Vac Group Holdings Pty Ltd (Subject to Deed of …...1....

1. D18-200513-VACGVAC10-CircularToCreditorsEmployees-GEW (v2).docx

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement)

ACN 130 053 388

and associated entities listed in Schedule 1

(collectively, the Vac Group)

Circular to Creditors and Employees

I refer to the appointment of Robert Kirman and I as Deed Administrators of the Vac Group entities on

20 December 2019, and to our previous Circulars.

This Circular will refer to three timeframes, as follows:

Pre-Voluntary Administration period: the period up to 18 November 2019

Voluntary Administration period: 18 November 2019 to 20 December 2019

Deed of Company Arrangement period: 20 December 2019 to date

Following is an update in respect of the Vac Group.

Executive summary

The Deed of Company Arrangement (Deed) was signed on 20 December 2019.

The Deed Proponents have paid contributions totalling $2m to the Deed Fund.

The majority of pre-Voluntary Administration and Voluntary Administration debtors have been

collected, and paid to the Deed Fund (net of Voluntary Administration funding).

The Deed Administrators have now settled or paid the majority of trading and other costs

associated with the Voluntary Administration period.

The Deed Administrators have convened a meeting of Deed Creditors for 10 June 2020 to seek

Deed Creditors’ approval:

to vary the terms of the Deed; and

of the Deed Administrators’ remuneration for the Deed of Company Arrangement period.

Subject to the outcome of the meeting of Deed Creditors, the Deed Administrators intend to

declare a dividend and distribute the Deed Fund, including amounts for Priority employee claims.

It is estimated that outstanding employee superannuation claims will be paid in full

(subject to final verification of outstanding claims).

Other priority employee claims in respect of entitlements owed to terminated employees

will also likely be paid in full.

Subject to quantification of the above claims and the collection of outstanding debtors, it

is possible that a dividend will be available for unsecured creditors. The amount of any

dividend for unsecured creditors cannot be calculated until higher priority claims have

been quantified and paid.

It is likely the dividend process will commence in mid-June 2020.

To participate and vote at the meeting convened for 10 June 2020, Deed Creditors are invited to

submit a Proof of Debt (if one has not previously been submitted) and complete a Proxy Form (if

required).

Deed of Company Arrangement (Deed)

A copy of the Deed is available at website https://www.mcgrathnicol.com/creditors/vac-group-holdings-pty-

ltd/ and is located in the Creditor information section.

As previously advised, the Deed was executed on 20 December 2019. In summary, pursuant to the terms of

the Deed:

The Voluntary Administrators became Deed Administrators of the Deed;

Control of the Vac Group business operations reverted to the Directors upon execution of the

Deed;

Leave entitlements for Continuing Employees were deferred, and could continue to be taken in the

normal course of the Vac Group’s on-going operations; and

a Deed Fund was created comprising:

– contributions from the Deed Proponents totalling $2m, payable over a period of 12

months;

– surplus funds (if any) from the trading of the Vac Group during the Voluntary

Administration period; and

– net collections from pre-Voluntary Administration debtors (if any).

Order of Distribution of Deed Fund

Pursuant to the Deed, the Deed Administrators’ role is to administer the Deed Fund, adjudicate on creditor

claims and pay distributions (until the Deed Fund is extinguished) in generally the following priority:

Remuneration, costs and expenses of the Voluntary Administrators;

Remuneration, costs and expense of the Deed Administrators;

Priority creditor claims, being claims for certain employee entitlements, primarily:

– outstanding superannuation for both Continuing and Non-continuing Employees; then

– employee entitlements for any former employees; then, if the fund has not been

extinguished:

Unsecured creditor claims on a pro-rata basis.

Contribution from Deed Proponents

Contributions totalling $2m were paid in full by the Deed Proponents on 23 December 2019.

Trading position and Debtor collections

During the Voluntary Administration period, in order to secure sufficient working capital to continue the

Vac Group’s business operations, the Voluntary Administrators entered into a debtor finance facility with

Cashflow Finance Australia (CFA). Vac Group’s existing pre-Voluntary Administration debtors and debtors

created during the Voluntary Administration period were used as collateral to secure funding from CFA.

Approximately $4.12m in pre-Voluntary Administration debtors and $3.33m in Voluntary Administration

debtors secured funding advances from CFA totalling $4.82m. This funding was used as follows:

https://www.mcgrathnicol.com/creditors/vac-group-holdings-pty-ltd/

https://www.mcgrathnicol.com/creditors/vac-group-holdings-pty-ltd/

An amount was paid by CFA directly to Westpac Bank to secure release of Westpac Bank’s existing

security over pre-Voluntary Administration debtors (that is, the Westpac Bank debt that related to

the pre-Voluntary Administration debtors was paid out); and

Payment of operational costs, including employees’ wages and trading costs incurred during the

Voluntary Administration period.

Pursuant to the funding arrangements, CFA retained security over, and responsibility for the collection of

debtors, until all advances, costs and interest were repaid to CFA, which occurred around the end of

February 2020.

Since that time, CFA have continued to collect certain pre-Voluntary Administration period and Voluntary

Administration period debtors, remitting those funds to the Deed Administrators to form part of the Deed

Fund.

Set out below is a summary of the Vac Group debtor position.

Vac Group debtors as at 22 May 2020

Particulars Pre-Voluntary

Administration ($)

Voluntary

Administration ($) Total ($)

Debtors collected 3,193,876 3,235,917 6,429,793

Funds distributed

Repayment of CFA funding (2,588,490) (2,236,758) (4,825,248)

CFA charges and fees (175,309) (126,956) (302,265)

Funds remitted to Deed Administrators (430,077) (872,204) (1,302,280)

Total funds distributed (3,193,876) (3,235,917) (6,429,793)

Debtors available to collect

Invoices assigned to CFA 4,119,182 3,324,570 7,443,752

Debtors collected (3,193,876) (3,235,917) (6,429,793)

Debtors written off/doubtful debts (553,373) - (553,373)

Debtors to be collected by Deed Administrators

directly (118,203) - (118,203)

Total debtors remaining to collect by CFA 253,729 88,653 342,383

As at 22 May 2020, there remains debtors of approximately $342,000 to be collected by CFA and

approximately $118,000 to be collected by the Deed Administrators that if collected, will be added to the

Deed Fund.

Summary receipts and payments

Following is a summary of the receipts and payments from the Deed Fund as at 22 May 2020.

Vac Group summary receipts and payments - Deed Fund to 22 May 2020

Particulars Total ($)

Receipts

Funds from Pre-Voluntary Administration bank accounts 193,077

Funds from Voluntary Administration bank accounts1 2,093,358

Pre-Voluntary Administration debtors2 441,247

Voluntary Administration period debtors2 872,204

Refunds 36,524

Total receipts 3,636,410

Payments

BAS payments (net of refunds) (738,675)

Initial Refund to Vac Group from Funding provided on 27/12/2019 (58,795)

Vac Group trading costs incurred during the Voluntary Administration (355,183)

Vac Group wages and salaries incurred during the Voluntary Administration (165,484)

Voluntary Administration costs3 (149,424)

Voluntary Administrators fees and disbursements (19,807)

Total payments (1,487,368)

Net receipts/(payments) 2,149,042

1 These funds include the Deed Proponents’ contributions totalling $2m.

2 Pre-Voluntary Administration and Voluntary Administration debtor collections represent the balance of the Vac Group

debtors that were not factored to CFA. These amounts are net of the secured funding advances from CFA totalling

$4.82m which were repaid in late February 2020.

3 Represents monies paid in respect of the Voluntary Administrators’ outlays, including but not limited to valuation fees,

legal fees, other consultants, insurance and other ancillary costs.

The Deed Administrators have paid the majority of operational and other costs associated with the

continued operations of the Vac Group during the Voluntary Administration period, and various Voluntary

Administration costs.

Certain remuneration of the Voluntary Administrators and the remuneration of the Deed Administrators

have not been paid. Further information in relation to remuneration is set out below.

As at 22 May 2020, the Deed Administrators retained approximately $2.15m in the Deed Fund, which is

available for distribution in accordance with the terms of the Deed.

Priority Creditor claims and Payments from the Deed Fund

Generally, amounts owed to employees in respect of their current or former employment are afforded

priority status pursuant to the Corporations Act.

Pursuant to the terms of the Deed, and following a resolution of the Vac Group’s employees, the statutory

provisions relating to priority claims were amended for the purposes of the Deed. In accordance with the

terms of the Deed:

Continuing Employees, meaning those employees whose employment with the Vac Group had not

ceased on or before 20 December 2019, agreed to defer from claiming amounts for certain

employee entitlements, other than outstanding superannuation.

Non-continuing Employees, meaning those employees whose employment with the Vac Group had

ceased on or before 20 December 2019, would be entitled to claim all entitlements owed to them

in respect of their former employment.

Furthermore, the terms of the Deed provide that Claims for employee entitlements will generally be in the

order of priority outlined in the Corporations Act, except for those claims that had been deferred by

Continuing Employees.

Further comments regarding employee entitlements and the application of the Deed terms to each category

of these claims is set out below.

Wages

The Voluntary Administrators paid wages owed to employees for the week ending 18 November 2019 (the

date of the Voluntary Administrators’ appointment). The Voluntary Administrators are not aware of any

other claims for unpaid pre-Voluntary Administration wages.

If any employee believes they have claims for unpaid pre-Voluntary Administration wages, please contact

the Deed Administrators’ office.

Pre-Voluntary Administration superannuation for the period to 17 November 2019

As previously advised in the Voluntary Administrators’ Report dated 12 December 2019, certain

superannuation contributions had not been paid by the Vac Group for the following periods:

1 January 2019 to 31 March 2019 (March Qtr 2019);

1 April 2019 to 30 June 2019 (June Qtr 2019);

1 July 2019 to 30 September 2019 (Sept Qtr 2019); and

1 October 2019 to 17 November 2019 (Dec Qtr 2019) – note superannuation for the balance of

the Dec Qtr 2019 was a cost of the Voluntary Administration and has been paid (see further

below).

As outstanding pre-Voluntary Administration superannuation payments were not paid by the Vac Group by

the relevant due dates for each of the periods, pursuant to the provisions of the Superannuation Guarantee

Charge Act (SGC Act) outstanding superannuation claims are claims that vest in Australian Taxation Office

(ATO).

The ATO is required to collect outstanding superannuation contributions and charges, and remit those

contributions to relevant employees’ individual superannuation funds.

Since commencement of the Deed, the Deed Administrators have collated, reconciled and lodged various

information from the Vac Group’s records with the ATO in respect of outstanding employee superannuation

contributions, in order to verify amounts outstanding.

In response to the work undertaken by the Deed Administrators, following is a summary of outstanding

employee superannuation contributions, including relevant charges and interest, provided by the ATO to the

Deed Administrators.

Vac Group SGC

Period

SGC Shortfall

($)

Nominal Interest

($)

SG Shortfall GIC

($)

SG Admin Fee

($)

Total

($)

March Qtr 2019 382,475 15,601 7,622 4,720 410,418

June Qtr 2019 392,985 16,042 13,277 4,320 426,624

September Qtr 2019 379,342 30,785 1,954 4,380 416,462

December Qtr 2019 222,199 12,460 2,167 3,860 240,686

Total 1,377,001 74,888 25,020 17,280 1,494,189

Less payments made (238,013) (16,387) - - (254,400)

Total Outstanding SGC 1,138,988 58,501 25,020 17,280 1,239,789

As noted above, certain payments were made by the Vac Group to the ATO for employee superannuation

contributions pursuant to a payment plan agreed between the Vac Group and the ATO.

Enclosed at Annexure 2 is a schedule of the Vac Group employees who, based on the Vac Group’s books

and records, the Deed Administrators understand have a claim for outstanding superannuation. The Deed

Administrators have notified the ATO of outstanding superannuation contributions for each individual

employee appearing in Annexure 2.

Due to privacy requirements, the ATO is not in a position to confirm to the Deed Administrators details of

amounts owed to individual employees for outstanding superannuation contributions, however the ATO has

confirmed the total outstanding amount of $1.24m as set out above. If any employee requires specific

details of the net amount owed to them for superannuation, please contact the ATO on 13 10 20.

Voluntary Administration superannuation for the period 18 November 2019 to 20 December 2019

All superannuation payable in respect of the Voluntary Administration period was paid to individual

employees’ nominated superannuation funds by the Deed Administrators on 28 January 2020.

Employee leave entitlements

Pursuant to the terms of the Deed, and in accordance with the resolution passed at the meeting of

employees convened on 19 December 2019, leave entitlements for Continuing Employees of the Vac Group

were to be deferred, as it was a condition of the Deed that these entitlements would be available to

Continuing Employees during the on-going operations of the Vac Group once the Deed had been executed.

Accordingly, the Deed Administrators confirm that the majority of leave entitlements for Continuing

Employees are not claims that will be admitted to prove for a future distribution from the Deed Fund.

Termination payments

As the majority of the Vac Group’s employees continued their employment as a condition of the Deed, the

Deed Administrators do not anticipate that there will be material claims for termination payments.

The Deed Administrators are aware a number of employees were terminated prior to, or during the

Voluntary Administration period. Termination payments owed to these employees are approximately

$66,000 and will be claims admitted to prove for a distribution from the Deed Fund.

Therefore any employee whose employment was terminated before or during the Voluntary Administration

period will be eligible to prove for their entitlements (including wages, and amounts payable under an

employment contract or an award on termination) through a Proof Debt form (attached).

