23 July 2015
To Creditors
Dear Sir/Madam
Toman Investments Pty Limited (Administrators Appointed)
ACN 006 332 163
ACN 100 704 514 Pty Ltd (Administrators Appointed)
ACN 100 704 514 (Referred to as “Man to Man (Imports) Pty Ltd”)
Stone Shoes Pty Limited (Administrators Appointed)
ACN 125 526 429
(Referred to as “the Group”)
As you are aware, Brendan Richards and I were appointed Administrators of the Group on
Wednesday, 17 December 2014 pursuant to Section 436A of the Corporations Act 2001 (the
Act).
We are now in a position to convene the second meeting of creditors of the Group in order to
determine the Group’s future.
Please find enclosed the Administrators’ report to creditors pursuant to Section 439A(4)(a) of
the Act, which includes our opinion, with supporting reasons, on each of the following matters:

Whether it would be in the creditors' interests for the Group to be wound up.

Whether it would be in the creditors' interests for the administration to end.
The following documents in respect of the second meeting of creditors of the Group are
attached to the report:
Report
annexure
A
Document
Notice of meeting of
creditors
(form 529)
Description


Please note that the meeting is to be on 3 August 2015
commencing at 11:00 am.
You should arrive for registration at least 15 minutes
prior to the meeting.
To Creditors
23 July 2015
Page 2
Report
annexure
Document
Description

B
Appointment of proxy
(form 532)



C
Formal proof of debt
(form 535)


D
E
Remuneration Approval
Request Report
Australian
Restructuring,
Insolvency and
Turnaround Association
(ARITA) Creditor
Information Sheet




This form enables you to appoint a person to act on your
behalf at the meeting.
Proxy forms submitted at the first meeting of creditors are
not valid for this meeting.
A person is not entitled to vote at the meeting unless they
provide particulars of the debt or claim to the
Administrators before the meeting.
If you submitted this form for the purposes of the first
meeting of creditors, you do not need to submit another
form for this meeting unless you seek to amend your
claim.
All creditors must furnish full details of their claims,
indicating whether they rank as secured, preferential or
unsecured, and whether they claim title to any goods
supplied to the Group or any lien over goods in their
possession which are the property of the Group.
Details of time spent by category of staff at the rates
applicable for such staff.
A summary of the work undertaken by the
Administrators and their staff in the administration.
A summary of the likely tasks and estimated
remuneration of the Liquidators, should creditors
resolve that the Group be wound up.
Contains information regarding offences, recoverable
transactions and insolvent trading, which may be
pursued if the Group is placed into liquidation.
Creditors should review the ARITA information sheet in
conjunction with section 8 of the Administrators’ report.
The proof of debt and proxy forms should be lodged with this office before the meeting
and, in any event not later than 4.00pm on the business day prior to the meeting.
Forms can be sent by facsimile on (03) 9642 5887 marked to the attention of Courtney
McLean or scanned and emailed to [email protected]. However, Corporations
Regulation 5.6.36A requires lodgement of the original of the proxy form with the
Administrators’ office within 72 hours of lodging the faxed / emailed copy.
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To Creditors
23 July 2015
Page 3
Should you have any questions regarding the administration or the enclosed report, please do
not hesitate to contact the relevant Ferrier Hodgson representative:
Representative
Creditor group
Phone
Email
Courtney McLean
Landlord creditors
(03) 9604 5120
[email protected]
Sarah Aylott
Employee creditors
(03) 9604 5639
[email protected]
Cameron McDougall
General creditor enquires
(03) 9604 5127
[email protected]
Yours faithfully
Toman Investments Pty Limited
ACN 100 704 514 Pty Limited
Stone Shoes Pty Limited
James Stewart
Administrator
Encls.
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Toman Investments Pty Limited (Administrators
Appointed) ACN 006 332 163
ACN 100 704 514 Pty Ltd (Administrators Appointed)
ACN 100 704 514 (Referred to as “Man to Man
(Imports) Pty Ltd”)
Stone Shoes Pty Ltd (Administrators Appointed)
ACN 125 526 409
(Referred to as “the Group”)
Report by Administrators pursuant to section
439A(4)(a) of the Corporations Act 2001
James Stewart and Brendan Richards
23 July 2015
Table of Contents
Section
Page
Statement by Administrators ............................................. 1
1
Executive summary ........................................................... 2
2
Introduction ....................................................................... 5
3
Group information.............................................................. 8
4
Historical financial position .............................................. 13
5
Statement by Directors .................................................... 21
6
Trading by Administrators................................................ 28
7
Sale of business / assets ................................................. 31
8
Statutory investigations ................................................... 32
9
Return to creditors ........................................................... 51
10
Administrators’ opinion .................................................... 52
11
Further information and enquiries .................................... 53
Glossary of terms ............................................................ 54
Annexure
A
Notice of meeting
B
Appointment of proxy form
C
Proof of debt form
D
Remuneration approval request report
E
ARITA creditor information sheet
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Report by Administrators pursuant to Section 439A
23 July 2015
Statement by Administrators
In reviewing this Report, creditors should note:

This Report is based upon our preliminary investigations to date. Any additional material
issues that are identified subsequent to the issue of this Report may be the subject of a
further written report and/or tabled at the Second Meeting.

The statements and opinions given in this Report are given in good faith and in the belief
that such statements and opinions are not false or misleading. We reserve the right to alter
any conclusions reached based on any changed or additional information which may be
provided to us between the date of this Report and the date of the Second Meeting
(except where otherwise stated).

In considering the options available to creditors and formulating our opinion and
recommendation, we have necessarily made forecasts of asset realisations and total
creditors’ claims based on our best assessment in the circumstances. These forecasts
and estimates may change as asset realisations progress and we receive creditor claims
and consequently the outcome for creditors might differ from the information provided in
this Report.

Creditors should consider seeking their own independent legal advice as to their rights and
the options available to them at the Second Meeting.
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1
Executive summary
1.1
Appointment
We, James Stewart and Brendan Richards were appointed as joint and several Administrators
of the Group on 17 December 2014 by the Directors under Section 436A of the Act.
1.2
Conduct of administration
On appointment, the Administrators assumed control of the Group’s operations and notified
employees, creditors and other stakeholders of their appointment. The Administrators then
conducted an urgent financial and commercial review of the Group with the assistance of key
personnel and communications with key stakeholders including customers and suppliers.
Immediately following our appointment, we commenced a sale and marketing program
seeking expressions of interest in the sale of business. In order to provide the best
opportunity to facilitate a sale of the Group, we made an application to the Federal Court of
Australia for an extension of the convening period for the Second Meeting for a period of six
months. On 21 January 2015, the Court made orders granting the extension requested.
The Administrators, with the approval of secured creditors, the National Australia Bank,
accepted an offer to purchase the business on a going concern basis by a group of investors
associated with one of the existing directors of the Group, Mr Alex Hampel. The
Administrators finalised the contract of sale with the purchaser and completed the sale of
business on 4 February 2015.
1.3
Purpose of report
The purpose of this Report is to table the findings of our investigations of the Group’s
business, property, affairs and financial circumstances, as well as our opinion on the three
options available to creditors in deciding the future of each company within the Group at the
Second Meeting.
1.4
Administrators’ recommendation
On the basis that a DOCA proposal has not been received for any company within the Group
and ending the Administration is not a viable option due to the insolvency of each company
within the Group, it is our opinion that the Group should be placed into liquidation.
If the Group is placed into liquidation at the Second Meeting, priority creditors may be able to
recover their outstanding entitlements (excluding unpaid superannuation) through FEG.
Please refer to section 9 for further information.
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1.5
Second Meeting
Details of the Second Meeting are as follows:
Second Meeting
Details
Date
Monday, 3 August 2015
Registration
10.45am
Meeting time
11.00am
Location
Ferrier Hodgson, Level 43, 600 Bourke Street, Melbourne, Victoria
The Administrators intend to hold concurrent second meetings of creditors of the Group.
Creditors who wish to participate in the Second Meeting must complete and submit the
following forms to this office by 4:00pm on Friday, 31 July 2015.
Form
Comments
Corporate creditors must appoint an individual to act on its behalf.
Appointment of proxy
(form 532)
Proof of debt
(form 535)
1.6
Individuals voting in person are not required to complete this form but must
complete this form if a representative is appointed to vote on their behalf.
Proxy forms submitted for the First Meeting are not valid for the Second
Meeting. A new proxy form must be submitted.
Creditors must submit documentation to support the amount they have
claimed (i.e. unpaid invoices, payslips).
Creditors who have already submitted a proof of debt are not required to
resubmit a proof of debt form unless the amount claimed has changed.
Summary of investigations
We have carried out preliminary investigations into the Group’s affairs to assist in formulating
our opinion as to what is in the creditors’ best interests.
The Administrators have concluded that:

The Man to Man business generated trading losses from around June 2013, with both
Toman Investments and Man to Man Imports having insufficient current assets to meet
their short term debt obligations from at least June 2013.

Significantly, the Man to Man business generated a net loss of approximately $10.2 million
for the 12 month period ending December 2013 and, prima facie, the Group did not have
access to sufficient sources of finance to fund the resulting shortfall in working capital.

The Group received access to alternative sources of funding from the Directors, in
particular Mr Alex Hampel who contributed $5.7 million to the Group through his director’s
loan accounts from around July 2013. However, the level of funding being provided by the
Directors was insufficient to place the Group into a position of solvency.
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
The Group entered into a number of payment plans with creditors from around
March 2014, with the number of payment plans agreed increasing significantly during
August 2014.

The Group’s statutory creditors, in particular superannuation owed to employees, were not
paid from August 2014.

It is our preliminary view that all the entities within the Group were more likely than not
insolvent from at least December 2013, and that the Directors would have had reasonable
grounds for suspecting so. We have formed the preliminary view that the Group traded
whilst insolvent.

In their defence, the Directors may argue they attempted to provide sufficient funding
through their loan accounts to support working capital and the financial viability of the
Group in order to return the Group to a solvent position.

The costs of proceeding with an insolvent trading action must be considered. A liquidator,
if appointed, would likely seek legal advice on this issue and conduct more investigations
possibly including public examinations of the Directors and other relevant parties.

We have identified payments totalling $7.2 million that appear to be of a preferential nature
and may be voidable in the event that the Group is placed into liquidation.

We have not identified any further potential liquidator recoveries.
The investigations undertaken to date in the Administration are detailed at section 8 of this
report.
1.7
Return to creditors
The funds received from the sale of the Group’s assets have been applied to costs of the
administration and provided for a small return on debt owed to the National Australia Bank
(NAB) which is a secured creditor.
As there will be insufficient funds to discharge NAB’s debt in full, there will be no funds
available to unsecured creditors from the realisation of the Group’s assets. There were also
insufficient funds received to allow a return to priority (employee) creditors from the
administration.
If the Group is placed into liquidation at the Second Meeting, priority creditors may be able to
recover their outstanding entitlements (excluding unpaid superannuation) through FEG.
Please refer to section 9 for further information.
We estimate that the dividends payable to each class of creditor are as follows:
Class of creditor
Priority (employee) creditors
 Entitlements
 Unpaid superannuation
Secured creditors
Unsecured creditors
Estimated dividend rate
(cents in the $)
Estimated payment date
Subject to claim through FEG
Nil
Nil
Nil
Subject to FEG timeline
n/a
n/a
n/a
The above dividend rates are estimates only. The final rate will be dependent on a number of
factors. Please refer to section 9 for further information.
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2
Introduction
2.1
Purpose of appointment and this report
The purpose underlying an administrator’s appointment is to allow for independent control and
investigation of an insolvent company’s affairs. During the administration period, creditors’
claims are put on hold.
We are required to provide creditors with information and recommendations in relation to the
three options available to creditors in deciding upon the Group’s future.
The three options available are:



The Group be placed into liquidation;
The Group execute a DOCA;
The Administration to end and control of the Group reverts back to its directors.
In the available time, we have undertaken the investigations detailed in Section 8 of this
report. These investigations have enabled us to form an opinion about the Group’s future.
Our opinion is set out in section 10 of this report.
2.2
Basis of report
This report has been prepared primarily from information obtained from the Group’s books and
records. Although the Administrators have conducted certain investigations of the affairs of
the Group, there may be matters which we are unaware of as an audit of the Group has not
been undertaken.
In order to complete our report, we have utilised information from:








The ASIC;
The PPSR;
The Group’s book and records;
Discussions with the Directors of the Group;
Discussions with key employees of the Group;
Discussions with the secured creditors of the Group;
Discussions with unsecured creditors of the Group; and
Other public databases.
2.3
Declaration of independence, relevant relationships and indemnities
The Administrators provided a DIRRI to creditors with their first circular to creditors. The
DIRRI was also tabled at the First Meeting.
There has been no change in the declaration since that time.
2.4
First Meeting and Committee of Creditors
At the First Meeting, creditors ratified our appointment as Administrators of the Group.
Creditors resolved not to appoint a Committee of Creditors for the Group.
2.5
Extension of convening period
Based on the statutory timetable of a voluntary administration, the Second Meeting was
required to be held on Monday, 3 February 2015.
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From previous experience gained on retail administrations similar to the Group, we considered
that offering prospective purchasers with certainty and the ability to continue to trade under
the protection of the statutory moratorium provided by the Voluntary Administration process
was essential to finding a suitable purchaser for the business and in the best interest of
creditors as a whole.
We do not believe that a purchaser would have been prepared to commit to the purchase of
the Group unless it could be sure that it would have an adequate period of time to negotiate
leases with landlords.
Accordingly, in order to provide the best opportunity to facilitate a sale of the Group, we made
an application to the Federal Court of Australia for an extension of the convening period
pursuant to Section 439A(6) and Section 447A(1) of the Act.
On 21 January 2015, the Court made orders including that the date by which the
Administrators were required under Section 439A of the Act to convene the second meeting of
creditors of each company within the Group be extended to Monday, 27 July 2015.
2.6
Second Meeting
Pursuant to Section 439A of the Act, the Second Meeting is convened for Monday, 3 August
2015 at the offices of Ferrier Hodgson, Level 43, 600 Bourke Street, Melbourne Victoria
at 11:00am.
At the Second Meeting, creditors will decide the Group’s future by voting on one of the
following options:



That the administration should end and control of the Group revert to its directors; or,
That the Group should be wound up; or,
That the Group execute a DOCA.
The Notice of Meeting of Creditors (Form 529) is attached at Annexure A along with an
appointment of proxy form (Annexure B) and a proof of debt or claim form (Annexure C)
Creditors have the opportunity to adjourn the Second Meeting for up to a period of 45
business days to enable further investigations to be undertaken.
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2.7
Remuneration
At the Second Meeting, we will be seeking approval for our remuneration for the Group as
follows:
Period
Amount (ex GST) $
Voluntary Administration –
Resolution 1:
17 December 2014 to 15 July 2015
Toman
Investments
Man to Man
Imports
Stone
Shoes
Total
1,260,026.50
46,721.50
24,764.50
1,331,512.50
32,620.00
5,435.00
2,560.00
40,615.00
1,292,646.50
52,156.50
27,324.50
1,372,127.50
150,000.00
25,000.00
25,000.00
200,000.00
1,442,646.50
77,156.50
53,324.50
1,572,127.50
Voluntary Administration –
Resolution 2:
16 July 2015 to 3 August 2015
Total – voluntary administration
Liquidation (if applicable) –
Resolution 3:
3 August 2015 to finalisation of liquidation
Total
Please refer to our Remuneration Approval Request Report at Annexure D for details of the
key tasks undertaken throughout the course of the administration along with a summary of the
receipts and payments to date.
2.8
Non-disclosure of certain information
There are sections of this Report where we have considered it inappropriate to disclose
certain information to creditors. Such information may include:




