commencing 28 days following

the execution of the DOCA;

7.4.3. in one instalment of $500,000 payable within 30 days following

execution of the DOCA.

7.5. The balance of Westpac’s debt after application of the proceeds referred to in

paragraph 7.1 and the reclassification of the Westpac Continuing Debt, will

become an unsecured claim against the Company and will be included as a

Class B Creditor in the Creditors’ Trust.

8. Restructure of CAT debt

8.1. The Administrators will sell the assets identified in Schedule 4 and apply the

proceeds to reduction of CAT’s Debt.

8.2. CAT will be classified as a non-participating creditor in the DOCA for an

amount of $1,250,000 (CAT’s Continuing Debt) which will continue to be a

liability of the Company following completion of the DOCA;

8.3. CAT will be entitled to hold specific security interests over the assets identified

in Schedule 3 in support of the CAT Continuing Debt.

8.4. CAT will enter into a new facility agreement with the Company in relation to the

CAT Continuing Debt that will require the CAT Continuing Debt to be repaid on

the following terms:

8.4.1. at an annual interest rate of 7.5%;

9

8.4.2. in 36 equal instalments of $38,862.77 commencing 28 days following

the execution of the DOCA;

8.5. In the event that CAT does not agree to the terms contained in paragraph’s 8.2

to 8.6 in relation to the CAT Continuing Debt, then this proposal will be

amended so that all assets identified in Schedule will be sold and the proceeds

applied to reduction of CAT’s Debt.

8.6. The balance of CAT’s debt after:

a) application of the proceeds referred to in paragraph 8.1; and

b) either the reclassification of the CAT Continuing Debt; or

c) application of the proceeds referred to in paragraph 8.5,

will become an unsecured claim against the Company and will be included as a

Class C Creditor in the Creditors’ Trust.

9. Equity investments and Conditions Precedent

9.1. Within 30 days from the date that this DOCA is approved by the Group’s

Creditors, the Proponent or its nominees will pay $150,000 to the Deed

Administrators (Equity Investment). 9.2. The Deed Administrators will be at liberty to amend the dates for payment of

the Equity Investment up to a maximum of 90 days without seeking approval

from the Company’s creditors.

9.3. Completion of the DOCA is subject to the satisfaction or waiver of the

Conditions Precedent. The Condition Precedent set out at clause 9.5.1 is not

capable of being waived. The Conditions Precedent set out at clause 9.5.4

may only be waived by the Proponent in writing.

9.4. If the DOCA terminates, then the Equity Investment will be repayable to the

Proponent, less any third party expenses that have been incurred by the Deed

Administrators that directly relate to their efforts to convene the Shareholders’

Meeting.

9.5. The Conditions Precedent are as follows:

9.5.1. The approval of the Company’s creditors of the DOCA at the

Creditors’ Meeting;

9.5.2. The consent of Westpac to the implementation of this proposal;

9.5.3. The consent of B61 to the implementation of this proposal;

9.5.4. The approval of the Company’s shareholders of the proposal set out

in clause 9.6 at the Shareholders’ Meeting;

10

9.5.5. The approval of Viento’s creditors and shareholders to a DOCA

(Viento DOCA) in terms satisfactory to the Proponent;

9.5.6. Confirmation from the ASX that Viento will not be required to re-

comply with ASX listing rules 1 and 2 following the completion of the

Viento DOCA.

9.5.7. The premiums for the Life Insurance Policies being paid as they fall

due;

9.5.8. Written notice from the Proponent that it has conducted due diligence

on the Company’s assets and is satisfied to proceed with the Equity

Investment.

9.6. In consideration for the Equity Investment, the Deed Administrators will cause a

meeting of the Company’s shareholders to be convened (Shareholders’ Meeting) in accordance with the Company’s constitution for the purpose of

considering and approving:

9.6.1. the transfer of all existing shares in the Company to Viento;

9.6.2. The cancellation of all options to acquire shares in the Company.

9.7. The Deed Administrators will remove any directors from the Company’s board

of directors and appoint new directors to the Company’s board of directors as

instructed by the Proponent.

