From BRUCE Piper
The only two certainties in life, it is said, are death and taxes — and while death may be a way off for most of us, the tax-man always seems to be just around the corner. That inevitably means that we also need accountants, who have unfortunately been very much in play recently as the Administrators of several high profile industry failures.
Describing them as a “necessary evil” is probably unfair — after all, they certainly have their uses and at least know how to add up. Or do they?
Perhaps not. Attendees at the recent Second Creditors Meeting of Excite Holidays were bemused at a $48 million “clarification” by the KPMG Administrators, who had previously confirmed an “immediate and ongoing decline in revenue” after the company left the ATAS accreditation scheme in late 2018.
Eagerly poring over those initial figures it was clear that Excite had suffered a major blow, with the early report indicating TTV had gone from $158 million for the 2018/19 financial year to just $16.8 million in the final six months before the company’s collapse. Wow, what a spectacular decline in sales, we all said, and no wonder the Directors had to put Excite out of its misery.
However, during the Creditors meeting an amended “Summary of the Companies’ consolidated P&L” was presented, noting that revenue from the sale of travel services was actually $65 million for the six months to 31 December — or an annual “run rate” of about $130 million. Definitely a decline from the prior year, but not nearly as catastrophic as it first seemed.
Now I love accountants. My brother-in-law is an accountant. But it seems that in a matter as basic as this, and with about $30 million in creditor claims at stake, KPMG might have gotten the numbers right.
During the meeting one of the KPMG Administrators assured attendees that despite the $48 million error, their preliminary conclusions about insolvent trading had not changed. Despite a number of people at the meeting raising questions about the Deed of Company Arrangement offered by Excite’s Directors, the proposal was voted through — with the help of a number of proxies from creditors who were not in attendance.
Mind-bogglingly, the Deed of Company Arrangement saw George Papaioannou and Nicholas Stavropoulos regain control of the collapsed companies — owing suppliers, travel agents and others more than $30 million — for just $100,000. At the same time they regained control of the parent company, Global Travel Holdings (the owner of Excite’s Sydney CBD premises), without paying a cent, because apparently even though all the companies traded as a group, this business was not technically insolvent. I’m still trying to get my head around it, because it really seems like the good guys didn’t win.