Troubled milk broking company National Dairy Products (NDP) will now go into liquidation. Deloitte joint and several administrator Glen Kanevsky said NDP had informed him a deed of company arrangement (DOCA) had been withdrawn, nor would there be a revised document.
“There won’t be a DOCA proposal, presented to creditors, at the reconvened meeting,” Mr Kanevsky said.
“There is no proposal, it’s going to go to liquidation.”
Another meeting of creditors will be held on February 22, at which it was expected a committee of creditors would be appointed.
Mr Kanevsky said the committee would then decide how to proceed, in retrieving the money they believed they were owed.
The creditors could decide whether or not they would fund litigation, to recover what they were owed, or seek a third party to help them.
Mr Kanevsky said the liquidation process could take up to two years before it was finally resolved.
“On balance, we recommended a better commercial outcome was a DOCA, but ultimately it is creditors’ money, and creditors get the decision,” he said.
“Instead of Eposito putting money in to fund a DOCA, he is going to be using that same money to potentially fund a defence for himself – but ultimately, it is the creditors’ call.”
Mr Esposito confirmed that his lawyers had recommended he withdraw the DOCA.
A report had been completed for the Australian Securities and Investments Commission, which might also fund a bid by creditors to retrieve what they believed they were owed.
But one of the creditors, Alex Robertson, said he was sceptical that Mr Esposito wanted the company to go into liquidation.
“It doesn’t make sense that this guy wants to go into liquidation now,” Mr Robertson said.
“He thinks we will not rock up and take him through a public hearing – think he is calling our bluff, and we are not going to stand for it.”
A second meeting of creditors was held, just before Christmas last year, and adjourned until the end of February.
“The primary purpose of that adjournment was to allow the proponents of a Deed of Company Arrangement (DOCA) an opportunity to revise their initial proposal for further consideration by creditors,” Mr Kanevsky said.
Administrators have told unsecured creditors they could expect as little as five cents in the dollar, under a DOCA.
The administrators said if NDP was declared insolvent, creditors could expect nothing or just over a cent in the dollar.
Deloitte found the company had liabilities of $9.2 million, made up of $4.3 million to unsecured creditors and a further $4.7 million owed to the Espositos.
Among those owed substantial amounts of money include Peter Stoitse Transport ($1.35 million), Warrnambool Cheese and Butter ($479,756) and and Tatura Milk ($197,000).
Farmers are also owed sums of up to $1.1 million in projected claims.
Mr Esposito agreed last week liquidation was now a real possibility.
“If that’s what’s chosen and the DOCA is not accepted in the form that is put forward, that’s what it is,” Mr Esposito said.
Creditors have said they would vote for liquidation, if Mr Esposito did not come back with a substantially revised DOCA.
By: Andrew Miller