A MONTH before it was placed into administration last year Walton Construction Queensland was in good financial health, solvent and with net assets of $9.7 million.
By October 5, 2013, it was in administration leaving debts of $29m to unsecured sub contract creditors after transferring most of its assets to Peloton Builders established by directors of the Mawson Group, Walton's business advisors.
Total Walton Group debt across all its entities is now around $90m.
- Subbies expect fresh inquiry with new appointment
- Who is Newman listening to when it comes to construction?
- Govt accused of misleading committee on subbie issue
Sunshine Coast landscaper Beau Hartshorn lost more than $500,000 for work done during August and September on the Nambour Coles project.
Hartshorn's company Earthscapes employed 15 people.
Having lost his home, vehicles, machinery and business in the fall out he and his young family now live with his parents.
He remains unemployed but hopeful of securing a job in council's parks department.
Just how Hartshorn and many others came to be left in such a state is something the Walton Sub Contractor Alliance, headed by Coolum civil contractor Les Williams, continue to push regulators to determine.
Records obtained by the Daily show that at August 31, 2013, Walton Construction Queensland was a company with $6.38m in cash in the bank and another $2m on term deposit and set to receive $13.3m from clients.
Yet about four weeks later it paid $1.3m to Peloton Builders to have it assume control of all its assets and projects.
Only a few days later, on October 5, it appointed Lawler Draper Dillon as administrator.
The name Peloton Builders had been registered on August 5, 2013, and is owned by Mawson directors who occupy the 17th and 18th floor of 530 Collins Street in the heart of Melbourne's CBD.
Just where the money went, and why, are questions the Alliance will be asking new liquidator Grant Thornton to find out.
Grant Thornton has taken over a public examination into the company's affairs after the Australian Investments and Securities Commission last month successfully petitioned the Federal Court to remove Lawler Draper Dillon because of its close business ties to the Mawson Group.
The fall out from the Walton collapse was catastrophic for sub contractors like Hartshorn who are generally exposed to 60 days of labour and material cost between payments.
In Townsville the impact on scaffolder Mark Stevens was even more traumatic than Hartshorn's losses.
Stevens went from running a business with a $2.5m turnover and owning 47,000 sq m of prime industrial land secured with a $1m loan, to sleeping in his car.
Now batching in his mate's donga, the 53-year-old has lost his business, equipment built up over 30 years including his nail bag, his investment property, home and marriage.
Like Hartshorn he remains unemployed.
Serious questions are expected to be raised about the transfer of Walton assets to Mawson through an Asset Sale Agreement without the support of an independent valuation.
That document is effectively the architecture used to affect the dispersal of those assets.
Expert examination of its content suggests it may be "void ab initio", a legal term effectively meaning to at no time hold any legal validity.
Yet, left untested by the previous liquidator, it took effect negating a process that otherwise would have seen debts collected, work in progress completed and the sale of assets and projects capable of returning a solid dividend to unsecured creditors.
The deal was signed on October 1 and included a clause that allowed Peloton at its discretion to exclude assets from the sale it deemed unviable. That it did on October 28 returning to Walton - by that stage in administration - $36.6m worth of unprofitable projects including Nambour Coles.
Yet the company's own documents show that in August not only was the Coles job profitable, but also that Walton Construction Queensland was on track to make a healthy return on $97m in turnover.
An underlying $4.6m profit was forecast for the year boosted by around $1.6m profit from the company's customer care division and more than $600,000 from a BUPA project the Queensland company was building in Victoria.
The Australian Securities and Investment Commission, troubled by the prior business relationship between liquidator Lawler Draper Dillon and the Mawson Group, went to appeal in the Federal Court to remove it from the winding up process.
That result has rung alarm bells in the insolvency sector which services the mess left by the $3.4bn in liquidations suffered by the Australian construction industry annually.
ASIC Commissioner John Price has warned that as fiduciaries, insolvency practitioners must be, and must be seen to be, independent and impartial.
"It is critical that creditors, and the wider public, have absolute confidence in liquidators acting, and being seen to act, independently and in the creditors' interests," he told the Daily.
"It is important for insolvency professionals to be very alive to the issue of actual and perceived conflict and that disclosure doesn't resolve that conflict. If in doubt they should contact ASIC or refuse the job."
Grant Thorton's appointment may begin to shed some real light on the complicated set of arrangements and company structures set up in advance of the Walton collapse.
It may also shed light on just who informed former liquidator Glenn Franklin of LDD that "Mawson was one of several advisory firms referred by the National Australia Bank Ltd to the company in or about March, 2013".
The claim, which was made in Lawler Draper Dillon's first report to Walton creditors in October last year, was this week emphatically denied by the NAB which said it had not done any such thing.
The sub-contractors' alliance has been dogged in its pursuit of a full understanding of the matter and determined that if and where impropriety has occurred that those involved be brought to account.
Specifically it wants examined by either the new liquidator or ASIC:
- Backdated share transfers involving WCQ in May 2012 and late lodgement of audited financials.
- Involvement of the NAB and Deloitte starting Jan 2013 until the present.
- The ASA agreements and the timing of project transfers including signed declarations supporting payment for transferring sub contractors plus supporting financial documentation from both Walton and the principals.
- Full access to Jobpac files and the appointment of a specialist analyst.
- Investigation into the return of bank guarantees, bonds and cash provided for security and the proposed beneficiaries.
- Investigate of any possible attempt to defeat creditors' rights pursuant to the Act.
- Early release of a National Australia Bank bank guarantee at Coles Nambour to the detriment of sub contractors.
- The benefit Mawson and or its associates derived from the Asset Sale Agreements.
- Any preferential payments that may have been made to crucial subcontractors required by Peloton Builders.
- The involvement of Walton's advisory board from May 2012.
Update your news preferences and get the latest news delivered to your inbox.