Ongoing leave entitlements and superannuation

All leave entitlements (including annual leave, sick leave, personal leave and long service leave) for

Continuing Employees (who remained employed by the Vac Group as at 20 December 2019) were preserved

and continued to be obligations of the Vac Group, to be paid out as and when the Continuing Employee is

eligible to receive them.

All superannuation amounts owing from 20 December 2019 are obligations payable by the Vac Group in

the ordinary course of ongoing operations.

Estimated funds available for distribution

Based on the terms of the Deed, outlined below is the current estimate of funds available for distribution

from the Deed Fund, subject to creditors’ approval of the variation to the Deed.

Deed cash position as at 22 May 2020

Particulars ($)

Cash at bank 2,149,042

Outstanding trading liability

Provision for further VA related costs (2,000)

Refund to Vac Group from Funding provided on 27/12/2019 (93,495)

GST accrued MYOB refund/(payment) - VA and DOCA to 31/03/20 7,966

Total trading liabilities (87,529)

Forecast net cash at bank after remaining trading liabilities 2,061,513

Administrators Remuneration

Remaining VA fees (subject to court approval) (GST incl.) (116,526)

Deed fees (subject to creditors approval) (GST incl.) (495,000)

Remaining Administrators costs and remuneration (611,526)

Funds available for distribution 1,449,987

The above estimate does not include any debtor collections after 22 May 2020 (which, when collected, will

add to the funds available for distribution).

Subject to quantification of the total claim, the Deed Administrators now estimate a dividend of 100 cents

in the dollar will be paid in respect of superannuation and other outstanding employee claims.

Subject to quantification and payment of the above claims and the collection of outstanding debtors, the

Deed Administrators now estimate it is possible that a dividend will be paid for unsecured creditors. For

clarity, the amount of any dividend for unsecured creditors cannot be calculated until the above higher

priority claims have been quantified and paid and debtors have been collected.

In the Voluntary Administrators’ Report dated 12 December 2019 (Report), it was forecast that a dividend of

59 cents in the dollar for superannuation only would be paid. The material increased return now estimated

to be available to priority employee creditors is attributed to:

Updated information and verification of outstanding pre-Voluntary Administration period

superannuation contributions being less than originally estimated; and

Debtor collections exceeding amounts originally forecast. This, in part, is due to the work

undertaken by the Deed Administrators, in conjunction with CFA and the Vac Group staff

continuing to monitor, follow up and address outstanding debtor collections, which has benefited

the overall return to creditors.

Deed Administrators’ fees

I will be requesting that Deed Creditors consider my enclosed detailed Remuneration Report and consider

resolutions at the Meeting of Deed Creditors to approve the Deed Administrators’ remuneration.

In accordance with the enclosed Remuneration Report, the following amounts have been proposed for

remuneration for the Deed of Company Arrangement period.

Approvals sought Amount (ex GST) Amount (inc GST)

Remuneration

Retrospective period (20 December 2019 to 8 May 2020) $387,567

Discount (37,567)

Retrospective remuneration (net of discount) $350,000 $385,000

Prospective period (9 May 2020 to finalisation) $100,000 $110,000

Total approval sought $450,000 $495,000

Summarised below is an overview of the various tasks associated with the Retrospective and Prospective

remuneration.

Retrospective Remuneration (20 December 2019 to 8 May 2020)

The Deed Administrators have incurred total professional time costs of $387,567, and we have proposed to

discount our total professional time costs to $350,000. The retrospective remuneration approval sought for

the Deed for the period to 8 May 2020 relates to work undertaken, including but not limited to the

following matters:

Dealing with residual Voluntary Administration trading matters during the Deed of Company

Arrangement period including:

reviewing payments to ensure suppliers were providing invoices in accordance with the

approved Purchase Orders issued during the Voluntary Administration;

maintaining and updating the Purchase Order register to ensure the cashflow analysis was

reliable and up to date to monitor Deed Fund;

continued presence of McGrathNicol staff at Vac Group’s head office to assist with preparation

of payments and transition of other matters following the Voluntary Administration; and

correspondence and telephone discussions with various suppliers, customers, statutory

authorities and employees regarding the finalisation of the Voluntary Administration.

Liaising with the ATO and lodging various Statements which include:

reviewing and reconciling the information relating to outstanding SGC claims;

preparing and lodging the SGC Statements with the ATO; and

lodging numerous Business Activity Statements in various Vac Group entities associated with

the Voluntary Administration and the Deed of Company Arrangement period.

Liaising with CFA and the Vac Group including:

continued monitoring of the CFA invoice finance facility and debtor collections;

reconciling and collecting residual debtor collections from CFA after repayment of the CFA

funding advances;

determining appropriate strategies with CFA and the Vac Group in respect of unpaid debtors

outside normal trading terms;

directly engaging in the collection of certain un-factored debtor accounts; and

reviewing various claims for credits or adjustments to outstanding debtor accounts claimed by

Debtors.

Instructing legal counsel to prepare applications to Court to seek approval of certain remuneration

associated with the Voluntary Administration period; and

Dealing with various general creditor claims or requests for information in respect of the Voluntary

Administration process.

Prospective Remuneration (9 May 2020 to effectuation of the DOCA)

The retrospective remuneration approval sought for the Deed for the period from 9 May 2020 relates to

work to be undertaken, including but not limited to the following matters:

Preparation of this update to creditors;

Convening the Meeting of Creditors on 10 June 2020 to consider the proposed variation of the

Deed and approval of the Deed Administrators’ remuneration;

Following the meeting of creditors, commencing the Dividend process, which will include:

issuing further statutory notices calling for Proofs of Debt;

adjudicating on Proofs of Debt received; and

declaring a dividend which the Deed Administrators estimate will result in the payment of the

outstanding employee superannuation claims and terminated employees claims in full;

Continue to monitor and take appropriate actions to facilitate the collection of the remaining debtors

totalling approx. $460,000 (or determining the extent to which it is in creditors’ interests for the Deed

Administrators to continue to pursue those outstanding Debtors);

Distributing any residual Deed Fund amounts in accordance with the terms of the Deed, including

any further updates to Creditors; and

Preparing and lodging statutory forms as necessary, e.g. BASs, Reports to ASIC, etc; and

Finalise the Deed.

Further detail on the various tasks, time invested by Deed Administrators’ staff, relevant rates of

remuneration, etc are contained within the attached Remuneration Report.

An information sheet on approving remuneration of an external administrator is also attached for your

information.

Proposal to vary the Deed

The terms of the Deed proposed by the Deed Proponents included a provision, at that time, to cap the

remuneration of the Deed Administrators to an amount of $50,000.

At the Second Meetings of Creditors of the Vac Group convened on 19 December 2019, the Chairperson of

the meeting noted:

A number of proxies were held by the Chairperson in respect of the prospective remuneration of

the Deed Administrators;

That the Chairperson was not in a position to use proxies to vote in favour of remuneration;

As a result, it was unlikely that the resolution would be passed; and

An alternative mechanism would be sought for the approval for the Deed Administrators’

remuneration (that is, convening a meeting of creditors as proposed in this Circular).

Separately, at the time the Deed Proponents submitted the Deed proposal to the Deed Administrators, the

Deed Administrators had noted to the Deed Proponents that the level of remuneration proposed as a term

of the Deed would be insufficient given the scope of the obligations imposed on the Deed Administrators

under the terms of the Deed. However, in the interests of creditors, the Deed Administrators had

recommended that creditors resolve to accept the terms of the Deed, on the basis that the Deed

Administrators remuneration would be resolved separately, as advised to creditors at the Second Meetings

of Creditors.

As outlined in this Circular (and the attached Remuneration Report), the Deed Administrators have

expended significant time and resources to date in continuing to administer the Deed, and to maximise the

estimated return to creditors.

Pursuant to section 445A of the Corporations Act, a Deed may be varied by a resolution passed at a

meeting of creditors. The Deed Administrators propose that the Deed be amended so that the Deed

Administrators’ remuneration be determined by a resolution passed a meeting of Deed Creditors or failing

that by the Court.

Meeting of Deed Creditors

A meeting of Deed Creditors has been convened to consider:

A variation to the terms of the Deed, specifically to amend the term relating to the Deed

Administrators’ remuneration, and subject to this resolution being approved by Deed Creditors;

Approval of the Deed Administrators’ remuneration.

Pursuant to the terms of the Deed, all relevant creditor claims in respect of any of the Vac Group entities

are now pooled. Accordingly, any relevant creditor of any Vac Group entity will be entitled to vote at the

meeting, subject to that creditor having a valid claim.

There will be a single meeting of the Deed Creditors (as opposed to multiple meetings of each individual

entity comprising the Vac Group). The meeting of Deed Creditors will be held as follows:

Date: 10 June 2020

Time: 10:00 AM

Address: McGrathNicol, Level 7, 175 Eagle Street, Brisbane Qld 4000

While the technical meeting location will be at the offices of McGrathNicol, Level 7, 175 Eagle Street,

Brisbane Qld 4000, the meeting of Deed Creditors will be held via teleconference and webinar only

and creditors will not be able to attend in person, given the recent Government guidance surrounding

COVID-19 and social distancing measures.

Attached at Annexure 3 is a notice of meeting.

To participate in the meeting, you must submit a proof of debt and information to substantiate your claim.

Attached at Annexure 4 is a schedule of proofs of debt submitted to date. If you have already lodged a

proof of debt, you are not required to do so again.

If the creditor is a person and will attend the meeting, this is all that is required. However, if the creditor is

another type of entity (such as a company), they must also appoint a person – a “proxy” or person

authorised under a power of attorney – to vote on behalf of the creditor at the meeting. A proxy should

also be appointed if the creditor is a person, but is not available to attend the meeting.

You can appoint the chairperson of the meeting as your proxy and direct the chairperson how you wish

your vote to be cast. If you choose to do this, the chairperson must cast your vote as directed. Proxy

forms lodged by creditors for previous meetings of creditors of the Vac Group cannot be used for this

meeting.

Proof of debt and proxy forms are enclosed, together with guidance notes to assist you when you complete

them.

To ensure that the meeting is conducted as efficiently as possible, any creditors wishing to attend the

meeting of Deed Creditors via teleconference are requested to please:

advise me in writing via email address: [email protected] of your attendance 24

hours before the meeting is due to be held (ie. by 10:00 AM on 9 June 2020);

confirm your contact details, including telephone number and email; and

provide your proof of debt and proxy (if required) at the same time.

Any materials that I intend to table at the meeting of Deed Creditors will be provided electronically prior to

the meeting, to creditors that have advised of their attendance in writing.

We also enclose general information for attending and voting at meetings of creditors.

What you should do next

You should:

Read the enclosed information;

Decide whether you are going to participate in the meeting, and if so;

Complete and return your proof of debt and proxy form (if required) by 9 June 2020 by email to

[email protected] to register for the meeting.

Finalisation

There remains a material amount of debtors to be collected. The Deed cannot be effectuated (finalised)

until:

all debtors have been collected; or

where the Deed Administrators do not believe it is in creditors’ best interests to continue to pursue

the unpaid debtors; and

the total Deed Fund is distributed in accordance with the terms of the Deed.

The timing of the collection of debtors and therefore the final payment from the Deed Fund is not known.

However, in the interim, subject to the outcome of the meeting of Deed Creditors, it is intended to make a

distribution in respect of (at least) priority employee claims.

mailto:[email protected]


Queries

If you have any queries in relation to the above, please contact [email protected].

Dated: 25 May 2020

Yours faithfully

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement) and associated entities listed in

Schedule 1

Jamie Harris

Deed Administrator

Enclosure(s):

Schedule of Vac Group entities over which the Deed Administrators are appointed

Schedule of Vac Group employees whose claim has been submitted with the ATO for outstanding

superannuation

Notice of Meeting

Proofs of Debt previously submitted

General information for attending and voting at a meeting of creditors

Proof of Debt (Form 535)

Proof of Debt Guidance Notes

Proxy form

Proxy guidance notes

Remuneration Report

ARITA Information Sheet – Approving remuneration of an external administrator


Annexure 1

Schedule of Vac Group entities over which the Deed Administrators are appointed

Company name (All Subject to Deed of Company Arrangement)

