Creditors may scoop $50m in Forge turbine dispute

An unexpected windfall could tip $50 million into failed construction company Forge Group as its receivers continue to recover money owed and make debt payments.

In a legal twist, receivers KordaMentha may be able to sell four gas turbines worth $50 million to pay off Forge’s debts, despite them being owned by US giant APR Energy, which had leased them to Forge.

Despite being the undisputed legal owner of the assets, APR Energy did not register its security interest on the Personal Property Securities Register and therefore may lose priority, effectively allowing Forge to sell the turbines and pay off its creditors.

Ferrier Hodgson partner Martin Jones, whose firm is acting as Forge’s liquidator, said the circumstances were unique and APR was likely to defend its priority.

After announcing in March that Ferrier Hodgson believed Forge may have traded while insolvent, Mr Jones said it was still carrying out forensic interrogation of records to prove the claim.

About 10 remaining former Forge employees are helping KordaMentha recover more than $50 million owed by former clients.

Former Forge quantity surveyors and claims officers have helped identify a number of the clients – including BHP Billiton, Rio Tinto and Samsung – to which Forge provided work but did not chase up payments owed after its rapid collapse in November last year.

Secured creditors Asset Insure, QBE Insurance Group and ANZ Banking Group, which are owed about $250 million, are set to receive about $10 to $15 million from the sale of Forge’s cranes, vehicles and yellow goods recently auctioned by Grays Online. 

It is believed a number of Western Australian companies bought the equipment, including mining services company Central Systems, during a week-long auction held in May.