A Henderson-based specialist pipeline testing company, now in liquidation, has launched legal action over $2.6 million in loans it claims are outstanding.
A Henderson-based specialist pipeline testing company, now in liquidation, has launched legal action against its former directors and the company’s trustee over loans it claims are outstanding for about $2.6 million.
Australian Pressure Testing Services (APTS) was established in 2003 and was awarded a Business News Rising Stars award in 2011 after then director Paul Newbound led a major expansion of the company that resulted in a turnover of almost $40 million.
But APTS began experiencing financial difficulties in 2014 when its revenue almost halved, difficulties which led to the company being placed in voluntary administration in late 2017 before a creditors’ voluntary liquidation commenced in March 2018.
Paul Eric Newbound and Elizabeth Anne Newbound were directors of the company for more than a decade, from May 2001 until November 2010.
Between them, the pair held three of the company’s 100 shares, with the remaining shares lying with its trustee P & E Newbound - a company headed by the pair.
According to a writ filed with the Supreme Court, the company entered into unsecured seven-year loan agreements with Paul Newbound, Elizabeth Newbound and P & E Newbound.
Between 2013 and June 2016, the company loaned Paul Newbound and Elizabeth Newbound $376,180.
The pair used dividends from the company against the loan balance over several years, reducing the amount owing to $206,518 and $51,138 in interest.
The company alleges that in breach of the 2013 joint loan, and despite demand by way of two letters sent in November 2020, the pair has failed to pay any amounts against the joint loan since 2016.
Between 2013 and 2016, the company lent a total of $2.78 million to P & E Newbound; of which it allegedly still owes $1.98 million including interest.
Despite demand, P & E Newbound has failed to repay the debt, according to the claims in the writ.
After 2016, the company loaned Paul Newbound additional amounts totaling $374,114.
Despite demand for the payments, the company claims in its writ that Paul Newbound has failed to repay the loan.
By way of a letter dated November 26, 2020, Paul Newbound claimed that $198,000 of the additional amounts comprised loans to Paul and Elizabeth jointly.
This week, the company filed a case against the three parties seeking repayment of a total of $2.6 million, as well as interest and costs.