9.8. The Deed Administrators must transfer the Available Property to the Creditors’

Trust within 5 business days of the date that the Proponent pays the Equity

Investment.

10. Termination

10.1. The DOCA automatically terminates when any of the following conditions are

met:

10.1.1. The Deed Administrators have transferred the Available Property to

the Creditors’ Trust;

10.1.2. The Court makes an order terminating the DOCA;

10.1.3. The Conditions Precedent are not satisfied or waived on or before 30

September 2015 or such other date as agreed in writing between the

Deed Administrators and the Proponent;

10.1.4. The Company’s creditors pass a resolution terminating the DOCA at

a meeting that was convened pursuant to section 445F of the Act.

10.2. If the Deed Administrators have transferred the available Property to the

Creditors’ Trust in accordance with the DOCA, then the Deed Administrators

11

must, within 5 business days after distribution, lodge a written notice with the

Australian Securities and Investments Commission in the following form:

Mining Management Group Pty Ltd (Subject to Deed of Company Arrangement) (ACN 112 172 022) We, Robert Michael Kirman and Jason Preston, both of McGrathNicol,

Level 17, 37 St Georges Terrace, Perth WA 6008, Deed

Administrators of the deed of company arrangement executed by

Mining Management Group Pty Ltd (Subject to Deed of Company

Arrangement) (ACN 112 172 022) on [insert date] hereby certify that the

deed has been wholly effected and is terminated upon lodgement of this

notice with the Australian Securities and Investments Commission.

10.3. On termination of the DOCA in accordance with clause 10.2 of this proposal,

the Deed Administrators must deliver to the Company all of the Company’s

books and records in the possession of the Deed Administrators other than

those books and records created after the Relevant Date, which the Deed

Administrators are required by law to retain.

10.4. The termination of the DOCA will not affect the previous operation of the

DOCA.

11. Release of claims

11.1. On termination of the DOCA, the Company is released from all Participating

Creditors' Claims and it is agreed that there is no consideration payable in

respect of the releases provided.

11.2. The Company may plead the DOCA in bar to any action, proceeding or suit

brought by a Participating Creditor in respect of that Participating Creditors’

Claim.

11.3. Where there have been mutual credits, mutual debts or other mutual dealings

between the Company and a Participating Creditor:

11.3.1. an account must be taken of what is due from the one party to the

other in respect of those mutual dealings;

11.3.2. the sum due from one party is to be set off against any sum due from

the other party;

11.3.3. only the balance of the account (if any) in favour of the Participating

Creditor as against the Company is to be released;

12

11.3.4. only the balance of the account (if any) in favour of the Company as

against the Participating Creditor, is payable by the Participating

Creditor to the Company.

11.4. A Participating Creditor will not be entitled to claim the benefit of any set-off if,

at the time of giving credit to the Company, or at the time of receiving credit

from the Company, it had notice of the fact that the Company was insolvent.

11.5. For the avoidance of doubt, the procedure set out in clause 11.4 is intended to

entitle a Participating Creditor to claim a set-off (if any) as may be available

pursuant to section 553C of the Act as against any liability to the Company as if

the Company was subject to a winding up so that the balance of the account (if

any):

11.5.1. in favour of the Participating Creditor is admissible to proof under the

Trust Deed without giving rise to any obligation on the Company

following the termination of this Deed to pay any monies to the

Participating Creditor; and

11.5.2. in favour of the Company is payable by the Participating Creditor to

the Company,

and to the extent that there may be any inconsistency between application of

the procedure set out in this proposal and the application of section 553C of

the Act, section 553C of the Corporations Act will prevail and will apply with

immediate and automatic effect in the manner provided for by that provision.

11.6. Each Participating Creditor accepts the Participating Creditor's entitlement

under the DOCA in full satisfaction of the Participating Creditor's Claim.

11.7. If the Deed Administrators request Participating Creditors to do so, each

Participating Creditor must, within 7 days after the making of the request,

execute and deliver to the Company a written release of the Participating

Creditor's Claim in the form the Deed Administrators reasonably require to fulfil

the arrangement effected by the DOCA, save to say that any such release will

not take effect unless and until the DOCA terminates.