Valuations of specific assets
Valuation of the business
Details of offers received during the sale process
Commercially sensitive prospective financial information (for example, projections /
forecasts)
We recognise the need to provide creditors with complete disclosure of all necessary
information relating to the Group. However, we believe this information is commercially
sensitive and it is not in creditors’ interests for us to disclose the information publicly at this
stage.
Where necessary in this Report, we provide a combined figure for potential realisations of
assets when comparing estimated dividends under the relevant options.
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3
Group information
3.1
Statutory information
3.1.1 Incorporation date and registered office
Company
Incorporation date
Toman Investments Pty Ltd
21/09/1984
Man to Man Imports Pty Ltd
28/05/2002
Stone Shoes Pty Ltd
22/05/2007
Registered office
Level 18, 530 Collins
Street, Melbourne VIC
Level 18, 530 Collins
Street, Melbourne VIC
Level 18, 530 Collins
Street, Melbourne VIC
Principal place of business
7 Duke Street,
Prahran VIC
7 Duke Street,
Prahran VIC
7 Duke Street,
Windsor VIC
3.1.2 Group officers
The Group’s officers over the past 12 months were:
Name
Toman Investments Pty Ltd
Alexander Hampel
Ross Ritoli
John Rametta
Man to Man Imports Pty Ltd
Alexander Hampel
Ross Ritoli
John Rametta
Stone Shoes Pty Ltd
Alexander Hampel
Ross Ritoli
John Rametta
Office held
Date appointed
Date ceased
Director
Director
Director
25/09/1984
22/02/2002
22/02/2002
N/A
N/A
N/A
Director
Director
Director
28/05/2002
28/05/2002
28/05/2002
N/A
N/A
N/A
Director
Director
Director
21/06/2007
21/06/2007
21/06/2007
N/A
N/A
N/A
A search of the National Personal Insolvency Index maintained by the Australian Financial
Security Authority shows that the Group’s Directors are not bankrupt or subject to a Personal
Insolvency Agreement under Part X of the Bankruptcy Act 1966.
3.1.3 Shareholders
The ASIC database discloses the Group’s shareholders to be:
Name
Toman Investments Pty Ltd
Ross Ritoli
John Rametta
Eterna Shirt Manufacturing Company Proprietary Limited
Man to Man Imports Pty Ltd
Ross Ritoli
John Rametta
Eterna Shirt Manufacturing Company Proprietary Limited
Stone Shoes Pty Ltd
Eterna Shirt Manufacturing Company Proprietary Limited
Four Four Investments Pty Ltd
Torres Services Pty Ltd
Shares held
1
1
18
1
1
18
90
5
5
3.1.4 Winding up applications
On appointment, there was no outstanding winding up application against the Group.
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3.1.5 Group structure
The structure of the Group is outlined below:
Man to Man brand
Shareholders
Eterna Shirt Manufacturing Co Pty Ltd
atf Hampel Eterna Trust
90%
Toman Investments Pty Ltd
atf MTM Unit Trust
Stock
transferred to
Toman
Investments
For Four Investments Pty Ltd
atf The R&G Ritoli Family Trust
Management
fee paid to
Man to Man
Imports
5%
Man to Man (Imports) Pty Ltd
atf Man to Man (Imports) Unit Trust
Torres Services Pty Ltd
atf Rametta Family Trust
5%
Stone Shoes Pty Ltd
atf Stone Unit Trust
(dormant entity)
The Group was established by Mr Alex Hampel in 1981. The Group’s primary brand, Man to
Man, specialises in the sale of men’s suits.
Toman Investments was the trading entity of the Man to Man brand and was responsible for:




Purchasing stock from Man to Man Imports;
Leasing retail stores from landlords;
Employing staff; and
Paying trading creditors such as overheads, utilities and other store related costs.
Man to Man Imports was the wholesale importing and distribution business of the Man to Man
brand. It was the entity responsible for purchasing stock from both overseas and local
suppliers. Man to Man Imports then on-sold stock to Toman Investments. A management fee
was paid by Toman Investments in relation to the stock purchasing services provided by Man
to Man Imports.
Based on our review of the available records of the Group and discussions with its
management we understand that this relationship had existed between these entities since the
incorporation of Man to Man Imports in or around 2002.
Stone Shoes was a men’s shoes retailer that was established in April 2010. At its peak it
operated 20 stores, however based on our review of the available records of the Group this
particular business did not operate profitability. The underperformance and eventual closure of
the Stone Shoes business was ultimately supported by funding from the Man to Man brand
entities. In or around June 2013, Stone Shoes ceased to trade.
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3.1.6 Registered security interests
Under the PPSA legislation that took effect on 30 January 2012, security over property (except
land and certain other asset categories) must be registered as a security interest on the
PPSR.
Briefly, the concept of fixed and floating charges was replaced under the PPSA by “security
interests over non-circulating assets” and “security interests over circulating assets”
respectively. In the case of inventory from 30 January 2012, title to any inventory required
registration as a PMSI on the PPSR. A PMSI is similar to a ROT provision in terms of trade.
Unless a supplier (including a ROT supplier) registers a PMSI as a security interest on the
PPSR, the goods under the ROT clause may become property of the Group and amount to a
windfall to the Group and its creditors.
The PPSR discloses that 10 parties hold registered security interest on the PPSR. The
majority of the security interests appear to relate to the supply or goods.
The Administrators completed a detailed assessment of the Group’s registered security
interests and any further PPSA claims that were received. Details of the security interest
holders are set out below.
Security interest holder
Toman Investments Pty Ltd
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
Grafton Shopping World Pty Ltd
St. Martins Centre Pty Ltd
Transcript Holdings Pty Ltd
Man to Man (Imports) Pty Ltd
National Australia Bank Limited
MDR Global Pty Ltd
C & D Clothing Pty Ltd
Stone Shoes Pty Ltd
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
National Australia Bank Limited
Accent Group Pty Ltd
Cadet Shoes Pty Ltd
Date created
Type of security
PMSI
3/02/2012
3/02/2012
6/02/2012
6/02/2012
8/02/2012
8/02/2012
10/02/2012
10/02/2012
23/02/2012
25/03/2013
30/01/2014
12/03/2014
26/09/2014
Other goods
Other goods
Motor vehicle
Motor vehicle
Motor vehicle
Motor vehicle
Other goods
Other goods
Other goods
ALL PAAP – No exceptions
Other goods
Other goods
ALL PAAP – No exceptions
No
No
No
No
Yes
Yes
Yes
Yes
Yes
Unknown
No
Yes
Unknown
25/03/2013
3/06/2013
30/09/2013
ALL PAAP – No exceptions
Other goods
Other goods
Unknown
Yes
Yes
30/01/2012
30/01/2012
30/02/2012
8/02/2012
8/02/2012
8/02/2012
8/02/2012
23/3/2012
9/10/2012
7/11/2012
11/12/2012
ALL PAAP – No exceptions
ALL PAAP – No exceptions
ALL PAAP – No exceptions
Other goods
Other goods
Motor Vehicle
Motor Vehicles
Other goods
Other goods
Other goods
Other goods
Unknown
Unknown
Unknown
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
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3.2
Group history
3.2.1 Man to Man
The Man to Man brand was established by Mr Alex Hampel in 1981 as a menswear retailer
and is recognised as one of the larger privately held fashion retailers in Australia. Man to Man
is operated by Toman Investments as the main trading entity within the Group.
The Group was based in Melbourne, Victoria with the business’ head office situated in Duke
Street, Windsor. The Group’s utilised third party logistics providers for its distribution
warehousing facilities located in Sunshine, Victoria.
Man to Man specialised in the sale of men’s suits, shirts, trousers, accessories, casual clothes
and shoes. The Group’s management estimates that the sale of men’s suits represented
approximately 35% of its business and that, the Man to Man brand was the single largest
importer of men’s suits in Australia.
Man to Man is a semi-vertically integrated retailer which sourced approximately 60% of its
product directly from suppliers based in Asian markets with the balance of products purchased
locally from Australian based menswear apparel wholesalers.
Since its establishment, Man to Man had grown to over 90 retail stores across all states and
territories of Australia. As at the date of our appointment, the retail store network had 82 retail
store locations around Australia. The stores were almost entirely located in either
sub-regional or supermarket based shopping centres.
Man to Man is supported by the Man to Man Imports business which operates as a wholesale
importing and distribution business for menswear apparel. Man to Man Imports supplies
product exclusively to the Man to Man business operated by Toman Investments.
3.2.2 Stone Shoes
In 2010, the Group’s management established Stone Shoes, a dedicated men’s footwear
retailer, as a result of increased shoe sales which were being experienced within the Man to
Man business.
Significant start-up costs were generated by the Stone Shoes business establishing its retail
network of approximately 20 stores across Australia.
Due to difficult trading conditions caused from the onset of the Global Financial Crisis and
increased adoption of online retailing, the Stone Shoes business performed well below the
forecasts set by the Group’s management.
As a consequence, the Stone Shoes business was finally closed in or around June 2013. We
understand that the Stone Shoes branded retail stores were progressively closed from around
March 2013. Four of the Stone Shoes retail stores were converted to Man to Man branded
retail stores, however only two formal lease assignments had been executed with landlords as
at the date of our appointment.
3.2.3 Other key events
During 2002, two long term employees of the Man to Man business, Mr Ross Ritoli and
Mr John Rametta, acquired equity interests in the business. We understand that the equity
interests of both Mr Ritoli and Mr Rametta were initially 25% each, however during the course
of the financial year ending 30 June 2014 these equity interests were significantly reduced to
5% each, impacted in part by the underperformance of both the Stone Shoes and the Man to
Man businesses.
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As a result of the underperformance of the Group’s businesses, the Directors invested in the
vicinity of $5.7 million from around July 2013 in order to underpin the financial viability of the
Group, to support the working capital position and to fund the strategic turnaround of the Man
to Man brand. Please refer to section 8 for further information regarding shareholder and
related party loan accounts.
During the financial year ending 30 June 2014, the Group’s management recognised a
significant stock write-off totalling $4.1 million, reducing the stock balance of Man to Man from
$8.1 million to $4.1 million as at 30 June 2014.
The recognition of stock losses of this magnitude raises questions regarding the business
practices of the Group and the accuracy of the historical profitability reported by the business,
and in particular gross margin performance.
3.3
Decision to appoint Administrators
The financial performance of the Man to Man business deteriorated significantly during the
financial year ending 30 June 2014 compared to prior years.
During January 2014, the Group’s management identified the need to develop a strategic
turnaround plan for the Man to Man business and appointed external advisors in the form of
turnaround and restructuring professional services firm, Bond Street.
Bond Street put forward a number or recommendations to turn around the business the
focused on:



Revenue growth;
People performance; and
Profitability and cash flow.
Unfortunately, the trading performance of the Man to Man business continued to deteriorate
and the director, Mr Hampel, continued to invest significant personal funds into the business
for working capital and to underpin the financial viability of the Group.
In November 2014, the National Australia Bank Limited (NAB), the first ranking secured
creditor of the Group approached James Stewart of Ferrier Hodgson to undertake an
independent business review of the Group, having regard to its underperformance at that time.
On 17 December 2014, Mr Hampel approached James Stewart to act as voluntary
administrator of the Group. The Directors subsequently resolved to appoint administrators
pursuant to section 436A of the Act.
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4
Historical financial position
Key comments

Due to the Group’s lack of sound financial and retail disciplines, particular in
respect of stock management, there are serious questions regarding the accuracy
of the Group’s financial records, including its historical profitability.

The financial position of the Group’s was also adversely impacted by the failure of
the Stone Shoes business from around March 2013.

During 2014, the trading performance of the Man to Man business deteriorated
significantly and its underlying financial position was adversely impacted by
material write-offs in respect of stock ($4.1 million) and fixed assets ($1.1 million).
4.1
Books and records
Section 286 of the Act requires a company to keep written financial records that correctly
record and explain the company’s transactions, financial position and performance and would
enable true and fair financial statements to be prepared. The financial records must be
retained for a period of seven years after the transactions covered by the records are
completed.
The failure to maintain books and records in accordance with Section 286 provides a
rebuttable presumption of insolvency which might be relied upon by a liquidator in an
application for compensation for insolvent trading.
The Group’s accountant is Nexia Chartered Accountants. Nexia was engaged by the Group to
provide income tax and accounting services, advisory services and corporate affairs (company
secretarial) services. This included the preparation of the annual financial statements and
income tax returns for the Group. The Directors of the Group, and not Nexia, were
responsible for maintaining the books and records of the Group.
We have received the following books and record from the Group:








Historical profit and loss statements and balance sheets for each entity and consolidated,
(profit and loss and balance sheet);
Stock reports;
Aged debtor and creditor listings;
Payroll information and employee entitlements;
Fixed asset registers;
Landlord and rent schedules;
Related party loan schedules and
Management accounts.
We have noted questions regarding the stock management practices of the Group and
deficiencies in its management reporting systems, however based on our review of the books
and records received, we are of the opinion that the Group kept adequate books and records
and that they were maintained in accordance with Section 286 of the Act up to the date of
appointment.
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4.2
Preparation of financial statements
The Group’s financial statements were prepared up to 30 June 2014 by the Group’s external
accountants, Nexia Chartered Accountants. The Directors of the Group have prepared the
financial statements for each of the respective trusts associated with the Group on the basis
that the trusts were non-reporting entities because there were no users dependent on general
purposes financial statements.
As a result, the financial statements prepared by Nexia are therefore special purpose financial
statements that were prepared in order to meet the requirements of the respective trust deeds
and the information needs of the beneficiaries for income tax purposes and have therefore not
been audited.
The Group’s has also prepared monthly management reports, cash flows and budgets for the
five months through to 30 November 2015 for both Toman Investments and Man to Man
Imports. We note that Stone Shoes had ceased to trade and therefore no financial statements
have been prepared beyond 30 June 2014.
4.3
Profit and loss statement and preliminary analysis
4.3.1 Toman Investments
Set out below is a summary of the Toman Investment’s profit and loss statements for the
financial years ending 30 June 2012, 30 June 2013, 30 June 2014 and the current year being
the five month period to 30 November 2014.
Profit and loss statements
$000s
Revenue
Less: Costs of goods sold
Gross profit
Gross profit margin %
Other income
Expenses
Staff
Rent
Marketing
Fitout and asset write off
Other
Total Expenses
EBITDA
Depreciation
EBIT
Interest
Net operating profit/(loss)
for the period
Year ended
30 June 2012
46,045
(18,139)
27,906
60.6%
306
Year ended
30 June 2013
45,933
(18,353)
27,579
60.0%
737
Year ended
30 June 2014
39,834
(20,871)
18,964
47.6%
925
5 months to
30 November 2014
16,717
(5,518)
11,199
67.0%
(299)
(12,385)
(10,917)
(161)
(731)
(2,603)
(26,797)
1,415
(798)
618
(73)
(12,658)
(11,269)
(150)
(299)
(3,591)
(27,967)
349
(608)
(259)
(16)
(13,920)
(11,891)
(106)
(1,129)
(2,911)
(29,958)
(10,070)
(696)
(10,765)
(276)
(5,377)
(4,085)
(202)
(1,464)
(11,128)
(228)
(235)
(464)
(211)
545
(275)
(11,042)
(675)
In respect of the above, we make the following comments:

Toman Investment’s performance materially deteriorated during the financial year ending
30 June 2014, with the business generating an EBITDA loss (before abnormal items) of
$10.1 million. The majority of the net loss was generated by the business during
December 2013.
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
The underperformance was largely driven by:
o
Sales $6.1 million;
o
GP%  12.4%, largely attributable to the significant stock write-off adjustment of
$4.1 million which was recognised as at 30 June 2014 (discussed further below); and
Operating expenses  $2.0 million.
o

During June 2014, Toman Investment’s management conducted a stocktake involving a
full count of stock at its third party warehouses and a sample count of stores. As a result
of the stocktake, a significant stock write-off adjustment of $4.1 million was recognised in
the accounts of Toman Investments as at 30 June 2014.

Ultimately, the stock write-off is likely to extend back over a period of years and
unfavourably impact the historical profitability reported for the business. Most significantly,
this is likely to mean that the gross margin performance of the Man to Man business has
been overstated in prior years.

The stocktake also identified aged and obsolete stock of approximately $1.1 million which
was subsequently cleared by Toman Investments through its retail stores during July and
August 2014.

The increase in expenses was driven by increased staff costs and a fixed asset write off of
$1.1 million, which was partly offset by lower rent costs as a result of the Group operating
fewer stores. The Directors advised that the fixed asset write off related to retail store fit
outs which were ultimately non-saleable and also retail store fit outs in respect of a
number of store closures which occurred during the financial year ending 30 June 2014.

During the five months to 30 November 2014, Toman Investment’s sales were $837,000
behind budget, which largely occurred during the month of August 2014 which was
$1.0 million behind budget. Management attributes the decrease in sales during
August 2014 to the clearance of aged and obsolete stock identified as at 30 June 2014.

Gross margin performance during the five months to November 2014 increased by 2.3%
compared to budget, notwithstanding the significant impact on gross margin performance
which occurred during July and August 2014 as a result of the clearance of aged and
obsolete stock.

Management has advised that a credit in the amount of approximately $100,000 was
recognised from stock supplier, Nimitz, during October 2014. We understand that Nimitz
had identified that Toman Investments has been overcharged for the purchase of stock
during the preceding six month period.

Overheads increased by $468,000 compared to the corresponding period last year as a
result of:
o
Increased consultancy fees of $230,000, representing the provision of additional
advice from Bond Street regarding visual merchandising, employee relations and
strategy;
o
Increased accountancy fees of $62,000, representing additional services provided by
Nexia Chartered Accountants as a result of their involvement in transitional change
and turnaround of the business;
o
Increased rent of $63,000, resulting from the timing of store closures and rent
abatement agreements with landlords achieved during the period; and
o
Increased product tailoring expenses of $95k given this cost was initially forecast to be
incorporated in gross margin.
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4.3.2 Man to Man (Imports)
Set out below is a summary of the Man to Man Imports’ profit and loss statements for the
financial years ending 30 June 2012, 30 June 2013, 30 June 2014 and the current year being
the five month period to 30 November 2014.
Profit and loss statements
$000s
Revenue
Less: Costs of goods sold
Gross profit
Gross profit margin %
Expenses
Freight
Other
Total Expenses
Contribution margin
Other income
EBITDA
Depreciation
EBIT
Interest
Net operating profit/(loss)
for the period
Year ended
30 June 2012
20,145
(18,685)
1,460
7.2%
Year ended
30 June 2013
21,786
(19,409)
2,377
10.9%
Year ended
30 June 2014
16,735
(15,692)
1,043
6.2%
5 months to
30 November 2014
5,897
(4,965)
931
15.8%
(171)
(408)
(579)
881
881
(354)
(214)
(171)
(385)
1,992
0
1,992
1,992
(401)
(327)
(3,005)
(3,332)
(2,289)
0
(2,289)
(2,289)
(150)
(50)
(50)
881
881
881
(130)
527
1,591
(2,439)
751
881
In respect of the above, we make the following comments:

Man to Man Imports operates as a wholesale importing and distribution business which
supplies product exclusively to the Man to Man business operated by Toman Investments.
Therefore, Man to Man Imports revenue is comprised of product sales to Toman
Investments and its underlying performance is ultimately dependent on the performance of
the Man to Man business.

