Payday ‘uncertain’ for Modco creditors

The liquidators in control of collapsed builder Modco Residential have warned a return to creditors is “uncertain” as they continue to wind up the failed company.

A report on the former administrators and current liquidators’ remuneration was filed with the Australian Securities and Investments Commission this week, giving an insight into the likelihood of dividends.  

In the report, the Hall Chadwick liquidators said they hadn’t calculated the cost of their services for paying dividends to creditors because they were uncertain there would be sufficient assets capable to enabling dividends.

Modco had just $300,000 in assets and its account was overdrawn by $900 when the administrator was appointed in July, according to a creditors meeting the following month.

“In this instance it is uncertain whether there will be sufficient assets capable of being realised in the liquidation to pay a dividend to creditors,” October's report read.

“Therefore, we have not contemplated the remuneration that would be charged to complete this work.

"Should sufficient funds be realised to pay a dividend to creditors then additional fees to cover this work will be requested to be determined by a committee of inspection (if appointed) or creditors at a later date."

It comes after creditor Torquejobs initially lodged a winding up application in June against Modco - founded by Perth couple Cynthia Lu and Yusuf Khan - in a bid to have the builder wound up.

In August, the Federal Court ruled that Modco be wound up on the grounds of insolvency, sparking hope for the up to 50 unpaid creditors believed to have been owed about $5 million, at the time.

Hall Chadwick's Cameron Shaw and Richard Albarran were court appointed liquidators to the shuttered building company, taking over from voluntary administrator Mathieu Tribut from GTS Advisory. 

The liquidators’ report also described that additional remuneration would be required if they were to identify any illegal activity, such as fraud, that would need to be reported to regulators.

“I note no illegal activity has been identified to date,” the report read.