Energy Watch owes more than $8 million to its creditors and $750,000 in employee entitlements, but the business’ remaining assets have been sold off as part of the troubled company’s sale.
The utility broker’s difficulties became public when founder and former chief executive Ben Polis stepped down from his role after making racist and offensive remarks on his personal Facebook page.
Energy Watch entered administration two weeks ago and, at the same time, the business was sold to a private consortium headed by businessman Danny Wallis.
Administrators of Energy Watch held a first creditors meeting on Tuesday as they attempt to untangle the company’s accounts.
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Administrator Glenn Franklin, of Lawler Draper Dillon, told SmartCompany the meeting involved discussion of the company’s financial position and that the entitlements of former employees were a key issue.
“The liability is unpaid wages and redundancy of $250,000 and superannuation that exceeds $500,000, so they are the priority entitlements,” says Franklin.
“The unsecured debts total, we believe, somewhere in excess of $8 million, owed to the Australian Tax Office, energy retailers who paid commission in advance, advertising agencies and a general assortment of other creditors; there is no bank involved.”
TRUenergy is owed about $562,000, Simply Energy is owed $273,000, Melbourne Football Club is seeking $233,000 in unpaid debts, Melbourne Victory $143,000 and Melbourne Rebels $63,000.
Franklin says it is unclear what assets are remaining following Energy Watch’s sale.
“It is unclear what assets would be available as the business has been sold,” says Franklin.
“A lot of assets were sold as part of the sale, but we are looking at other things such as debtors, which may be available to us. There will be debtors for director loan accounts, but working out whether they are recoverable.”
Franklin says unless Energy Watch is liquidated there is no recourse against the purchasers of Energy Watch.
“I understand there will be a deed of company arrangement put forward so the creditors will look at the deed and give a view as to whether they should accept; in order for creditors to accept, it has to be a better outlook than liquidation,” says Franklin.
“Only in a liquidation could the sale contract be overturned. You would have to go to court and have that challenged in court.”
If Energy Watch enters liquidation the Federal Government GEER scheme will also apply, which will cover Energy Watch’s employees for unpaid entitlements, apart from superannuation.
Franklin says creditors will vote whether to accept the deed of company arrangement or put the company into liquidation at the next creditors meeting on June 22.