ACN ABN

Vac Group Holdings Pty Ltd 130 053 388 99 130 053 388

Beacos Pty 118 965 398 94 359 583 849

Rebirthed Earth Pty Ltd 144 749 235 93 144 749 235

Soil Transfer Pty Ltd 130 054 303 50 130 054 303

Staking U Asia Pacific Campus Pty Ltd 158 311 516 25 158 311 516

Vac Group Employees Pty Ltd 155 400 043 53 155 400 043

Vac Group Operations Pty Ltd 130 054 296 33 130 054 296

Vac-U-Dig Pty Ltd 105 678 493 90 105 678 493

Vac-U-Digga Pty Ltd 115 882 347 78 450 702 816

Vac-U-Digga R & D Pty Ltd 120 462 053 83 120 462 053

VHS IP Pty Ltd 618 795 583

Earth Radar Group Pty Ltd 620 043 129 35 620 043 129

Earth Radar Pty Ltd 163 919 088 82 163 919 088

Cosbea Pty Ltd 152 898 041 27 318 596 387

Employee full name Employee full name Employee full name

ADAMS Nicholas James DALTON Adrian Richard HAMMOND Brendan

ALEXANDER Todd Anthony DALY Liam Joseph HANCOCK Davin Joel

ALPEN Jaron William DAWSON Oliver Curtis HARPER Ryan Christopher

ANDERSON Kenneth Gregory DESIRA Joseph HART Lea Tracey

ANKETELL Samuel Louis DEVERSON Georgia May HASTINGS Rebecca Meredith

ANKOR Simon Kingsley DOWLING Ian Thomas HAYNES Nathan Christopher Willima

AVRAMIDES Jordan McGlasson DUNCANSON Kylie Rachel HENDERSON Lee William

BADAL Nelly DUNLOP Jay Lindsay HENDERSON Rena Gaye

BANNISTER Andrew Steven DUNN Jason James HEWITT Keith Richard

BARNES Christopher Stephen DUONG Danny HICKSON Nathan James

BEACH John William EDGERTON Aaron Michael HILAIRE Alan James

BERNHARD Scott Anthony EICHNER Steven Robert HILL Geoff Laurence

BORGSTROM Andrew ELLIS Cameron James HILTON Mathew

BORTIS Peter ESCOBAR Jorge HOLMES Christopher James

BOUCHER Peter Anthony FALLA Michael Robert HOOLEY Samuel Steven

BOWN Anne Ruth FARMER Gregory David HORKY Frank

BREST Christopher James FEAR Leslie James HORTON Benjamie

BROOKS Andrew Robert FENTON Steven Luke HOWARTH Peter Charles

BROWN Matthew Duncan FLEMING Jason David HUNT Layne Robert Wade

BURT Aaron Geoffrey John FORD Ryan Mitchell HUTCHINSON Mark David

BUTCHER Timothy Fredrick FORD Steven Brian Thomas HYLAND Greg Richard

BUTTIE Jordan Dean FORSYTH Cody Harrison HYLAND Sandra Edith

BYLES-TIATIA Shontelle H FOWLER Simon IBBOTSON Cody Sam

CAMPBELL Stephen Luke FOYLE Gregory James JELICIC Milorad (Michael)

CARR Jesse James Edward FRANDSEN Daniel James JONES Nathan Robert

CARTER Vernon Alfred FREEMAN Corey Peter JONES Robert Matthew

CHAKKANAPARAMBIL Anees FRENKEN Luke Ernest KAY Barry Shane

CHAPMAN Claire Elizabeth FRIESZ William Robert KER Rodney Howard

CHECCHIN Christopher Robert GADD Barry David KING Peter Charles

CHOUFANI Mario GARLICK Stephen Lindsay KINGDON Robert John

CHRISTIAN Grahame Alan GERSBACH Cameron Keith KINI Joshua Tauita

CHRISTIE Robbie GIBSON David Edward KIRLEY Sarah Elizabeth

COCKRAM Kim GILBERT Sebastian KNIGHT Trent Paul Sidney John

COLEMAN Simon James GILES Hayden Joachim KOLARIK Paul Anthony

COOKSLEY Jarred Desmond GILLIES Warren Alan LAM Hai (Henry) Thanh

COONEY Alice Terina GLEESON Teigan Ashleigh LAMBERT Graham Edward

COSTELLO Benjamin James GONANO Luke Mark LANCASTER Robert John

COSTELLO Benjamin Paul GRAY Dylan Brian LAWLER Cassandra Lee

COSTELLO Debra Noeleen GRAY Simon Ashley LOADER Jillian Lee

COSTELLO Kelly Louise GREEN Andrew James LOCK Gerard

COSTELLO Neil Edward GREEN Beau LOOYER Danny Richard

COSTELLO Samantha Lee GRIFFITHS John Albert LOWE Drew Garry

COWAN Andrew Robert GU Kevin Quilin LUFF Adam

COX Iain GUGELE Shannon Joseph Brian LURSSEN Adam Robert

CRANFIELD Paul David HADFIELD Brett Andrew LYLE Daniel James

CUMMING Matthew James HAHN Jacob Daniel MAIDMENT Sheara Anne

CUNNINGHAM Benjamin John HALLIDAY Andrew James MAITLAND Mark Robert

Annexure 2 - Schedule of Vac Group employees whose claim has been submitted with the ATO for outstanding superannuation

Employee full name Employee full name Employee full name

MAKIM Richard Liam PETERSEN Ricky Charles STRAY Dennis George Peter

MANN John PETROVIC Richard Francis STULEC Lisa Therese

MARSHALL Scott Nicholas PICKUP Brett Alan SUKKAR Mansour Youseff

MARTIN Janelle PLATTS David James SWAN Nathan Colin

MAYER Jason PLESTED Carra Louise SYMES Jason

MCFADYEN Brodie James POLLARD Joshua Allan TALBOT Gary

MCFALL Chantel Elizabeth POTTER Mitchell Robby TALIANA Craig Anthony

MCGUINNESS Melyssa Rose POWER Scott Arthur TAYLOR Daniel Vincent

MCILWRATH Brent Colin PURTON Tim TENGIZ Cihan

MCKILLOP-DAVIES Matthew QUINN Jason Roderick TILLEY Robert D

MCMAHON Brett Anthony RAMOS Jeffrey Jay TOLEAFOA Julius Alexander

McMULLEN Connor James Alexander REEVES Bryan Anthony TOMPKINS Mitchell William

MEIDE Michael Rahhal REYNOLDS Mathew George TOPALOGLU Caglar

MEUWESEN Willem Pieter ROGERS Dean Matthew TRABY Timothy Michael

MICHALAS Adam ROGERS Nathan Harley TWIGG Luke

MICHALAS Gregory RONALD Dean UCCETTA Paul Richard

MILLS Philip RONALD Dean UDEN Jason Richard

MITCHELL John ROSS David Stewart URQUHART Troy James

MITCHELL Neale Alexander ROWAN Jacob VAN DALEN Patricia Maria

MOLLER Douglas Ross RUMBELOW Tom VAN DER MERWE Maria Josephine

MORFETT Faron Jose SALKELD Andrew John VIGLIAROLO Daniel

MORRISON Adam Craig SANDERS Jake Anthony VITNELL Christopher Brendon

MOYLE Kyle SANDERSON James Russell WAIRAMA Haerewa Joseph

MUHLACK Christopher Paul SAVAGE Christopher WAITE Benjamin Ross

MULLER Wayne Bernard SCHUSTER Catherine Rebecca WALKER Bradley John

MUNN Jeremy Paul SHANAHAN Galen John WALKER Graham Michael

MYERS Michael Gary SHAW Bradley John WALLIN Gregory Peter

NASSIRY Cais Azizullah SHEARSMITH Lyall Wesley WALTON Callum

NECAJEV Julian SHELVOCK Jason Luke WARD Bronwyn Anne

NEEDHAM Joshua Robert SIME Emily Ann WARD James John

NEWMAN Anthony Brian SIMMONS Anthony Mark WATSON Peter James

NGATIKAURA Morgan Tangata SIMONDS Laine Ryan WATSON Thomas James

NGAWAKA Elizabeth Jayne SIMPSON John Anthony WATTS Michelle Katherine

NGO Andrew SKIDMORE John Simon WELKE Jerrome Michael

O'BRIEN Leigh Anthony SLATER Michael Edwin Angelo WILKINSON Grant James

OCCLESHAW Julie Elizabeth SMITH Andrew David WILLIAMS Clifford Robert

O'FRIEL Patrick Stewart SMITH Benjamin Ian WILLIAMS Leonard John

O'LEARY Matthew Allen SMITH Janelle WILLIAMSON Michelle Margaret

PAIRAMA Michael Tini SMITH Kerrie Margaret WILSON PJ Alex

PARTON Jay Christian SMITH Michelle Violet WITHERS Mark Graham

PATTERSON Jason Paul SMITH Patrick William WOOD Rhiana Lee

PAYNE Mark Andrew SOLOMONS Craig Samuel WRIGHT Cody Allan

PELL Tory Sinead SPRATT Logan William YALDA Jacqueline

PERRY James STAINES Jay Anthony YATES Murray James

PERRYMAN Daniel Charles STEELE Beau John ZHANG Huiyao (York)

PERSKY Rodney Owen STEPHENS Ben Avon

PETERS Christopher Mark STOTT Sharni Lee

Annexure 2 - Schedule of Vac Group employees whose claim has been submitted with the ATO for outstanding superannuation

D18-200522-VACGVAC10-Notice of Meeting-JTP.docx

Notice of Meeting

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement) ACN 130 053 388

and associated entities listed in Schedule 1 (collectively, Vac Group)

NOTICE OF MEETING OF CREDITORS OF COMPANY UNDER EXTERNAL ADMINISTRATION

1. Notice is now given that a meeting of creditors of the Vac Group will be held virtually on Wednesday, 10 June 2020 at 10:00 AM (AEST).

2. While the technical meeting location will be at the offices of McGrathNicol, Level 7, 175 Eagle Street, Brisbane Qld, the meeting of creditors will be held via teleconference and webcast only and creditors will not be able to attend in person, given the recent Government guidance regarding COVID-19 and social distancing measures.

3. Any creditors wishing to attend the meeting of creditors via teleconference are requested to please:

a. advise me in writing via email address: [email protected] of your attendance 24 hours before the meeting is due to be held (i.e. by 10:00 AM on 9 June 2020);

b. confirm your contact details, including telephone number; and

c. provide your proof of debt and proxy (if required) at the same time.

4. The purpose of the meeting is for creditors to:

a. consider a resolution that the Deed of Company Arrangement executed on 20 December 2020 be varied in accordance with section 445A of the Corporations Act;

b. consider, and if thought fit, approve the remuneration of the Deed Administrators; and

c. consider any other relevant business which may arise.

5. The effect of Insolvency Practice Rules (Corporations) section 75-85 (entitlement to vote as a creditor at meeting of creditors) is:

a. a person other than a creditor (or the creditor’s proxy or attorney) is not entitled to vote at a meeting of creditors.

b. subject to subsections (3), (4) and (5), each creditor is entitled to vote and has one vote.

c. a person is not entitled to vote as a creditor at a meeting of creditors unless:

(i) his or her debt or claim has been admitted wholly or in part by the external administrator; or

(ii) he or she has lodged, with the person presiding at the meeting, or with the person named in the notice convening the meeting as the person who may receive particulars of the debt or claim:

those particulars; or

if required—a formal proof of the debt or claim.


d. a creditor must not vote in respect of:

(i) an unliquidated debt; or

(ii) a contingent debt; or

(iii) an unliquidated or a contingent claim; or

(iv) a debt the value of which is not established;

unless a just estimate of its value has been made.

6. Any materials that I intend to table at the meeting of creditors will be provided electronically priorto the meeting, to creditors that have advised of their attendance in writing.

Dated: 22 May 2020

Jamie Harris Deed Administrator

McGrathNicol GPO Box 9986 Brisbane QLD 4001 Australia

Schedule 1 – Vac Group entities


ACN ABN Appointment date

Vac Group Holdings Pty Ltd 130 053 388 99 130 053 388 20 December 2019

Beacos Pty Ltd 118 965 398 94 359 583 849 20 December 2019

Rebirthed Earth Pty Ltd 144 749 235 93 144 749 235 20 December 2019

Soil Transfer Pty Ltd 130 054 303 50 130 054 303 20 December 2019

Staking U Asia Pacific Campus Pty Ltd 158 311 516 25 158 311 516 20 December 2019

Vac Group Employees Pty Ltd 155 400 043 53 155 400 043 20 December 2019

Vac Group Operations Pty Ltd 130 054 296 33 130 054 296 20 December 2019

Vac-U-Dig Pty Ltd 105 678 493 90 105 678 493 20 December 2019

Vac-U-Digga Pty Ltd 115 882 347 78 450 702 816 20 December 2019

Vac-U-Digga R & D Pty Ltd 120 462 053 83 120 462 053 20 December 2019

VHS IP Pty Ltd 618 795 583 20 December 2019

Earth Radar Group Pty Ltd 620 043 129 35 620 043 129 20 December 2019

Earth Radar Pty Ltd 163 919 088 82 163 919 088 20 December 2019

Cosbea Pty Ltd 152 898 041 27 318 596 387 20 December 2019

Annexure 4 - Proofs of Debt previously submitted

Creditor namePOD Amount submitted ($)

Entity (all Subject to Deed of Company Arrangement)

167 Prospect Highway Pty Limited 145,787.74 Vac Group Holdings Pty Ltd

AAGP Pty Ltd 1,571.63 Vac Group Operations Pty Ltd

Additional Resources Pty Ltd 69,666.65 Vac Group Operations Pty Ltd

Adsteel Brokers Pty Ltd 136.31 Cosbea Pty Ltd ATF Cosbea Unit Trust

Advanced Business Technologies T/as ABT Group 2,258.92 Vac Group Holdings Pty Ltd

AI Group 17,243.24 Vac Group Employees Pty Ltd

AI Group Workplace Lawyers 10,077.47 Vac Group Employees Pty Ltd

Aitken Welding Supplies Pty Ltd 847.86 Vac Group Operations Pty Ltd

AJP Professional Cleaning Serv 1,694.00 Vac Group Operations Pty Ltd

Allgas Energy Pty Ltd 1,056.00 Vac Group Holdings Pty Ltd

Altus Traffic Pty Ltd 12,739.69 Vac Group Holdings Pty Ltd

Aquasoil Recycling Pty Ltd 10,395.00 Vac Group Operations Pty Ltd

AUSCO MODULAR PTY LTD 2,106.72 Vac Group Operations Pty Ltd

AustClean (The Trustee for Sambe Unit Trust) 385.00 Vac Group Holdings Pty Ltd

Australian Pipeline Management 2,475.00 Vac Group Operations Pty LtdAustralian Taxation Office 4,922,948.07 Vac Group Operations Pty Ltd