11.8. Each Participating Creditor irrevocably appoints the Deed Administrators to be

the attorney of the Participating Creditor with full power for and on behalf of and

In the name of the Participating Creditor to do all acts and things and sign and

execute all deeds, documents and notices as may be necessary or convenient

13

for the purpose of the execution and delivery to the Company of the written

release of the Participating Creditor’s Claim.

12. Abandonment by creditors who do not prove

12.1. A Creditor, other than the Secured Creditor, is taken to have abandoned the

Creditor's Claim if, before the declaration of a final dividend to Participating

Creditors in accordance with the DOCA, the Creditor:

12.1.1. fails to submit a formal proof of debt or claim in respect of the

Creditor's Claim; or

12.1.2. having submitted a formal proof of debt or claim in respect of the

Creditor's Claim which is rejected, falls to appeal to the Court against

the rejection, within the time allowed for such appeal under the Act

and the Corporations Regulations.

13. Remuneration

13.1. Subject to clause13.2, the Deed Administrators’ remuneration for the Deed

Administrators’ services as administrators of this Deed Is fixed at the amount

calculated as follows:

Remuneration = Time x Firm Rates where:

Time means the time actually spent by the Deed Administrators and any of the Deed Administrators’ partners or employees in performance of the services (to be calculated in 6 minute units or part of them); and

Firm Rates means the following hourly rates for persons having the job description of the Deed Administrators and the Deed Administrators’ partners and employees performing the services;

Title Hourly rate (excl GST)

Appointee/Partner $690

Director 1 $625

Director $580

Senior Manager $515

Manager 1 $460

Manager $410

Assistant Manager $370

Senior Accountant 1 $320

Senior Accountant $285

14

Title Hourly rate (excl GST)

Accountant 1 $250

Accountant $245

Undergraduate/ Cadet $210

Practice Services Director $580

Senior Practice Services $410

Senior Client Administration and Senior Treasury $210

Client Administration and Treasury $160

13.2. The Deed Administrators’ remuneration for the Deed Administrators’ services

as administrators of the DOCA is not to exceed $100,000 or such greater

amount as is approved from time to time under section 449E of the Act.

13.3. The Deed Administrators may draw the Deed Administrators’ remuneration

from the Available Property, or, if the Available Property is insufficient, from any

other property of the Company.

13.4. The Deed Administrators are entitled to be reimbursed from the Available

Property for the whole of the costs, charges and expenses incurred by the

Deed Administrators in connection with or incidental to the Deed

Administrators’ administration of the DOCA.

13.5. The Deed Administrators may draw the Deed Administrators’ remuneration and

reimbursement at the end of each month.

14. Deed Administrators’ indemnity

14.1. The Administrators, Deed Administrators and Trustees are entitled to be

indemnified out of the Available Property for:

a) their remuneration and reimbursement under the DOCA;

b) all Claims arising out of, in connection with or incidental to any

debts incurred by the Company, the Administrators, Deed

Administrators or Trustees or their partners or employees in the

course of the administration of the DOCA; and

c) all Claims, other than a Claim by the Company, against the

Administrators, Deed Administrators or Trustees or their partners

or employees, arising out of, in connection with or incidental to

the administration of the DOCA.

15

14.2. The Administrators, Deed Administrators and the Trustees are not entitled to

an indemnity out of the Available Property or any other property of the

Company against any Claims arising out of, in connection with or incidental to:

14.2.1. any fraudulent or negligent act or omission by them or their partners

or employees;

14.2.2. any act or omission done or omitted to be done by them or their

partners or employees:

a) in breach of good faith; or

b) in contravention of any provision of sections 180 to 184 inclusive

of the Act; or

14.2.3. any act done by them or their partners or employees outside the

provisions of this Deed or the Act.

14.3. The Administrators’, Deed Administrators’ and Trustees’ right of indemnity has

priority as a Priority Creditor's Claim.