Other expenses included a $2.4 million bad debt debts expense in relation to a related
party receivable owed by Stone Shoes. The receivable related to funding provided by
Man to Man Imports to underpin the financial viability and eventual closure of the Stone
Stones business.
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4.3.3 Stone Shoes
Set out below is a summary of the Stone Shoes profit and loss statements for the financial
years ending 30 June 2012, 30 June 2013 and 30 June 2014. We note that management
accounts for Stone Shoes have not been prepared for the current year.
Profit and loss statements
$000s
Revenue
Less: Costs of goods sold
Gross profit
Gross profit margin %
Expenses
Staff
Rent
Marketing
Fit out and asset write off
Other
Total Expenses
Contribution margin
Other income
EBITDA
Depreciation
EBIT
Interest
Net operating profit/(loss) for the period
Year ended
30 June 2012
3,002
(433)
2,569
85.6%
Year ended
30 June 2013
4,412
(1,779)
2,633
59.7%
Year ended
30 June 2014
1,143
(935)
208
18.2%
(1,228)
(1,135)
(182)
(422)
(2,966)
(397)
618
221
(238)
(17)
(17)
(2,047)
(1,942)
(101)
(467)
(4,558)
(1,925)
1,710
(215)
(282)
(497)
(27)
(524)
(184)
(132)
1
(1,237)
(31)
(1,583)
(1,375)
491
(885)
(19)
(904)
(2)
(906)
In respect of the above, we make the following comments:

The Group’s management commenced a controlled closure of the Stone Shoes business
in March 2013, with the final Stone Shoes retail store closed in or around November 2014.
The Stone Shoes business had ceased trading prior to our appointment.

The reduction in sales from the financial year ended 30 June 2012 through to 30 June
2014 reflects the controlled wind down of the Stone Shoes business.

At its peak the Stone Shoes business operated 20 retail stores across Australia.

Stone Shoes never generated a profit and the Group took steps to close the business as a
result. The underperformance and eventual closure of the Stone Shoes business was
ultimately supported by funding from the Man to Man brand entities, primarily Toman
Investments.

The asset write off of $1.2 million recognised as at 30 June 2014 relates to the fit outs of
the Stone Shoes retail stores which were closed, with the Directors determining that the
remaining fit outs were non-saleable.
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4.4
Balance sheet and preliminary analysis
4.4.1 Toman Investments
Set out below is a summary of the Toman Investments’ balance sheet as at 30 June 2012,
30 June 2013, 30 June 2014 and 30 November 2014:
Balance sheet
$000s
Current assets
Cash and cash equivalent
Trade and other receivables
Inventory
Loans receivable
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
(including related party loans)
Provision for entitlements
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Related party loans
Long service leave
Total non-current liabilities
Total liabilities
Net asset surplus/ (deficiency)
30 June 2012
30 June 2013
30 June 2014
30 November 2014
316
559
5,462
3,362
9,699
679
921
7,391
3,894
12,885
212
154
4,094
4,460
(378)
512
3,574
3,708
6,066
471
6,537
16,236
6,808
471
7,279
20,164
6,680
471
7,151
11,611
6,177
471
6,648
10,356
(9,422)
(14,435)
(14,860)
(17,184)
(9,422)
(14,435)
(719)
(15,578)
(647)
(17,830)
(1,473)
(5,258)
(1,273)
(4,647)
(1,440)
(5,825)
(1,442)
(3,439)
(6,731)
(5,920)
(7,265)
(303)
(5,184)
(16,153)
(20,355)
(22,844)
(23,015)
83
(192)
(11,233)
(12,659)
In respect of the above, we make the following comments:


The primary drivers of the net asset deterioration of $11.0 m during FY14 were:
o
Inventory decline of  $3.3 million largely attributable to a stock write-off of $4.0 million
recognised as at 30 June 2014.
o
A reduction in related party loans receivable of $3.0 million and an increase in related
party loans payable of $1.2 million, the majority of which was contributed by Mr Alex
Hampel in order to support the working capital requirements of the business
throughout the year.
Toman Investment’s net asset position has further deteriorated through to November
2014, primarily attributable to the underperformance of the business during YTD trading
which led to deferral of payment of trade creditors.
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

Toman Investments’ balance sheet is highly leveraged as a result of:
o
Trade creditors of $6.9m, represented by landlords c.$2.5m and stock suppliers $4.1m;
o
Indebtedness to the NAB of $5.9m (including credit cards of $454k); and
o
Related party loans of $5.8 million.
Management has noted that Toman Investment’s balance sheet was adversely impacted
by the wind down of the Stone Shoes business, with trading losses and considerable
outstanding payables ultimately having been funded by Toman.
4.4.2 Man to Man Imports
Set out below is a summary of the Man to Man imports balance sheet as at 30 June 2012,
30 June 2013, 30 June 2014 and 30 November 2014:
Balance sheet
$000s
Current assets
Cash and cash equivalent
Trade and other receivables
Loans receivable
Total current assets
Total assets
Current liabilities
Trade and other payables
Related party loans
NAB facilities
Total current liabilities
Total liabilities
Net asset surplus/ (deficiency)
30 June 2012
30 June 2013
30 June 2014
30 November 2014
0
8,871
4,301
13,172
13,172
14
14,049
4,634
18,698
18,698
1
10,909
2,066
12,976
12,976
46
13,473
13,519
13,519
(13,172)
(13,172)
(13,172)
-
(10,255)
(8,433)
(18,698)
(18,698)
-
(6,100)
(5,574)
(3,741)
(15,415)
(15,415)
(2,439)
(6,783)
(4,647)
(3,777)
(15,207)
(15,207)
(1,688)
In respect of the above, we make the following comments:

Trade and other receivables are largely from Toman Investments.

Loans receivable relate to loans provided by Man to Man Imports to the Directors.

Related party loans reflect funding provided to the business by the Directors to support its
working capital requirements.

Trade and other payables relate to stock purchases from suppliers.
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4.4.3 Stone Shoes
Set out below is a summary of the Stone Shoes balance sheet as at 30 June 2012,
30 June 2013 and 30 June 2014:
Balance sheet
$000s
Current assets
Cash and cash equivalent
Trade and other receivables
Inventory
Loans receivable
Total current assets
30 June 2012
30 June 2013
30 June 2014
3
2
636
641
23
1,881
799
2,703
9
2,183
4
2,195
Property, plant and equipment
Intangible assets
Total non-current assets
2,398
1
2,399
2,186
1
2,187
29
111
0
141
Total assets
Current liabilities
Trade and other payables
Provision for entitlements
Total current liabilities
3,040
4,890
2,336
(1,777)
(1,777)
(4,063)
(1)
(4,063)
(3,278)
(2)
(3,280)
(682)
(699)
(1,381)
(3,158)
(1,273)
(195)
(1,469)
(5,532)
(604)
(604)
(3,884)
(118)
(642)
(1,548)
Non-current assets
Non-current liabilities
Interest bearing liabilities
Other
Total non-current liabilities
Total liabilities
Estimated surplus / (deficiency)
In respect of the above, we make the following comments:

Management has not prepared monthly management accounts for Stone Shoes for year to
date as the business had ceased to trade.

Trade payables are predominately represented by former landlords of the Stone Shoes
business.

Stone Shoes was largely funded by other entities within the Group.
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5
Statement by Directors
Key comments

There were insufficient realisations from the sale of business transaction to
discharge the NAB’s secured debt in full.

241 employees and their outstanding entitlements were transferred successfully to
the purchase of the Man to Man business. Employee claims remaining with the
Group total approximately $882,000.

Total unsecured creditors are estimated to be in the vicinity of $37 million, of
which approximately $9 million is owed to parties not related to the Group.
Section 438B of the Act requires the Directors to give an administrator a statement about the
Group’s business, property, affairs and financial circumstances. We received the Directors’
statement on 21 January 2015 which aggregated the position of the three companies within
the Group. In the statement, the Directors detailed the Group’s assets and liabilities at book
value and ERV. The following table summarises the assets and liabilities disclosed in the
Directors’ Statement:
Directors’ Statement
$000s
Report
Reference
Cost or Net
Book Value
Directors’
ERV
Administrators’ ERV
High
Low
Circulating assets
Cash
5.1.1
55
55
33
33
Debtors
5.1.2
16,242
26
4
4
Stock
5.1.3
3,500
Undisclosed
1,050
1,050
Work in progress
Total circulating assets
5.1.4
4,521
24,319
N/A
Nil
1,087
Nil
1,087
Less: Priority (employee) claims
Balance of circulating assets
(after priority claims)
Non-circulating assets
5.1.5
(657)
Undisclosed
(882)
(882)
21,314
N/A
205
205
Plant & equipment
Total non-circulating assets
5.1.6
6,177
6,177
Undisclosed
N/A
(479)
(479)
(479)
(479)
Undisclosed
Undisclosed
(5,328)
(5,328)
27,491
N/A
(5,538)
(5,538)
(8,873)
Undisclosed
(10,179)
(10,179)
(16,242)
Undisclosed
(25,115)
Undisclosed
(16,242)
(16,242)
Undisclosed
Undisclosed
(10,600)
(37,021)
(10,600)
(37,021)
2,376
N/A
(42,559)
(42,559)
Less: Secured creditors (APAAP
security interests)
Net assets available for
unsecured creditors
5.1.7
Less: Unsecured creditors
Non-related party creditors
Related party creditors
Directors loan accounts
Total unsecured creditors
5.1.8
Estimated surplus / deficiency
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The Administrators have not audited the Group’s records or the book values. The above
schedule should not be used to determine the likely return to creditors as a number of
realisable values are based on the Group’s records and remain subject to the review of the
Administrators and, in particular:

The Administrators are not in a position to confirm (or otherwise) certain asset values as
valuations commissioned by the Administrators are commercially sensitive and are not
disclosed in this report.

The value of creditor claims remains subject to change as further claims may be received
and require adjudication.

The table above does not provide for possible trading losses or professional costs
associated with the administration process.
We comment on the Directors’ statement as follows:
5.1.1 Cash
The Group operated a number of bank accounts, the table below shows cash at bank as at
the date of our appointment:
Cash
$000s
Toman Investments
National Australia Bank
Westpac
Commonwealth Bank
St George
Bendigo Bank
ANZ
Total Toman Investments
Directors’
ERV
Balance on
appointment
13
9
1
10
13
8
1
6
0
0
Store receipts
1
35
1
30
Store receipts
2
2
Payments to stock suppliers
1
3
1
3
Previously payments to stock suppliers
0
0
Previous trading account
Purpose
Primary trading account
Store receipts
Store receipts
Store receipts
Man to Man Imports
National Australia Bank
Westpac
Total Man to Man Imports
Stone Shoes
National Australia Bank
Total Stone Shoes
Total cash
0
0
38
33
The Directors also advised that $17,750 of cash on hand on appointment related to cash floats
within Man to Man’s retail stores. As part of the sales of the business transaction cash floats
were realised for an amount of $13,500. Please refer to section 7 for further information
regarding the sale of business.
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5.1.2 Debtors
Debtors
$000s
Toman Investments
Related party debtors
Book Value
Administrators’
ERV Low
Administrator’s
ERV High
444
Nil
26
26
4
4
466
26
4
4
Non related debtors
Total Toman Investments
Directors’
ERV
Man to Man Imports
Related party debtors
15,776
Nil
Nil
Nil
Total Man to Man Imports
Total debtors
15,776
Nil
Nil
Nil
16,242
26
4
4
Related party debtors relate to intercompany trading within the Group and are uncollectible.
Toman Investments’ non-related party debtors as at the date of our appointment primarily
related to an amount of $24,200 owed by Perron Investments, a landlord and creditor of the
Group. This debtor was partly offset against amounts owed to Perron Investments by the
Group, with the net balance of $4,108 collected during the administration period.
The remaining debtors balance was partially collected during the administration period, with
an immaterial balance being considered uncollectible.
5.1.3 Stock
Stock on hand at the date of our appointment was $3.5 million, comprising:
Stock - $000s
Store stock
Warehouse stock
Book value
3,229
184
Stock in transit & other
Total
88
3,500
During the course of the Administration, the Administrators purchased approximately
$175,000 of stock from locally based menswear apparel retailers in order to replenish stock
which had been sold during the administration trading period.
At the time of the completion of sale of the business, the book value of stock on hand was
$1.9 million. Stock was realised as part of the sale of business transaction for an amount of
$1.1 million, representing an overall return of approximately 57 cents in the dollar. Please
refer to section 7 for further information regarding the sale of business.
5.1.4 Work in progress
Work in progress refers to stock that has been ordered by the Group prior to our appointment,
however had not yet been paid for. As a result, the amount disclosed for work in progress did
not represent a realisable asset of the Group.
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The total amount of work in progress included $2.2 million of stock on order from Australian
based suppliers and US$1.9 million of stock ordered from overseas, primarily Chinese based
suppliers. The overseas work in progress had been translated into Australian dollars by
applying a foreign exchange rate of US$0.8228, based on the current rate as at the date of
our appointment.
We note that the majority of the work in progress relates to stock purchases for the winter
season and as a result were not purchased by us during the administration period.
5.1.5 Employee claims
Employee claims outstanding at the date of our appointment were:
Employee claims
$000s
Unpaid
superannuation
Annual leave
Leave loading
Long service leave
Payment in Lieu of
Notice
Redundancy
Total
Administrators ERV
Less:
Transferred
employees
Less: Excluded
under sale
employees
Directors’
ERV
Total
employee
entitlements
-
429
-
(48)
381
278
56
323
269
38
335
(187)
(28)
(117)
(105)
82
10
113
-
290
(211)
(9)
70
657
755
2,117
(507)
(1,050)
(23)
(185)
225
882
Net priority
entitlements
Following the sale of the business, 241 employees and their outstanding entitlements were
transferred successfully to the purchaser. As a result of the transfer of employees,
redundancy and payment in lieu of notice entitlements totalling $718,000 did not crystallise
and leave entitlements totalling $332,000 were transferred to the purchaser. Please refer to
section 7 for further information regarding the sale of business.
The Directors’ estimate of outstanding entitlements as at the date of our appointment includes
all employees; that is, both the employees who received continuing employment as a result of
the sale of business and those employees who were ultimately terminated.
Employee claims are afforded priority of repayment pursuant to Section 556 of the Act, ahead
of any return to unsecured creditors.
The Act provides that excluded employees (including company directors and their spouses)
are each restricted to a total maximum priority claim of $2,000 for unpaid wages and
superannuation entitlements and $1,500 for leave entitlements. Amounts owed to excluded
employees that exceed the statutory limit, and all payments owing in respect of redundancy
and payment in lieu of notice will rank as an ordinary unsecured claim.
Should the Company be placed into liquidation at the Second Meeting, employees may be
eligible for financial assistance under the Fair Entitlements Guarantee Act 2012. Further
information on FEG including eligibility for assistance can be found at
www.employment.gov.au/feg.
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5.1.6 Plant and equipment
Plant and equipment is comprised of fixtures and fittings in the retail store network and office
furniture and equipment.
The plant and equipment was sold for $249,999 as part of the sale of the business. This
amount, less realisation costs of $10,000 was distributed to the NAB who held a PMSI in the
plant and equipment under an asset finance facility. The outstanding balance of the NAB’s
asset finance facility following this distribution was in the vicinity of $479,000.
5.1.7 Secured creditor
The major secured creditor is the Group’s banker, NAB, which offered a number of facilities to
the Group. These facilities are secured over the assets of the Group, and supported by
assets owed by related parties and also personal guarantees from the Directors.
The amount outstanding to NAB as at the date of appointment was approximately $6.0 million,
which is dissected as follows:
Secured debt (NAB) - $000s
Balance
Trade finance facility
(3,800)
Commercial bills
(1,086)
Business credit cards
Asset finance facility
Sub-total (excluding off-balances sheet liabilities)
Bank guarantee facility
Total debt
(40)
(728)
(5,654)
(402)
(6,056)
There were insufficient proceeds realised from the sale of business transaction to discharge
NAB’s debt in full.
5.1.8 Unsecured creditors
The Directors have disclosed unsecured creditor claims against the Group of $25.1 million, as
summarised below:
Unsecured creditors - $000s
Toman Investments
Trade creditors
Statutory creditors
Related party creditors
Total Toman Investments
Man to Man Imports
Trade creditors
Statutory creditors
Related party creditors
Total Man to Man Imports
Stone Shoes
Trade creditors
Statutory creditors
Related party creditors
Total Stone Shoes
Total
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Book value
3,955
155
13,138
17,247
4,270
457
4,726
474
21
2,647
3,142
25,115
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Our preliminary view is that the Group owes the amounts claimed by the Directors.
Additionally, we are aware of a potential claim in the amount of $1.3 million owed to the ATO
in respect of unpaid PAYG and GST. At the date of writing of this report we had not received
confirmation of this claim from the ATO.
Given the level intracompany trading within the Group, there are significant amounts of related
party creditors. Toman Investments and Stone Shoes’ related party creditor balances of
$13.1 million and $2.6 million respectively, relates to the purchases of stock from
Man to Man Imports. We note that based on the records of the Group that approximately
$11.8 million of the related party creditor balance was aged greater than 90 days as at the
date of our appointment.
We also note that the amounts above are subject to the receipt and adjudication of proofs of
debt from unsecured creditors. To date, we have received 74 proofs of debt totalling
$2.7 million.
5.1.9 Directors loans
The Directors provided cash advances to the Group via primarily interest bearing loan
accounts, in order to support working capital and underpin the financial viability of the Group.
The funding from the Directors was provided periodically over the course of a number of
years.
We note that from July 2013 the Directors invested in the vicinity of $5.7 million into the
Group.
A summary of the outstanding balances of the Directors’ loans at the date of our appointment
is shown below:
Directors loans
$000s
Toman Investments
Alex Hampel
John Rametta
Ross Ritoli
Total Toman Investments
Man to Man Imports
Alex Hampel
John Rametta
Ross Ritoli
Total Man to Man Imports
Total
Interest
bearing loans
Other
loans
Total
(4,520)
(4,520)
(1,062)
(588)
(525)
(2,175)
(5,582)
(588)
(525)
(6,695)
(4,266)
37
374
(3,855)
(8,375)
90
(140)
(50)
(2,225)
(4,176)
(103)
374
(3,905)
(10,600)
Our preliminary view is that the Group owes the amounts claimed by the Directors.
We note that the amounts above are subject to the receipt and adjudication of proofs of debt
from the Directors. Given the nature of the loans being interest bearing loan accounts, the
outstanding amounts will likely rank as unsecured claims against the Group.
5.2
Omissions from statements
Aside from not providing an estimated realisable value for a number of asset categories, we
have not identified any material omissions from the Directors’ statement.
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5.3
Explanation for current financial position
The Directors’ explanation for the Group’s financial position is as follows:

The Group’s consolidated balance sheet was adversely impacted by wind down of the
Stone Shoes business, with trading losses and outstanding payables ultimately funded by
the Man to Man business entities of Toman Investments and Man to Man Imports.

