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ATO now taking Picton administrators to court

Wednesday, 09 January 2019
By Wayne Robinson

The Australian Tax Office is lodging further legal action against the directors of debt-ridden Picton Press, taking them back to court, and this time has named the company’s administrators in its lawsuit, as it seeks to overturn the Dec 18 court ruling,  which dismissed its winding up order.

In a separate development long-time well respected operations manager Murray Scott has joined the exodus out of the company, with two pre-press operators also just leaving.

The ATO – which is owed $1.3m by Picton – lodged an application to the Federal Court on Dec 21, three days after the ruling that dismissed its original winding up order.

For the first time the ATO named administrators Jeremy Nipps and Clifford Rocke from Cor Cordis in the lawsuit, as well as Picton directors Garry Kennedy and Dennis Hague, and Picton Press itself, as the defendants. No date has yet been set for the court hearing.

Administrator Jeremy Nipps steered the business into a Deed of Company Arrangement (DOCA), thanks to what creditors at the meeting said was a highly controversial vote he managed. Almost all unsecured creditors – including the ATO – voted against, but all employees voted for, with Nipps then declaring the vote deadlocked, before casting his vote in favour to get the DOCA over the line.

The DOCA will enable the company to shed between 98 and 99 per cent of its $3.6m unsecured debt, with unsecured creditors – including the ATO – getting between just 1c and 2c in the dollar. In the ATO’s case this translates into somewhere between just $13,000 and $26,000 of its $1.3m.

Cor Cordis received $356,000 for its six month stint as administrator, from May 22 to November 29, a period which saw Picton gain receipts in of $3.12m, while payments out were $2.95m.

The Dec 18 court case came after several adjournments. The court ruled against the ATO, citing the approved DOCA, but in an interesting move it awarded the ATO’s costs against Picton.

The DOCA has caused uproar in the WA printing community, as they point out that it effectively means that while they have all been writing cheques to the tax office for 100c in the dollar, and paying their paper bills in full for the past four years, and pricing their jobs accordingly, Picton has not, and now does not have to, having shed itself of more than $3.5m of its $3.6m debt, which is owed to 72 unsecured creditors.

Administrator Jeremy Nipps says the DOCA is a legitimate tool to help a struggling business move forward. However one local print identity told Print21, “If this is the outcome then the ATO’s new anti-phoenixing unit is a gigantic waste of time and money. It beggars belief.”

Picton put itself into voluntary administration in May when the ATO initiated its winding up order as Picton failed to pay its $1.3m tax bill.

The ATO is thought to be under pressure from its own multi-million dollar anti-phoenixing unit to puruse Picton.

Picton had been in trouble for four years, ever since 2014 when it put in a new B1 ten-colour press, which even at the time was viewed as optimistic for the Perth market, and it was compounded by the WA economy tanking virtually as soon as the press was commissioned.

The press was installed on a business plan with sales of minimum $12m, at the time they were around $13.5m. However three years later they were less than $8m. This year sales will struggle to hit $6m.

As well as the unsecured debts Picton has around $5.5m in loans from banks, secured against various properties.

2 Responses to “ATO now taking Picton administrators to court”

  1. January 09, 2019 at 3:14 pm,

    Bert
    said:

    If the owners and administrators of Pictons are so convinced with their ability to survive, then why are they going from printer to printer, begging them to buy the business. They are only protecting their own assets (paid for by the company), whilst continuing to give their staff false hope.
    If you hit genuine financial hardship, the market and suppliers would likely lend some support.
    But these guys are not playing by the rules.

  2. January 15, 2019 at 12:08 am,

    Benni
    said:

    Haven’t played by the rules. Don’t care about anyone but themselves. Don’t deserve to have the business. Do the right thing and wind it up sell the press and whatever else and pay everyone what they are owed.

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