Mundella Foods liquidation, Digi Mart USA News (Western Australia): Liquidators of dairy company Mundella Foods are examining potentially unreasonable transactions and possible insolvent trading worth more than $2 million in total. Creditors of Mundella Foods and related companies are still owed $12.5 million, according to a report by ABC News Australia.
A report by liquidators Mackay Goodwin, filed with the corporate regulator, states that they identified $778,000 in potentially unreasonable director-related transactions, including frequent cash withdrawals. The liquidators stressed that further investigation is needed to determine whether these funds were used in the company’s operations and whether the transactions were unreasonable.
The liquidators also found that Mundella may have traded while insolvent from at least 1 July 2024, with the value of the relevant transactions amounting to $1.3 million. The report provides no final conclusions, and additional funding is required to continue the investigation.
Employees, who are priority creditors, are owed nearly $940,000 in wages, pension contributions and other payments. Secured creditors are owed another $3 million, while unsecured creditors are owed $8.5 million.
The liquidators told creditors that Hayden Russell was unlikely to have the financial capacity to meet any potential claims against him and that, at this stage of the liquidation, payments to any class of creditors were unlikely.
The liquidators are also examining whether the multimillion-dollar sale of the Mundella and Margaret River Dairy Company brands, property and assets to Artisanal Market may have been commercially unreasonable. The deal was agreed on 17 July, weeks before creditors voted to liquidate the companies.
The seller was private credit company Bowral Capital, which acted as mortgagee.
After the assets were finally sold in October, Bowral Capital received $5.85 million, while another secured creditor, Bizcap, received almost $1 million. According to the liquidators, these funds were insufficient even to fully repay the debts owed to the two creditors, so other creditors will receive no recoveries from the sale.
Former director Hayden Russell denied carrying out unreasonable transactions. He said he acted in good faith, used the withdrawn funds to operate the business and pay wages, and invested several hundred thousand dollars of his own savings in the business.
Bowral Capital said it was not a party to the companies’ financial restructuring agreement and had no obligation to provide them with additional funding.