14.4. The Administrators’, Deed Administrators and the Trustees are entitled to

exercise their right of indemnity conferred by the DOCA whether or not they

have paid or satisfied the Claims.

14.5. The Administrators, Deed Administrators and the Trustees are entitled to

exercise a lien on the Available Property to secure their right of indemnity.

14.6. Nothing in the DOCA affects or limits the operation of Subdivision B of Division

9 of Part 5.3A of the Act.

15. Members rights exercisable by Deed Administrators

15.1. Until the DOCA terminates, for the purpose of administering the DOCA or

fulfilling the arrangement effected by the DOCA the Deed Administrator has all

the rights and powers of the Company's members in general meeting to the

exclusion of the Company's members.

15.2. For the purpose of the Deed Administrator exercising the rights and powers of

the Company's members in general meeting, until this Deed terminates each

member of the Company irrevocably appoints the Deed Administrators to be

the attorney of the member with full power for and on behalf of and in the name

of the member to do all acts and things and sign and execute all deeds,

documents and notices as may be necessary or convenient for the purpose of:

15.2.1. the Deed Administrators being appointed as the member's proxy to

attend and vote instead of the member at a meeting of the Company;

or

16

15.2.2. passing a resolution without a general meeting being held in

accordance with section 249A or section 249B of the Act.

16. Committee of inspection

16.1. In order to advise and assist the Deed Administrators there may be a

committee of inspection.

16.2. For the purpose of determining whether there is to be a committee of

inspection, and, if so, the conduct of proceedings of the committee of

inspection, the following provisions apply to the DOCA:

16.2.1. sections 548 to 551 inclusive of the Act; and

16.2.2. regulations 5.6.12 to 5.6.36A inclusive of the Corporations

Regulations.

17. Exclusion of Prescribed Provisions

17.1. Except where expressly included in this Deed the Prescribed Provisions are

excluded from the DOCA.

18. Further assurance

18.1. Each party must promptly at its own cost do all things (including executing and

if necessary delivering all documents) necessary or desirable to give full effect

to the DOCA.

19. Costs and outlays

19.1. The costs and outlays connected with the negotiation, preparation and

execution of the DOCA for the Company and the Deed Administrators are

taken to be costs, charges and expenses incurred by the Deed Administrators

in connection with or incidental to the Deed Administrators’ administration of

the DOCA.

19.2. The Proponent’s costs and outlays connected with the negotiation, preparation

and execution of this Deed are its own.

19.3. The Company must pay all duty and other government imposts payable in

connection with the DOCA and all other documents and matters referred to in

the DOCA when due or earlier if requested in writing by the Deed

Administrators.

20. Governing law and jurisdiction

20.1. The law of Western Australia will govern the DOCA.

17

20.2. The parties submit to the exclusive jurisdiction of the Court and agree that any

lawsuit must be heard, if at all, in the Court.

