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This is just a good example on how RMG insolvency can bring the best outcome.

Paying creditors with no assets.

I was appointed Voluntary Administrator of T&M Marketing Pty Ltd ('the Company') on 19 December 2003.

The Company sold off peak accommodation in South-East Queensland at approximately twenty 1201 different resorts, promoting accommodation packages, for example for five (5) nights accommodation for four (4) people for $599, via telemarketing, print media and television advertising.

The Company's strategy was to charge a commission of between $149 and $204 per package and remit the balance to the resorts in payment for the accommodation.

The Company collected deposits which allowed the customers twelve (12) months to make a booking at their nominated resort and pay the balance. The Company confirmed bookings with the resort and arranged for payment two (2) weeks prior to the date of the booking. Consequently, the Company held monies paid by customers for up to twelve (12) months in advance. These monies were not held by the Company in a trust account.

The monies collected from customers for accommodation were used in the general operation of the Company and extensive cash flow hid losses incurred as proper financial records were not maintained. At the dale of my appointment the Company had no cash at bank and computer assets worth less than $5,000.

 From my initial investigation I was of the opinion that the Company's merchant facility provider, St George Bank limited ('St George'), was liable for any deposits or accommodation paid by credit card and not honoured as a result. On that basis, I approached St George to meet credit card payments and avoid inconveniencing customers and increasing significant fees and expenses.

From my analysis:

  • Approximately 600 customers paid for accommodation, of which approximately 550 paid by credit card. The value of the credit card payments was $227,834.50
  • Approximately 2425 customers paid deposits within the last 12 months, of which approximately 2,127 paid by credit card. The value of the credit card payments was $362,880

    • The directors' deed proposal allowed for the directors to honour the deposits with St George fulfilling on behalf of the Company its obligations with respect to all accommodation paid by credit card.

    Over the 12 months of the administration, 2700 customers effectively received a dividend of 100 cents in the dollar on claims of approximately $600,000 and St George avoided the extensive cost of processing credit card charge backs and reduced their overall loss by over 80% of the potential loss that could have been incurred.

    Although some small creditors claims were not paid the majority of creditors were paid in full within 12 months.

    Murray Godfrey