Administrators have recommended creditors of construction company Pindan accept its parent company’s $14.3 million payment offer, but there are doubts about whether larger claimants will back the move.
In an updated report released late this afternoon, administrators from EY recommended creditors authorise them to execute the deed of company arrangement, which was lodged by Pindan’s Singaporean owner earlier this week.
Oxley Holdings upped its DOCA proposal for the third and final time ahead of the second creditors meeting on December 3, which was postponed in the wake of its previous offer of $12.3 million.
That proposal came after administrators recommended rejecting the DOCA in favour of the winding up of Pindan Contracting, a decision which would have given them assent to pursue Oxley for damages in connection with claims it would support the group to remain solvent until October 2021.
The latest offer supports the payment of all 235 of the group’s employees, provides a payment to the liquidation entities of $1.5 million, a payment of $1,500 for trade creditors and a dividend to larger creditors.
Ankura senior managing director Quentin Olde said he was confident the DOCA would have the support of creditors, employees and directors, but administrators have flagged the possibility of creditors pursuing legal action instead.
While reiterating it was in the best interests of creditors to executive the revised DOCA, with 75 of the 109 unsecured creditors owed more than $69 million between them, EY administrators said they believed the differential treatment of creditors may give rise to a subsequent legal challenge.
That challenge would centre around letters Oxley signed confirming it would support Pindan to remain solvent until October 2021.
“Given the extent of differentiation in rates of returns for creditors owed more than $15,000 this risk is heightened,” the report stated.
A decision on the future of the multi-disciplinary construction group is expected to be made at the meeting on December 3.
EY was appointed as administrators of three Pindan entities and liquidators of a further nine on May 18, after Business News revealed the company was facing financial trouble.
The multi-disciplinary construction group collapsed owing more than $97 million, leaving the business’s 80 active projects, 280 staff and hundreds of subcontractors and trade suppliers in limbo.
Business News is a registered creditor of Pindan in relation to a small advertising contract.