18

Schedule 1

Specific security to be granted to Westpac for the Westpac Continuing Debt

Asset I.D Description Serial number PPSR number

DOZ002 CAT D11R Dozer 7PZ00339 201302190032211

RDT001 Komatsu 785-5 Rear Dump Truck 4155 201504140008839




RDT012 Komatsu 785-3 Rear Dump Truck 2022


EXC001 Komatsu PC1250/7 Excavator 20020

19

Schedule 2

Assets to be sold and proceeds paid to Westpac


EXC003 Liebherr 994-200 Excavator 1710204 201302190045869

RTD001 CAT 690 Tiger Rubber Tyre Dozer 42X944


20

Schedule 3

Specific security to be granted to CAT for the CAT Continuing Debt




GRD004 CAT 14M Grader B9J00464 201204040024838

21

Schedule 4

Assets to be sold and proceeds paid to CAT


GRD005 CAT 16H Grader 6ZJ00609 201206060054597

RDT006 CAT 785-B Rear Dump Truck 6HK-00536 201202140225964

RDT007 CAT 785-B Rear Dump Truck 6HK-00731 201202140255504

22

Schedule 5

Employee entitlements to survive DOCA

Surname Christian Name

Annual Leave Wages Redundancy Total

Brackenrig Leah $0 $663 $0 $663

Finlay Grant $0 $60 $0 $60

Finlay Joyce $0 $60 $0 $60

Gunter Leona $20,861 $20,861 $0 $41,721

Gunter Phillip $20,752 $20,752 $0 $41,504

Scotts Genelle $2,823 $1,080 $17,280 $21,183

Total $44,435 $43,476 $17,280 $105,191

23

Schedule 6

Light vehicles to be sold

Vehicle I.D Make Model Registration

VEH-011 Toyota Aurion BMG05A

VEH-006 Toyota Prado BHH87K

VEH-001 Toyota HiLux 4x4 dual cab AH75CK

VEH-015 Toyota HiLux 4x4 dual cab BL29VY

VEH-019 Toyota HiLux 4x4 dual cab BG29TS

VEH-023 Toyota Troop carrier BK42VL

VEH-010 Toyota HiLux 4x4 dual cab BMG05K

VEH-022 Toyota Troop carrier BJ96ME

VEH-008 Toyota Landcruiser BB62CY

VEH-007 Toyota HiLux ute BE35TT

VEH-013 Toyota HiLux ute BMG05X

VEH-021 Isuzu NPS 300 Light Truck BK23SH

VEH-028 Great Wall 2.0L Dual Cab 4WD Ute BP25XJ

VEH-029 Great Wall Dual Cab 4WD Ute BP26XJ

24

FORM 529A

Corporations Act 2001

Subregulation 5.6.12(1)

NOTICE OF SECOND MEETING OF

CREDITORS OF COMPANY UNDER ADMINISTRATION

Mining Management Group Pty Limited ACN 112 172 022 (Administrators Appointed)

MMG Drill & Blast Pty Limited ACN 122 840 582 (Administrators Appointed)

(“the Companies”)

Notice is given that the second meeting of creditors of the Companies will be held concurrently at the Francis Phillip

Motor Inn, 18 Maitland Road, Singleton, NSW 12:00 PM (AEST) on Monday, 6 July 2015.

Agenda

1. To consider the Administrators' report pursuant to Section 439A of the Corporations Act, in relation to the

Companies and any other matters raised relating to the Companies future and then to resolve either that:

a. the Companies execute a Deed of Company Arrangement; or

b. the administration should end; or

c. the Companies be wound up; or

d. the meeting be adjourned for a period of up to 45 business days.

2. To consider, and if thought fit, approve the Administrators' remuneration.

3. If the Companies are wound up:

a. to consider, and if thought fit, approve the Liquidator’s remuneration;

b. to consider the appointment of a Committee of Inspection;

c. to consider authorising the Liquidators to compromise debts of the Company under Section 477(2A) of

the Corporations Act; and

d. to consider authorising the Liquidators to enter into agreements that may take longer than three

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

4. To discuss any other relevant business which may arise.

Dated this Monday, 29 June 2015.

Jason Preston

Joint and Several Voluntary Administrator

Australian Company Number: 112 172 022

FORM 535 Subregulation 5.6.49(2)

Corporations Act (2001)

FORMAL PROOF OF DEBT OR CLAIM (GENERAL FORM)

To the Administrators of: Mining Management Group Pty Limited (Administrators Appointed) 1. This is to state that the company was on 1 June 2015 (date of resolution to wind up), and still is, justly

and truly indebted to: _________________________________________________________

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

Date Consideration (state how the

Debt arose) Amount

$ c Remarks (include details of

voucher substantiating payment

2. To my knowledge or belief the creditor has not, nor has any person by the creditor's order, had or

received any satisfaction or security for the sum or any part of it except for the following: (insert particulars of all securities held. If the securities are on the property of the company, assess the value of those securities. If any bills or other negotiable securities are held, show them in a schedule in the following form).

Date Drawer Acceptor Amount $c Due Date

*3. I am employed by the creditor and authorised in writing by the creditor to make this statement. I know

that the debt was incurred for the consideration stated and that the debt, to the best of my knowledge and belief, remains unpaid and unsatisfied.