The failure of the Stone Shoes business placed considerable pressure upon the
management team, who lacked appropriate skills and expertise to manage both the
controlled wind down of the Stone Shoes business and the ongoing operations of the Man
to Man business.

At the peak of business, on or around 30 June 2013, the Group operated around 20 Stone
Shoes stores and 100 Man to Man stores.

In or around January 2014, the Companies engaged with external advisors to review the
business. The external advisors completed the following:

o
Developed a turnaround plan and sustainability model for the future of the Man to Man
business; and
o
Identified changes to the organisational and operational structures of the business,
including introduction of new management personnel.
The Directors noted that, whilst improvement in the trading performance of the Man to
Man business occurred following the external advisors’ review, ultimately the business
succumb to the significant level of debt on the consolidated balance sheet.
Our preliminary view is that, in addition to the reasons identified by the Directors, other factors
contributing to the Group’s financial position were a general lack of both financial and retail
discipline exacerbated by a particularly challenging retail environment. Most significantly we
note that:

The Group had historically operated with no controls in respect of the product buying
process, with no formal merchandise planning tool in place;

The product buying team had been heavily reliant on suppliers and import agents for
product design and development; and

The Group had limited ability to produce reliable and timely financial reporting and analysis
to assist management in guiding the strategic direction of the business.
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6
Trading by Administrators
6.1
Overview
Upon our appointment we assumed control of the Group’s businesses and appropriate
controls and systems were put in place with respect to cash / banking, purchase orders, stock
control and reporting.
We endeavoured to allow the business to trade in the ordinary course in order to allow
sufficient opportunity to conduct a sale and marketing program seeking expressions of interest
in the sale of business. In particular, we:

Secured and insured the assets of the Group;

Conducted an immediate stock take for stock on hand, based on a count of 15 sample
retail stores and the Group’s third party warehousing facilities;

Initiated a comprehensive communication strategy for key stakeholders, including
employees, suppliers and the media;

Opened new accounts with service providers, utilities and other non-stock suppliers;

Continued employment of staff;

Negotiated certain payments of necessity to ensure continued supply of business critical
services;

Negotiated security interest settlements;

Conducted meetings with the Directors, senior management and staff;

Preparation of an ‘Administration’ trading forecasts;

Reviewed the procedures for IT services and back up processes for information on site;

Reviewed the adequacy of the insurances policies held by the Company;

Stabilised arrangements with Landlords;

Initiated a sale and marketing campaign calling for urgent Expressions of Interest in
respect of the sale of the Man to Man business;

Engaged Norton Rose Fulbright as our legal advisors during the Administration period;

Made an application to the Federal Court of Australia for an extension of the convening
period pursuant to Section 439A(6) and Section 447A(1) of the Act;

Conducted a restructure of the Man to Man business, including the identification and
controlled closure of 20 non-performing stores; and

Replenished stock levels within the business in order to maintain appropriate stock levels
to support trading forecasts for the administration period.
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6.2
Trading strategy
Upon our appointment we conducted an urgent review of the Group’s business and in
conjunction with management prepared an ‘Administration’ trading forecast in order to
determine whether continuing to trade the Man to Man business would be in the interests of
creditors.
We determined that it was in the best interests of creditors, and in particular employees of the
business, to continue trading the Man to Man business whilst urgent Expressions of Interest
were sought in relation to the possible sale of business. We continued to trade the business
by realising the existing stock in the business and only committing to necessary replenishment
of stock for core product lines.
In order to make the business as profitable and attractive as possible for potential purchasers,
we assessed the opportunities for restructuring and cost saving initiatives to be implemented
in order to improve the underlying profitability of the business.
On 8 January 2015, we announced a Man to Man store restructure involving the closure of 20
underperforming stores to enhance profitability and prepare the chain for a successful sale.
The restructure included stores in the ACT, New South Wales, Queensland, South Australia,
Victoria and Western Australia. Those staff which were affected by retail store closures were
provided with redeployment opportunities in similar roles and locations wherever possible.
The Man to Man store restructure was conducted in conjunction with an “Administrators Sale”
campaign for continuing stores, with the marketing strategy aimed at improving store sales
performance of the business during the traditionally weak trading month of January.
The Administrators continued to trade the business until a sale completed on
4 February 2015. Upon completion of the sale, the Group ceased to trade and all employees
that did not transfer to the Purchaser were terminated by redundancy.
Following the sale, the Administrators continued to collect sales and make payments on behalf
of the Purchaser until it had set up its own banking facilities.
Upon completion of the sale, the Administrators entered into a license agreement with the
Purchaser to allow it to trade from stores leased by the Administrators while it negotiated
lease assignments with the landlords. The Administrators charged the Purchaser a license fee
for this period to pay rent and outgoings but did not make any profit during the license period.
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6.3
Trading summary
The trading performance of the Man to Man business during the administration period is
summarised below:
Trading summary
$
Week ending
21 Dec 14
28 Dec 14
4 Jan 15
11 Jan 15
18 Jan 15
25 Jan 15
1 Feb 15
4 Feb 15
Total
Sales
Mgmt.
forecast
Variance
(%)
Cost of
goods sold
Gross
margin
Gross
margin (%)
472,223
689,928
417,975
565,459
943,057
709,179
450,922
128,553
4,377,297
575,677
654,764
499,493
507,223
501,016
435,761
500,000
138,696
3,812,630
(21.9%)
5.1%
(19.5%)
10.3%
46.9%
38.6%
(10.9%)
(7.9%)
12.9%
164,799
275,135
164,327
238,992
547,873
432,695
204,116
59,092
2,087,030
307,424
414,793
253,648
326,467
395,184
276,484
246,806
69,461
2,290,266
65.1%
60.1%
60.7%
57.7%
41.9%
39.0%
54.7%
54.0%
52.3%
In respect of the above, we make the following comments:

The sales performance of the business throughout the administration trended favourably
against the initial trading forecasts provided by management, supported by an
“Administrators Sale” campaign.

The strong trading performance of the Man to Man retail stores afforded us sufficient
opportunity to pursue all relevant avenues of inquiry in respect of the sale of business.

Overall gross margin performance of 52.3% was achieved during the administration,
however we note that gross margin was adversely impacted during Weeks 29 and 30 as a
result of the closure of the 20 underperforming stores with associated closing down sales
programs.
6.4
Summary of receipts and payments
A summary of the Administrators’ receipts and payments for the period 17 December 2014 to
21 July 2015 is included at Part 9 of the Administrators’ Remuneration Approval Request
Report attached as Annexure D.
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7
Sale of business / assets
Immediately following our appointment, we commenced a sale and marketing program
seeking expressions of interest in the sale of the business.
The timetable for the sale process was as follows:
Date
Sale program
23 December 2014
Information memorandum was finalised for distribution to interested parties
immediately following execution of non-disclosure agreements
9 January 2015
Non-binding indicative offers were due
12 January 2015
Data room available for due diligence
21 January 2015
Final binding offers due
4 February 2015
Completion of sale and settlement
The closing date for indicative offers was 9 January 2015. A summary of the level of interest
is shown below:
Expressions of
interest received
Executed nondisclosure
agreements
Data room access
provided
Non-binding offers
received
Binding offer
received
17
14
14
7
1
Several indicative offers were received and a number of parties were shortlisted and provided
access to the data room. Shortlisted parties undertook their due diligence enquiries and final
offers were received on 21 January 2015.
The Administrators held discussions with a number of shortlisted parties to gain an
understanding of the offer terms and each party’s capacity to complete the transaction.
The Administrators, with the approval of secured creditor, the NAB, accepted an offer to
purchase the business on a going concern basis by a group of investors associated with Mr
Alex Hampel. The Administrators finalised the contract of sale with the purchaser and
completed the sale of the business on 4 February 2015. The net proceeds from the sale of
business are summarised as follows:
Sale transaction
Stock
Cash floats
Plant and equipment (including $50,000 deposit)
Intellectual property
Amount ($)
1,132,215
13,500
249,999
1
Less: employee entitlements (Transferring employees)
(339,768)
Net proceeds from the sale of business
1,055,947
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Proceeds of the sale of plant and equipment and intellectual property were applied to the debt
due to the secured creditor. The balance of the sales proceeds were will be applied to priority
creditors, to the extent available, after discharging the Administrator’s fees and costs. There
will be no return for unsecured creditors. Please refer to section 9 for further information
regarding the return to creditors.
If the Company is placed into liquidation at the Second Meeting, priority creditors may be
eligible to apply for payment of their unpaid entitlements through FEG.
8
Statutory investigations
8.1
Nature and scope of review
The Act requires an administrator to carry out preliminary investigations into a company’s
business, property, affairs and financial circumstances.
Investigations centre on transactions entered into by a company that a liquidator might seek to
void or otherwise challenge where the company is wound up. Investigations allow an
administrator to advise creditors what funds might become available to a liquidator such that
creditors can properly assess whether to resolve to wind up the company.
A liquidator may recover funds from certain voidable transactions or though other avenues; for
example, through action seeking compensation for insolvent trading or breach of director
duties. Funds recovered would be available to the general body of unsecured creditors
including secured creditors but only to the extent of any shortfall incurred after realising their
security.
A deed administrator does not have recourse to voidable transactions.
The Administrators’ knowledge of the Group’s affairs comes principally from the following
sources:

Discussions with the Directors, their advisors and key staff members.

The Directors’ Statement and questionnaire.

Management accounts, books and records, board reports and financial statements.

The Group’s internal accounting system.

Correspondence and discussions with the Group’s creditors.

Searches obtained from relevant statutory authorities.

Records maintained by the ATO.

Publicly available information.
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8.2
The Company’s solvency
Key comments

The Man to Man business generated trading losses from around June 2013, with
both Toman Investments and Man to Man Imports having insufficient current
assets to meet their short term debt obligations from at least April 2013.

The Group received access to alternative sources of funding from the Directors, in
particular Mr Alex Hampel who contributed $5.7 million to the Group through his
director’s loan accounts from around July 2013.

It is our preliminary view that all the entities within the Group were more likely than
not insolvent from at least December 2013.
8.2.1 Overview of insolvency tests and indicators
In order for a liquidator to recover funds through the voiding of certain transactions or through
other legal action, such as seeking compensation from directors for insolvent trading, a
company’s insolvency must be established at the relevant time.
There are two primary tests used in determining a company’s solvency, at a particular date,
namely:

Balance sheet test; and

Cash flow or commercial test.
The Courts have widely used the cash flow or commercial test in determining a company’s
solvency at a particular date along with several other indicators.
We have summarised below the insolvency indicators adopted by the Courts and the ASIC
together with our comments in relation to the Group:
Insolvency indicator
Working capital
deficiency
Ref
Administrators’ comments
8.2.2.1.1
Toman Investments and Man to Man (Imports) had
insufficient current assets to meet their short term debt
obligations from at least June 2013.
Stone Shoes had a working capital deficiency from at least
30 June 2012.
Net asset deficiency
8.2.2.1.2
Ageing of creditors
8.2.2.1.3
Toman Investments and Man to Man (Imports) had a net
asset deficiency from at least June 2013.
Stone Shoes had a net asset deficiency from at least
30 June 2012.
Toman Investments and Man to Man (Imports) entered into a
number of payment plans with creditors from March 2014.
Stone Shoes failed to pay creditors from July 2013.
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Insolvency indicator
Ref
Administrators’ comments
Inability to extend
finance facilities and
breaches of covenants
8.2.2.1.4
Ferrier Hodgson was approached by NAB to conduct an
Independent Business Review in November 2014.
Inability to meet other
financial commitments /
default on finance
agreements
8.2.2.1.5
Hire purchase liabilities were current and paid up until the
date of our appointment.
Profitability / trading
losses
8.2.2.2.1
Toman Investments generated trading losses from
June 2013. Man to Man (Imports) generated trading losses
from June 2014. Stone Shoes generated trading losses from
June 2011.
Cash flow difficulties
8.2.2.2.2
Toman Investments and Man to Man (Imports) commenced
payment plans with creditors from March 2014 indicating that
it began to experience cash flow difficulties from this time.
No access to alternative
sources of finance
(including equity capital)
8.2.2.2.3
The Directors continued to support the working capital
requirements of the Group until December 2014.
Inability to dispose noncore assets
8.2.2.2.4
It is unclear as to whether the Group considered the disposal
of non-core assets. However, we note that non-core assets of
the Group are unlikely to have been sufficient to support
working capital shortfalls.
Overdue Commonwealth
and State taxes
8.2.2.3
The Group failed to pay superannuation from August 2014.
No forbearance from
creditors / legal action
threatened or
commenced by creditors
8.2.2.4
We are aware of a number of creditors threatening to cease
supply or take legal action against the Group for unpaid
debts.
The above indicators are discussed in further detail in section 8.2.2 below.
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8.2.2 Preliminary determination
Set out below is a summary of our preliminary investigations and our preliminary
determination as to the Company’s solvency.
8.2.2.1
Endemic shortage of working capital - balance sheet test
8.2.2.1.1
Working capital
The table below summarises the Group’s working capital position:
$000s
30-Jun-12
30-Jun-13
30-Jun-14
30-Nov-14
Toman Investments
Current assets
Current liabilities
Working capital surplus / deficiency
Man to Man Imports
Current assets
Current liabilities
Working capital surplus / deficiency
9,699
12,885
4,460
3,742
(9,422)
277
(14,435)
(1,550)
(15,578)
(11,118)
(14,905)
(11,163)
13,172
18,698
12,976
13,521
(13,172)
(18,698)
(15,415)
(10,561)
-
-
(2,439)
2,960
641
2,703
2,195
-
(1,777)
(1,136)
(4,063)
(1,360)
(3,279)
(1,084)
-
Stone Shoes
Current assets
Current liabilities
Working capital surplus / deficiency
-
We make the following comments in respect of the above high level analysis:

Toman Investments had insufficient assets to meet its short term debt obligations and a
working capital deficiency from at least June 2013. Toman Investments’ working capital
position deteriorated significantly as at 30 June 2014 largely due to the material write-off of
stock ($4.1 million) and fixed assets ($1.1 million).

Man to Man Imports had a working capital deficiency as at 30 June 2014. However,
according to its management accounts, which are unaudited and had not been reviewed
by its external accountant, this had reverted to a working capital surplus at
30 November 2014.
The working capital balances for Man to Man Imports include related party receivables
from Toman Investments of $13.6 million and $13.2 million as at 30 June 2014 and
30 November 2014 respectively. Based on the financial position and trading performance
of Toman Investments, it would appear unlikely that this asset would have been collectible.
In such circumstances, Man to Man Imports may not have been able to meet its debts as
and when they fell due from, at least, 30 June 2014.

Stone Shoes had a working capital deficiency from at least 30 June 2012 and could not
meet its short term debt obligations from this time. As previously noted, the financial
viability of the Stone Shoes business was supported by other entities within the Group.
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8.2.2.1.2
Net asset position
The table below summarises the Group’s net asset position:
$000s
Toman Investments
Total assets
Total liabilities
Surplus / (deficiency)
Man to Man Imports
Total assets
Total liabilities
Surplus / (deficiency)
Stone Shoes
Total assets
Total liabilities
Surplus / (deficiency)
30-Jun-12
30-Jun-13
30-Jun-14
30-Nov-14
16,236
(16,153)
83
20,164
(20,355)
(192)
11,611
(22,844)
(11,233)
10,390
(24,736)
(14,347)
13,172
(13,172)
-
18,698
(18,698)
-
12,976
(15,415)
(2,439)
13,521
(15,208)
(1,687)
3,039
(3,157)
(118)
4,890
(5,532)
(642)
2,336
(3.884)
(1,548)
-
We make the following comments in respect of the above high level analysis:

Toman Investments had a net asset deficiency from, at least, 30 June 2013.

