The 18-month long investigation into the collapse of the Peats Ridge Festival has come to a halt, with creditors unlikely to see any of the $1.6 million believed to be owed.
Held at Glenworth Valley, the much-loved boutique New Year’s Eve camping festival dissolved shortly after its 2012/13 edition. A dramatic fall out left creditors looking for money in a high-profile case for the music industry and its observers. In mid-August, liquidators Worrells delivered their forensic report on the company, which alleged to have found evidence of offences committed by Peats Ridge director Matthew Grant. Without further funds the investigations have halted. The report delivered to creditors said that Peats Ridge did not keep adequate trading and cash budgets, did not prepare quarterly financial statements and found evidence of payments that could warrant further investigation. Worrells alleged that Grant used income from the company Peats Ridge Pty Ltd – which held the 2011/12 and 12/13 events – to pay off debts from Perife Pty Ltd – which held the 2009/10 and 10/11 festivals. As such, they conclude that he knew the company would be insolvent from inception. “We believe that Mr Grant may have breached a number of criminal sections of the Corporation Act,” the report reads. “Mr Grant’s own explanation of the financial failures of Peats Ridge evidences that he intended to use revenue from the 2011 festival to pay creditors of companies that operated previous year’s festivals. Worrells say that potential offences may include fraud by officers, falsification of books and dishonest insolvent trading. In regards to loans provided between companies which Grant was the director of, Worrells say that he “would have been aware of their inability to repay the amounts”. “This may constitute unreasonable director related transactions pursuant. and may constitute a further breach of director duties.” As reported last year, Worrells delivered their findings to the Australia Securities and Investment Commission [ASIC] in March 2013, with the Commission advising on June 6, 2013 that they would not be taking any further action. With the backing of creditors and the Media, Entertainment and Arts Alliance [MEAA], Worrells resubmitted further information to ASIC on June 11, 2013 “with particular emphasis on trading whilst insolvent and intercompany transactions”. Pushing for ASIC to fund a public examination of Grant under the Assetless Administrator Fund, the Commission responded on June 18, 2014 advising that they were not prepared to fund the investigation. Worrells have indicated they intend to appeal the decision and have invited creditors to submit extra information. MEAA entertainment, crew and sport section director, Mal Tulloch said ASIC’s decision was “terribly disappointing”. “You can have the strongest laws in the land but if the regulator is reluctant to prosecute, what’s the point of having those laws?”, he said. Tulloch believes the case slipped down the pecking order due to a lack of funds in the case for investigation. “[AISC is] not funded sufficiently by the government to protect the public interest. [this is] purely based on an economic decision.” He added: “They’ve decided this is not an important case. even though it has major ramifications for the music industry.” Tulloch urged creditors to keep supplying Worrells with information about Peats Ridge debts for the appeal process. “It’s about putting pressure on ASIC to pursue this case. “If people don’t get involved, they’ll feel people are accepting this outcome, and we don’t think it is right to accept this outcome. this is people’s livelihoods.” In total, $1.463 million was generated by the festival. Transferred into another of Grant’s companies The Festival Company Pty Ltd, a total of $1.386 million was then transferred from The Festival Company to Peats Ridge Pty Ltd. Worrells say they are unaware what happened to the remaining $73,000. The report indicates that while approximately $500,000 was taken from alcohol sales at the 2012 event, deposits of only $192,933 were made. A lack of books and records made it difficult to track the complete details, but Worrells believe there were “insufficient deposits”. With an added $132,750 in sponsorship from Peats Ridge Pty Ltd, approximately $400,000 was transferred to the related Perife Pty Ltd entity, which Worrells claim was used to pay old debts from a previous festival. Sums of $388,465 and $219,648 were also transferred to MRG Assets Pty Ltd and MRG Operations Pty Ltd respectively – which together with Peats Ridge Pty Ltd formed the group of companies that ran the final two festivals. Worrells say that MRG Assets’ records indicate payments of $99,898 to Grant’s loan account, with similar transactions from MRG Operations totalling $70,703. They indicate Peats Ridge Pty Ltd made payments of $28,745 to Grant’s account as well. Grant was declared bankrupt on July 3, 2013, with a negative bank account, a car worth under $3,000 and a record collection worth $1,500, which was in the possession of Worrells. As such, the loan to Grant was unable to be reclaimed. So far, all the money claimed has been allocated to the liquidators- who themselves are writing off approximately $90,000 for their work – and $17,000 worth of employee entitlements. Creditor claims currently total over $820,000, but according to Peats Ridge’s books, Worrells believe another 174 creditors may have claims of over $823,000
– a total of over $1.611 million. Among the festival’s creditors are touring company Billions Australia (who are owed $45,650), Damian Cunningham’s Elastic Entertainment ($29,647), The Harbour Agency ($16,195), Modular Touring ($11,000), Niche Productions ($11,412) and Central Coast Tourism Incorporated ($75,900). Worrells have indicated that in a best case scenario, $649,333 could be recovered, with $479,953 available for distribution after liquidator’s fees – which would be 34.43 cents on the dollar for creditors. However the worst case scenario would see just $158,975 recovered and leave nothing for distribution to creditors after liquidator costs. Andrew Spring of Jirsch Sutherland had originally been appointed as liquidator until the creditors moved to replace them with Worrells. They charged fees of $49,380, but creditors only approved the amount of $26,112.50. The difference of $13,768 was to be approved by the courts before Spring would be remitted the amount.
Email, 22 Aug 2014