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

........................................... Dated Signature Occupation: Address Proof of Debt Reference:

*Do not complete if this proof is made by the creditor personally.

Australian Company Number: 122 840 582

FORM 535 Subregulation 5.6.49(2)

Corporations Act (2001)

FORMAL PROOF OF DEBT OR CLAIM (GENERAL FORM)

To the Administrators of: MMG Drill & Blast Pty Limited (Administrators Appointed) 1. This is to state that the company was on 1 June 2015 (date of resolution to wind up), and still is, justly

and truly indebted to: _________________________________________________________

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

Date Consideration (state how the

Debt arose) Amount

$ c Remarks (include details of

voucher substantiating payment

2. To my knowledge or belief the creditor has not, nor has any person by the creditor's order, had or

received any satisfaction or security for the sum or any part of it except for the following: (insert particulars of all securities held. If the securities are on the property of the company, assess the value of those securities. If any bills or other negotiable securities are held, show them in a schedule in the following form).

Date Drawer Acceptor Amount $c Due Date

*3. I am employed by the creditor and authorised in writing by the creditor to make this statement. I know

that the debt was incurred for the consideration stated and that the debt, to the best of my knowledge and belief, remains unpaid and unsatisfied.

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

........................................... Dated Signature Occupation: Address Proof of Debt Reference:

*Do not complete if this proof is made by the creditor personally.

Address: Level 31, 60 Margaret Street, Sydney NSW 2000 Contact Name: Timothy Duncan Contact Number: (02) 9248 9913

Proofs of Debt Notes for your guidance

(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 that:

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

b) evidence, such as that detailed below, 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 titled “Information to support your claim” below for further information).

4. Where the space provided for a particular purpose is insufficient to contain all the required information in relation to a particular item, that information should be set out in an annexure.

5. An annexure to the form must have an identifying mark and be endorsed with the words:

“This is the annexure of …… pages marked …… referred to in the Form 535/536 signed by me and dated …………………

…………………………………… …………………………………………………….. Signature(s) Name of Signatory “IN BLOCK LETTERS”

and signed by each person signing the form to which the document is annexed.

6. The pages in the annexure must be numbered consecutively.

7. Where a document, copy of a document or other matter is annexed to a form, reference made in the form to the annexure shall be by its identifying mark, the number of pages in it, and a brief description of the nature of the document and its contents.

8. A reference to an annexure includes a document, copy of a document or any other matter accompanying, attaching to or annexed to a form.

Information to support your claim

Please note that your debt is not likely to be accepted unless evidence to support its existence is provided. Detailed below are some examples of the type of debt creditors may be claiming and a suggested list of documents, copies of which should accompany a proof of debt for that class of creditor.

Trade Creditors

Statements and supporting invoices(s) showing the amount of the debt; and

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

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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

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.

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FORM 532 Corporations Act 2001

Regulation 5.6.29

Mining Management Group Pty Limited (Administrators Appointed) ACN 112 172 022

APPOINTMENT OF PROXY

I/We (1) _____________________________________________________________________________ of _________________________________________________________________________________________________ a creditor/member of Mining Management Group Pty Limited (Administrators Appointed) appoint

(2)_____________________________________________ or in his/her absence (3) _____________________________________________as my/our general/special proxy to vote at the meeting of creditors to be held on Monday, 6 July 2015 at 12:00 PM or at any adjournment of that meeting. DATED this ___________ day of ________________________ 2015 (4) Signature ___________________________________ CERTIFICATE OF WITNESS - only complete if the person given the proxy is blind or incapable of writing. I, ____________________________________________ of _______________________________________________ certify that the above instrument appointing a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him before he attached his signature or mark to the instrument. DATED this ___________ day of ________________________ 2015 Signature of witness ___________________________________

Description ___________________________________

Place of residence ___________________________________

___________________________________

Notes: (1) If a firm strike out "I" and set out the full name of the firm. (2) Insert the name of the person appointed. (3) If a special proxy, “add the words ‘to vote for’ or the words ‘to vote against’ and specify the particular resolution”. (4) If the creditor is a sole trader , sign in accordance with the following example: “A.B., proprietor”. If the creditor is a partnership, sign in accordance with the following example: “A.B., a partner of the said firm.” If the creditor is a company, then the form of proxy must be under its Common Seal or under the hand of some officer duly

authorised in that capacity, and the fact that the officer is so authorised must be stated in accordance with the following example: “for the company, A.B.” (duly authorised under the Seal of the Company).

