Diploma Group Limited

Diploma Construction (WA) Pty Ltd
DGX Construction Pty Ltd

Background

Diploma Group Limited (ASX:DGX) (Diploma) is a large commercial construction and property development company, focused on commercial, retail and high density retail projects, operating in Perth, Western Australia.  Diploma Construction (WA) Pty Ltd (DCWA) and DGX Construction Pty Ltd (DGX) are wholly-owned subsidiaries of Diploma.

On 21 December 2016, the secured lenders of Diploma, DCWA and DGX (the Companies) appointed Martin Jones and Andrew Smith of Ferrier Hodgson as receivers and managers of the Companies.

Following this, on 22 December, the board of directors of Diploma appointed Matthew Donnelly, Andrew Hewitt and David Hodgson of Grant Thornton as voluntary administrators of the Companies. The receivers and managers have taken control of the operations of the Companies.

The receivers and managers have taken control of the assets, undertakings and management of the Companies.

The receivers and managers and voluntary administrators are required to report to ASIC possible offences by people involved with the Companies. We will assess reports received to consider our own investigations and action, if any.

Visit the Grant Thornton website for further information.

What is receivership?

If a company is in financial difficulty, or is not meeting its obligations under the relevant finance contract, a secured creditor may put the company into receivership. If a receiver has, under the terms of their appointment, the power to manage the company’s affairs, they are known as a receiver and manager.

It is possible for a company in receivership to also be in voluntary administration.

In general, the receiver and manager’s primary role is to collect and sell enough of a company’s secured assets to repay the debt owed to a secured creditor. Their primary duty is to the company’s secured creditor.

The receiver and manager’s main duty owed to unsecured creditors is an obligation to take reasonable care to sell secured property for not less than its market value or, if there is no market value, the best price reasonably obtainable. A receiver also has the same general duties as a company director.

The receiver has no obligation to report to unsecured creditors about the receivership, either by calling a meeting or in writing. However, the receiver will usually write to all of the company’s suppliers to inform them of their appointment. Unsecured creditors are not entitled to see the receiver’s reports to the secured creditor.

Another responsibility of the receiver and manager is to report to ASIC possible offences by people involved with the company.

More information:

What is voluntary administration?

Voluntary administration is where the directors of a financially troubled company or a secured creditor with a security interest over most of the company’s assets appoint an external administrator called a ‘voluntary administrator’.

The role of the voluntary administrator is to investigate the company’s business, property, affairs and financial circumstances, to report to creditors and to recommend to creditors whether the company should enter into a deed of company arrangement, go into liquidation or for the administration to end and control of the company be returned to the directors.

Like a receiver and manager, a voluntary administrator is to report to ASIC possible offences by people involved with the company.

More information:

ASIC’s role

The receivers and managers and the voluntary administrators are obliged to report to ASIC possible offences by people involved with the Companies. We will assess the reports to consider our own investigations and action, if any.

This approach also avoids ASIC's investigations diverting resources of the Companies at the early crucial stages of an administration.

ASIC has been in contact with the external administrators.  We continue to monitor the progress of this matter closely. Further, ASIC can initiate any investigations at any time if circumstances develop where early ASIC involvement is appropriate.

Affected creditors

Sub-contractors

Sub-contractors and contractors are not employees: they are ordinary unsecured creditors. Unsecured creditors should register their interests with the voluntary administrators as outlined below.

Further information can be found on Grant Thornton's website for each of the Companies, including dates of the first creditors' meetings: Diploma, DCWA and DGX.

Employees

Employees are a special class of creditor (priority creditor).  The receivers and managers have taken control of the assets, undertakings and management of the Companies.

The receivers and managers' contact details

By phone to:      (08) 9214 1444
By email to:  diploma@fh.com.au

Registering as an unsecured creditor

To register as an unsecured creditor of the Companies, contact details are as follows:

By email to: maddison.billinghurst@au.gt.com
By phone to:  Maddison Billinghurst (08) 9480 2046
Eve Switka (08) 9480 2028
By facsimile to: (08) 9322 7787
By post to: Grant Thornton Australia Limited
PO Box 570
West Perth  WA  6872

Unpaid employee entitlements

The Fair Entitlements Guarantee (FEG) provides assistance for unpaid employee entitlements following liquidation of a company.

The FEG is a last resort financial assistance scheme where there is no other source of funds to pay entitlements after liquidation has occurred.

It is too early in the administrations to confirm whether FEG assistance will be available or required (as the Companies are not in liquidation).

The Department of Employment administers FEG.

Further information

Trouble with debt

The trouble with debt page on our MoneySmart website has information to assist you if you are experiencing problems with debt and cash flow.

If your company is, or may be, experiencing financial difficulty, ASIC's website also has information to assist you.

Taxation inquiries

For any tax-related questions or concerns, please contact the Australian Taxation Office on 131 020.

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Last updated: 23/12/2016 04:56