Simon was appointed Administrator of 11 entities within the Mega Group of Companies (the “Mega Group”) in August 2019.
Mega Ltd (“Mega”) is an unlisted public Company and the holding company of the group, established to import energy products for distribution to wholesale customers, retail network and strategic partners.
After the Mega Group’s major fuel supplier ceased supply, Mega’s secured creditor withdrew their financial support and exercised their right to appoint Receivers and Managers over 10 entities in the Mega Group. Simon was appointed as Administrator the following day.
After three days, Receivers were also appointed over the debtor-books of 8 of the entities in the Mega Group.
Following our appointment and assessment of the viability of the business with the Receivers and Managers, a large part of the Mega business ceased trading immediately. It was then our task to work alongside the Receivers and Managers and the secured creditors to recover the assets from the various businesses.
Background
The Mega Group operated primarily through its 10 subsidiaries throughout the east coast of Australia. Mega was the holding company of the group and provided support services to subsidiaries. In the two years preceding our appointment, Mega embarked on an industry consolidation process, which saw the acquisition of several small to medium sized independent operations to integrate into the Group.
At its peak, the Mega Group operated a fleet of over 50 trucks, road trains and over 200 large scale fuel tanks. The Mega Group also operated fuel retail stores and unmanned tanks throughout the east coast of Australia and invested heavily in sponsorship of Australian motorsports.
The Group grew rapidly from mid-2018 to March 2019, supported by significant funding from the secured creditor. However, during this period Mega was not generating sufficient income to meet its operating expenses and was incurring increasing trading losses.
Although the Mega Group was well-funded, they made poor choices in their investments, did not keep adequate books and records, failed to properly integrate acquired businesses into the group and was heavily reliant on ongoing financial support from a single secured creditor without proper consideration to alternative sources of finance.
When the secured creditor withdrew support for the Mega Group and enforced their security, Mega and its subsidiaries could no longer continue to operate due to limited funds, assets, and reliance of the entities within the Mega Group on one another.
How did we assist
During our appointment as Administrators and subsequently Liquidators, the following was undertaken:
- We worked closely with the secured creditors and their Receivers and Managers to realise the Mega Group’s assets and conduct investigations into the financial position of the group.
- Managed the day-to-day requirements of 11 concurrent appointments in Queensland and New South Wales, including dealing with secured creditors, receivers, receivers and managers, employees, and unsecured creditors.
- Following the pay-out of the debtor-book secured creditor, we were then tasked to collect the remaining debtors for one of the subsidiaries for the benefit of unsecured creditors.
- Conducted investigations into the voidable transactions of the business and reported our findings to ASIC and to creditors.
- We continued to work with the main secured creditor and their Receiver and Manager, supporting them as required in their further investigations into the conduct of the business and recoveries for the benefit of unsecured creditors.
Outcome
The Mega Group was orderly wound down by supporting the Receiver and Manager in this wind down and then conducting investigations into the affairs of the business. For some of the entities, certain investigations, recoveries, and dividend processes continue today.