Australian Taxation Office 31,926.72 Earth Radar Pty Ltd

Australian Taxation Office 873,460.90 Beacos Pty Ltd ATF Beacos Trust

Australian Taxation Office 768.00 Cosbea Pty Ltd ATF Cosbea Unit Trust

Australian Taxation Office 873,460.90 Rebirthed Earth Pty Ltd

Australian Taxation Office 873,460.90 Vac-U-Digga R & D Pty Ltd

Australian Taxation Office 873,460.90 Soil Transfer Pty Ltd

Australian Taxation Office 875,340.30 Staking U Asia Pacific Campus Pty Ltd

Australian Taxation Office 873,460.90 Vac Group Employees Pty Ltd

Australian Taxation Office 875,340.30 Vac Group Holdings Pty Ltd

Australian Taxation Office 873,460.90 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

Auto Electrical Imports P/L 3,597.91 Vac Group Operations Pty Ltd

BAR Group Pty Ltd 25,227.08 Vac Group Operations Pty Ltd

Beacos Pty Ltd (Subject to Deed of Company Arrangement) 7,049.00 Staking U Asia Pacific Campus Pty Ltd

Beacos Pty Ltd (Subject to Deed of Company Arrangement) 551,129.00 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

Beacos Pty Ltd (Subject to Deed of Company Arrangement) 2,573,103.00 Vac Group Holdings Pty Ltd

Beacos Pty Ltd (Subject to Deed of Company Arrangement) 1,367,788.00 Vac Group Employees Pty Ltd

Beacos Pty Ltd (Subject to Deed of Company Arrangement) 4,412.00 Soil Transfer Pty Ltd

Benchmark Electrical Group Pty Ltd 1,840.58 Vac Group Operations Pty Ltd

Berendsen Fluid Power Pty Ltd 5,296.50 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

Bettergrow Pty Ltd 70,813.90 Vac Group Operations Pty Ltd

Brydaw Pty Ltd 676.23 Vac Group Holdings Pty Ltd

BULK RECOVERY SOLUTIONS 80,844.72 Vac Group Operations Pty Ltd

Bunnings Group Limited 4,019.33 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

CFAS Advisory 69,049.21 Vac Group Holdings Pty Ltd

Clearpro Construction Water Solutions 17,548.86 Soil Transfer Pty Ltd

Cliplyn Pty Ltd 301,539.86 Vac Group Holdings Pty Ltd

Corfield Property Trust 4,767.40 Vac Group Operations Pty Ltd

Cosbea Pty Ltd (Subject to Deed of Company Arrangement) 390,188.00 Beacos Pty Ltd ATF Beacos Trust

Cosbea Pty Ltd (Subject to Deed of Company Arrangement) 2,326,703.00 Vac Group Operations Pty Ltd

Dabsand Pty Ltd 1,590.60 Vac Group Operations Pty Ltd

Daimler Trucks Brisbane 18,024.61 Vac Group Operations Pty Ltd

Deeble Group Pty Ltd T/as IRSO Recruitment 5,829.84 Vac Group Operations Pty Ltd

Diesel Parts & Service Pty Ltd 21,123.36 Vac Group Operations Pty Ltd

Dirt Cheap Landscaping Mats (The Trustee for Tammy and Camilo Sabariz) 1,398.00 Vac Group Operations Pty Ltd

Douglas Partners 6,253.50 Vac Group Operations Pty Ltd

Earth Radar Group Pty Ltd (Subject to Deed of Company Arrangement) 2,710,830.00 Earth Radar Pty Ltd

Earth Radar Pty Ltd (Subject to Deed of Company Arrangement) 1,894.00 Vac Group Holdings Pty Ltd

Earth Radar Pty Ltd (Subject to Deed of Company Arrangement) 535,835.00 Beacos Pty Ltd ATF Beacos Trust




Eco Earth Resources Pty Ltd 1,089.00 Vac Group Operations Pty Ltd

Electrostatic Coatings 23,380.50 Vac Group Operations Pty Ltd

EML 10,295.28 Vac Group Operations Pty Ltd

Envirocivil Pty Ltd 81,413.86 Vac Group Operations Pty Ltd

Enzed Coopers Plains 4,268.18 Vac Group Operations Pty Ltd

Ephta 6 Family Trust 2,383.33 Vac Group Operations Pty Ltd

Fire Chief 691.90 Cosbea Pty Ltd ATF Cosbea Unit Trust

Fire Chief 691.90 Vac Group Holdings Pty Ltd

Fulton Hogan Industries 5593941 1,405.80 Vac Group Operations Pty Ltd

Fulton Hogan Industries Pty Ltd (Central) 1,405.80 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

Fulton Hogan Industries Pty Ltd (QLD) 12,672.01 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

GADD, Barry 4,550.00 Vac Group Operations Pty Ltd

Gladstone Regional Council 2,560.57 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

Gold Coast City Council 3,249.20 Vac Group Operations Pty Ltd

GU, Kevin Quilin 10,105.31 Earth Radar Group Pty Ltd

GU, Kevin Quilin 10,105.31 Earth Radar Pty Ltd

Hare & Forbes Machinery House 130.00 Vac Group Operations Pty Ltd

HCI Professional Services Pty Ltd 34,889.86 Vac Group Holdings Pty Ltd

Icecap Pty Ltd 465.87 Vac Group Operations Pty Ltd

Jabegil Pty. Limited 2,554.16 Vac Group Operations Pty Ltd

Jackman Street Investments Pty Ltd 3,539.03 Vac Group Operations Pty Ltd

JD Dodds Plant & Machinery Valuers 71,500.00 Vac Group Holdings Pty Ltd

JHT Tyres Pty Ltd t/as Tyre & Mechanical World 2,521.00 Vac-U-Dig Pty Ltd

JJ Richards and Sons Pty Ltd 718.2 Vac Group Holdings Pty Ltd

Jobfit Health Group Pty Ltd 15,458.30 Vac Group Operations Pty Ltd

Joel Mark Gluis 23,848.50 Vac Group Operations Pty Ltd

Jonetral Holdings Pty Ltd t/as Concut 1,033.45 Vac Group Operations Pty Ltd

Kennards Hire Pty Ltd 4,216.80 Vac Group Operations Pty Ltd

KT Cable Accessories 417.12 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

Kwik Kopy 557.65 Staking U Asia Pacific Campus Pty Ltd

Kwik Kopy Underwood (Marmarand QLD Pty Ltd) 696.30 Vac Group Operations Pty Ltd

Linkt 52,160.13 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

Logan City Council 329.66 Vac Group Operations Pty Ltd

Marion Sand & Metal Pty Ltd 2,209.72 Vac Group Operations Pty Ltd

MaxiParts 799.81 Vac Group Holdings Pty Ltd

Mercury Technology Solutions Pty Ltd 260,176.71 Vac Group Operations Pty Ltd

MessageNet Pty Ltd 1,677.42 Vac Group Operations Pty Ltd

Mvoice Pty Ltd 547.97 Vac Group Operations Pty Ltd

National Australia Bank 3,582.33 Earth Radar Pty Ltd

Network Technology (Aust) Pty Ltd 20.60 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

Office State Revenue NSW 133,279.97 Vac Group Operations Pty Ltd

Onsafe 160.78 Cosbea Pty Ltd ATF Cosbea Unit Trust

Onsafe 160.78 Vac Group Holdings Pty Ltd

Organic Environmental Solutions Pty Ltd 82,713.95 Vac Group Operations Pty Ltd

Origin Energy Electricity Ltd 14,376.51 Vac Group Operations Pty Ltd

Pinkenba Quarrying & Recycling 3,144.68 Vac Group Operations Pty Ltd

Pronto Cloud Pty Ltd 5,599.44 Vac Group Operations Pty Ltd

Pronto Software Limited 14,690.39 Vac Group Operations Pty Ltd

Quality Consulting Solutions (The Trustee for Adams Family Trust) 1,716.00 Vac Group Operations Pty Ltd

Repurpose-IT Pty Ltd 31,178.79 Vac Group Operations Pty Ltd

Retracom Hire Pty Ltd 6,600.91 Vac Group Operations Pty Ltd

Retracom Hire Pty Ltd 2,846.23 Earth Radar Pty Ltd

Return to Work SA 22,548.95 Vac Group Operations Pty Ltd

Revenue NSW 6,065.00 Cosbea Pty Ltd ATF Cosbea Unit Trust




Reynolds Soil Technologies Pty Ltd 1,086.80 Vac Group Operations Pty Ltd

RGM Maintenance 2,896.34 Vac Group Operations Pty Ltd

Royale Truck Services P/L 595.00 Vac Group Operations Pty Ltd

RPS Australia East Pty Ltd 60,955.27 Vac Group Operations Pty Ltd

Ruswin (The Trustee for NEAL AND KING UNIT TRUST) 387.20 Vac Group Holdings Pty Ltd

RX Plastics Pty Ltd 6,832.11 Vac Group Operations Pty Ltd

Shred X Pty Ltd 1,120.18 Vac Group Operations Pty Ltd

Skye Sands Pty Ltd 110,780.47 Vac Group Operations Pty Ltd

Soil Transfer Pty Ltd (Subject to Deed of Company Arrangement) 682,294.00 Vac Group Operations Pty Ltd

Spruson & Ferguson 13,216.98 Earth Radar Pty Ltd

Spruson & Ferguson 28,705.28 Vac Group Operations Pty Ltd

Spruson & Ferguson 13,216.98 Earth Radar Group Pty Ltd

St John Ambulance Australia SA Inc 1,890.00 Vac Group Operations Pty Ltd

Staking U Asia Pacific Pty Ltd (Subject to Deed of Company Arrangement) 10,535.00 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

Staking U Asia Pacific Pty Ltd (Subject to Deed of Company Arrangement) 362,176.00 Vac Group Operations Pty Ltd

Staking U Asia Pty Ltd (Subject to Deed of Company Arrangement) 2,000.00 Earth Radar Pty Ltd

State Revenue Office QLD 350,220.33 Vac Group Operations Pty Ltd

Suez Recycling & Recovery (NSW) Pty Ltd 261,153.16 Vac Group Operations Pty Ltd

Supagas Pty Ltd 8,849.09 Vac Group Holdings Pty Ltd

Sydney Trucks & Machinery Centre Pty Ltd 2,296.30 Vac Group Operations Pty Ltd

T2GWS Pty Ltd t/as Drugs Safe Workplaces 2,090.50 Vac Group Operations Pty Ltd

The Information Management Group 235.72 Vac Group Holdings Pty Ltd

The Trustee for Beazley Family Trust 1,571.63 Vac Group Operations Pty Ltd

Traffic Group Australia Pty Ltd (Workfoce International Pty Ltd) 33,609.85 Vac Group Operations Pty Ltd

Vac Group Employees Pty Ltd (Subject to Deed of Company Arrangement) 975,217.00 Staking U Asia Pacific Campus Pty Ltd

Vac Group Employees Pty Ltd (Subject to Deed of Company Arrangement) 39,993.00 Soil Transfer Pty Ltd

Vac Group Employees Pty Ltd (Subject to Deed of Company Arrangement) 624,965.00 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

Vac Group Employees Pty Ltd (Subject to Deed of Company Arrangement) 402,675.00 Vac-U-Digga R & D Pty Ltd

Vac Group Employees Pty Ltd (Subject to Deed of Company Arrangement) 4,000.00 Cosbea Pty Ltd ATF Cosbea Unit Trust

Vac Group Employees Pty Ltd (Subject to Deed of Company Arrangement) 10,386,505.00 Vac Group Operations Pty Ltd

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement) 99,775.00 Staking U Asia Pacific Campus Pty Ltd

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement) 272,245.00 Soil Transfer Pty Ltd

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement) 1,246,882.00 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement) 11,810,041.00 Vac Group Employees Pty Ltd

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement) 2,893.00 Rebirthed Earth Pty Ltd

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement) 2,391,578.00 Cosbea Pty Ltd ATF Cosbea Unit Trust

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement) 219,655.00 VHS IP Pty Ltd

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement) 730,832.00 Vac Group Operations Pty Ltd

Vac Group Operations Pty Ltd (Administrators Appointed) 275.00 Vac-U-Dig Pty Ltd

Vac Group Operations Pty Ltd (Subject to Deed of Company Arrangement) 275.00 Earth Radar Group Pty Ltd

Vac Group Operations Pty Ltd (Subject to Deed of Company Arrangement) 1,589,369.00 Vac-U-Digga R & D Pty Ltd

Vac Group Operations Pty Ltd (Subject to Deed of Company Arrangement) 1,237.00 Rebirthed Earth Pty Ltd

Vac Group Operations Pty Ltd (Subject to Deed of Company Arrangement) 6,273,761.00 Beacos Pty Ltd ATF Beacos Trust

Vac Group Operations Pty Ltd (Subject to Deed of Company Arrangement) 30,007.00 VHS IP Pty Ltd

Vac Group Operations Pty Ltd (Subject to Deed of Company Arrangement) 2,503,371.00 Earth Radar Pty Ltd

Vac-U-Digga Pty Ltd (Subject to Deed of Company Arrangement) 254.00 Soil Transfer Pty Ltd

Vac-U-Digga Pty Ltd (Subject to Deed of Company Arrangement) 1,417,443.00 Vac Group Operations Pty Ltd

Vac-U-Digga R & D Pty Ltd (Subject to Deed of Company Arrangement) 395,406.00 Vac Group Holdings Pty Ltd

Vac-U-Digga R & D Pty Ltd (Subject to Deed of Company Arrangement) 125,396.00 Beacos Pty Ltd ATF Beacos Trust

Vac-U-Digga R&D Pty Ltd (Subject to Deed of Company Arrangement) 757.00 Soil Transfer Pty Ltd

Vac-U-Digga R&D Pty Ltd (Subject to Deed of Company Arrangement) 1,384.00 Rebirthed Earth Pty Ltd

Veolia Environment Services Archerfield 30,925.10 Vac Group Operations Pty Ltd

VHS Assets Pty Ltd 255,473.31 Vac Group Operations Pty Ltd

VHS Assets Pty Ltd 2,022.70 VHS IP Pty Ltd




VHS Assets Pty Ltd 300,565.39 Beacos Pty Ltd ATF Beacos Trust

Weworkbook 660.00 Staking U Asia Pacific Campus Pty Ltd

WEX Australia (Wright Express Fuel Cards Australia) 96,504.01 Vac-U-Digga Pty Ltd ATF Vac-U-Digga Trust

WorkCover Queensland 86,164.81 Vac Group Operations Pty Ltd

Workers Compensation Nominal Insurer 173,132.17 Vac Group Operations Pty Ltd

1



(collectively, Vac Group)

General Information for Attending and Voting at Meetings of Creditors

Time and Place of Meeting

Pursuant to Insolvency Practice Rules (Corporations) (IPR) 75-30, a meeting of creditors must be convened at the time and place the Chairperson believes are convenient for the majority of creditors entitled to receive notice of the meeting.