Proxy forms should have been completed and returned by no later than 5:00 PM on 3 July 2015 to be eligible to vote at the meeting. RETURN TO: Mining Management Group Pty Limited (Administrators Appointed) of care of McGrathNicol Address: GPO Box 9986, Sydney NSW 2001 Phone: +61 2 9338 2600 Fax: +61 2 9338 2699

FORM 532 Corporations Act 2001

Regulation 5.6.29

MMG Drill & Blast Pty Limited (Administrators Appointed) ACN 122 840 582

APPOINTMENT OF PROXY

I/We (1) _____________________________________________________________________________ of _________________________________________________________________________________________________ a creditor/member of MMG Drill & Blast Pty Limited (Administrators Appointed) appoint

(2)_____________________________________________ or in his/her absence (3) _____________________________________________as my/our general/special proxy to vote at the meeting of creditors to be held on Monday, 6 July 2015 at 12:00 PM or at any adjournment of that meeting. DATED this ___________ day of ________________________ 2015 (4) Signature ___________________________________ CERTIFICATE OF WITNESS - only complete if the person given the proxy is blind or incapable of writing. I, ____________________________________________ of _______________________________________________ certify that the above instrument appointing a proxy was completed by me in the presence of and at the request of the person appointing the proxy and read to him before he attached his signature or mark to the instrument. DATED this ___________ day of ________________________ 2015 Signature of witness ___________________________________

Description ___________________________________

Place of residence ___________________________________

___________________________________

Notes: (1) If a firm strike out "I" and set out the full name of the firm. (2) Insert the name of the person appointed. (3) If a special proxy, “add the words ‘to vote for’ or the words ‘to vote against’ and specify the particular resolution”. (4) If the creditor is a sole trader , sign in accordance with the following example: “A.B., proprietor”. If the creditor is a partnership, sign in accordance with the following example: “A.B., a partner of the said firm.” If the creditor is a company, then the form of proxy must be under its Common Seal or under the hand of some officer duly

authorised in that capacity, and the fact that the officer is so authorised must be stated in accordance with the following example: “for the company, A.B.” (duly authorised under the Seal of the Company).

Proxy forms should have been completed and returned by no later than 5:00 PM on 3 July 2015 to be eligible to vote at the meeting. RETURN TO: MMG Drill & Blast Pty Limited (Administrators Appointed) of care of McGrathNicol Address: GPO Box 9986, Sydney NSW 2001 Phone: +61 2 9338 2600 Fax: +61 2 9338 2699

Proxy

Notes for your Guidance

Insert full name and address of creditor, contributory or member on the top line.

On the second line, insert the name of the person you appoint as your proxy. You may insert “the Chairperson of the meeting” if you wish.

On the next line insert the organisation the proxy holder represents or works for (not required if the Chairperson is your proxy).

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.

If the proxy is a general proxy the form requires no addition.

If the proxy is a special proxy the form must include instructions regarding the use of the proxy (i.e. details of the resolution and whether the proxy holder is to cast a vote in favour or against the resolution or abstain from voting).

Date and sign the Proxy form using one of the following various forms of execution:

− Sole Trader - Sign the proxy yourself.

− Partnership - e.g. sign – “Smith & Associates Per John Smith - Partner”

− Company - (i) By a director or secretary, e.g. “J Smith – Director”.

(ii) By a person duly authorised to sign on behalf of the company, e.g.

“Smith & Sons Pty Ltd. ACN: ______________

Per: J Smith

A person duly authorised to sign on the company’s behalf”.

OR

“Smith & Sons Pty Ltd. ACN: ______________

By its duly constituted attorney J Smith”.

