The liquidation of the Australian Institute of Professional Photography is nearing finalisation, with documents lodged with ASIC by liquidator Mathew Gollant (CJG Advisory) indicating that the former association had sufficient funds to pay all creditors in full.
It appears that after creditors and the liquidator have been paid, the former association will remain with a significant surplus. No-one is saying at this stage where that surplus and ‘intangible assets’ such as the Accredited Photographers/Videographers ‘brands’ will end up.
The organisation voluntarily called in the liquidators last November due to concerns it would in the near future be trading while insolvent. According to the ‘Statutory report by a liquidator to creditors’, lodged with ASIC, the former AIPP had no secured creditors; three priority creditors (employees), owed a total of $1075; and one unsecured creditor – the ATO – owed $15, 035. Creditors were paid in April.
When it abruptly ceased operations at the end of last year, the AIPP had $164,000 in the bank, with a further $9500 in plant and equipment.
Total costs to CJG Advisory to handle the administration and liquidation was $63,000!
The administrator seemed to indicate that the AIPP Board was acting with an abundance of caution in placing the association (which operated under an limited liability company structure) into administration and then liquidation: ‘The Company appears to be in a relatively healthy financial position during FY19 with sufficient current assets on hand to meet liabilities as and when due. This is reflected in the current ratio (of funds to liabilities) being well above 1 at 6.90.’
Financial performance deteriorated rapidly after this, but nonetheless the liquidator reports ‘at the date of my appointment (November 2021) the current ratio was still above 1 at 1.48 indicating that the Company held sufficient assets on hand to meet debts as and when due.’ That is, it was not at that stage close to trading while insolvent.
‘A director has advised that the Company was placed into Administration due to financial
projections indicating that the Company would have been insolvent should it continue trading and hold its annual photography competition and awards night in December 2021,’ the report states.
After making a profit of over $200K in financial year 2019, it lost $179K in 2020. Covid related payments in 2021 of around $160K masked the true financial performance of the AIPP in that year. Without those payments it would have lost about $100K. With the Covid payments it made a profit of $64K. In the period July to November 17, 2021, it made a punishing loss of $173K.
The liquidator reported that everything was in good order administratively, except for one potential ‘Unfair Preference Payment’ of $16,639. An Unfair Preference Payment is ‘a transactions made by a company if it was insolvent at the time it entered into the transaction or if it became insolvent because of the transaction’. He said that he was unlikely to pursue this, in part because: ‘Creditor 1 may have a number of potential defences available to them, including that there was ongoing supply of their services to the Company and their work was required to assist in determining the future of the Company.
AUTHOR’S NOTE: I forwarded a series of questions earlier this week to the liquidator seeking further information on the remaining assets of the former association.
This was the (somewhat enigmatic) response: A Director’s powers are suspended whilst the Company is in liquidation pursuant to Section 471A of the Corporations Act 2001 and a result they are unable to formally respond on the below. The Liquidator advises that all creditors have been paid in full and that the remaining funds and assets (including intangible assets) are subject to an order of the Supreme Court of Victoria per the Company’s constitution.
To access the Liquidators report: AIPP liquidation
Is it possible that ‘the remaining funds and assets (including intangible assets)’ might contribute to the foundation of a new association for professional photographers in Australia?
Liquidators are notorious for stripping money from failed companies. The rates that are charged are somewhat exorbitant by most peoples standards. And they justify this by carrying out work that has already been completed by the failed company’s staff.
Perhaps one idea for any excess funds after dissolution is to share amongst the state bodies that are being formed in the wake of the AIPP closure?
On the surface, this isn’t a good look. If projections were that ongoing losses were imminent, then why not suspend operations, rather than go into liquidation. Pause, reflect and act responsibly. If the bottom line is financial viability, they appeared to be viable a the time they opted to call in the liquidators that took a further $63,000. Company law is complex but specific. Directors have a responsibility to not trade whilst insolvent. Sounds like they bailed before it got ugly. Family companies tend to try and trade through difficult times, often sacrificing personal assets to keep the dream afloat. Not so with an organisation like the AIPP, even though we all thought it was a family.