Avid means probe reveals $26m debt

A probe has cast doubt over AvidSys's ability to repay $1.3 million to contractor Decmil after it was revealed the company's debts exceed $26 million, amid confirmation it plans to appeal the payment order.

The information was divulged by AvidSys Group boss Ansh Gautam, who was questioned about the company’s financial status in the Supreme Court today as part of a means probe.

The inquiry followed Decmil’s victory in a nine-month stoush with AvidSys over an outstanding bill for work at Rio Tinto’s Mesa mines, which subsidiary Avid Resources contested before its collapse.

Decmil lawyer James Scovell told the court its inquiry had been hindered by Avid’s failure to hand over various financial statements covering the company’s three years in business after taking issue with the scope.

“What we’re seeking is not unreasonable and it perplexes me as to why some of the documents have not been produced, including tax returns,” he said.

“Our questions will be curtailed by the fact we don’t have the materials we ought to be entitled to.”

The Avid director took the stand, telling the court the parent company had no source of income, with both of its once profitable subsidiaries now in the hands of administrators.

It was revealed Avid sought loans to pay its 200 employees from Mr Gautam’s father and external parties, with its liabilities now exceeding $26.6 million.

The court was told Avid Australia currently has just over $6,000 in the bank, with KPMG still trawling through the remains of its subsidiaries.

The loan agreement means his father has security over all assets in Avid to the tune of $26 million, with Avid Australia, Avid Water, Avid Resources, holding company Tech Holdings WA and active company Remsafe among the borrowers.

When questioned by Mr Scovell, Mr Gautam told the court he believed four of the five companies did not have the capacity to repay the loan because Decmil had “tipped Avid over”.

But he could not be drawn on the financial status of Remsafe.

The questioning was brought to an abrupt stop by Mr Gautam’s lawyers, who argued that divulging the information of other parties and detailing their capacity to pay the loan was “a step too far”. 

The court heard Avid took out a loan of $800,000 in the past six months from MAPD Investment Management; a company Mr Gautam was formerly a director of.

But the loan was now in default, with payment due within the next seven days.

Other debts included an American Express credit card owing $33,000 and a $10,000 bill from the company’s accountant.

A second hearing has now been scheduled, with Mr Gautam ordered to hand over financial documents for transactions in excess of $10,000 to Decmil’s lawyers one week beforehand.

Administrators were appointed to Avid Resources in November, the engineering and construction subsidiary of AvidSys Group.

Avid Resources comprised three businesses formerly part of RCR Tomlinson.