Quorum

Pursuant to IPR 75-105, unless a quorum is present, a meeting must not act for any purpose other than:

− the election of a chairperson; and

− the proving of debts; and

− the adjournment of the meeting.

A quorum is present if two (2) or more persons are entitled to vote and at least two (2) persons are present at the meeting in person, by proxy or by power of attorney.

A quorum is present if only one (1) person is entitled to vote and that person is present at the meeting in person, by proxy or by power of attorney.

A person who participates in the meeting using electronic facilities is taken to be present in person at the meeting.

A meeting is sufficiently constituted if only one (1) person is present in person, if the person represents personally or by proxy or otherwise a number of persons sufficient to constitute a quorum.

Chairperson

Pursuant to IPR 75-50, the external administrator is appointed Chairperson of the meeting. Alternatively, pursuant to IPR 75-50 and IPR 75-152 the external administrator may appoint someone else to act as chairperson of the meeting and authorise that person to use any proxies held by the external administrator on the external administrator’s behalf.

For the second meeting of creditors in a Voluntary Administration, the Administrator must chair the meeting pursuant to IPR 75-50.

Voting

Pursuant to IPR 75-85, creditors will not be eligible to vote at the meeting unless they have lodged particulars of their debt or claim prior to or at the meeting.

Accordingly, creditors who intend to vote at the meeting should ensure that they lodge a formal proof of debt with the external administrator prior to or at the meeting.

Pursuant to IPR 75-110, a resolution put to the meeting is to be decided on the voices or by a poll, if one is requested.

A poll may be requested by:

− the chairperson; or

− a person participating and entitled to vote at the meeting.

2

Pursuant to IPR 75-115, should a poll be requested:

– a resolution is passed if a majority in number and a majority in value vote in favour of the resolution; and

− a resolution is not passed if a majority in number and a majority in value vote against the proposed resolution.

In the event of a deadlock, the chairperson may exercise a casting vote. In such situations, the minutes of the meeting must specify the chairperson’s reasons for exercising, or not exercising, their casting vote.

Proxies

Pursuant to IPR 75-150, a person entitled to vote at a meeting may, in writing, appoint an individual as their proxy to attend and vote at the meeting on their behalf.

Accordingly, creditors who are unable to attend the meeting but who wish to be represented should ensure that a validly executed proxy form is lodged with the external administrator prior to the meeting.

Corporate Creditors

Corporate creditors who wish to attend the meeting should note that an individual may only represent them if the corporation validly grants that person a proxy or power of attorney.

Alternatively, section 250D of the Corporations Act provides that a corporation may, by resolution of its board, provide a standing authority for a specified person to represent the corporation at a specified meeting of creditors. A copy of any such resolution should be provided to the external administrator prior to attending the meeting.

Committee of Inspection

Pursuant to IPR 80-5, a person may only serve as a member of a Committee of Inspection if the person is:

a creditor of the company personally; or

the attorney of a creditor under a general power of attorney; or

authorised in writing by a creditor; or

a representative of the Commonwealth if a FEG claim has been, or the Commonwealth considers a claim is likely to be, made in relation to unpaid employee entitlements.

Corporate creditors who are members of a Committee of Inspection may be represented by an individual authorised in writing by the member to represent the member on the committee.

3

Schedule 1 – Vac Group entities


ACN ABN Appointment date















Subregulation 5.6.49(2)

FORM 535

FORMAL PROOF OF DEBT OR CLAIM (GENERAL FORM)

To the Liquidator/Administrator of "the Company", being:

1. This is to state that the Company was on , and still is, justly and truly indebted to:

___________________________________________________________________________________________________ (name of creditor)

of _____________________________________________________________________________________________ (address of creditor)

for $_________________________and____________cents (GST inclusive) GST amount _______________________________

Date Consideration (state how the

Debt arose)

Amount

$ c

Remarks (include details of

voucher substantiating payment)

Page 1 of 2

Vac Group Holdings Pty Ltd (Administrators Appointed) ACN 130 053 388

Beacos Pty Ltd ACN (Administrators Appointed) 118 965 398

Rebirthed Earth Pty Ltd (Administrators Appointed) ACN 144 749 235

Soil Transfer Pty Ltd (Administrators Appointed) ACN 130 054 303

Staking U Asia Pacific Campus Pty Ltd (Administrators Appointed) 158 311 516

Vac Group Employees Pty Ltd (Administrators Appointed) ACN 155 400 043

Vac Group Operations Pty Ltd (Administrators Appointed) ACN 130 054 296

Vac-U-Dig Pty Ltd (Administrators Appointed) ACN 105 678 493

Vac-U-Digga Pty Ltd (Administrators Appointed) ACN 115 882 347

Vac-U-Digga R & D Pty Ltd (Administrators Appointed) ACN 120 462 053

VHS IP Pty Ltd (Administrators Appointed) ACN 618 795 583

Earth Radar Group Pty Ltd (Administrators Appointed) ACN 620 043 129

Earth Radar Pty Ltd (Administrators Appointed) ACN 163 919 088

4. If you are a related party, state your relationship ________________________________________________________________

☐ I nominate to receive electronic notifications of documents in accordance with Section 600G of the

Corporations Act at the following email address

Email: __________________________________________________

This debt was inncurred for the consideration stated and the debt, to the best of my knowledge and belief,

remains unpaid and unsatisfied.

Signature ............................................................................................ Dated ………………………………………………………..

Name: ___________________________________________________________

Address: ____________________________________________________________________________________________________________

Page 2 of 2

5. Is this debt claimed on the basis of an assignment? Yes☐ No☐If so, what consideration was paid for the debt? _________________________

3. Select which of the below applies (choose one):

The creditor is a company and I am signing as

a director of the company The creditor is a partnership and I am signing as

a partner of the partnership

The creditor is a company and I am signing as

an authorised representative/duly constituted

attorney of the company

I am signing in my personal capacity as a

member or contributory of the Company

I am an individual and I am signing in my

personal capacity (which includes employees) Other: ____________________________________________

The creditor is a sole trader and I am signing

as the proprietor

2. To my knowledge or belief the creditor has not, nor has any person by the creditor's order, had or received any

satisfaction or security for the sum or any part of it except for the following: (insert particulars of all securities

held. If the securities are on the property of the company, assess the value of those securities. If any bills or

other negotiable securities are held, show them in a schedule in the following form).

Date Drawer Acceptor Amount $c Due Date

Cosbea Pty Ltd

(Administrators Appointed)

152 898 041

19 November 2019

1

Proof of Debt Guidance Notes

(Please read carefully before filling in Form 535 or Form 536)

It is a creditor’s responsibility to prove their claim to our satisfaction.

When lodging claims, creditors must ensure:

the proof of debt form is properly completed in every particular; and

evidence, as set out under “Information to support your claim”, is attached to the Form 535 or Form 536.

Directions for completion of a Proof of Debt

1. Insert the full name and address of the creditor.

2. Under “Consideration” state how the debt arose, for example “goods sold to the company on ______________________”.

3. Under “Remarks” include details of any documents that substantiate the debt (refer to the section “Information to support your claim” below for further information).

4. Where the space provided for a particular purpose is insufficient to contain all the information required for a particular item, please attach additional information.

Information to support your claim

Please note that unless you provide evidence to support the existence of the debt, your debt is not likely to be accepted. Detailed below are some examples of debts creditors may claim and a suggested list of documents that should accompany a proof of debt to substantiate the debt.

Trade Creditors

Invoice(s) and statement(s) showing the amount of the debt; and

Advice(s) to pay outstanding invoice(s) (optional).

Guarantees/Indemnities

Executed guarantee/indemnity;

Notice of Demand served on the guarantor; and

Calculation of the amount outstanding under the guarantee.

Judgment Debt

Copy of the judgment; and

Documents/details to support the underlying debt as per other categories.

Deficiencies on Secured Debt

Security Documents (eg. mortgage);

Independent valuation of the secured portion of the debt (if not yet realised) or the basis of the creditor’s estimated value of the security;

Calculation of the deficiency on the security; and

Details of income earned and expenses incurred by the secured creditor in respect of the secured asset since the date of appointment.

Loans (Bank and Personal)

Executed loan agreement; and

2

Loan statements showing payments made, interest accruing and the amount outstanding as at the date of appointment.

Tax Debts

Documentation that shows the assessment of debts, whether it is an actual debt or an estimate, and separate amounts for the primary debt and any penalties.

Employee Debts

Basis of calculation of the debt;

Type of Claim (eg. wages, holiday pay, etc);

Correspondence relating to the debt being claimed; and

Contract of Employment (if any).

Leases

Copy of the lease; and

Statement showing amounts outstanding under the lease, differentiating between amounts outstanding at the date of the appointment and any future monies.

PROXY FORM


and associated entities listed in Schedule 1 (collectively, Vac Group)

APPOINTMENT OF PROXY

_______________________________________________________________________________________________________________________________

(insert name, address and description of the person appointed)

or in his or her absence

_______________________________________________________________________________________________________________________________

(insert name, address and description of the person appointed)

I/We (if a firm, strike out “I” and set out the full name of the firm) ______________________________________________________ of

_______________________________________________________________________________________________________________ (insert address)

a creditor of “the Company”, being: Company name (All Subject to Deed of Company Arrangement)

Vac Group Holdings Pty Ltd ACN 130 053 388

Beacos Pty Ltd ACN 118 965 398

Rebirthed Earth Pty Ltd ACN 144 749 235

Soil Transfer Pty Ltd ACN 130 054 303

Staking U Asia Pacific Campus Pty Ltd ACN 158 311 516

Vac Group Employees Pty Ltd ACN 155 400 043

Vac Group Operations Pty Ltd ACN 130 054 296

Vac-U-Dig Pty Ltd ACN 105 678 493

Vac-U-Digga Pty Ltd ACN 115 882 347

Vac-U-Digga R & D Pty Ltd ACN 120 462 053

VHS IP Pty Ltd ACN 618 795 583

Earth Radar Group Pty Ltd ACN 620 043 129

Earth Radar Pty Ltd ACN 163 919 088

Cosbea Pty Ltd ACN 152 898 041

appoint

as my/our (choose one):

general proxy special proxy

to vote at the meetings of creditors to be held on 10 June 2020 at 10:00 AM (AEST) or at any adjournment of that

meeting.

Resolution (only complete where appointing a special proxy) For Against Abstain

Variation of the Deed of Company ArrangementThat clause 20.2(c) of the Deed of Company Arrangement executed on 20 December 2019 be deleted, and replaced with “Third, payment of the Deed Administrators’ expenses, costs and remuneration for acting as Deed Administrators under this Deed, as approved from time to time, by a resolution of Deed Creditors, or failing that by Order of the Supreme Court of Queensland".

Approval of retrospective remunerationThat the remuneration of the Deed Administrators, for the period 20 December 2019 to 8 May 2020, calculated at hourly rates as detailed in the Initial Remuneration Notice dated 21 November 2019, is determined in the amount of $350,000 (exclusive of GST).

Approval of prospective remunerationThat the remuneration of the Deed Administrators for the period 9 May 2020 to finalisation of the Deed of Company Arrangement, is determined at a sum equal to the cost of time spent by the Deed Administrators and their partners and staff, calculated at the hourly rates as detailed in the Initial Remuneration Notice dated 21 November 2019, up to a capped amount of $100,000 (exclusive of GST).

DATED this ___________ day of ________________________ 2020

Name ___________________________________________________

Signature ___________________________________________________

Select which of the below applies (choose one):

The creditor is a company and I am signing as a director of the company The creditor is a partnership and I am signing

as a partner of the partnership

The creditor is a company and I am signing as an authorised representative/duly constituted attorney of the company

I am signing in my personal capacity as a member or contributory of the Company

I am an individual and I am signing in my personal capacity (which includes employees) Other: ____________________________________________

The creditor is a sole trader and I am signing as the proprietor

Proxy forms should be completed and returned by no later than 10:00 AM (AEST) on 9 June 2020.

