Mining giant Rio Tinto has been caught up in a financial bind after a contractor working on one of its Pilbara projects collapsed owing an estimated $14 million.
Mining giant Rio Tinto has been embroiled in a financial bind after a contractor working on one of its Pilbara projects collapsed owing an estimated $14 million.
It is understood Rio Tinto recently paid $420,000 to Subiaco-based The Anywhere Group of Companies, having been invoiced in June, despite TAG having gone into administration in February.
Subcontractors to TAG believe the funds ought to flow through to them.
TAG, which built kitchens and remote accommodation, is believed to owe more than $14 million, the bulk of that to Singaporean investment firm Crest Capital Asia.
Liquidator BRI Ferrier’s Ron Gamble said the total amount owed was still being calculated, and it was proving complex to identify priorities because of the number of and varied type of creditors.
Subcontractors who provided items and services to TAG for Rio Tinto’s Nammuldi below-watertable project north-west of Tom Price have seen a statutory declaration authorising payment of $420,000 owed to them, but one subcontractor told Business News the money was being held up.
Mr Gamble said BRI Ferrier was receiving legal advice and could not comment.
Subcontractors owed money include an electrical company that installed a $100,000 switchboard at Nammuldi to power the commercial kitchen, a transport company owed a final $65,000 payment, and a carpentry business.
A Rio Tinto spokesman said it was cooperating with the administrators and would leave it to them to determine the outcome for individual TAG suppliers.
Generally, subcontractors are considered to be unsecured creditors when a company collapses, but businesses can protect themselves.
HHG Legal Group director Murray Thornhill said companies that registered items on the Personal Property Securities Register were essentially guaranteed title of that property until they were paid for it.
By registering property – including intellectual property, but not services or real estate – on the PPSR, companies maintain ownership until they are paid; if their contractor goes under, then they become secured creditors.
An unusual case involving the PPSR and failed construction company Forge Group was revealed by Business News in October.
In a legal twist, receivers KordaMentha said it might 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 because APR had not registered its interest on the PPSR.