Russell-Smith should be placed into liquidation: Administrators

The administrators of Russell-Smith say the company should be placed into liquidation.

Releasing its latest report on Wednesday, insolvency firm Jirsch Sutherland suggested to the company’s creditors that its future should be decided at next month’s meeting.

The last meeting with creditors was adjourned after the former director, Prasanga Shiromon Kingsley De Silva, put forward a Deed of Company Agreement (DOCA) proposal which could have seen the business avoid liquidation.

However administrator Stewart Free said in his report that he does “not recommend” creditors accept the proposal.

Since going into voluntary administration in September, the company is believed to owe more than $700,000 to its former employees.

While Mr De Silva claimed a total of $162,083 in annual leave, rostered days off and superannuation was owed to workers, the administrator estimated $736,375 was in fact outstanding.

“It is my view that the former director’s … estimates grossly underestimate the total employee entitlements that are, in reality, outstanding,” Mr Free said in his report.

“Employees are unlikely to be paid out in full in a timely manner under the proposed DOCA.”

Russell-Smith is also said to owe more than $3 million to the Australian Taxation Office and a total of nearly $9 million to unsecured creditors.

Mr De Silva disputed the amount and claimed $5,666,800 was outstanding.

Russell-Smith has been referred to the Australian Securities and Investments Commission with claims from the administrators the company traded while insolvent.

Mr De Silva previously rejected the insolvent trading claim and an ASIC spokeswoman said they were unable to “comment on or confirm the existence of any enquiries ASIC may be making into particular companies”.

The next creditors meeting will be held in Hobart on December 1.

“We are recommending creditors resolve to place the company into liquidation,” Mr Free said.

Mr De Silva was contacted for further comment.

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