Man to Man Imports had a net asset deficiency from, at least, 30 June 2014. As discussed
above, Man to Man Imports assets included receivables from Toman Investments which
were unlikely to have been collectable. Excluding these related party receivables, Man to
Man Imports had a net asset deficiency of $16 million at 30 June 2014 and $15 million at
30 November 2014.

Stone Shoes had a net asset deficiency from 2012, indicating it held insufficient assets to
meet tits liabilities from this time.
8.2.2.1.3
Aged payables review
Toman Investments
The table below sets out an analysis of Toman Investments’ aged payables at a number of
points in time leading up to the date of our appointment.
Aged payables - $000s
30 June 2013
Percentage of total (%)
31 December 2013
Percentage of total (%)
30 June 2014
Percentage of total (%)
17 December 2014
Percentage of total (%)
0-30 days
4,302
35%
1,450
13%
3,925
29%
2,385
14%
30 -60 days
117
1%
1,453
13%
452
3%
1,784
11%
60 -90 days
3,039
25%
1,782
16%
1,458
11%
2,111
13%
90+ days
4,722
39%
6,469
58%
7,593
57%
10,167
62%
Total
12,180
100%
11,154
100%
13,428
100%
16,447
100%
We note that Toman Investments aged payables is largely represented by a related party
payable to Man to Man Imports, which made up $13.1 million of the total creditors balance of
$16.4 million at 17 December 2014. The remaining creditors balance is primarily represented
by landlords, service providers and other expenses.
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Toman Investments total payables balance increased by $4.2 million from 30 June 2013
through to the date of our appointment, while the percentage of creditors aged over 90 days
also deteriorated significantly during this period.
The chart below illustrates the increase in aged creditors greater than 90 days at the end of
each month during the six months prior to the date of our appointment.
Toman Investments - Monthly aged creditor profile
18,000
16,000
14,000
13,428
13,607
13,266
Jun-14
Jul-14
Aug-14
15,215
14,253
15,966
16,447
Nov-14
Dec-14
($'000s)
12,000
10,000
8,000
6,000
4,000
2,000
0 - 30
31 - 60
Sep-14
Oct-14
61 - 90
90+
The monthly aged creditor profile for Toman Investments deteriorates significantly from
June 2014 through to the date of our appointment, which is indicative of the cash flow
difficulties being experienced by the business during this period.
Toman Investments - Monthly creditor profile
(Related party v. trade creditors)
18,000
16,000
14,000
($'000s)
12,000
13,428
13,607
13,266
14,253
2,942
15,215
3,119
2,420
2,812
2,746
11,009
10,796
10,520
11,311
12,096
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
15,966
16,447
2,782
3,318
13,184
13,129
Nov-14
Dec-14
10,000
8,000
6,000
4,000
2,000
Related party creditors
Trade creditors
Toman Investments entered into a number of payment plans with creditors, particularly
landlords, which is discussed further in section 8.2.2.4 below. Notwithstanding the payment
plans with creditors, amounts owed to trade (non-related party) creditors increased from
$2.4 million as at June 2014 to $3.3 million as at the date of our appointment.
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Man to Man (Imports)
The table below sets out an analysis of Man to Man Imports aged payables at a number of
points in time leading up to the date of our appointment:
Aged payables - $000s
30 June 2013
Percentage of total %
30 June 2014
Percentage of total %
17 December 2014
Percentage of total %
0-30 days
1,522
22%
1,439
22%
431
10%
30 -60 days
1,562
22%
744
11%
742
17%
60 -90 days
1,573
23%
1,023
15%
230
5%
90+ days
2,319
33%
3,484
52%
2,969
68%
Total
6,977
100%
6,691
100%
4,372
100%
The aged creditor profile of Man to Man Imports deteriorated significantly between June 2013
and June 2014, with creditors aged greater than 90 days increasing from 33% (June 2013) to
68% by the date of our appointment. We do note that the overall balance of Man to Man
Imports creditors decreased materially over the same period.
The chart below illustrates the increase in the percentage of aged creditors greater than
90 days at the end of each of the six months prior to the Administration and on the date of
appointment:
Man to Man (Imports) - Monthly aged creditor profile
8,000
7,000
6,691
6,451
6,245
5,632
($'000s)
6,000
5,000
4,719
4,539
4,372
Oct-14
Nov-14
Dec-14
4,000
3,000
2,000
1,000
Jun-14
Jul-14
Aug-14
0 - 30
31 - 60
Sep-14
61 - 90
90+
The total trade creditors balance reduces from $6.6m in June 2014 down to $4.3 million as at
the date of our appointment, driven by the payment plans entered into between the Group and
its creditors. Most significantly, we note that Man to Man Imports paid $600,000 to stock
supplier Le’win Corporation in October 2014 in respect of debts aged greater than 90 days.
The payment plans agreed by the Group are discussed further in section 8.2.2.4 below.
Despite the reduction in the total aged creditors balance, the percentage of creditors aged
greater than 90 days increased from 52% as at June 2014 to 68% as at the date of our
appointment.
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Stone Shoes
The table below sets out an analysis of Stone Shoes aged payables at a number of points in
time leading up to the date of our appointment.
Aged payables - $000s
30 June 2013
Percentage of total %
30 June 2014
Percentage of total %
17 December 2014
Percentage of total %
0-30 days
822
26%
5
0%
3
0%
30 -60 days
28
1%
2
0%
60 -90 days
220
7%
4
0%
90+ days
2,104
66%
3,123
100%
3,109
100%
Total
3,174
100%
3,128
100%
3,119
100%
We note that Stone Shoes aged payables is largely represented by a related party payable to
Man to Man Imports, which made up $2.6 million of the total creditors balance of $3.1 million
at 17 December 2014. The remaining creditors balance is represented by landlords of the
business’ former retail stores.
8.2.2.1.4
Review of banking facilities
As discussed in section 5.1.7, the NAB bank debt as at the date of our appointment was
dissected as follows:
NAB debt schedule - $’000s
Balance
Trade finance facility
(3,800)
Commercial bills
(1,086)
Business credit cards
Asset finance facility
Sub-total (excluding off-balances sheet liabilities)
Bank guarantees
Total debt
(40)
(728)
(5,654)
(402)
(6,056)
The Group traded from a number of accounts with various banks. The majority of these
accounts were operated by Toman Investments and setup to accept cash deposits relating to
trading from the Man to Man retail store network. The Group would transfer cash receipts
from the various accounts into a NAB trading account which would be used to pay creditors,
suppliers, including repayment of related party payables to Man to Man (Imports).
The NAB trading account did not have an overdraft facility, however based on our review of
the Group’s available records, the account closed with a debit balance on 15 occasions in the
six month period leading up to the date of our appointment. On each occasion, the NAB
trading account was returned to a credit balance within one to two days. We note that the
largest debit balance on the NAB trading account totalling $99,077 occurring on
11 August 2014.
The Man to Man Imports account, which was primarily used for stock purchases, did not have
an overdraft facility, however the account closed with a debit on 26 occasions in the six month
period leading up to the date of our appointment. We note that the largest debit balance was
$261,338 occurring on 20 June 2014.
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In November 2014, Ferrier Hodgson was engaged by NAB to conduct an Independent
Business Review of the Group due to concerns regarding the financial viability of the Man to
Man business, including uncertainty regarding remedial strategies to turnaround the business
and the presence of immediate creditor, cash flow and liquidity stress.
8.2.2.1.5
Finance commitments review
In addition to the bank facilities outlined above, the Group had a number of hire purchase
liabilities for store fixtures and fittings with NAB. We note that these hire purchase liabilities
are included in the above table dissecting the NAB bank debt as at the date of our
appointment under the Asset Finance Facility.
The hire purchase liabilities were paid monthly in advance and were paid up to the end of
November 2014 as at the date of our appointment. The monthly amount payable under the
Asset Finance Facility was approximately $50,000. As at the date of our appointment, the
Group’s liability outstanding under the facility totalled approximately $728,000.
8.2.2.2
Availability of other cash resources – cash flow test
8.2.2.2.1
Profitability
Set out below is a summary of the Group’s profit and loss performance for the financial years
ending 30 June 2012, 30 June 2013, 30 June 2014, and the current year being the five month
period to 30 November 2014 (where available).
Profit and loss summary
$000s
Toman Investments
EBITDA
Net operating profit/(loss)
Man to Man Imports
EBITDA
Net operating profit/(loss)
Stone Shoes
EBITDA
Net operating profit/(loss)
Year ended
30 June 2012
Year ended
30 June 2013
Year ended
30 June 2014
5 months to
30 November 2014
1,415
545
349
(275)
(10,070)
(11,042)
(228)
(675)
881
527
1,992
1,591
(2,289)
(2,439)
881
751
221
(17)
(215)
(524)
(885)
(906)
n/a
n/a
As discussed in section 4.3, based on the Group’s financial accounts:

Toman Investments has generated a net loss since the 2013 financial year;

Man to Man Imports generated a net loss during the 2014 financial year;

Stone Shoes has generated net losses since it was first established.
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Significantly, the Group generated a net loss of approximately $10.2 million for the 12 months
period ending December 2013, which is primarily attributable to Toman Investments as
illustrated by the graph below.
Net profit / (loss) for
rolling last twelve months (LTM) period - ($'m)
4.0
(4.0)
(8.0)
(12.0)
(16.0)
Consolidated Group
Toman Investments ($'000s)
Man to Man Imports
Stone Shoes
The net loss generated by the Man to Man business during the month of December 2013 was
significant and, prima facie, the Group did not have access to sufficient sources of finance to
fund the resulting shortfall in working capital.
8.2.2.2.2
Cash flow
Prior to the 2015 financial year the Group did not maintain a three-way financial forecast
model for managing its businesses.
Management’s financial forecast for 2015 was prepared on a going concern basis with creditor
payments to be made outside agreed payment terms as necessary to assist with cash flow
requirements. The financial forecast also assumed that any cash flow shortfalls would be
funded by the Directors.
The Group’s actual closing cash balance in the five months leading up to the date of our
appointment from this model is summarised as follows:
($’000s)
Closing cash
Jul-14
(201)
Aug-14
(474)
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151
Oct-14
(395)
Nov-14
(350)
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Management employed a number of strategies to address its cash position including:

Selective payment of, and deferral of payments to, creditors of the Group;

Entering into payment arrangements creditors of the Group, in particular with landlords
and stock suppliers;

Ensuring that the banking facilities provided by NAB were fully utilised where appropriate,
including the use of the Directors’ business credit cards to make payments to creditors;

Cost reduction initiatives; and

Funding from the Directors.
8.2.2.2.3
Access to alternative sources of finance
The Group relied on funding received from the Directors in order to support working capital
requirements and fund trading losses. This funding was provided periodically from July 2013,
primarily by Mr Alex Hampel. A summary of the Directors’ loan account balances as at the
date of our appointment is shown below:
Directors’ loan accounts
$000s
Alex Hampel
John Rametta
Ross Ritoli
Total Toman Investments
Alex Hampel
John Rametta
Ross Ritoli
Total Man to Man Imports
Total loan accounts
Interest bearing
loans
(4,520)
(4,520)
(4,266)
37
374
(3,855)
(8,375)
Other loans
Total loans
(1,062)
(588)
(525)
(2,175)
90
(140)
(50)
(2,225)
(5,582)
(588)
(525)
(6,695)
(4,176)
(103)
374
(3,905)
(10,600)
The funding provided by the Directors was not formally documented, other than being
recorded through their respective Directors’ loan accounts in the Group’s accounting records.
There is also no evidence to suggest that the Directors would have forgone their entitlement to
be repaid their Directors’ loan accounts by the Group.
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Significantly, Mr Alex Hampel contributed $5.7 million to the Group through his director’s loan
accounts from July 2013. The graph below shows the balance of Mr Hampel’s loan account
from July 2013 through to the date of our appointment.
Alex Hampel's loan account movement - ($'m)
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
At this stage, we have not made any assessment as to the financial capacity of Mr Hampel to
have continued providing financial support to the Group. Our assessment of the Mr Hampel’s
financial position has been limited to searches of the Land & Property Information database
which has not located any real property currently held in his name.
Notwithstanding the financial support provided by the Directors, on 17 December 2014 the
Group’s total liabilities to external creditors was in the vicinity of $13 million.
8.2.2.2.4
Disposal of non-core assets
The Group did not have any non-core assets which it could have disposed of which would
have materially assisted the working capital position of the business.
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8.2.2.3
Overdue Commonwealth and State taxes
We have not received running account balances from the Australian Taxation Office as at the
date of writing of this report. The Group’s records indicate that outstanding GST liabilities of
$1.06 million and PAYG liabilities of $248,000 were payable to the Australian Taxation Office
at the date of our appointment.
Payroll tax outstanding as at the date of appointment is summarised as follows:
Toman Investments
$
Australian Capital Territory
New South Wales
Northern Territory
Queensland
South Australia
Tasmania
Victoria
Western Australia
0-30 days
2,061
10,559
773
4,333
4,209
1,159
30,483
8,856
30 -60 days
60 -90 days
18,737
30,028
37,410
-
90+ days
Total
-
2,061
10,559
773
4,333
4,209
1,159
86,630
38,884
A review of Toman Investments’ monthly aged creditors’ listings indicates that it failed to meet
paying its payroll tax obligations in Victoria from around October 2014.
At the date of appointment, the Group had $381,159 in superannuation outstanding dating
back to August 2014.
8.2.2.4
Creditor forbearances / indulgences
We are not aware of any statutory demands, writs, winding up applications taken against the
Group. However, the Group had entered into payment plans with a number of creditors in the
months leading up to the appointment of Administrations.
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The directors provided us with a list of payment plans entered into with various suppliers. A
summary of these payment plans is outlined below:
Supplier
($000s)
Toman Investments
Westfield
Federation Centres
Colonial
QIC Properties
LendLease
Pacific Shopping Centres Australia
Savills
Stockland
GPT Property Management
L.J Coloquhorn Dixon
McConaghy Shopping Centres
Dexus Property Group
Knight Frank
Jones Lang Lasalle
Colliers International (NSW)
Priority Printing
Toman Investments Total
Man to Man (Imports)
Le'win
C&D Clothing
MDR Global
Man to Man (Imports) Total
Stone Shoes
Payroll Tax (SRO WA)
Stone Shoes Total
Total
Type of
supply
Payment plan
commenced
Total planned
payments
Total paid
Rent
Rent
Rent
Rent
Rent
Rent
Rent
Rent
Rent
Rent
Rent
Rent
Rent
Rent
Rent
Printing
Aug-14
Aug-14
Aug-14
Aug-14
Aug-14
Aug-14
Aug-14
Aug-14
Sep-14
Aug-14
Aug-14
Jul-14
Sep-14
Jul-14
Aug-14
Nov-14
1,330
334
766
395
470
154
169
247
186
27
24
58
51
186
28
35
4,460
1,219
256
490
371
250
104
117
148
161
27
24
49
47
135
25
35
3,458
Stock
Stock
Stock
Mar-14
Mar-14
Mar-14
860
1,570
602
3,032
1,440
986
1,335
3,762
Statutory
Feb-14
24
24
7,516
11
11
7,231
In addition to the payment plans outlined above, we have cited email correspondence from
creditors and suppliers pressing the Group for payment of outstanding debts from at least
September 2014.
8.2.3 Preliminary conclusion as to solvency
In light of the insolvency indicators discussed above, we are of the opinion that each of the
entities within the Group may have been insolvent from as early as June 2013, however the
Group was more likely than not insolvent from at least December 2013.
Stone Shoes is likely to have been insolvent from a date earlier than both Toman Investments
and Man to Man Imports, particularly given the business did not generate a profit since its
establishment in April 2010.
A liquidator, if appointed, would need to conduct further investigations, and possibly conduct a
public examination of relevant parties, to ultimately determine whether or not the Company
became insolvent at that time or earlier.
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8.3
Potential liquidator recoveries – insolvent trading
Key comments

Based on our analysis at Section 8.2 of this report, we have indicated that the
Group was more likely than not insolvent from at least December 2013, and that
the Directors would have had reasonable grounds for suspecting so. We have
formed the preliminary view that the Group traded whilst insolvent.

