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The administrator claims the Australian company was trading while insolvent, and has uncovered possible instances of voidable transactions, including shifty account transfers between the former civil and mining contractor and Walter Bau AG, described as “window dressing” Walter’s dilapidated accounts.
These include a $13 million transfer from Walter Bau AG to Walter Constructions the day auditor KPMG wrapped up an internal appraisal. The money was repaid the following day.
Nearly $6 million in subcontractor cash retentions on “at least” five contracts were also not honoured in four separate cases.
KordaMentha also accused auditors KPMG of failing to properly investigate the cash transactions.
“We have found that subsidy/charges and other inter-company transactions between Walter Bau AG and the company had the effect of creating revenue and improving the book value of the assets,” KordaMentha said.
“The purpose may have been to window dress the accounts to improve opportunities in tendering for new work.”
Walter Construction fell into administration on February 1 2005 with debts exceeding $90 million. It was Australia’s 18th largest commercial builder, operating out of New South Wales and Queensland.
KordaMentha also queried whether directors on both boards knew of Walter Constructions’ fate before the remaining members became aware it was headed for administration. KordaMentha suggested legal action against board members could be an avenue if “contraventions of director duties” were proven to have taken place.
The exact date as to when Walter Constructions became insolvent has yet to be determined. Both it and its parent company are now in the hands of administrators.
In the report released to creditors this week, KordaMentha said the chances of unsecured creditors receiving any monetary reparations were “remote”
However, there was a margin of good news for employees of the fallen contractor, with KordaMentha estimating more than half of Walter’s former 950 staff would retain their jobs, funded by the securing of Helmsman Funds Management Limited (HFML) as a buyer for Walter’s mining division.
“Numerous favourable settlement outcomes” had also increased the likelihood of employees receiving full entitlements.
The Federal Government issued a caveat to KordaMentha this month to "exhaust all avenues for funds" before requesting federal government assistance to reimburse out-of-pocket workers through the commonwealth funded General Employee Entitlements and Redundancy Scheme scheme.
The second creditors meeting will be held Wednesday, March 30.
