Company in voluntary administration

[Fleeta]

Hey guys,

A stock I hold (ION) went into voluntary administration this morning and shares suspended. I know this isn't good, but does anybody know how long it takes to resolve and whether shareholders will get any money. I don't care if I lose the money, but I want the capital loss in the current financial year.

I find it hard to believe that shareholders would get nothing. The company seems to be in reasonable health, profitable, just highly geared.

Any thoughts/advice?

 

[markrmau]

Obviously only a qualified tax consultant can answer this etc etc...

Check out the ATO website. I think there are special provisions for this sort of thing.

I could be totally wrong as I have not looked into it... but even if things aren't sorted out this year, I think you can retrospectively fix things when they are worked out.

I read something about this with anset. Again, I may be wrong here.

 

[Knobby22]

Sad to here it, learn from it.

You cannot claim the loss until the process is through. This will probably take years.

If you are a big investor you can sell the shares to a specialist company who will charge a small fee to buy them and you can crystallise the loss. If you are small just claim the loss on your tax return. Not much chance anyone will care. (Risks invoved if caught)

 

[Knobby22]

PS You are extremely unlikely to get a red cent after the admisinstrators have charged their fees and all the other creditors line up in front of you. Your money is gone. Sorry.

 

[rozella]

The administrator has to call a meeting of creditors within 28 days, which give the administrator time to access the companies position. The administrator is usually the winner with the fees etc. Unfortunately it is my understanding that you can't write off the loss until the company actually fails & goes into liquidation, that has been my experience as a creditor on a number of occassions (nothing to do with sharetrading)

If you want to know more about voluntary administration, the following site may shed a bit more light on the subject....I just found it at random.Voluntary Administration

rozella

 

[Bingo]

It can even be worse. The Adsministrator must do certain things to enable a tax deduction and often they don't. This means you never get a tax deduction.

The company to go to is www.delisted.com.au who will buy the shares off you and this enables the tax deduction. In this case however you need to wait intill the administrator has done his job. As someone said earlier it is unlikely to be this tax year.

I feel for you on this one. I bought some and sold at a loss as I became worried. It seems amazing as it was not long ago they said their cash was OK.

Bingo

 

[Bingo]

I cut the following from the delisted site.

"We recommend that shareholders do not dispose of their shares in the meantime for two good reasons:

The government has indicated it may change the legislation to enable other insolvency practitioners to issue the declaration that can presently only be issued by a liquidator. That would allow the administrator of Pasminco, for example, to issue the appropriate declaration and there would therefore be no need to sell shares. (deListed has been lobbying the Government on this very point and we are hopeful legislation will be passed during the current financial year)

The loss need only be crystallised by 30 June 2005. There is therefore no point in selling shares if there is a possibility a declaration may be issued by then. (deListed monitors progress and you can review developments by searching on your company) "

I was wrong in my earlier post it is the liquidator who causes the problem.

Bingo

 

[Fleeta]

Thanks for your help guys, much appreciated.

Thanks for your sympathy too, but I only lost 5k, which is a lot less than i've made on other investments, which is why I would love the CGT benefit.

Is it not true that companies can trade out of voluntary administration? I thought this happened with Tassal...not sure though.

Lesson learnt - listen to brokers when they say a company is too highly geared.

Has anybody else invested in company's that have been through this or am I the only one picking duds here?

 

[rozella]

The administrator usually becomes the liquidator in most cases, giving them two bites upfront.

rozella

 

[rozella]

Fleeta,

Usually, they draw up a deed of company arrangement, where they agree with the creditors to freeze the existing debt & pay that off over an agreed time at xx in the dollar, & they then start trading again debt free in a separate entity. But the administrators fees are usually extremely high & they have the VA hanging over them.....it is very difficult....12 months later usually has the writing on the wall. I sometimes wonder whether it would not be better to liquidate immediately & let the creditors claim their losses, & then all, including the directors/owners can get on with life.

rozella

 

[Fleeta]

Thanks Rozella, it all looks very gloomy indeed, can't believe they didn't just go to the market and ask for more money earlier from shareholders if the company had good prospects.

Just goes to show that not even an ASX200 company is less riskier than a punt at the TAB.

 

[Bingo]

Thanks for your help guys, much appreciated.

Thanks for your sympathy too, but I only lost 5k, which is a lot less than i've made on other investments, which is why I would love the CGT benefit.

Is it not true that companies can trade out of voluntary administration? I thought this happened with Tassal...not sure though.

Lesson learnt - listen to brokers when they say a company is too highly geared.

Has anybody else invested in company's that have been through this or am I the only one picking duds here?

Some companies do trade out of administration. In reference to Tassal it traded out in the sense that it was sold to a group of investors who then refloated it at a substantial profit to them. The ANZ bank also I believe got its' money back. Note that the administrator is working for the creditors and not the shareholders.

The shareholders got nothing and neither did the holders of income securities. I know because I held both and lost the lot.

Bingo

 

[Fleeta]

Is it just me or do you find it bizarre that just because a company goes into voluntary administration, it can be sold off at a bargain and these people make alot of money? It's just a redistribution of wealth from existing shareholders to new shareholders. Its a shame because in both Tassal and Ion's case, it wasn't a lack of profitability that killed them, just a lack of cash. The banks should have lent them more money, because in the long run, profitability is sustained and it can be repaid...just look at Burns Philp for example.

Also, can the auditors get sued here? If they say everything is fine at 30 June and by December it falls over. I know auditors aren't supposed to judge whether a company is a good investment, but they are supposed to evaluate that the company is a going concern for the next 12 months.

 

[kooka1956]

Hi Fleeta. You can complete a white transfer (STANDARD)and transfer shares to someone else. Sell the shares to your mum for $1 and then lodge transfer with the companys sharegistry . Why pay someone $50 or $100 when you can do the work yourself. Regards KOOKA

 

[nto]

Hi,

When a company goes into voluntary administration, it is not necessary it will be the end of the company. The administrators access the situation and financial state of the company. If they can sell it off to keep it running then they will. But dont forget that administrators will cover there own fees first and the next people inline are the employees. They are the first inline creditors before investors, where they are entitled for redundancy, holiday leave, salary and super. It has been nearly 3 years since my ex-company went into voluntary administration, and they still sorting things out.

As an investor it all comes down to what you willing to risk. Nothing certain these days

Norm