In their defence, the Directors may argue they attempted to provide sufficient
funding through their loan accounts to support working capital and the financial
viability of the Group in order to return the Group to a solvent position.
8.3.1 Directors’ liability
Section 588G of the Act imposes a positive duty upon company directors to prevent insolvent
trading. If a director is found guilty of an offence in contravening Section 588G, the Court may
order him or her to pay compensation to the company equal to the amount of loss or damage
suffered by its creditors.
The Court may also impose upon the directors one of two types of civil penalty orders, the first
can include a fine or an order prohibiting the directors from participating in the management of
a company. The second, where there is criminal intent and conviction, a director could also
be imposed for up to five years.
This action is not a right that is available to an administrator or a deed administrator.
Applications for compensation payable to the company are usually made by a liquidator, or in
specified circumstances, a creditor.
The substantive elements of Section 588G are:

A person must be a director of a company at a time when the company incurs a debt;

The company must be insolvent at the time or becomes insolvent by incurring the debt;
and

The director must have reasonable grounds for suspecting that the company is insolvent
or would become insolvent.
The defences available to directors contained in Section 588H are:

The directors had reasonable grounds at the time the debt was incurred to expect the
company to be solvent and would remain solvent even after the debt was incurred;

The directors relied on another competent and reliable person to provide information about
whether or not the company was insolvent;

The directors were ill or for some other good reason did not take part in the management
of the company; and

The directors took reasonable steps to prevent the incurring of debt.
A liquidator must form an opinion as to the date of insolvency and determine the debts
incurred from that date; thereby quantifying the loss to the company.
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The costs of proceeding with an insolvent trading action must be considered.
It is our opinion that the Group was more likely than not insolvent from at least
December 2013 and that the Directors would have had reasonable grounds for suspecting
that the Group was insolvent, or likely to become insolvent from this time onwards, given, inter
alia:

Man to Man had generated significant trading losses during the last twelve months ending
December 2013, with the trading performance of the business during the month of
December 2013 being particularly poor;

The Group had a significant shortfall in its working capital and net asset positions as at
December 2013 and the level of funding being provided by the Directors was insufficient to
place the Group into a position of solvency;

There is evidence to suggest that the Group had entered into a number of payment plans
with creditors from at least March 2014; and

The Group’s statutory creditors, in particular superannuation owed to employees, were not
paid from August 2014.
In their defence, the Directors may argue they attempted to provide sufficient funding through
their loan accounts to support working capital and the financial viability of the Group in order to
return the Group to a solvent position.
Again, a liquidator, if appointed, would likely seek legal advice on these issues and conduct
more investigations possibly including public examinations of the Directors and other relevant
parties.
8.4
Potential liquidator recoveries – voidable transactions
We have identified payments totalling $7.2 million that appear to be of a preferential
nature and may be voidable in the event the Group is placed into liquidation.
A liquidator has the power to void certain transactions which are either not beneficial to, or
detrimental to a company. An administrator must identify any transactions that appear to be
voidable by a liquidator.
Enclosed at Annexure E is a creditor information sheet published by ARITA. This information
sheet details the types of transactions which a liquidator can seek to void.
The Administrators have undertaken a review of the Group’s books and records, held
discussions with the Directors and relevant employees, reviewed payment plans entered into
with creditors and reviewed email correspondence with creditors pressing the Group for
payment.
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8.4.1 Unfair preferences
Payments totalling $7.2 million were made to a number of creditors by the Group during the
relation back period. These are detailed in the table at Section 8.2.2.4 above.
Prima facie, it would appear that these creditors may have had reasonable grounds for
suspecting the Group was insolvent at the time they entered into the formal payment plans.
A liquidator, if appointed, would need to conduct further investigations in relation to the
transactions and make an assessment as to:

Whether there are defences available to the creditors; and

Whether the costs likely to be incurred in voiding the transactions will outweigh the return.
8.4.2 Uncommercial transactions
A liquidator must investigate transactions deemed to be uncommercial, having regard to the
detriment to the company suffered as a consequence of the transaction in the period two
years prior to the date of administration.
Based on the books and records in my possession we have not identified any transactions
which would constitute uncommercial transactions.
In addition, Section 588FDA of the Act refers to “unreasonable director-related transactions”
and requires the liquidator to investigate such transactions, having regard to the detriment to
the Company (if any) suffered as a consequence of the transaction.
As illustrated in section 8.2.2.2.3 above, the Directors funded the working capital requirements
of the Group through the Directors’ loans account. The table in section 8.2.2.2.3 details the net
balances of the Directors’ loan accounts to be $10.6 million as at the date of our appointment.
We note that movements in relation to the Directors’ loan accounts did include the withdrawal of
funds by the Directors as repayment of these loans.
A liquidator, if appointed, would need to conduct further investigations in relation to the
transactions and make an assessment as to:

Whether there are defences available to the Directors; and

Whether the costs likely to be incurred in voiding the transactions will outweigh the return.
As the funding provided by the Directors through these loan accounts significantly exceeded the
amounts withdrawn as loan repayments to the Directors, it is unlikely that these transactions
would be considered voidable in the event that the Group is placed into liquidation.
8.4.3 Unfair loans
A liquidator must investigate loans to the company which may be considered unfair due to
extortionate interest rates or charges.
Based on preliminary investigations, the Administrators have not identified any unfair loans.
8.4.4 Voidable transactions - related parties
A liquidator must investigate related party transactions within four years of the date of
administration and determine whether any transactions occurred when the company was
insolvent or was likely to become insolvent as a result of the transaction.
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As discussed in section 8.4.2 above we have identified a number of loan account repayments
made to the Directors which appear to have been made at a time when the respective entities
within the Group were insolvent. However as discussed above, given the funding provided to
the Group through these loans accounts significantly exceeded the withdrawals by the
Directors, it is unlikely that these transactions would be considered voidable in the event that
the Group is placed into liquidation.
A liquidator, if appointed, would need to conduct further investigations in relation to these
transactions and make an assessment as to:

Whether there are defences available to related parties; and

Whether the costs likely to be incurred in voiding the transactions will outweigh the return.
8.4.5 Voidable charges
The Administrators’ preliminary investigations have not identified any voidable charges.
8.5
Other potential liquidator recoveries
8.5.1 Compensation for breach of directors duties
Based on our investigations to date, other than the issues already identified in this report, we
have not identified any offences the Directors may have committed under the provisions of the
Act.
8.5.2 Arrangements to avoid employee entitlements
Part 5.8A of the Act aims to protect the entitlements of a company’s employees from
agreements that deliberately defeat the recovery of those entitlements upon insolvency.
Under Section 596AB(1) of the Act, it is an offence for a person to enter into a transaction or
relevant agreement with the intention of, or with intentions that include:

Preventing recovery of employee entitlements; or

Significantly reducing the amount of employee entitlements recoverable.
Based on preliminary investigations, the Administrators have identified any contravention of
Part 5.8A of the Act.
8.6
Other matters arising from investigations
8.6.1 Falsification of books
Pursuant to Section 1307 of the Act, it is an offence for a person to engage in conduct that
results in the concealment, destruction, mutilation or falsification of any securities of or
belonging to the company or any books affecting or relating to affairs of the company.
If a breach is proven, Part 9.4 of the Act provides for criminal penalties only. Therefore, any
breaches of Section 1307 will not result in recovery of funds by a liquidator.
The Administrators’ preliminary investigations do not reveal any evidence of falsification of
books.
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8.6.2 False or misleading statements
Pursuant to Section 1308 of the Act, a company must not advertise or publish a misleading
statement regarding the amount of its capital. It is an offence for a person to make or
authorise a statement that, to the person’s knowledge is false or misleading in a material
particular.
The Administrators’ preliminary investigations do not reveal any evidence of any false or
misleading statements.
8.6.3 False information
Pursuant to Section 1309 of the Act, it is an offence for an officer or employee to make
available or give information to a director, auditor, member, debenture holder, or trustee for
debenture holders of the company that is to the knowledge of the officer or employee:

False or misleading in a particular matter; or

Has omitted from it a matter the omission of which renders the information misleading in a
material respect.
The Administrators’ preliminary investigations do not reveal any evidence of any false
information.
8.7
Summary of potential liquidator recoveries
Set out below is a summary of transactions that a liquidator would investigate further if the
Group is placed into liquidation.
Potential recovery item
Compensation from the Directors for insolvent trading
Unfair preferences
Value ($)
To be determined
$7.2 million
Uncommercial transactions
To be determined
Unreasonable director-related transactions
To be determined
Unfair loans
Voidable transactions – related parties
Nil
To be determined
Voidable charges
Compensation for breach of directors duties
Nil
To be determined
Arrangements to avoid employee entitlements
8.8
Nil
Directors’ ability to pay a liquidator’s claims
At this stage, the Administrators have not made any assessment as to the financial capacity of
the Directors to meet any potential actions that we may identify.
Our assessment of the Directors’ financial position has been limited to searches of the Land &
Property Information database which has not located any real property currently held in the
names of the Directors.
8.9
Reports to the ASIC
We have not identified any offences that require reporting to the ASIC pursuant to Section
438D of the Act.
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9
Return to creditors
9.1
Liquidation
Based upon the information in this report, where the Group is wound up, we estimate that any
dividend to priority (employee) creditors and unsecured creditors will be dependent on what, if
any, antecedent transactions a liquidator is able to recover.
$000s
Non-circulating assets
Administrators’ ERV
High
Low
Sales of business – Plant and equipment, intellectual property
250
250
Less: Administrators’ fees and disbursements
(10)
(10)
Realisations from non-circulating assets
240
240
Less: secured creditor’s non-circulating claim
(6,056)
(6,056)
Surplus / (deficit) after secured creditor’s non-circulating claim
(5,816)
(5,816)
33
33
4
4
1,132
1,132
Circulating assets
Cash on appointment
Debtors
Sale of business (circulating assets only)
-
Stock
-
Cash floats
-
Less: employee entitlements (Transferring employees)
14
14
(340)
(340)
1,005
1,848
955
1,798
(1,381)
(1,381)
(220)
(240)
247
177
(150)
(200)
(40)
(60)
Trading surplus from administration period
Realisations from circulating assets (net of PMSI claims)
Less: Administrators’ fees and disbursements
Less: Legal costs
Realisations from circulating assets after administration costs
Less: Liquidators’ fees and disbursements
Less: Legal costs
Amount available for priority (employee) creditors
57
(83)
Less: Priority (employee) creditors (see Section 5.1.5)
(882)
(882)
Surplus / (deficit) after priority (employee) creditors’ claims
(825)
(965)
Amount available for secured creditor’s circulating claim
Voidable transactions & other recoveries (see Section 8)
Amount available for ordinary unsecured creditors
Unsecured claims
Estimated dividend to ordinary unsecured creditors
Nil
Nil
Unknown
Unknown
Unknown
Unknown
(37,021)
(37,021)
Unknown
Unknown
The above calculations are an estimate only and may change due to:

Final proving of creditor claims;

Any recovery of voidable transactions & other recoveries (including unfair preference
payments); and

The costs of litigation to recover any voidable transactions & other recoveries.
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The funds received from the sale of the Group’s assets provided for a small return to NAB,
which is a secured creditor. As there will be insufficient funds to discharge NAB’s debt in full,
there will be no funds available to unsecured creditors. There were also insufficient funds
received after realisation costs to allow a return to priority (employee) creditors from the
administration.
If the Group is placed into liquidation, employees may be eligible for payment of their
outstanding employee entitlements (excluding unpaid superannuation) under FEG, a scheme
operated by the Department of Employment. Any dividend to unsecured creditors would be
dependent on what, if any, antecedent transactions a liquidator is able to recover.
Employees can obtain further information on the eligibility requirements of FEG at
www.employment.gov.au /fair-entitlements-guarantee-feg.
9.2
Timing of dividend
Any dividend to unsecured creditors is dependent on what, if any, antecedent transactions a
liquidator is able to recover. Therefore the timing of any possible dividend is unknown.
Administrators’ opinion
10
We recommend that each of the entities within the Group be placed into liquidation.
Pursuant to Section 439A(4)(b) of the Act, we are required to provide creditors with a
statement setting out our opinion on whether it is in creditors’ interests for the:

Administration to end;

Company to be wound up; and

Company to execute a DOCA.
Each of these options is considered below. In forming our opinion, it is necessary to consider
an estimate of the dividend creditors might expect and the likely costs under each option.
10.1
Administration to end
Each entity within the Group is insolvent and unable to pay its debts as and when they fall
due. Accordingly, returning control of the Group to its Directors would be inappropriate and is
not recommended.
10.2
DOCA
As no DOCA has been proposed at this point in time, therefore this option is not available to
creditors.
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10.3
Winding up of the Company
In the absence of a DOCA proposal, it is our opinion that each entity within the Group
should be placed into liquidation.
A liquidator would be in a position to conduct detailed investigations into the conduct of
directors and the financial affairs of the Group. A liquidator will also be empowered to:

Assist employees in applying for FEG for the payment of certain employee entitlements
that cannot otherwise be funded by the Group.

Pursue various potential recoveries under the Act.

Distribute recoveries made in accordance with the priority provisions of the Act.

Report to the ASIC on the results of investigations into the Group’s affairs.
11
Further information and enquiries
The ASIC has released several insolvency information sheets to assist creditors, employees
and shareholders with their understanding of the insolvency process. You can access the
relevant ASIC information sheets at www.asic.gov.au
We will advise creditors in writing of any additional matter that comes to our attention after the
release of this report, which in our view is material to creditors’ consideration.
Should you have any enquiries, please contact the relevant Ferrier Hodgson representative:
Representative
Creditor group
Phone
Email
Courtney McLean
Landlord creditors
(03) 9604 5120
[email protected]
Sarah Aylott
Employee creditors
(03) 9604 5639
[email protected]
Cameron McDougall
General creditor enquires
(03) 9604 5127
[email protected]
Dated this 23rd day of July 2015
James Stewart
Brendan Richards
Joint and Several Administrators of Toman Investments Pty Limited, ACN 100 704 514 Pty
Ltd (formerly Man to Man (Imports) Pty Ltd) and Stone Shoes Pty Ltd
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Glossary of terms
Abbreviation
Description
ACN
Australian Company Number
Act
Corporations Act 2001
Administrators
James Stewart
Brendan Richards and
APAAP
All present and after-acquired property – no exceptions
ARITA
Australian Restructuring, Insolvency & Turnaround Association
ASIC
Australian Securities & Investments Commission
ATO
Australian Taxation Office
Code
ARITA Code of Professional Practice
COC
Committee of Creditors
Group
Toman Investments Pty Limited, Man to Man (Imports) Pty Ltd, Stone Shoes Pty
Ltd
Directors
Alexander Hampel, Ross Ritoli, John Rametta
DIRRI
Declaration of Independence, Relevant Relationships and Indemnities, pursuant
to s436DA of the Act and Code.
DOCA
Deed of Company Arrangement
ERV
Estimated Realisable Value
FEG
Fair Entitlements Guarantee
First Meeting
First meeting of creditors held on 31 December 2014
FY
Financial year
PMSI
Purchase Money Security Interest
PPSA
Personal Property Securities Act 2009 (Cth)
PPSR
Personal Property Securities Register
RATA
Report as to Affairs
Report
This report, prepared pursuant to Section 439A of the Act
ROT
Retention of Title
Second Meeting
Second meeting held pursuant to Section 439A of the Act, where creditors
determine the future of the Company.
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Annexure
A Notice of meeting
Form 529
Notice of Meeting
Corporations Act 2001
Subregulation 5.6.12(2)
Toman Investments Pty Limited (Administrators Appointed)
ACN 006 332 163
ACN 100 704 514 Pty Ltd (Administrators Appointed)
ACN 100 704 514 (Referred to as “Man to Man (Imports) Pty Ltd”)
Stone Shoes Pty Limited (Administrators Appointed)
ACN 125 526 429
(Referred to as “the Group”)
NOTICE is given that a meeting of creditors of the Group will be held on 3 August 2015 at
11:00 am at Level 43, 600 Bourke Street, Melbourne.
Agenda
1.
To consider a statement by the Directors about the Group’s business, property, affairs
and financial circumstances.
2.
To consider the circumstances leading to the appointment of the Administrators to the
Group and the various options available to creditors.
3.
To consider the report of the Administrators.
4.
To resolve that:


