This article is from the Australian Property Journal archive
THE Australian Securities and Investments Commission has banned four directors involved in the failure of six property development companies in the Hunter Valley-based Morgan and Bay Group.
Gregg Ross Morgan, of Lenaghan, New South Wales, has been disqualified from managing corporations for five years; Darren Boyd Van Aardt, of Brightwaters, NSW, has been disqualified for three years; and Phillip Norman Rankin, of Redhead, and David Hastings Warne, of Pymble, NSW, have each been disqualified for 18 months.
ASIC’s action follows the collapse of Morgan Building & Property Maintenance Pty Ltd, Bay Building Developments Pty Ltd, Bay Building Investments Pty Ltd, Bay Constructions (Aust) Pty Ltd, Debay Holdings Pty Ltd and Victory Parade Pty Ltd in mid 2006.
Liquidators have concluded that the companies are unable to pay any dividend to unsecured creditors which include building and construction contractors, suppliers and service providers in the Hunter region, project manager consultants, employees, investors and the Australian Tax Office. The total deficiency of the corporations is $23.30 million. The companies owe unsecured creditors a total of $22.78 million.
ASIC’s executive director of Enforcement Jan Redfern said the maximum period of five years disqualification is only imposed in the worst cases.
“In this instance, the directors of the Morgan and Bay group of companies failed to use their powers and discharge their duties with care and in the best interests of the corporations.
“Their conduct directly contributed to the failure of multiple corporations, insolvent trading and significant deficiencies,” he added.
Morgan and Van Aardt established and were directors of all six companies, the first of which was established in late 1998. Rankin and Warne were directors of Morgan Building and Bay Building Developments from mid-2004.
ASIC’s investigation followed the lodgement of reports by liquidators about the inability of the companies to pay their debts. Jonathon McLeod of McLeod and Partners was the liquidator of Morgan Building, Bay Building Investments, Bay Building Developments, Bay Constructions and Debay Holdings. James Shaw of Ferrier Hodgson was the liquidator of Victory Parade.
ASIC found Morgan, Van Aardt, Rankin and Warne were responsible for the failure and financial deficiencies of the corporations and engaged in multiple forms of misconduct.
Specifically, ASIC found Morgan Building, Bay Building Investments and Bay Constructions paid trade creditors in preference to employees’ superannuation. Morgan and Van Aardt also failed to prevent Bay Building Investments from incurring debts totalling $576,227 while insolvent.
ASIC also found the directors made, or agreed to the making, of uncommercial and irrecoverable loans to related entities.
For example, Morgan Building made interest-free and unsecured loans totalling $423,193.80 to corporations of which Morgan, Van Aardt, Rankin and Warne were directors.
Bay Building Investments made interest-free and unsecured loans totalling $5,806,407 to corporations of which Morgan and Van Aardt were directors and Bay Constructions loaned $1,296,893 to Bay Building Investments without interest or security.
The directors also failed to ensure that the corporations met statutory requirements in relation to tax and workers’ compensation and failed to keep and provide the liquidator with proper financial records.
Morgan, Van Aardt, Rankin and Warne have the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.
Australian Property Journal
