Airwell creditors split on likely payment outcomes

By Chris Nicholls

MELBOURNE: Airwell creditors are split today, with “ordinary unsecured creditors” likely to get anything from half to almost all their money back, but warranty repair creditors set to receive only 18 cents in the dollar at best.

In a copy of the creditors’ report, sent on 13 August and obtained by Current.com.au, Deloitte administrators Timothy Bryce Norman and Salvatore Algeri recommended the offer, as liquidation, the only other option, would give most unsecured creditors nothing.

Under the proposed Deed of Company Arrangement (DOCA), “priority employee creditors” will receive 100 cents in the dollar, while “Ordinary unsecured creditors” will receive at worst 56 cents and at best 92 cents in the dollar.

However, warranty creditors will only receive between 11 and 18 cents in the dollar.

“After consideration of the three options available to creditors for the future of the company, being; the administration to end, place the company into liquidation or accept the proposal for a DOCA, we consider that the likely returns from a DOCA will exceed those likely to be realised in a liquidation of ECP,” the administrators said.

The report went on to say that “it is our recommendation that creditors vote in favour of the proposed DOCA”.

While the proposed best outcome for normal unsecured creditors does come close to the suggestion Norman made in late July that unsecured creditors would receive an offer “similarly attractive” to that for employees, it appears warranty creditors have missed out.

At the time of the interview, Norman said while he could not speak with absolute certainty, other creditors would receive an “attractive proposal”. It appears he did not mean warranty creditors.

One such creditor, speaking anonymously, said it looked as if ECP had been “a sinking ship for quite a while” and that “it would have been nice if they had let their warranty agents know, instead of letting us dig a deeper hole financially with them”.

The money will come from a Deed of Company Arrangement (DOCA), proposed by Airwell’s parent, ECP Australia, that will add $1.275 million to the payout pool for unsecured creditors and the creation of a creditors’ trust to be created for all warranty creditors.

Also revealed in the report was confirmation the two businesses had received offers to purchase them after an advert was placed last month in the Australian Financial Review, and the cost of Deloitte’s services to date – $450,000.

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