Unfamiliar software frustrates administrators’ efforts

With the rate of voluntary administrator (VA) appointments rising from the crypt of COVID-era suppression it’d be no surprise if the rate of applications to extend convening periods is also on rise.

Whilst the reasons for making such applications are frequently familiar – time for the VAs to conclude a sale process; time for a deed proponent to put together a proposal – there’s plenty of scope for courts to be asked to rule on applications based on more singular reasons, such as those in the case of Shaw, in the matter of Ausglobal Construction Pty Ltd [2024] FCA 1143.

Another West Australian-centric matter for today’s edition of iNO, the extension application was brought by David Trim, Cameron Shaw and Richard Albarran in their capacities as VAs of commercial and residential builder Ausglobal Construction Pty Ltd (Ausglobal).

The Hall Chadwick trio’s DIRRI advises that the job was referred to Trim by Subiaco-based Collab Capital. It doesn’t disclose that Ausglobal’s sole director 32 year old We (Peter) Sui of Wilson in South Perth is also a director and 50 per cent shareholder of Collab Capital.

In the judgment delivered last week by Federal Court judge Michael Feutrill his honour was asked to approve the extension application because the administrators hadn’t been able to obtain sufficient information since their July 11, 2024 appointments to form an opinion they could present to creditors.

This was, the judge heard, largely for two reasons.

One, because the company had not used standard accounting software. Instead, it stored and recorded its financial information in construction project management software.

In an affidavit Shaw provided in support of the application he said the company’s data, being intermingled with data for other entities related to it within the Ausglobal Group, “raises concerns for the administrators regarding the accuracy of the data as recorded in the project software”.

Further, the administrators told the court that they’d had difficulties “communicating and obtaining information in a timely manner from the company’s internal accountant” and appeared to blame those difficulties on the unnamed accountant’s proficiency, or lack thereof, in English.

Additionally, other company books and records were said to be “stored in repositories that are not controlled by the company, which are intermingled with books and records of other related entities”.

“While the administrators have made formal requests for information under s 438C of the Act, not all that information has yet been forthcoming,” the judge said.

In concluding that an extension was warranted Justice Feutrill also had the benefit of a confidential affidavit which outlined why sole director Su might not only be prepared to propose a DoCA but also fund the administrators to undertake a forensic examination of the company’s historical affairs.

The outcome of that examination might the judge said lead to the assets available for distribution to creditors being augmented.

Insolvency practitioners are no strangers to encountering language barriers or a general reluctance to cooperate and Shaw, Albarran and Trim between them know plenty of ways to overcome them.

Unfamiliar software not fit for purpose however poses a potential challenge that needs time to overcome and fortunately for VAs on the clock, judges are tending to see it that way too. Until they don’t.