A SUPREME Court judge has labelled the failure of a company to secure a US$90 million loan to keep it afloat, contrary to a series of announcements to the Australian Stock Exchange, as a "matter of significant concern".
Justice Kate Williams was assessing Integrated Green Energy Solutions' (IGE) financial position in 2021 following an application by Sydney-based property developer Charles McIntosh's Mac Wealth Holdings (Singapore) to place it in liquidation over a $12.4 million debt.
Mac Wealth loaned the company $10 million and was owed at least $2.4 million in interest.
IGE had ambitious plans to turn plastics into fuel and applied to the court in May 2021 for an adjournment of Mr McIntosh's winding up application, claiming it was in the process of securing millions in funding that would save it from liquidation.
But the court heard from IGE's then administrator Trent Devine, of Jirsch Sutherland, who was appointed three days before the hearing. He detailed an initial list of creditors owed about $40 million.
"His inquiries had been sufficient to allow him to accept without hesitation in cross-examination that IGE is insolvent and is likely to have been insolvent for some time," Justice Williams said.
The court heard IGE made at least five announcements to the ASX between August 2019 and January 2020 about delays in securing the US$90 million loan from US-based Structured Growth Capital (SGC), which IGE was reliant on to remain afloat and complete planned plastic-to-fuel plants in Amsterdam and England.
Reasons for the delays included the COVID-19 pandemic, changes to the loan agreement and stability of "major markets".
Justice Williams raised concern about the language used by IGE in its ASX public announcements, and other correspondence, about the likelihood of the loan eventuating.
She said it professed "commitment", but was couched in terms of 'in a position to', 'expectation' and 'anticipation', which fell short of an actual agreement.
Asking for more time to secure funding, IGE executive chairman Paul Dickson detailed a number of possible funding sources, but Justice Williams said "assuming" SGC was willing to provide the loan, the repeated delays demonstrated it was "unable to do so".
"The adjournment of the winding up application will have the effect of deferring the appointment of a liquidator who would be in a position to take such steps as they may consider appropriate to investigate potential insolvent trading claims against directors and any other recovery action," she said.
IGE provided a letter from SGC to the court indicating that some money had been placed with two overseas banks in October 2020 ready to be transferred, but no money was ever paid.
Justice Williams noted a discrepancy in the letter which listed the loan amount as US$50 million, while the loan agreement was for US$90 million.
"No funds flowed from SGC to IGE under the SGC loan agreement in the period of almost four years since it was signed on or about 6 July 2017," she said.
Justice Williams ordered a liquidator be appointed to take control of IGE.
Know more? Donna.page@newcastleherald.com.au
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