The Administration should end; or
The Group be wound up.
5.
If it is resolved that the Group be wound up, consider whether a Committee of Inspection
is to be appointed, and if so, the members of that Committee.
6.
If it is resolved that the Group be wound up, consider whether, pursuant to Section
477(2A) of the Corporations Act 2001 (the Act), creditors authorise the Liquidators to
compromise a debt owed to the Group up to a maximum limit of $100,000.00.
7.
If it is resolved that the Group be wound up, consider whether, subject to obtaining the
approval of the Australian Securities & Investments Commission (ASIC) pursuant to
Section 542(4) of the Act, the books and records of the Group and of the Liquidators
may be disposed of by the Liquidators 12 months after the dissolution of the Group or
earlier at the discretion of ASIC.
8.
To fix the remuneration of the Administrators.
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9.
If it is resolved that the Group be wound up, to fix the remuneration of the Liquidators
10.
Any other business that may be lawfully brought forward.
For a person to be eligible to attend and vote at the meeting on your behalf, a Form 532,
Appointment of Proxy, is to be completed and submitted by no later than 4:00pm on Friday 31
July 2015 to:
Toman Investments Pty Limited (Administrators Appointed)
c/- Ferrier Hodgson
PO Box 290, Collins Street West, MELBOURNE VIC 8007
Tel:
03 9600 4922
Fax:
03 9642 5887
Email: [email protected]
Note:
In accordance with Regulation 5.6.36A of the Corporations Regulations 2001, if a proxy is submitted by facsimile, the original
document must be lodged within 72 hours after lodging the faxed copy.
A company may only be represented by proxy or by an attorney appointed pursuant to
Corporations Regulations 5.6.28 and 5.6.31 respectively or, by a representative appointed
under Section 250D of the Act.
In accordance with Subregulation 5.6.23(1) of the Corporations Regulations, creditors will not be
entitled to vote at the meeting unless they have previously lodged particulars of their claim
against the Company in accordance with the Corporations Regulations and that claim has been
admitted, for voting purposes, wholly or in part.
Dated this 23rd day of July 2015
James Stewart
Administrator
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Brendan Richards
Administrator
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Annexure
B Appointment of proxy form
Form 532
Appointment of Proxy
Corporations Act 2001
Regulation 5.6.29
Toman Investments Pty Limited (Administrators Appointed) (the Company)
ACN 006 332 163
Instructions:
Please complete Sections A, B, C and D and submit in accordance with the Section E.
*
Strike out if inapplicable.
A. Name and Contact Details of Person or Entity Entitled to Attend Meeting
(if entitled in a personal capacity, given name and surname; if a corporate entity, full name of company, etc)
of
(address)
Tel:
Fax:
B. Appointment of Person to Act as Proxy
Note:
You may nominate “the Chairperson of the meeting” as your proxy (or your alternate proxy in the event that the first-named
proxy is not in attendance).
*I / *We, as named in Section A above, a *creditor / *eligible employee creditor / *contributory /
*debenture holder / *member of the Company, appoint
(name of person appointed as proxy)
or in his / her absence
(address of person appointed as proxy)
(name of person appointed as alternate proxy)
as *my / *our proxy
(address of person appointed as alternate proxy)
to vote at the joint meeting of creditors to be held on 3 August 2015 at 11:00am at Level 43,
600 Bourke Street, Melbourne, or at any adjournment of that meeting in accordance with the
instructions in Section C below.
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C. Voting Instructions
Note:
A general proxy is entitled to vote on any resolution, subject to Regulation 5.6.33 of the Corporations Regulations 2001, as
they see fit at the meeting – tick the “general proxy” box.
A special proxy in entitled to vote only in accordance with your specific instructions – tick the “special proxy” box and
indicate your specific voting instructions by ticking one option only for each resolution for which you wish to give such
instructions.
Your proxy may act as both a special proxy, in accordance with your instructions in relation to specific resolutions, and as a
general proxy, in relation to resolutions where you have not issued specific instructions – tick both the “general proxy” and
“special proxy” boxes. Your proxy will then be authorised to vote specifically in accordance with your instructions in relation
to those resolutions where specific instructions have been given, and generally in relation to resolutions where no specific
instructions have been given, and other business of the meeting.
*My / *Our proxy, as named in Section B above, is entitled to act as *my / *our :

general proxy, to vote on *my / *our behalf generally, as *he / *she determines, subject
to any specific instructions below, if applicable.
and / or

special proxy, to vote on *my / *our behalf specifically, in accordance with the following
special instructions: (for each resolution for which you wish to give specific voting instructions, please tick one
option only)
Resolution
For
Against
Abstain
1.
That the Administration should end.



2.
That the Company be wound up.



3.
That a Committee of Inspection be appointed, the members of












which are to be determined by the meeting.
4.
That, pursuant to Section 477(2A) of the Corporations Act
2001, creditors authorise the Liquidators to compromise a debt
owed to the Company up to a maximum limit of $100,000.00
5.
That, pursuant to Section 477(2B) of the Corporations Act
2001, creditors authorise the Liquidators to enter into any
agreement on the Company’s behalf where:
a) the term of the agreement may end; or
b) obligations of a party to the agreement may, according to
the terms of the agreement, be discharged by
performance; more than three months after the agreement
is entered into.
6.
That, subject to obtaining the approval of the Australian
Securities & Investments Commission (ASIC) pursuant to
Section 542(4), the books and records of the Company and of
the Liquidators be disposed of by the Liquidators 12 months
after the dissolution of the Company or earlier at the discretion
of ASIC.
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Resolution
7.
For
Against
Abstain









That the remuneration of the Administrators, as set out in the
Remuneration Approval Request Report dated 23 July 2015,
for the period from 17 December 2014 to 15 July 2015 be fixed
in the amount of $1,260,026.50 plus any applicable GST, and
may be paid.
8.
That the remuneration of the Administrators, as set out in the
Remuneration Approval Request Report dated 23 July 2015,
for the period from 16 July 2015 to 3 August 2015 be fixed up
to a maximum amount of $32,620.00, plus any applicable GST,
but subject to upward revision by resolution of creditors, and
that the Administrators be authorised to make periodic
payments on account of such accruing remuneration as
incurred.
9.
That the remuneration of the Liquidators, as set out in the
Remuneration Approval Request Report dated 23 July 2015,
for the period from 3 August 2015 to completion of the
liquidation be fixed up to a maximum amount of $150,000.00,
plus any applicable GST, but subject to upward revision by
resolution of creditors, or the Committee of Inspection should
one be appointed, and that the Liquidators be authorised to
make periodic payments on account of such accruing
remuneration as incurred.
D. Signature
Dated:
Signature:
Name / Capacity #:
#
If an individual, insert full name
If a sole trader, insert in accordance with the following example: “full name, proprietor”
If a partnership, insert in accordance with the following example: “full name, partner of the firm named in Section A above”
If a company, pursuant to Regulations 5.6.28 and 5.6.31 of the Corporations Regulations 2001, it may only be represented
by proxy or attorney respectively, or by a representative appointed under Section 250D of the Corporations Act 2001. The
document appointing the proxy, attorney or representative must be in executed in accordance with Section 127 of the
Corporations Act 2001, in which instance, insert in accordance with the following example: “full name, director / secretary /
director/secretary of the company named in Section A above” or under the hand of some officer duly authorised in that
capacity, and the fact that the officer is so authorised must be stated in accordance with the following example: “full name,
for the company named in Section A above (duly authorised under the seal of the company)” – a copy of authority / power of
attorney is to be annexed.
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E. Submitting the Proxy
For a person to be eligible to attend and vote at the meeting on your behalf, this form is to be
completed and submitted by no later than 4:00pm on Friday 31 July 2015, to:
Toman Investments Pty Limited (Administrators Appointed)
c/- Ferrier Hodgson
PO Box 290, Collins Street West, MELBOURNE VIC 8007
Tel:
03 9600 4922
Fax:
03 9642 5887
Email: [email protected]
Note:
In accordance with Regulation 5.6.36A of the Corporations Regulations 2001, if a proxy is submitted by facsimile, the original
document must be lodged within 72 hours after lodging the faxed copy.
Certificate of Witness (to be completed only in special circumstances – see below)
This certificate is only to be completed only if the person giving the proxy is blind or incapable of writing. The certificate of
the creditor, contributory, debenture holder or member must not be witnessed by the person nominated as proxy.
I
(name of witness)
of
(address of witness)
certify that the above instrument appointing a proxy was completed by me in the presence of and at the request of the person
appointing the proxy and read to him/her before he/she signed or marked the instrument.
Dated:
Signature:
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Annexure
C Proof of debt form
Form 535
Formal Proof of Debt or Claim (General Form)
Corporations Act 2001
Regulation 5.6.49(2)
Toman Investments Pty Limited (Administrators Appointed) (the Company)
ACN 006 332 163
Instructions:
Please complete Sections A, B and C and submit to:
Toman Investments Pty Limited (Administrators Appointed)
c/- Ferrier Hodgson
PO Box 290, Collins Street West, MELBOURNE VIC 8007
Tel:
03 9600 4922
Fax: 03 9642 5887
Email: [email protected]
*
Strike out if inapplicable.
A. Name and Contact Details of Creditor
(“the Creditor”)
(if in a personal capacity, given name and surname; if a corporate entity, full name of company, etc)
of
(address)
Tel:
Email:
Fax:
B. Details of Debt or Claim
To the Administrators of the Company
1. This is to state that the Company was, on Wednesday, 17 December 2014, and still is
justly and truly indebted to the Creditor for
dollars
(amount in words)
and
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cents (inclusive of GST, if applicable).
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Particulars of the debt are:
Date
Consideration
1
Net
$
GST
$
Total
$
2
Remarks
1. Under "Consideration" state how the debt arose, for example "goods sold and delivered to the company
between the dates of .....................", "moneys advanced in respect of the Bill of Exchange".
2. Under "Remarks" include details of vouchers substantiating payment.
2.
To my knowledge or belief the Creditor has not, nor has any person by the Creditor‘s
order, had or received any satisfaction or security for the sum or any part of it,
*except for:
(insert particulars of all securities held. If the securities are on the property of the company,
assess the value of those securities. If any bills or other negotiable securities are held, indicate
“refer attached” above and show them in a schedule in the following form:)
Date
3.
Drawer
Acceptor
Amount
$
Due Date
*I am employed by the Creditor / *I am the Creditor’s agent
*and authorised in writing by the Creditor to make this statement.
I know that the debt was incurred for the consideration stated and that the debt, to the
best of my knowledge and belief, remains unpaid and unsatisfied.
C. Signature
Dated:
Signature:
Name / Capacity #:
#
If the Creditor is an individual, insert full name
If the Creditor is a sole trader, insert in accordance with the following example: “full name, proprietor”
If the Creditor is a partnership, insert in accordance with the following example: “full name, partner of the firm named in
Section A above”
If the Creditor is a company, insert in accordance with the following example: “full name, director / secretary /
director/secretary of the company named in Section A above” or under the hand of some officer duly authorised in that
capacity, and the fact that the officer is so authorised must be stated in accordance with the following example: “full name,
for the company named in Section A above (duly authorised under the seal of the company)”.
Where this form is completed by, for example, a solicitor or accountant of the Creditor, sign this form as the Creditor’s
authorised agent; where this form is completed by an authorised employee of the Creditor, indicate occupation (eg: credit
manager, etc)
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Annexure
D Remuneration approval request report
Corporations Act 2001
Section 449E
Toman Investments Pty Limited (Administrators Appointed) (the Company)
ACN 006 332 163
Remuneration approval request report
1
Declaration
We, James Stewart and Brendan Richards of Ferrier Hodgson, have undertaken a proper
assessment of this remuneration claim for our appointment as Administrators of the Company
in accordance with the Corporations Act 2001 (Cth) (the Act), the Australian Restructuring
Insolvency & Turnaround Association (ARITA) Code of Professional Practice (the Code) and
applicable professional standards.
We are satisfied that the remuneration claimed is in respect of necessary work, properly
performed, or to be properly performed, in the conduct of the administration.
2
Executive summary
2.1
Summary of remuneration approval sought for the Group
This remuneration approval request report is for the Company only, however certain sections
of this remuneration report refer to both the Company and the following related entities:

ACN 100 704 514 Pty Limited (formerly trading as Man to Man (Imports) Pty Limited)
(Administrators Appointed); and

Stone Shoes Pty Limited (Administrators Appointed).
Collectively referred to herein as “the Group”.
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To date, no remuneration has been approved and paid in the administration of the Group. This
remuneration report details approval sought for the following fees:
Amount (ex GST)
$
Period
Current remuneration approval sought:
Voluntary administration
Toman Investments Pty Limited
Resolution 1:
17 December 2014 to 15 July 2015
1,260,026.50
Resolution 2:
16 July 2015 to 3 August 2015
32,620.00
Man to Man (Imports) Pty Limited
Resolution 1:
46,721.50
17 December 2014 to 15 July 2015
Resolution 2:
16 July 2015 to 3 August 2015
5,435.00
Stone Shoes Pty Limited
Resolution 1:
24,764.50
17 December 2014 to 15 July 2015
Resolution 2:
16 July 2015 to 3 August 2015
2,560.00
Total Group – voluntary administration*
1,372,127.50
Liquidation
Toman Investments Pty Limited
Resolution 3:
3 August 2015 to finalisation of liquidation
150,000.00
Man to Man (Imports) Pty Limited
Resolution 3:
3 August 2015 to finalisation of liquidation
25,000.00
Stone Shoes Pty Limited
Resolution 3:
3 August 2015 to finalisation of liquidation
25,000.00
Total Group – liquidation* (if applicable)
200,000.00
* Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of
the administration. Should additional work be necessary beyond what is contemplated, further approval may be
sought from creditors.
2.2
Comparison to estimate of costs provided in initial advice to creditors
The remuneration approval sought for the Group differs to the estimate of costs provided in
the initial advice to creditors on remuneration dated 18 December 2014. Our initial
remuneration estimate of $700,000 to $900,000 for the Group was based on the planned
Administration period that was scheduled to conclude on Monday, 3 February 2015.
From previous experience gained on retail administrations similar to the Group, we considered
that offering prospective purchasers with certainty and the ability to continue to trade under
the protection of the statutory moratorium provided by the Voluntary Administration process
was essential to finding a suitable purchaser for the business and in the best interest of
creditors as a whole.
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We do not believe that a purchaser would have been prepared to commit to the purchase of
the Group unless it could be sure that it would have an adequate period of time to negotiate
leases with landlords.
Accordingly, in order to provide the best opportunity to facilitate a sale of the business and
assets of the Group, and thereby achieve the best outcome for employees and creditors, the
convening period was extended by the Court for a period of six months. Importantly,
remuneration for this extension to the convening period was not contemplated in our initial
remuneration estimate.
Our total remuneration claim for the Group through to the end of the initial Administration
convening period, being 3 February 2015, totalled $712,571 which is at the lower end of our
initial advice to creditors on remuneration of $700,000 to $900,000 for this period.
Additionally, in order to successfully achieve the sale of business as a going concern, the
Administrators were required to provide the services of Ferrier Hodgson’s retail leasing
specialist, to assist the purchaser’s negotiations with landlords for the assignment of the
Group’s property leases. Under the contract of sale, the services of our retail leasing specialist
up to an agreed cap of 140 hours were provided to the purchaser. The services of our retail
leasing specialist were not contemplated in our initial remuneration estimate.
These issues are summarised in the following table:
Period - $000s
All entities (the Group)
From date of our appointment to the end of the initial convening period (3 February 2015)
Extension to the convening period:
From 4 February 2015 to 15 July 2015
From 15 July 2015 to 3 August 2015 (estimated remuneration)
Ferrier Hodgson’s retail leasing specialist
Total remuneration claim for the Group
Amount (ex GST)
712
535
41
84
1,372
This table shows that our remuneration for the period through to the end of the initial
convening period, being 3 February 2015, is at the low end of our initial remuneration
estimate.
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The chart below illustrates that our weekly remuneration run-rate decreased significantly
following the completion of the sale of business on 5 February 2015.
Weekly remuneration - All entities (ex GST)
180
$535K
$712K
160
Avg. $22k per wk
Avg. $102k per wk
140
($'000s)
120
100
3-Feb
80
60
40
20
0
Initial convening period
Extended convening period
*Note: The above chart excludes the time of Ferrier Hodgson’s retail leasing specialist
We note that to date insufficient funds have been realised in the administrations of Man to
Man (Imports) and Stone Shoes to allow for the payment of our remuneration claim. Payment
of our remuneration claim (if approved by creditors) will be subject to the recovery of voidable
transactions and other recoveries should creditors resolve to place these entities into
liquidation.
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3
Description of work completed / to be completed
3.1
Toman Investments – Resolution 1
Company:
Administration Type:
Practitioners:
Period:
Task area
Toman Investments Pty Limited (Administrators Appointed)
Voluntary Administration
James Stewart and Brendan Richards of Ferrier Hodgson
17 December 2014 to 15 July 2015
General description




Assets
754.9 hours
$327,414.50
(excl GST)
Includes
Sale of business as a going
concern



Plant and equipment
Assets subject to specific
charges
Debtors
Stock
Other assets
Leasing











Creditors
367.0 hours
$115,593.50
(excl GST)



Creditor enquiries




Retention of title claims



Toman Investments Remuneration report.docx5277847v2
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Preparing an information memorandum
Liaising with interested parties
Liaising with potential purchasers
Internal meetings to discuss / review offers
received
Contract negotiations with successful
bidder
Liaising with lawyers regarding sale
contracts
Liaising with purchaser to settle
transitional issues
Liaising with interested parties
Reviewing asset listings
All tasks associated with realising a
charged asset
Correspondence with debtors
Reviewing and assessing debtors ledgers
Conducting stock takes
Reviewing stock values
Liaising with purchasers
Tasks associated with realising other
assets
Reviewing leasing documents
Liaising with owners / lessors
Tasks associated with assisting in
assignment of leases to purchaser
Tasks associated with disclaiming leases
Receive and follow up creditor enquiries
via telephone and email
Maintaining creditor enquiry register
Review and prepare correspondence to
creditors and their representatives via
facsimile, email and post
Receive initial notification of creditors’
intention to claim
Provision of retention of title claim form to
creditor
Receive completed retention of title claim
form
Maintain retention of title file
Adjudicate retention of title claim
Report by Administrators pursuant to Section 439A
23 July 2015| Page 13
Task area
General description
Secured creditor reporting
Creditor reports
Dealing with proofs of debt
Meeting of creditors
Employees
613.2 hours
$219,014.50
(excl GST)
Employee enquiries
Calculation of entitlements
Employee dividend
Toman Investments Remuneration report.docx5277847v2
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Includes
 Forward correspondence to claimant
notifying outcome of adjudication
 Preparation of payment vouchers to satisfy
valid claim
 Preparation of correspondence to claimant
to accompany payment of claim (if valid)
 Preparing reports to secured creditor
 Responding to secured creditor’s queries
 Preparing report on results of
investigation, meeting and general reports
to creditors
 Receipting and filing proofs of debt when
not related to a dividend
 Corresponding with OSR and ATO
regarding proofs of debt when not related
to a dividend
 Preparation of meeting notices, proxies
and advertisements
 Forward notice of meeting to all known
creditors
 Preparation of meeting file, including
agenda, certificate of postage, attendance
register, list of creditors, reports to
creditors, advertisement of meeting and
draft minutes of meeting.
 Preparation and lodgement of minutes of
meetings with ASIC
 Respond to stakeholder queries and
questions immediately following meeting
 Receive and follow up employee enquiries
via telephone
 Maintain employee enquiry register
 Review and prepare correspondence to
employees and their representatives via
facsimile, email and post
 Preparation of letters to employees
advising of their entitlements and options
available
 Receive and prepare correspondence in
response to employees objections to leave
entitlements
 Calculating employee entitlements
 Reviewing employee files and Company’s
books and records
 Reconciling superannuation accounts
 Reviewing awards
 Liaising with solicitors regarding
entitlements
 Correspondence with employees
regarding dividend
 Correspondence with ATO regarding SGC
proof of debt
Report by Administrators pursuant to Section 439A
23 July 2015| Page 14
Task area
General description
Includes








