Liquidators probe multi-million-dollar sale of collapsed Mundella assets
The former director of West Australian dairy company, Mundella Foods, says he "literally has nothing" left and has denied any improper transactions following the company's collapse into liquidation.
Hayden Russell is facing scrutiny from liquidators over what they say could be more than $2 million in potentially unreasonable director-related and insolvent trading transactions.
Liquidators are also investigating whether the multi-million-dollar sale of Mundella and the Margaret River Dairy Company (MRDC) to dairy processor, Artisanal Market, constitutes an "uncommercial" deal.
Creditors are still owed $12.5 million following the collapse of Mundella Foods and associated companies.
In a statutory report filed to the corporate regulator, liquidators at Mackay Goodwin said they had uncovered $778,000 of potentially unreasonable director-related transactions, including "frequent cash withdrawals".
They noted that further investigations were required to determine whether those withdrawals were used in the company's operations or were unreasonable.
The liquidators also found Mundella may have traded insolvent from as early as July 1, 2024, with transactions totalling $1.3 million.
The report did not make final findings and noted that further investigations would require additional funding.
Former director Hayden Russell. (Supplied: Kira Price)
'I acted in good faith'
Mr Russell denied making any unreasonable transactions, telling the ABC he acted "in good faith" at all times.
He claims he used cash withdrawals to pay for operations and workers' wages and had spent a few hundred thousand dollars of personal savings on the business.
"I literally have nothing now, because I put every single penny I had into there to try keep it afloat,"
he said.
The liquidators' report shows workers, who are priority creditors, are still owed almost $940,000 in unpaid wages, superannuation and entitlements.
Secured and unsecured creditors are owed a further $3 million and $8.5 million respectively.
Liquidators told creditors it was unlikely Mr Russell had the financial capacity to meet any claims brought against him, and further investigations would not be possible without further funding from creditors.
"At this stage of the Liquidation, it is unlikely that there will be a dividend to any class of creditors," the report stated.
Liquidators say they have identified potentially unreasonable transactions from the previous owner of Mundella. (ABC South West WA: Jon Daly)
The last-minute sale
Last month, Artisanal Market announced its subsidiary had purchased the Mundella and MRDC brands, properties and assets.
The liquidators' report states the sale was agreed to on July 17, just weeks before creditors voted to put the companies, albeit what little was left of them, into liquidation.
The seller was mortgagee and private lender, Bowral Capital.
Bowral and another secured lender, Bizcap, received $5.85 million and almost $1 million respectively from the final sale of the dairy companies' property and assets in October.
Liquidators said investigations into whether the property deal was uncommercial were ongoing.
An uncommercial transaction occurs when a company makes a deal that a reasonable person in its circumstances would not have agreed to.
"For the avoidance of any doubt, proceeds from the Sale remain insufficient to repay Bowral and Bizcap in full for the amount owed by the Company and MRDC," liquidators said.
"Accordingly, the Sale will not result in any recoveries for other creditors."
Bowral has been approached for comment on the liquidators' investigation of the sale.
The former director of Mundella and Margaret River Dairy Company said his financial rescue plan would have worked if his primary lender had provided more money. (ABC Rural: Annie Brown)
Failed bid for funds
The dairy companies were put into liquidation in August following a failed financial rescue plan set out in a Deed of Company Arrangement (DOCA).
The liquidators' report confirmed the companies failed to meet several obligations to creditors under the agreement, including $40,000 of unpaid funds to the Deed Fund.
Bowral acquired the properties and assets during the ongoing DOCA period from original lender Oak Capital, which went into its own liquidation in May this year.
Separately, Oak Capital is being sued in the federal court by the corporate watchdog, ASIC, for alleged unconscionable conduct and predatory lending practices, which it denies.
Mr Russell claims the DOCA would have succeeded if the subsequent mortgagee Bowral had lent him more money.
In a statement, Bowral said the company was not a party to the DOCA, "nor did it impose any obligation on Bowral Capital to provide further funding".
"Bowral Capital's responsibility was to manage the fund and protect the interests of its investors," the company said.
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