The Supreme Court of Western Australia has approved an amendment to a restructure of embattled construction company Cooper & Oxley Builders that will leave unsecured creditors with between six and 13 cents in the dollar.
UPDATED: The Supreme Court of Western Australia has approved an amendment to a restructure of embattled construction company Cooper & Oxley Builders that will leave unsecured creditors with between six and 13 cents in the dollar.
Cooper & Oxley’s long-serving managing director, George Hampel, has proposed a deed of company arrangement (DOCA) that would allow him to regain control of the company from administrators Hall Chadwick WA.
The DOCA includes part proceeds from the sale of two of Mr Hampel's properties, though this week's Supreme Court judgement indicates the amount is unclear.
It was initially presented as a $300,000 contribution but a report to creditors indicated a different payment.
"Instead of the contribution of $300,000 from the sale of the director's properties, the properties were to be sold with the balance of the net proceeds after $300,000 becoming part of the available property under the creditors' trust," it stated.
The report to creditors said that, under the DOCA, unsecured creditors would receive between six and 13 cents for every dollar owed.
However, the unsecured creditors would receive no payment if the company went into liquidation.
The DOCA would also ensure full repayment to priority creditors, including eligible employee creditors, but if the company was wound-up those creditors would only be repaid 18 cents in the dollar.
Secured creditors would be repaid in full under both situations.
This week's court ruling followed a creditors' meeting at which a resolution to execute the DOCA was approved.
Subsequent to the meeting, Hall Chadwick was made aware that court approval was required for an amendment to a priority provision relating to the eligible employee creditors.
Justice John Vaughan made orders approving the amendment.
“The circumstances of Cooper & Oxley's administration presented as a case in which the application for approval of the non-inclusion of the priority provision had overwhelming force,” he stated in his judgement.
“In the circumstances I was satisfied that non-inclusion of the priority provision in the deed of company arrangement as proposed is likely to result in a better outcome for eligible employee creditors as a whole than would result from an immediate winding up of Cooper & Oxley.”
The builder was placed into voluntary administration in February, at which time it employed about 70 people and had seven projects under way.
The administrators worked out agreements for work to continue on six smaller projects, and the company continues to employ 30 staff.
The company has total outstanding employee entitlements of more than $2 million, and the 30 employees are owed $1.2 million.
“In my view, continued employment for 30 out of the 70 eligible employee creditors is a sufficient proportion to take that into account in determining which outcome is better for the relevant creditors as a whole,” Justice Vaughan said.
The administrators were unable to negotiate terms to recommence work at C&O's largest project, the Subi XO development on Hay Street in Subiaco.
The company is in dispute with developer Dradgin Pte regarding that project, with Mr Hampel believing his company has a significant claim against the developer.
UPDATES: Cooper & Oxley has confirmed that the company has come out of administration and is under the control of its directors.
It has been reported that construction company Doric is negotiating with Dradgin to complete the Subi XO project.