RETURN TO:

of care of

Address:

Phone:

Fax:

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement)

McGrathNicol

GPO Box 9986, Brisbane, QLD, 4001, Australia

+61 7 3333 9800

+61 7 3333 9899

Email: [email protected]

Schedule 1 – the Vac Group entities


ACN Deed Administrators' Appointment date

Vac Group Holdings Pty Ltd 130 053 388 20 December 2019

Beacos Pty Ltd 118 965 398

Rebirthed Earth Pty Ltd 144 749 235

Soil Transfer Pty Ltd 130 054 303

Staking U Asia Pacific Campus Pty Ltd 158 311 516

Vac Group Employees Pty Ltd 155 400 043

Vac Group Operations Pty Ltd 130 054 296

Vac-U-Dig Pty Ltd 105 678 493

Vac-U-Digga Pty Ltd 115 882 347

Vac-U-Digga R & D Pty Ltd 120 462 053

VHS IP Pty Ltd 618 795 583

Earth Radar Group Pty Ltd 620 043 129

Earth Radar Pty Ltd 163 919 088

Cosbea Pty Ltd 152 898 041

20 December 2019

20 December 2019

20 December 2019

20 December 2019

20 December 2019

20 December 2019

20 December 2019

20 December 2019

20 December 2019

20 December 2019

20 December 2019

20 December 2019

20 December 2019

1

Proxy Guidance Notes

Insert full name and address of creditor, contributory or member on the top line.

On the second line, insert the address of the creditor, contributory or member.

On the next line insert the name of the person you appoint as your proxy. You may insert “the Chairperson of the meeting” if you wish.

You may appoint an alternate proxy on the fourth line who may act if your first appointed proxy cannot attend the meeting. You may insert “the Chairperson of the meeting” if you wish.

Make sure you select whether the proxy is a general or special proxy.

A general proxy is where you leave it to the proxy to decide how to vote on each of the resolutions put before the meeting.

A special proxy is where you specify how the proxy is to vote on each resolution and the proxy must vote in accordance with that instruction.

If the proxy is a special proxy, the form must include details of each resolution and whether the proxy holder is to cast their vote in favour or against each resolution or abstain from voting.

Date and sign the Proxy form, indicating in which capacity you are signing the form. The person signing must be authorised to do so.

Remuneration Approval Report Vac Group Holdings Pty Ltd (Subject to Deed of Company

Arrangement)

ACN 130 053 388


(collectively, the Vac Group)

Remuneration Report 1

This remuneration approval report provides you with information to assist you to make an informed decision regarding the approval of our proposed remuneration for undertaking administration of the Deed of Company Arrangement executed by Vac Group Holdings Pty Ltd and associated entities (collectively, the Vac Group) on 20 December 2019.

The report has the following information:

Declaration ........................................................................................................................................................................................................................ 3 Executive Summary ....................................................................................................................................................................................................... 4 Remuneration................................................................................................................................................................................................................... 4

Retrospective remuneration...................................................................................................................................................................................... 4 Prospective remuneration ....................................................................................................................................................................................... 11 Estimated future remuneration ............................................................................................................................................................................ 13 Total remuneration reconciliation ....................................................................................................................................................................... 13 Likely impact on dividends .................................................................................................................................................................................... 15 Remuneration recovered from external sources ......................................................................................................................................... 15

Disbursements .............................................................................................................................................................................................................. 15 External disbursements ............................................................................................................................................................................................ 16 Internal disbursements ............................................................................................................................................................................................. 16

Queries ............................................................................................................................................................................................................................. 17


What should you do next?

Please read this report and the accompanying information we have sent you and consider your votes on the resolutions that will be put to the meeting. The meeting will also give you an opportunity to ask any questions that you have.

Alternatively, you may appoint a representative to attend the meeting on your behalf, by lodging a proxy form. Lodging a specific proxy form allows you to specify how your proxy must vote. Lodging a general proxy form allows your representative to choose how to exercise your vote.

If you have any queries, please contact Mahin Chaudhary on (07) 3333 9832 or email [email protected].



Declaration

We, Jamie Harris and Robert Kirman of McGrathNicol, have undertaken a proper assessment of this remuneration claim for our appointment as Deed Administrators of the Vac Group in accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed is in respect of necessary work, properly performed, or to be properly performed, in the conduct of this matter. This remuneration report covers the following entities in the Vac Group as detailed in the Schedule below:

Schedule 1 – the Vac Group entities

Company name (All Subject to Deed of Company Arrangement) ACN ABN Appointment date















This remuneration report will refer to three timeframes, as follows:

Pre-Voluntary Administration period: the period up to 18 November 2019

Voluntary Administration period: 18 November 2019 to 20 December 2019

Deed of Company Arrangement period: 20 December 2019 to date


Executive Summary

To date, no remuneration or internal disbursements have been approved and paid in respect of the Deed of Company Arrangement (Deed). The Deed Administrators are seeking approval of the Vac Group creditors, at the Meeting of Creditors to be convened on 10 June 2020, for total remuneration as summarised in the table below:

Approvals sought Report Reference Amount (ex GST)

Remuneration

Retrospective period (20 December 2019 to 8 May 2020) 3.1 $350,000

Prospective period (9 May 2020 to finalisation)* 3.2 $100,000

Total remuneration $450,000

* Approval sought for future remuneration and internal disbursements (with a profit element) is based on an estimate of the work necessary finalisation of the Deed. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors.

Please refer to the report section references for full details of the calculation and composition of the remuneration for which approval is sought.

Remuneration

Retrospective remuneration

Retrospective remuneration for the period 20 December 2019 to 8 May 2020

Subject to the outcome of the creditors vote to vary the Deed at the Meeting of Creditors on 10 June 2020, we will request the resolution detailed below be approved by creditors for our retrospective remuneration incurred for the period 20 December 2019 to 8 May 2020.

Retrospective remuneration resolution Appointment Type Amount (ex GST)

Resolution 2: 20 December 2019 to 8 May 2020 Deed of Company Arrangement $350,000

Total retrospective remuneration resolution $350,000

Resolution 2: from 20 December 2019 to 8 May 2020

“That the remuneration of the Deed Administrators, for the period 20 December 2019 to 8 May 2020, calculated at hourly rates as detailed in the Initial Remuneration Notice dated 21 November 2019, is determined in the amount of $350,000 (exclusive of GST).”

We will withdraw funds from the Deed Fund in respect of the Deed Administrators’ remuneration immediately upon approval of the resolution, if funds are available. If funds are not available, we will withdraw funds progressively over time as funds become available.


The below table sets out the time charged to each major task area by staff members engaged in administering the Deed for the period 20 December 2019 to 8 May 2020, which is the basis of Resolution 2. More detailed descriptions of the tasks performed within each task area, matching the amounts below, are contained in following sections of this Report.

Vac Group Holdings Pty Ltd (Subject to Deed of Company Arrangement) and associated entities - Combined Net WIP for the period 20 December 2019 to 8 May 2020

Staff Position$/hour

(ex GST)Total actual

hours Total

$ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST Hrs $ ex GST

Jamie Harris Appointee 660 21.1 13,926.00 8.30 5,478.00 2.40 1,584.00 3.00 1,980.00 5.20 3,432.00 0.30 198.00 - - 1.90 1,254.00

Employee A Partner 660 1.1 726.00 0.20 132.00 - - - - 0.90 594.00 - - - - - -

Employee B Director 590 181.1 106,849.00 32.10 18,939.00 17.20 10,148.00 40.50 23,895.00 67.30 39,707.00 17.60 10,384.00 - - 6.40 3,776.00

Employee C Director 550 1.8 990.00 - - 0.10 55.00 - - 0.20 110.00 0.60 330.00 0.90 495.00 - -

Employee D Manager 470 81.5 38,305.00 74.50 35,015.00 0.40 188.00 - - 4.40 2,068.00 2.20 1,034.00 - - - -

Employee E Assistant manager 430 17.0 7,310.00 16.70 7,181.00 - - - - 0.10 43.00 0.20 86.00 - - - -

Employee F Senior Accountant 390 297.9 116,181.00 126.10 49,179.00 15.70 6,123.00 46.40 18,096.00 82.70 32,253.00 25.60 9,984.00 - - 1.40 546.00

Employee G Senior Accountant 390 1.4 546.00 - - 0.50 195.00 - - 0.90 351.00 - - - - - -

Employee H Accountant 305 115.5 35,227.50 20.70 6,313.50 10.00 3,050.00 1.30 396.50 54.60 16,653.00 24.20 7,381.00 4.70 1,433.50 - -

Employee I Accountant 305 25.4 7,747.00 1.10 335.50 13.20 4,026.00 2.50 762.50 8.40 2,562.00 0.20 61.00 - - - -

Employee J Undergraduate 180 12.6 2,268.00 12.60 2,268.00 - - - - - - - - - - - -

Employee K Senior Treasury 425 11.6 4,930.00 - - - - - - 10.50 4,462.50 1.10 467.50 - - - -

Employee L Treasury 335 19.8 6,633.00 8.20 2,747.00 - - - - 11.60 3,886.00 - - - - - -

Employee M Treasury 335 16.6 5,561.00 10.40 3,484.00 - - - - 6.20 2,077.00 - - - - - -

Employee N Treasury 335 120.5 40,367.50 34.90 11,691.50 - - 2.60 871.00 77.80 26,063.00 5.20 1,742.00 - - - -

924.90 387,567.00 345.80 142,763.50 59.50 25,369.00 96.30 46,001.00 330.80 134,261.50 77.20 31,667.50 5.60 1,928.50 9.70 5,576.00

Time written off to bill capped amt (subject to approval) (37,567.00)

Subtotal 350,000.00

GST 35,000.00

Total 385,000.00

DividendTrade on Creditors Assets Statutory & Administration Employees Investigation


Description of work undertaken

The below table sets out a detailed description of work undertaken for the period 20 December 2019 to 8 May 2020, which is the basis of Resolution 2.

Task Area General Description Includes

Trade on 345.80 hours $142,763.50

Trade on management Provided assistance following the execution of the Deed to the Vac Group management and staff

Closed Administration supplier accounts and liaised with suppliers in relation to the voluntary administration period

Prepared, updated and monitored cash flow forecasts Liaised with relevant state authorities, including the

relevant Offices of State Revenue to calculate payroll tax owing from Voluntary Administration period

Monitored, reviewed, considered and responded to enquiries from customers and suppliers by email and telephone

Attendance at Vac Group premises to assist with reconciliation and preparation of payments and other matters following the voluntary administration

Liaised with the Vac Group in respect of various supplier accounts relating to both Voluntary Administration and post Deed of Company Arrangement trading costs

Continued monitoring and maintenance of functional mailbox for trading related queries

Processed receipts and payments

Entered receipts and payments from Voluntary Administration into Deed Administration accounting system to maintain statutory report of Deed Fund receipts and payments

Prepared and authorised receipt and payment vouchers in respect of various Voluntary Administration trading activities

Reviewed purchase order register and reconciled schedule to monitor residual trading liabilities as Voluntary Administration trading costs were paid

Creditors 59.50 hours $25,369.00

Creditor Enquiries, Requests & Directions

Received and responded to creditor enquiries Prepared initial correspondence to creditors and their

representatives advising of Deed execution Facilitated uploading various information relating to

creditors to the McGrathNicol website Continued monitoring and maintenance of functional

mailbox for creditor queries

Provide updates to secured parties

Provided regular updates as requested by secured parties in respect of conduct of Deed Administration and other procedural issues

Liaised with Cashflow Finance Australia (CFA) in respect of amendments to terms and release of certain guarantees associated with ongoing working capital facilities transitioned to the Vac Group

Creditor reports Commenced preparation of current Update to creditors in respect of administration of the Deed terms to date



Assets 96.30 hours $46,001.00

Cash at bank Swept residual balances of Voluntary Administration bank accounts to create Deed Fund bank account

Assets subject to specific charges and security interests

Finalised PPSR queries and claims received from various PPSR creditors during Voluntary Administration period

Settled and paid valid PPSR claims

Leasing Settled liabilities with landlords regarding costs for use and occupation of premises during the Voluntary Administration period

Responded to queries from various landlords relating to the terms of the Deed

Debtors Initial review of pre-Voluntary Administration debtor ledger at commencement of the Deed

Reconciliation of Voluntary Administration debtors and finalise invoicing for Voluntary Administration sales with the Vac Group management

Attended regular meetings and discussions with CFA regarding debtor collections reporting and ongoing strategies for collection of outstanding debtors

Continual monitoring and updating of pre-Administration and Voluntary Administration debtor ledgers, including monitoring of repayments of CFA principal funding facilities and associated costs

Liaised with CFA to arrange remittance of unfactored pre-Voluntary Administration and Voluntary Administration debtors collections and deposit to Deed Fund accordingly

Liaised with the Vac Group’s finance team regarding invoices raised and various credit or adjustment requests relating to pre-Voluntary Administration and Voluntary Administration debtor accounts.

