Besides milking the distressed steelmaker Arrium for $1 million in fees a week, KordaMentha is helping itself to at least $500,000 a month to preside over the insolvency of Maria’s Farm Veggies.
It gets better. According to a note to creditors, the great insolvency fee-sponge is concocting a scheme to touch up taxpayers for a few million dollars more.
The latest KordaMentha Report to Creditors of Maria’s Farm Veggies talks about suing the NSW Government and the Department of Defence because the land on which the agricultural project is based is contaminated.
There is only one problem with this; the veggies are to be grown in glasshouses above the ground, not “in” the ground. Cor Disselkoen, the Dutch entrepreneur behind Maria’s Farm told this reporter in quite plain terms that it didn’t matter one bit that the Williamtown soil was contaminated.
Irritating details such as these are unlikely to dissuade corporate welfare warriors KordaMentha and Maria’s Farm creditor Macquarie Bank from having a lash at a lawsuit anyway.
When they pulled the plug on Maria’s Farm last June, they forgot to engage the company in a farm debt mediation process, which is required by law in NSW. Then they brazenly argued farm debt mediation was not needed as Maria’s Farm wasn’t a farm anyway.
Despite the middle word in Maria’s Farm Veggies being “Farm”, despite the purpose of the venture being to farm tomatoes and cucumbers, despite the land on which the project resides near Williamtown, Newcastle, being zoned rural – ergo farmland – the wallet farmers from Sydney’s CBD contended this was not a farm.
Macquarie and Korda have yet to devise how to best clog up the courts with their claim against the government. There is already a class action afoot. They may join that action or they may launch discreet proceedings of their own.
Maria’s Farm directors are also being investigated by administrators for unfair preferences, unreasonable transactions, insolvent trading and breach of fiduciary duties.
This may be a tactical move. Korda is unlikely to sue directors as it would prefer them onside, albeit with the leverage of threatened proceedings, not just to make their Williamstown contamination claim stand up but also because there is a flood damage insurance policy worth some $20 million.
As with Arrium, the administration of Maria’s Farm is likely to be stretched as long as humanly possible because the longer the insolvency, the more the insolvency practitioners are paid.
As Peter Gosnell of Sydney Insolvency News put it back in December, the $1 million a week clip “suggests a truly frenetic degree of activity”.
Many are wondering why this profitable company has been languishing in administration for so long. It has been tipped to make almost $300 million in earnings before interest, tax, depreciation and amortisation for the year to June 2017.
There ought to be some movement shortly though as KordaMentha is thought to be within days of deciding whether Arrium will be sold to Britain’s Liberty House and SIMEC or the private equity firm Newlake which is backed by Korean steelmaker Posco.