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15-338MR ASIC commences proceedings to set aside DOCA and wind up failed land banking company
ASIC has commenced proceedings in the Federal Court of Australia for orders to set aside a resolution made by creditors of Midland Hwy Pty Ltd ACN 153 096 069 (administrators appointed) (Midland Hwy) to enter into a deed of company arrangement (DOCA) and for Midland Hwy to be wound up.
ASIC has concerns about the proposed DOCA in light of various matters reported on by the Administrators, Messrs Nicholas Martin and Craig Crosbie, of PPB Advisory.
The DOCA was proposed by Bilkurra Investments Pty Ltd (Bilkurra) and agreed to by creditors on 21 October 2015. Under the deed, Bilkurra, who owns the land associated with the Hermitage Bendigo project, was to take over the development.
Matters reported by the Administrators about which ASIC is concerned include:
- only $1.7 million of the $24 million received from option holders in the Hermitage Bendigo project had been put towards the development;
- Midland Hwy does not have funds to pay the $24 million back to option holders and is likely to have been insolvent from March 2012 and potentially as early as 7 September 2011;
- up to $22.3 million of payments are likely to be subject to other claims which should be investigated by liquidators to see if they can be recovered, including substantial amounts paid to companies associated with Bilkurra for which there is no proper documentation; and
- it is unclear whether Bilkurra has the financial resources to undertake the development.
ASIC considers that it is in the public interest for Midland Hwy to be wound up so that a proper investigation into the affairs of Midland Hwy can be conducted by independent liquidators.
The matter was heard on 11 November 2015, with judgment reserved. Until the hearing and determination of the proceeding has concluded, the Court has ordered that s444B(5) of the Corporations Act, which requires the administrators to execute a DOCA within a certain time, does not operate.
Midland Hwy was the developer of a land banking scheme known as 'Hermitage Bendigo' (formerly'Acacia Banks'), located just outside of Bendigo, Victoria and was put into administration on 2 July 2015. At the second creditors' meeting of Midland Hwy held on 21 October 2015, creditors voted in favour of the DOCA despite the Administrators recommending the company be put into liquidation.
ASIC’s proceedings are part of ASIC's wider and ongoing investigation into land banking schemes (refer: 15-214MR).
ASIC previously resolved proceedings against Midland Hwy to remove Mr David Anthony Ross and Mr Richard Albarran of Hall Chadwick as the administrators (refer: 15-203MR).
On 3 December 2015, the Federal Court of Australia made orders to set aside a resolution made by creditors of Midland Hwyon 21 October 2015 to enter into a DOCA and for Midland Hwy to be wound up (refer: 15-368MR).