NB: If signing on behalf of a company the following example is not sufficient: ”Smith & Sons Pty Ltd. ACN: _______________ Per: J Smith”

“Certificate of Witness” is only to be used where the Proxy is being completed on behalf of a person who is blind or incapable of writing. In all other cases a witness to the signature of the person appointing the Proxy is not required and you may ignore the section headed “Certificate of Witness”.

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Mining Management Group Pty Limited ACN 112 172 022 (Administrators Appointed) MMG Drill & Blast Pty Limited ACN 122 840 582 (Administrators Appointed)

General Information for Attending and Voting at Meetings of Creditors

Time and Place of Meeting

Pursuant to Corporations Regulations 2001 (Regulation) 5.6.14 a meeting of creditors must be convened at a time and place most convenient for the majority of creditors entitled to receive notice of the meeting.

Quorum

Pursuant to Regulation 5.6.16 a meeting must not act for any purpose except:

− the election of a chairperson; and

− the proving of debts; and

− the adjournment of the meeting:

unless a quorum is present.

A quorum is deemed to be present if at least 2 (two) creditors are present at the meeting in person, by proxy, by power of attorney or participating by telephone.

A meeting is sufficiently constituted if only one 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 Regulation 5.6.17 the Administrator is appointed Chairperson of the meeting. Alternatively, the Administrator may, pursuant to Regulations 5.6.17 and 5.6.34, appoint someone else to act as chairperson of the meeting and authorise that person to use any proxies held by the Administrator on the Administrator’s behalf.

For the second meeting of creditors in a Voluntary Administration, the Administrator must chair the meeting pursuant to Section 439B of the Corporations Act 2001.

Voting

Pursuant to Regulation 5.6.23 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 company prior to or at the meeting.

Pursuant to Regulation 5.6.19 all resolutions put to the meeting will be decided on the voices unless a poll is demanded, before or on the declaration of the result of the voices.

A poll may be demanded by:

− the chairperson; or

− at least 2 (two) persons present in person, by proxy, by power of attorney or participating by telephone and entitled to vote at the meeting; or

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− a person present in person, by proxy, by power of attorney or participating by telephone and representing not less than 10% of the total voting rights of all persons entitled to vote at the meeting.

Pursuant to Regulation 5.6.21, should a poll be demanded:

− a resolution will be carried if a majority in number and a majority in value vote in favour of the resolution; and

− a resolution will be lost 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 Regulation 5.6.28 creditors who are entitled to attend and vote at the meeting may appoint a natural person over the age of 18 years 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 Administrator prior to the meeting.

Pursuant to Regulations 5.6.28 and 5.6.36A creditors may lodge a facsimile copy of a proxy form with the Administrator prior to the meeting; however, the original of the instrument must be received by the Administrator within 72 hours of receipt of the faxed copy.

Pursuant to Regulations 5.6.28, 5.6.29 and 5.6.31 creditors may lodge a proxy form with the company prior to the meeting by electronic means, however electronic lodgement will only be possible where the convenor has specified an electronic address or other electronic means on the proxy form. Proxy forms lodged via electronic means must be validly executed by signing and scanning the form.

Pursuant to Regulation 5.6.32 a person may, should they so desire, appoint the Administrator by name or by reference to his or her office to act as his, her or its general or special proxy.

Corporate Creditors

Corporate creditors who wish to attend the meeting should note that they may only be represented by an individual if that person is validly granted a proxy or power of attorney by that corporation.

Alternatively, Section 250D of the Corporations Act 2001 provides that a corporation may, by resolution of its board, provide a standing authority for a specified person to represent the corporation at specified meeting of creditors. A copy of any such resolution should be provided to the Administrator prior to attending the meeting.

Committee of Inspection/Committee of Creditors

Pursuant to Section 436G of the Corporations Act 2001, a person may only serve as a member of a Committee of Creditors 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.

Corporate creditors who are members of a Committee of Inspection may be represented by:

an officer or employee of the member; or

an individual authorised in writing by the member to represent the member on the committee.

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