Prepared initial notices for collection of certain unfactored debtor accounts directly by the Deed Administrators

Followed up various unfactored debtors for payment of invoices

Statutory & Administration 330.80 hours $134,261.50

Deed Attend to lodgement of various statutory forms with ASIC relating to the execution of the Deed and corresponding retirement of Voluntary Administrators

Various discussions and correspondence with the Vac Group Management regarding operative provisions of the Deed, and information to assist Management with communications to key counterparties for ongoing trading by the Vac Group

Preparation and continued monitoring of projected outcomes and returns for Deed creditors based on settlement of Voluntary Administration trading liabilities and debtor collections

Document maintenance/file review/checklist

Maintained physical and electronic engagement file Updated checklists Conducted one month file reviews



Insurance Identified potential issues requiring attention of insurance specialists

Advised insurers of transition to Deed Corresponded with insurers regarding ongoing

insurance requirements and adjustments to policies as necessary

Reviewed insurance policies

Australian Securities and Investments Commission (ASIC) forms

Prepared and lodged individual copies per entity in the Vac Group of the following ASIC forms − 5047 – Copy of deed of company arrangement

(14 forms) − 5603 – End of administration return (14 forms) − 505 – External Administration or Controllership

Appointment of an administrator or controller (14 forms)

− 507 – Report on Company Activities and Property (14 forms)

− 5011 – Copy of minutes of meeting (14 forms)

ATO and other statutory reporting

Issued notification of transition from Voluntary Administration to the Deed

Liaised with the ATO to provide updates on the Deed Prepared and lodged monthly BAS returns for

multiple entities including BAS returns for Voluntary Administration period and ongoing monthly BAS returns for the Deed

Various telephone conversations and correspondence with ATO regarding reporting requirements for all Vac Group entities relating to taxation matters

Planning/review Discussed status of external administration with engagement team

Various team meetings, including reassignment of tasks and roles, for ongoing efficient management of Deed

Application to court for fee approval

Initial discussions and instructions to legal advisors to prepare materials for application to Court for approval for outstanding Voluntary Administration remuneration

Collate various information and preparation of schedules of fee information, creditor contact information, copies of Minutes of meetings and other supporting information required for affidavit to be submitted to Court



Bank account administration Ongoing review, maintenance and reconciliation of the Deed Fund bank account

Perform bank account reconciliations on Voluntary Administration bank accounts, including pre-Voluntary Administration bank and credit card accounts utilised for Voluntary Administration trading period

Correspond with bank regarding specific transfers or account matters

Finalise bank account reconciliations for Voluntary Administration bank and credit card accounts

Closed bank accounts opened during the Voluntary Administration

Employees 77.20 hours $31,667.50

Employee queries Continued to monitor and maintain functional employee mailbox

Responded to various employee enquiries, including by telephone, email or correspondence

Updated employees about final wage payments from Voluntary Administration period

Facilitated payment of the Vac Group wages for initial post Deed payment run. Various discussions with the Vac Group Management associated with placing Deed Administrators in funds to make payments on behalf of the Vac Group

Prepared general update to employees

Employee entitlements Prepared, reviewed and reconciled superannuation accounts

Liaised with payroll staff regrading employee entitlements

Reviewed and remitted post-appointment wages

Other employee tasks Prepared separation certificates for former employees Liaised with Workcover and lodged wage

declarations

Investigation 5.60 hours $1,928.50

Conduct investigations Finalised filenote regarding investigations conducted in Voluntary Administration period

Dividend 9.70 hours $5,576.00

Dealt with proofs of debt (POD)

Continued to receive, review and log various PODs from claimants

Updated POD listings and responded to enquiries regarding claims


Dividend procedures Corresponded with creditors regarding enquiries in respect of the dividend

Liaised and corresponded with the ATO regarding the superannuation guarantee charge (SGC) outstanding

Lodged SGC statements with the ATO to register the claim for superannuation

Calculate funds available for distribution in line with Deed priority of payments

Prepare dividend timeline

Total (excluding GST and net of discount) $350,000


Prospective remuneration

Prospective remuneration for the period 9 May 2020 to effectuation of the DOCA

Subject to the outcome of the creditors vote to vary the Deed at the Meeting of Creditors on 10 June 2020, we will request the resolution detailed below be approved by creditors for our prospective remuneration incurred for the period 9 May 2020 to finalisation of the Deed.

Prospective remuneration resolution Appointment Type Amount (ex GST)

Resolution 3: 9 May 2020 to finalisation of the Deed Deed of Company Arrangement $100,000

Total prospective remuneration resolution $100,000

Resolution 3: from 9 May 2020 to effectuation of the DOCA

“That the remuneration of the Deed Administrators for the period 9 May 2020 to finalisation of the Deed of Company Arrangement, is determined at a sum equal to the cost of time spent by the Deed Administrators and their partners and staff, calculated at the hourly rates as detailed in the Initial Remuneration Notice dated 21 November 2019, up to a capped amount of $100,000 (exclusive of GST).”

We will withdraw funds from the Deed Fund in respect of the Deed Administrators’ remuneration progressively over time as funds become available and only once it is incurred. If actual costs incurred are below the capped amount, the Deed Administrators are only authorised to draw the amount incurred. If actual costs incurred exceed the amount approved, the Deed Administrators may seek further approval from creditors.

Description of work to be undertaken

The below table sets out the expected costs and a detailed description of the work by task area to be undertaken (where applicable or appropriate) on the Deed for the period 9 May 2020 to effectuation (finalisation) of the Deed, which is the basis of Resolution 3.

Resolution 3: from 9 May 2020 to effectuation of the Deed


Assets $20,000

Cash at bank Continue to monitor the Deed Fund Finalise closure of the Deed Fund in due course

Debtors

Continue to monitor and reconcile pre-Voluntary Administration and Voluntary Administration debtor ledgers

Liaise with CFA to arrange further debtor remittances to be distributed into the Deed fund

Attend meetings with CFA to determine debtor reporting and collection

Liaise with the Vac Group’s finance team regarding invoices previously raised and credit note requests

Continue to follow up and collect pre-appointment debtors for payment of invoices



Creditors $10,000

Creditor enquiries, requests & directions

Continue to monitor and respond to creditor enquiries

Facilitate the upload of information relating to creditors on the McGrathNicol website

Continue to manage the functional mailbox for creditor queries

Consider reasonableness of creditor requests, if received

Obtain legal advice on requests from creditors for information, documents or a report if required

Document reasons for not complying with requests or directions if required

Compile information requested by creditors if required

Provide updates to creditors

Secured creditor reporting Provide updates to secured parties Respond to secured parties’ queries

Meeting of Creditors Prepare and send notice for Meeting of Creditors to vary Deed

Advertise notice of Meeting of Creditors Prepare meeting file, including registers for meeting,

chairperson notes and presentation Attend Meeting of Creditors Prepare and lodge minutes of Meeting of Creditors Respond to stakeholder queries and questions

following the Meeting of Creditors

Employees $10,000

Calculation of entitlements

Finalise calculation of employee entitlements for terminated employees

Notifications to employees regarding entitlements (where required)

Trade On $5,000

Trade on management Continue to provide assistance to management and staff

Prepare and monitor cash position Manage functional mailboxes

Process receipts and payments Enter receipts and payments into accounting system Review and approve payments

Dividend $40,000

Process proofs of debt (PODs) Prepare notices to potential creditors inviting lodgement of POD

Receive and adjudicate PODs Maintain POD register Correspond with claimants regarding PODs

Deed fund distributions (priority claims)

Prepare notices to priority creditors regarding intention to declare a dividend

Calculate and prepare distributions to priority claims Seek legal advice as required Prepare PAYG payment summaries following

distribution



Dividend procedures (unsecured creditors)

Correspond with unsecured creditors regarding dividend (if applicable)

Receive and adjudicate on PODs Advertise intention to declare interim or final

dividends Obtain clearance from ATO Calculate increasing or decreasing adjustment

regarding ATO’s claim for any pre-Voluntary Administration tax obligations outstanding

Calculate equalising dividend (if required) Calculate and pay dividend

Administration $15,000

Document maintenance/file review/checklist

Conduct first six monthly file review Maintain physical and electronic engagement file Update checklists

Insurance Correspond with insurer regarding ongoing and future insurance requirements

Review insurance policies

Bank account administration Perform bank account reconciliations Correspond with bank regarding specific bank

account matters Process payments on a weekly basis

ASIC forms Prepare and lodge ASIC forms Correspond with ASIC regarding statutory forms

ATO and other statutory reporting

Prepare BASs Correspond with ATO

Finalisation Notify ATO of ceasing to act Cancel ABN/GST/PAYG registration Complete checklists

Planning/review Discuss status of external administration with engagement team

Total (excluding GST) $100,000

Estimated future remuneration

In preparing this report, our prospective remuneration approval is our best estimate of what we believe the External Administration will cost to finalise administration of the Deed. As outlined above, we estimate future remuneration from 9 May 2020 to finalisation of the Deed to be approximately $100,000 (exclusive of GST), subject to creditors approving to vary the Deed at the meeting of creditors on 10 June 2020.


Total remuneration reconciliation

We estimate that the total remuneration of the Vac Group Deed (subject to creditors approving the variation to the Deed) will be $450,000 (GST exclusive), as shown in the table below.

Estimated remuneration (if creditors vote for DOCA variation) Amount (ex GST)

Current remuneration approval being sought :

Retrospective remuneration approval (refer to Section 3.1) $350,000

Prospective remuneration approval (refer to Section 3.2) $100,000

Estimated total remuneration $450,000

The remuneration associated with the Deed period of $450,000 (excluding GST) is higher than the estimate provided in our Remuneration Report dated 12 December 2019, which estimated remuneration of $50,000 (excluding GST) for the Deed, being the amount proposed by the Deed Proponents as a term of the Deed. The reason for this increase is as follows:

Dealing with residual Voluntary Administration trading matters during the Deed of Company Arrangement period as follows:

− reviewing payments to ensure suppliers were providing invoices in accordance with the approved Purchase Orders;

− maintaining and updating the Purchase Order register to ensure cashflow analysis was reliable and up to date to monitor the Deed Fund;

− the presence of McGrathNicol staff on site to assist with initial preparation of payments and other matters following the voluntary administration;

− correspondence and telephone discussions with various suppliers, customers, statutory authorities and employees regarding the finalisation of the Voluntary Administration and the ongoing operations of Vac Group; and

− the time taken to reconcile and pay all obligations incurred during the Voluntary Administration period has been materially longer than forecast.

Assisting the Vac Group in its transition from the Voluntary Administration process; including

− facilitating the payment of wages to the Vac Group employees for the initial Deed wages that were due on 31 December 2019, utlising the Voluntary Administrator’ banking facilities; and

− providing assistance and other correspondence to the Vac Group to clarify the Deed terms for counter-parties engaging in ongoing business dealings with the Vac Group.

Liaising with the ATO and lodging various Statements which include:

− the substantial SGC claim as mentioned above;

− preparing and lodging the SGC Statements; and

− lodging numerous Business Activity Statements in various Vac Group entities and following up relevant GST refunds for the benefit of the Deed Fund.

Continual monitoring of the invoice finance facility to determine the strategy after the CFA advances were repaid. In addition, the Deed Administrators have resumed control and responsibility for collecting certain outstanding debtors and have been proactive in collection of those debtors by preparing letters and follow up telephone discussions. These further collections have maximised recoveries from debtors to date;

The time required to collect debtors has been materially longer than forecast, and has included dealing with various requests for credits, adjustment or disputes raised by customers relating to both pre-Voluntary Administration and Voluntary Administration debtor balances.

Preparation of Court application in relation to approval of outstanding remuneration in respect of the Voluntary Administration; and


The Deed Administrators have spent significant time which has exceeded the amount of retrospective remuneration sought.

We have provided an explanation of the tasks that remain to be completed, including our estimated costs to complete those tasks, to support our current remuneration approval request, at Section 3.2 of this report.

Likely impact on dividends

It is both reasonable and appropriate for a professional service provider to be remunerated for their services. An external administrator is entitled to be remunerated for necessary work that is properly performed. That work generates the funds that may be recovered for the benefit of creditors and other stakeholders.

The impact of the approval of the external administrators’ remuneration is that the remuneration will then be paid provided sufficient funds are generated to enable it to be paid. The remuneration will be paid from those funds that are generated prior to the payment of most creditors in the external administration.

It is noted that funds would only be available to any stakeholder as a consequence of the work necessarily undertaken by the external administrator.

The impact on dividends will also depend on the decision made at the meeting of creditors. If a dividend or distribution is to be paid to stakeholders, there is also necessary work that must be undertaken by the external administrator to properly adjudicate on claims and distribute any available funds.

Remuneration recovered from external sources

We have not recovered any remuneration from external sources or received any indemnities or up-front payments during the Deed period to date, the Deed Administrators are in the process of applying to the Court for approval of unpaid fees from the Voluntary Administration period.


Disbursements

Disbursements are paid for by McGrathNicol and are recovered from the Deed Fund.

Disbursements are divided into two types:

External disbursements- these are recovered at cost. Examples are travel, accommodation, postage, advertising, couriers and search fees.

Internal disbursements – these disbursements are charged at a rate which recoups both fixed and variable costs and may include an element of profit or advantage to the External Administrator or a related party of the External Administrator. Examples are printing and data storage. The recovery of these costs must be on a reasonable commercial basis. Details of the basis of recovery of each of these costs is discussed below.

We have undertaken a proper assessment of disbursements claimed for the Administration, in accordance with the law and applicable professional standards. We are satisfied that the disbursements claimed are necessary and proper.

External disbursements

External disbursements are recovered at cost. Creditors are not required to approve these types of disbursements, but details are provided to account to creditors, including the basis of charging for these types of disbursements. Creditors are entitled to question the incurring of the disbursements and can challenge the disbursements in Court.

Internal disbursements

Internal disbursements may have an element of profit or advantage to the External Administrator or a related party of the External Administrator. Creditors are required to approve these types of disbursements.

