23/05/2017 - 12:58

Diploma maintains faith despite liquidation order

23/05/2017 - 12:58

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UPDATE: Diploma Group boss Nick Di Latte says the company will continue to push forward with its proposal to revive the company and provide a return to creditors, after provisional liquidators were appointed to 20 Diploma-related entities today.

Diploma maintains faith despite liquidation order
Diploma Group's revival plan was based on managing the $160 million Chemlabs proposal in East Perth.

UPDATE: Diploma Group boss Nick Di Latte says the company will continue to push forward with its proposal to revive the company and provide a return to creditors, after provisional liquidators were appointed to 20 Diploma-related entities today.

Justice Neil McKerracher of the Federal Court today lifted a stay on the appointment of liquidators from Grant Thornton onto the Diploma-related companies, consigning the collapsed company to being wound up.

Two weeks ago, Diploma Group was given more time to finalise a Deed of Company Arrangement, which it maintained was the best way forward to provide a return to creditors, who were owed more than $36 million at the time of the company’s January collapse.

Grant Thornton’s David Hodgson and Andrew Hewitt now have 45 days to provide a detailed report on the financial position of Diploma Group.

However, Mr Di Latte said there remained a chance that the DOCA, which was submitted on May 17, could be implemented.

"The judge emphasised that his decision to appoint provisional liquidators did not preclude the administrators Grant Thornto reapplying to pull Diploma back into administration if they found merit in the revised DOCA proposal," Mr Di Latte told Business News.

"We maintain our view that the revised DOCA proposal is a better outcome than liquidation for creditors and intend to continue to push for it." 

An ASIC investigation into the collapse is ongoing.

Diploma’s DOCA was based around a debt-to-equity swap, under which its founders, the Di Latte family, would give up 50 per cent of their shares in the company in return for erasing its debts.

The revival plan was based on Diploma becoming a development management company, on the back of a $6 million contract to manage the $160 million hotel and apartments project at the Chemlabs site in East Perth.

However, the Metropolitan Redevelopment Authority said it had terminated the contract for the sale of the land, effectively scuttling Diploma's plan.

MRA chief executive Kieran Kinsella said every courtesy had been extended to Diploma, which was appointed to develop the site in 2015, including time extensions.

"The developer was unable to achieve settlement by the final settlement date and as a result the contract has been terminated," Mr Kinsella said.

"We have been working with the developer for some months now to achieve the necessary contract milestones, and have sought expert commercial, financial and legal advice as appropriate throughout those negotiations.

"In the sale of land and any contractual matters, the MRA operates to protect the interests of the State Government and the wider community and this decision was not taken lightly."

ASIC said creditors should contact Grant Thornton if they had any questions about their rights.

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