21/03/2022 - 16:09

Liquidators consider Avid insolvent trading claim

21/03/2022 - 16:09

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Unsecured creditors of Avid Resources are likely to receive nothing, but liquidators have said they will consider an insolvent trading claim.

Liquidators consider Avid insolvent trading claim
Avid may have been insolvent more than a year before administrators were appointed. Photo: Avid

Unsecured creditors of Avid Resources are likely to receive nothing, but liquidators have said they will consider an insolvent trading claim.

Matthew Woods and Clint Joseph of KPMG were appointed to run Avid Water and Avid Resources WA in November.

An initial review blamed a contract dispute with Decmil, potential underquoting on tenders and an inability to secure financial backing among the key causes.

The two businesses took over parts of RCR Tomlinson in 2019 following that company’s collapse, including RCR Resources, RCR Power and RCR Water West.

Business News previously reported that administrators had believed Avid Resources was possibly insolvent as early as November 2019, in the aftermath of that deal.

In a March report now acting as a liquidator, Mr Woods said priority creditors may receive a small dividend.

Unsecured creditors were likely to receive nothing unless some transactions were voided or an insolvent trading claim was pursued.

Voidable transactions included potential unfair preferencing transactions worth about $700,000, and related party deals with Remsafe and Tech Holdings.

There are also uncommercial transaction claims.

“The liquidators have been made aware of claims that AVRWA’s contracts with Decmil and Tech Mahindra may potentially be considered uncommercial transactions,” the report said.

“We continue to consider these allegations.”

Decmil and Avid agreed two subcontracting agreements in January for work at Rio Tinto’s Mesa mines.

But by September, Decmil had issued a default notice on AVRWA, and in November, lodged a writ in the Supreme Court claiming $1.3 million due from the two contracts.

Decmil has lodged a $2 million contingent claim, the report said.

Separately, an insolvent trading claim may be considered, liquidators said.

They would have to consider the size of the claim, costs, and a lack of funds in the liquidation to undertake public examinations and pursue to trial, the report said.

“Having regard to the above, the liquidators will explore the possibility of obtaining litigation funding and the broader commercial merits of pursuing an insolvent trading claim against the director,” the report said.

Avid’s director was Himanshu Gautam, according to the report.

Among the creditors were the state and federal governments.

RevenueWA was owed $1.3 million.

The Australian Taxation Office was expected to be owed about  $3 million of GST.

Earlier this month, Business News reported the Commissioner of State Revenue lodged a winding up order against related party AvidSys, but this has since been withdrawn.

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