There have been no internal disbursement incurred in the Deed to the date of this remuneration report.

Future disbursements provided by McGrathNicol will be charged to the external administration on the following basis:

Disbursement type Rate (GST exclusive)

External disbursements

Postage At cost

Stationery and other incidental disbursements At cost

Telephony – conference calls At cost

Searches At cost

Advertising At cost

Courier At cost

Staff per diem travel allowance* $89.00 per day**

Staff vehicle use $0.68 per km**

ASIC user pays levy At cost

Internal disbursements (that may have an element of profit or advantage)

Data processing – data loading & processing fee $20-$60 per gigabyte (GB)***, minimum $3,000 for matters less than 50GB.

Data hosting – monthly hosting fee $10 per GB, per month. Minimum $1,000 for small matters.

Large matters are priced on application.

Printing – black and white $0.09 per page

Printing – Colour $0.28 per page


* Payable when partners or staff are required for business purposes to stay away from their usual place of residenceovernight.

** These rates are deemed reasonable by the Australian Taxation Office.

*** Tiered pricing model depending on volume of data to be hosted.

Queries

If you have any queries regarding the information in this report, please contact Mahin Chaudhary on (07) 3333 9832.

You can also access information that may assist you on the following websites:

ARITA at www.arita.com.au/creditors

ASIC at www.asic.gov.au (search for “fees of insolvency practitioner”).

Dated: 25 May 2020

Jamie Harris Deed Administrator

ARITA ACN 002 472 362

Level 5, 191 Clarence Street, Sydney NSW 2000 Australia | GPO Box 4340, Sydney NSW 2001 t +61 2 8004 4344 | e [email protected] | arita.com.au

AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION

Information sheet: Approving remuneration of an

external administrator

If you are a creditor in a liquidation, voluntary administration or deed of company arrangement you may be asked to approve the external administrator’s remuneration. An external administrator can be a liquidator, voluntary administrator or deed administrator. The process for approving the remuneration for each of these is the same.

This information sheet gives general information to help you understand the process of approving an external administrator’s remuneration and your rights in this process. The following topics are covered in this information sheet:

• About external administrations

• External administrator’s remuneration and costs

• Calculating remuneration

• Information you will receive

• Approving remuneration

• Who may approve remuneration

• Deciding if remuneration is reasonable

• What can you do if you decide the remuneration is unreasonable?

• Reimbursement of out of pocket costs

• Queries and complaints

• More information.

If a company goes into liquidation, voluntary administration or enters into a deed of company arrangement, an independent person is appointed to oversee the administration. They are called an external administrator and include a liquidator, voluntary administrator and deed administrator, depending on the type of administration involved. In this information sheet they are simply referred to as an external administrator.

The duties of an external administrator are specified in legislation and they must adhere to certain standards while conducting the administration.

All external administrators are required by law to undertake certain tasks which may not benefit creditors directly (e.g. investigating whether any offences have been committed and reporting to the Australian Securities and Investments Commission (ASIC)).

External administrators are entitled to be paid for the necessary work they properly perform in the administration.

An external administrator is entitled:

• to be paid reasonable remuneration, for the work they perform, once this remuneration has been approved,

• to be paid for internal disbursements they incur in performing their role (these costs do need approval), and

• to be reimbursed for out-of-pocket costs incurred in performing their role (these costs do not need approval).

About external administrations

External administrator’s remuneration and costs

AUSTRALIAN RESTRUCTURING INSOLVENCY & TURNAROUND ASSOCIATION PAGE 2

INFO remuneration external administrator.docx Version: August 2017

Common internal disbursements are stationery, photocopying and telephone costs.

Commonly reimbursed out-of-pocket costs include:

• legal fees

• a valuer’s, real administration agent’s and auctioneer’s fees

• postage costs

• retrieval costs for recovering the company’s computer records, and

• storage costs for the company’s books and records.

Creditors have a direct interest in the amount of an external administrator’s remuneration and costs, as these will generally be paid from the administration before any payments are made to creditors.

Remuneration and internal disbursements must be approved in accordance with the Corporations Act and Insolvency Practice Rules (Corporations) before it can be paid.

If there is a shortfall between the external administrator’s remuneration and the assets available from the administration, in certain circumstances the external administrator may arrange for a third party to pay the shortfall. As a creditor, you will be provided details of any such arrangement.

If there are not enough assets to pay the external administrator’s remuneration and costs, and there is no third party payment arrangement, the external administrator remains unpaid.

An external administrator may calculate their remuneration using one (or a combination) of a number of methods, such as:

• on the basis of time spent working on the administration, according to hourly rates

• a quoted fixed fee, based on an estimate of the costs

• a percentage (usually of asset realisations), or

• a contingent basis on a particular outcome being achieved.

Charging on the basis of time spent is the most common method used. External administrators have a set of hourly rates that they will seek to charge. These rates are set to reflect the seniority, skills and experience of staff and, where applicable, the complexity and risks of the bankruptcy. They cover staff costs and overheads.

If remuneration is being charged on a time basis, the external administrator must keep time sheets noting the number of hours spent on the tasks performed.

Creditors have a right to question the external administrator about the remuneration and the rates to be charged. They also have a right to question the external administrator about the fee calculation method used and how the calculation was made. The external administrator must justify why the chosen fee calculation method is appropriate for the administration.

There are different types of remuneration reports that you may receive during the course of an external administration. The following table details the reports and when you might receive them.

Calculating remuneration

Information you will receive



The meeting of creditors (or committee of inspection) gives a chance for those participating to ask questions about the external administrator’s remuneration. Fees are then approved by a vote of the creditors. Alternatively, the external administrator may seek approval of remuneration via a proposal without a meeting. Whichever method is used, the external administrator must provide the same report to creditors about their remuneration (Remuneration Approval Report).

Creditors may be asked to approve remuneration for work already performed and/or remuneration estimate for work not yet carried out. If the work is yet to be carried out, the external administrator must set a maximum limit (cap) on the future remuneration approval. For example, ‘future remuneration is approved, calculated on hours worked at the rates charged (as set out in the provided rate scale) up to a cap of $X’.

Document Information it contains When you will receive it

Initial Remuneration Notice (IRN)

• A brief explanation of the types of methods that may be used to calculate fees.

• The external administrator’s chosen fee calculation method(s) and why it is appropriate.

• Details of the external administrator’s rates, including hourly rates if time spent basis is used.

• An estimate of the external administrator’s remuneration.

• The method that will be used to calculate disbursements.

Voluntary Administration – with the notice of first meeting.

Creditors’ voluntary liquidation – within 10 business days of appointment.

Court liquidation – within 20 business days of appointment.

Remuneration Approval Report (RAR)

• A summary description of the major tasks performed, or likely to be performed.

• The costs associated with each of those major tasks and the method of calculation.

• The periods at which the external administrator proposes to withdraw funds from the administration for remuneration.

• An estimated total amount, or range of total amounts, of the external administrator’s remuneration.

• An explanation of the likely impact of that remuneration on the dividends (if any) to creditors.

• Where internal disbursements are being claimed, the external administrator will report to creditors on the amount and method of calculation of these disbursements.

Sent at the same time as:

• the notice to creditors of the meeting at which approval of remuneration will be sought; or

• the notice to creditors of the proposal without a meeting by which approval of remuneration will be sought

If approval of remuneration is not being sought, a RAR will not be provided.

Approving remuneration



If the remuneration for work done then exceeds this figure, the external administrator will have to ask the creditors to approve a further amount of remuneration, after accounting for the amount already incurred.

If an external administrator can’t get the creditors’ approval, an application can be made to the Court to determine their remuneration.

When there are limited funds available in the administration, or the external administrator’s remuneration is below a statutory threshold, an external administrator is entitled to draw a one-off amount of up to that threshold plus GST, without creditor approval. This amount is currently $5,000 (indexed).

Committee of inspection approval

A committee of inspection will generally only be established where there are a large number of creditors and/or complex matters which make having a committee desirable. Committee members are chosen by a vote of all creditors and work with the external administrator to represent the creditors’ interests.

If there is a committee, the external administrator will ask it to approve the remuneration. A committee makes its decision by a majority in number of its members present in person at a meeting, but it can only vote if a majority of its members attend.

In approving the remuneration, it is important that committee members understand that they represent all the creditors, not just their own individual interests.

Creditors’ approval

Creditors approve remuneration by passing a resolution at a creditors’ meeting. Creditors may vote according to their individual interests.

To approve an external administrator’s remuneration, a resolution is put to the meeting to be decided on the voices or by a ‘poll’ (if requested by the external administrator or a person participating and entitled to vote at the meeting). A poll requires a count of each vote and its value to be taken and recorded for each creditor present and voting.

A proxy is a document whereby a creditor appoints someone else to represent them at a creditors’ meeting and to vote on their behalf. A proxy can be either a general proxy or a special proxy. A general proxy allows the person holding the proxy to vote how they want on a resolution, while a special proxy directs the proxy holder to vote in a particular way.

A creditor will sometimes appoint the external administrator as a proxy to vote on the creditor’s behalf. An external administrator is only able to vote on remuneration if they hold a special proxy.

There are provisions for a resolution to be passed by creditors without a meeting. This still requires a majority in value and number of creditors voting to vote in favour of the resolution. Creditors representing at least 25% in value of those responding to the external administrator’s proposal can object to the proposal being resolved without a meeting of creditors.

Who may approve remuneration?



If you are asked to approve an external administrator’s remuneration, your task is to decide if the amount of remuneration is reasonable, given the work carried out in the administration and the results of that work.

You may find the following information from the external administrator useful in deciding if the remuneration claimed is reasonable:

• the method used to calculate remuneration

• the major tasks that have been performed, or are likely to be performed, for the remuneration

• the remuneration/estimated remuneration (as applicable) for each of the major tasks

• the size and complexity (or otherwise) of the administration

• the amount of remuneration (if any) that has previously been approved

• if the remuneration is calculated, in whole or in part, on a time basis: o the period over which the work was, or is likely to be performed o if the remuneration is for work that has already been carried out, the time spent by

each level of staff on each of the major tasks o if the remuneration is for work that is yet to be carried out, whether the

remuneration is capped.

ARITA’s Code of Professional Practice (‘the Code’) outlines the steps external administrators should take to make sure they fulfil their responsibilities to creditors when asking creditors to approve remuneration, including when those creditors are acting in their capacity as committee members. The Code is available on the ARITA website at www.arita.com.au.

If you need more information about remuneration than is provided in the external administrator’s report, you should let them know before the meeting at which remuneration will be voted on.

If you think the remuneration being claimed is unreasonable, you should raise your concerns with the external administrator. It is your decision whether to vote in favour of, or against, a resolution to approve remuneration. You may also choose to not vote on the resolution (abstain).

You also have the power to put a resolution to the meeting. For example, you could put forward a resolution to change the way the external administrator charges for remuneration, or the periods at which the external administrator may withdraw funds. Any amending resolution must occur before the vote being taken on the resolution to approve remuneration. If the amended proposal is passed, the resolution is binding on the external administrator. However, such an amendment may result in the external administrator seeking to be replaced by another external administrator.

If the external administrator is seeking approval of remuneration via a resolution without a meeting and more than 25% in value of the creditors responding object using the form provided by the external administrator, the proposal will not pass. If the external administrator wants the proposal passed, a meeting will need to be convened and any creditor entitled to participate in the meeting has the right, before the vote is taken, to put a resolution to the meeting as mentioned above.

What can you do if you think the remuneration is unreasonable?

Deciding if remuneration is reasonable

http://www.arita.com.au/



A creditor may apply to Court for a review of an external administrator’s remuneration. Creditors also have the power to appoint, by resolution, a reviewing liquidator to review any remuneration approved within the six months and any disbursements incurred in the 12 months before the reviewing liquidator’s appointment. The cost of a reviewing liquidator is paid from the assets of the external administration. An individual creditor may also appoint a reviewing liquidator with the external administrator’s consent. An individual creditor seeking the appointment of a reviewing liquidator must pay the cost of the reviewing liquidator.

An external administrator should be very careful incurring costs that must be paid from the administration; as careful as if they were incurring the expenses on their own behalf. Their report on remuneration sent to creditors must also include information on the out-of-pocket costs of the administration (disbursements).

Where these out-of-pocket costs are internal disbursements paid to the external administrator’s firm (for example photocopying and phone calls) the external administrator must request creditor approval of these amounts. The external administrator may also ask for approval of internal disbursements in advance. If they do so, they will set the rates for those disbursements and a cap on the maximum amount that can be drawn.

If you have questions about any of these costs, you should ask the external administrator and, if necessary, bring it up at a creditors’ or committee meeting. If you are still concerned, you have the right to seek the appointment of a reviewing liquidator (refer above).

You should first raise any queries or complaints with the external administrator or their firm.

If this fails to resolve your concerns, including any concerns about their conduct, you can lodge a complaint with ARITA at www.arita.com.au or with ASIC at www.asic.gov.au. ARITA is only able to deal with complaints in respect of their members.

The ARITA website contains the ARITA Code of Professional Practice which is applicable to all its members. ARITA also provides general information to assist creditors at www.arita.com.au/creditors.

ASIC includes information on its website which may assist creditors. Go to www.asic.gov.au and search for ‘insolvency information sheets’.

Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances.

Reimbursement of out-of-pocket costs

Queries and complaints

More information


http://www.asic.gov.au/


http://www.arita.com.au/creditors

http://www.asic.gov.au/

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