Workers compensation claims




Other employee issues
Trade on
1,179.3 hours
$445,185.00
(excl GST)
Trade-on management










Processing receipts and
payments


Budgeting and financial reporting






Investigation
19.4 hours
$8,850.00
(excl GST)
Conducting investigation
Toman Investments Remuneration report.docx5277847v2
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


Calculating dividend rate
Receipting proofs of debt
Adjudicating proofs of debt
Ensuring PAYG is remitted to ATO
Review insurance policies
Receipt of claim
Liaising with claimant
Liaising with insurers and solicitors
regarding claims
Identification of potential issues requiring
attention of insurance specialists
Correspondence with insurer regarding
initial and ongoing workers compensation
insurance requirements
Correspondence with previous brokers
Responding to and attending on employee
claims for unfair dismissal with the Fair
Work Commission
Correspondence with Child Support
Correspondence with Centrelink
Liaising with suppliers
Liaising with management and staff
Attendance on site
Authorising purchase orders
Maintaining purchase order registry
Preparing and authorising receipt
vouchers
Preparing and authorising payment
vouchers
Liaising with OSR regarding payroll tax
issues
Entering receipts and payments into
accounting system
Reviewing Company’s budgets and
financial statements
Preparing budgets
Maintaining daily cash book
Finalising trading profit or loss
Meetings to discuss trading position
Review of Company Information
Technology
Collection and preservation of electronic
books and records
Imaging of Company servers
Review and preparation of Company
nature and history
Conducting and summarising statutory
searches
Report by Administrators pursuant to Section 439A
23 July 2015| Page 15
Task area
General description
Includes
Correspondence
 General correspondence
Administration
430.0 hours
$143,969.00
(excl GST)
Document maintenance / file
review / checklist
Insurance
Bank account administration
ASIC Form 524 and other forms
ATO and other statutory
reporting
Finalisation
Planning / review
Books and records / storage
Toman Investments Remuneration report.docx5277847v2
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 First month, then six monthly
administration review
 Filing of documents
 File reviews
 Updating checklists
 Identification of potential issues requiring
attention of insurance specialists
 Correspondence with insurer regarding
initial and ongoing insurance requirements
 Reviewing insurance policies
 Correspondence with previous brokers
 Preparing correspondence opening and
closing accounts
 Requesting bank statements
 Bank account reconciliations
 Correspondence with bank regarding
specific transfers
 Preparing and lodging ASIC forms
including 505, 524, 911, etc
 Correspondence with ASIC regarding
statutory forms
 Notification of appointment
 Preparing BASs
 Completing group certificates
 Cancelling ABN / GST / PAYG registration
 Completing checklists
 Finalising WIP
 Discussions regarding status / strategy of
administration
 Dealing with records in storage
 Sending job files to storage
Report by Administrators pursuant to Section 439A
23 July 2015| Page 16
3.2
Toman Investments – Resolution 2
Company:
Administration Type:
Practitioners:
Period:
Task area
Toman Investments Pty Limited (Administrators Appointed)
Voluntary Administration
James Stewart and Brendan Richards of Ferrier Hodgson
16 July 2015 to 3 August 2015
General description
Includes
16.0 hours
$5,900.00
(excl GST)
Creditors
Leasing
 Liaising with owners / lessors
 Tasks associated with assisting in
assignment of leases to purchaser
 Tasks associated with disclaiming leases
49.0 hours
$20,650.00
(excl GST)
Creditor enquiries
 Receive and follow up creditor enquiries
via telephone and email
Assets
Creditor reports
Meeting of creditors
 Preparing report on results of
investigation, meeting and general reports
to creditors
 Preparation of meeting notices, proxies
and advertisements
 Forward notice of meeting to all known
creditors
 Preparation of meeting file, including
agenda, certificate of postage, attendance
register, list of creditors, reports to
creditors, advertisement of meeting and
draft minutes of meeting.
 Preparation and lodgement of minutes of
meetings with ASIC
 Respond to stakeholder queries and
questions immediately following meeting
Employees
8.0 hours
$1,350.00
(excl GST)
Employee enquiries
 Receive and follow up employee enquiries
via telephone
Employee dividend
 Correspondence with employees
regarding dividend
 Calculating dividend rate
 Ensuring PAYG is remitted to ATO
Workers compensation claims
 Correspondence with insurer regarding
initial and ongoing workers compensation
insurance requirements
Trade-on management
 Preparing and authorising receipt
vouchers
 Preparing and authorising payment
vouchers
Trade on
4.0 hours
$1,350.00
(excl GST)
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Task area
General description
Includes
Processing receipts and
payments
 Entering receipts and payments into
accounting system
 Maintaining daily cash book
 Meetings to discuss trading position
 General correspondence
 Six monthly administration review
 Filing of documents
 File reviews
 Updating checklists
 Correspondence with insurer regarding
initial and ongoing insurance requirements
 Preparing correspondence closing
accounts
 Requesting bank statements
 Bank account reconciliations
 Correspondence with bank regarding
specific transfers
Budgeting and financial reporting
Administration
7.0 hours
$2,320.00
(excl GST)
Correspondence
Document maintenance / file
review / checklist
Insurance
Bank account administration
ATO and other statutory
reporting
 Preparing BASs
Finalisation




Toman Investments Remuneration report.docx5277847v2
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Notifying ATO of finalisation
Cancelling ABN / GST / PAYG registration
Completing checklists
Finalising WIP
Report by Administrators pursuant to Section 439A
23 July 2015| Page 18
4
Calculation of remuneration
4.1
Toman Investments – Resolution 1
Employee
Position
Avg. Rate
(ex GST)
$/Hr
Total
Hrs
$
Hrs
Assets
$
Creditors
Hrs
$
Richards, Brendan
Partner / Appointee
625.00
36.9
23,062.50
Stewart, James
Partner / Appointee
625.00
40.5
25,312.50
Georges, George
Partner
625.00
5.3
3,312.50
Taylor, Samantha
Executive Director
575.00
69.10
Keeble, Andrew
Director
550.00
Winterburn, Kevin
Director
550.00
McKinnon, Scott
Senior Manager / Director
Fairhurst, Kate
Senior Manager
Fernandez, Fred
Senior Manager
475.00
1.3
617.50
Geri, Justin
Senior Manager
475.00
11.7
5,557.50
Green, Russell
Manager
425.00
198.9
84,532.50
3.3
1,402.50
Kyriakides, Christos
Manager
425.00
14.6
6,205.00
0.5
212.50
Zayas, Edgar
Manager
Assistant Manager /
Manager
425.00
7.0
2,975.00
378.26
588.8
222,720.00
99.8
37,425.00
Creedon, Liam
Assistant Manager
375.00
98.6
36,975.00
1.5
562.50
Lieu, Henry
Assistant Manager
375.00
339.9
127,462.50
213.1
79,912.50
Linde, Pernilla
Assistant Manager
375.00
18.6
6,975.00
Mawkes, Gabrielle
Assistant Manager
375.00
1.9
712.50
1.5
562.50
Petkovic, Michael
Assistant Manager
375.00
3.4
1,275.00
3.4
1,275.00
Velo, Megan
Assistant Manager
Senior Analyst / Assistant
Manager
375.00
3.0
1,125.00
341.57
437.9
149,572.00
0.9
306.00
Cutts, Samantha
Senior Analyst
340.00
1.7
578.00
Goulden, Kristy
Senior Analyst
340.00
0.4
136.00
Tippet, Mark
Senior Analyst
340.00
1.5
510.00
Kellman, Jaryd
Aylott, Sarah
toman investments remuneration report.docx
\A01_B09
25.8
16,125.00
2.8
1,750.00
39,732.50
58.9
33,867.50
0.1
57.50
153.0
84,150.0
153.0
84,150.0
32.5
17,875.00
475.41
314.7
149,610.00
475.00
1.5
712.50
107.1
1.3
50,872.50
13.6
6,587.50
Task Area
Employees
Trade On
Hrs
$
Hrs
$
3.8
2,375.00
8.4
3,990.00
1.5
712.50
36.9
23,062.50
5.6
3,500.00
32.5
17,875.00
164.0
77,900.00
Investigation
Hrs
$
0.4
250.0
Administration
Hrs
$
2.1
1,312.50
5.3
3,312.50
10.1
5,807.50
21.6
10,260.00
617.50
11.7
1.8
765.00
69.5
29,537.50
1.0
425.00
118.9
50,532.50
7.0
94.3
73.2
36,207.50
27,450.00
3.6
1,224.00
0.4
136.00
23 July 2015 | Page 19
5,557.50
7.2
3,060.00
11.3
4,802.50
2,975.00
115.9
43,972.50
187.1
70,422.50
91.7
34,692.50
1.6
600.00
87.8
32,925.00
7.7
2,887.50
2.8
1,050.00
30.4
11,400.00
20.4
7,650.00
18.6
6,975.00
0.4
150.00
71.1
24,198.50
0.8
272.00
0.6
225.00
2.4
900.00
323.3
110,573.00
39.0
13,270.50
1.7
578.00
0.7
238.00
Employee
Position
Avg. Rate
(ex GST)
$/Hr
Total
Hrs
Assets
Hrs
$
$
Creditors
Hrs
$
Task Area
Employees
Trade On
Hrs
$
Hrs
$
Investigation
Hrs
$
Wilson, Zach
Senior Analyst
340.00
1.1
374.00
Young, Stephanie
Senior Analyst
340.00
430.2
146,268.00
Cassar, Adam
Analyst
300.00
0.3
90.00
Williams, Haydn
Analyst
300.00
6.1
1,830.00
6.1
1,830.00
McLean, Courtney
Accountant / Analyst
234.75
212.7
49,642.50
75.9
17,685.00
19.2
4,357.50
McDougall, Cameron Accountant / Analyst
226.00
251.5
56,842.50
1.7
382.50
144.3
32,497.50
Mann, Peter
Accountant
225.00
2.0
450.00
2.0
450.00
Mariani, Thomas
Accountant
225.00
2.0
450.00
2.0
450.00
Schreurs, Hayden
Accountant
225.00
1.1
247.50
Song, Haki
Accountant
225.00
1.3
292.50
1.3
292.50
Bernarde, Gabriel
Junior Accountant
170.00
3.4
578.00
2.3
391.00
Lammardo, Andrew
Junior Accountant
170.00
0.8
Saul, Alexandra
Junior Accountant
170.00
1.9
Bailey, Holly
Personal / Team Assistant
170.00
2.5
425.00
Koulax, Nancy
Personal / Team Assistant
170.00
31.6
5,372.00
Kruger, Katy
Personal / Team Assistant
170.00
11.3
1,921.00
Evans, Louise
Accounts Supervisor
145.00
18.4
2,668.00
16.4
2,378.00
Khin, Zin
Accounts Supervisor
145.00
1.9
275.50
0.7
Kobylinski, Sonya
Accounts Supervisor
145.00
1.0
145.00
0.7
Total (excl GST)
GST
Total (incl GST)
Average hourly rate
toman investments remuneration report.docx
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3,363.8
13.0
0.3
4,420.00
1.1
374.00
53.7
18,258.00
325.9
110,806.00
0.7
157.50
98.1
22,635.00
19.3
4,365.00
32.0
7,200.00
0.4
90.00
Administration
Hrs
$
37.6
12,784.00
90.00
18.8
4,807.50
53.9
12,330.00
0.3
67.50
136.00
0.8
136.00
323.00
1.9
323.00
0.4
0.8
136.00
0.3
90.00
51.00
0.5
1,260,026.50 754.9
126,002.65
327,414.50
32,741.45
367.0
115,593.50
11,559.35
1,386,029.15
360,155.95
127,152.85
374.58
433.72
314.97
23 July 2015 | Page 20
613.2
219,014.50
21,901.45
1,179.3
0.3
67.50
85.00
2.0
340.00
31.6
5,372.00
11.3
1,921.00
2.0
290.00
101.50
1.2
174.00
101.50
0.3
43.50
430.0
143,969.00
14,396.90
445,185.00 19.4
44,518.50
8,850.00
885.00
240,915.95
489,703.50
9,735.00
158,365.90
357.17
377.50
456.19
334.81
4.2
Toman Investments – Resolution 2
The remuneration estimate may be summarised as follows:
Task
Assets
Creditors
Employees
Trade on
Administration
Total
Hours
Amount
$ (excl GST)
16.0
49.0
8.0
4.0
7.0
84.0
5,900.00
20,650.00
2,400.00
1,350.00
2,320.00
32,620.00
Please note that the above is an estimate only. If costs exceed the estimate, creditors will be
advised accordingly and further approval will be sought.
4.3
Toman Investments – Resolution 3
The Liquidators’ remuneration estimate for the period 3 August 2015 to the completion of the
liquidation may be summarised as follows:
Task
Assets
Creditors
Dividend
Employees
Investigation
Administration
Total
Amount
$ (excl GST)
20,000.00
20,000.00
10,000.00
60,000.00
20,000.00
20,000.00
150,000.00
Please note that the above is an estimate only. If costs exceed the estimate, creditors will be
advised accordingly and further approval will be sought.
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23 July 2015 | Page 21
5
Statement of remuneration claim
5.1
Toman Investments – Resolutions to be put to creditors at the Second Meeting
convened for 3 August 2015
At the Second Meeting of creditors convened for 3 August 2015, creditors will be asked to
consider the following resolutions:
5.1.1
Voluntary administration period
Resolution 1:
"That the remuneration of the Administrators, as set out in the Remuneration Approval Request
Report dated 23 July 2015, for the period from 17 December 2014 to 15 July 2015 be fixed in
the amount of $1,260,026.50, plus any applicable GST, and may be paid."
Resolution 2:
“That the remuneration of the Administrators, as set out in the Remuneration Approval Request
Report dated 23 July 2015, for the period from 16 July 2015 to 3 August 2015 be fixed up to a
maximum amount of $32,620.00, plus any applicable GST, but subject to upward revision by
resolution of creditors, and that the Administrators be authorised to make periodic payments on
account of such accruing remuneration as incurred.”
5.1.2
Liquidation period (if applicable)
Resolution 3:
“That the remuneration of the Liquidators, as set out in the Remuneration Approval Request
Report dated 23 July 2015, for the period from 3 August 2015 to the completion of the
liquidation be fixed up to a maximum amount of $150,000.00 plus any applicable GST, but
subject to upward revision by resolution of creditors, or the Committee of Inspection should one
be appointed, and that the Liquidators be authorised to make periodic payments on account of
such accruing remuneration as incurred.”
Please note that the above is an estimate only and is heavily dependent on time spent
assisting employees with FEG applications. This estimate excludes costs involved with the
recoveries of voidable transactions. Creditors will be notified in advance of the Liquidators’
intent to recover voidable transactions if applicable.
If costs exceed the estimate, or the Liquidators decide to pursue the recovery of voidable
transactions, creditors will be advised accordingly and further approval of the Liquidators’
remuneration will be sought in the future.
5.2
Remuneration approved and drawn to date
Creditors have not previously approved any remuneration of the Administrators.
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6
Remuneration recoverable from external sources
The Administrators have not received, and are not entitled to receive, any funding from
external sources in respect of remuneration.
7
Disbursements
7.1
Types of disbursements
Disbursements are divided into three types:

Externally provided professional services. These are recovered at cost.

Externally provided non-professional costs such as travel, accommodation and search
fees. These disbursements are recovered at cost.

Internal disbursements such as photocopying, printing and postage. These
disbursements, if charged to the administration, would generally be charged at cost;
though some expenses such as telephone calls, photocopying and printing may be
charged at a rate which recoups both variable and fixed costs. The relevant rates are set
out below:
Disbursement type
Charges (ex GST)
Advertising
Couriers
Mileage reimbursement
Photocopying (colour)
Photocopying (mono)
Photocopying (outsourced)
Printing (colour)
Printing (mono)
Printing (outsourced)
Postage
Searches
Storage and storage transit
Telephone calls
At cost
At cost
$0.76 per kilometre
$0.50 per page
$0.20 per page
At cost
$0.50 per page
$0.20 per page
At cost
At cost
At cost
At cost
At cost
Note: Above rates are applicable for the financial year ending 30 June 2015
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7.2
Toman Investments – Disbursements paid from the administration to
Ferrier Hodgson
The following disbursements have been paid from the administration to Ferrier Hodgson for
the period from 17 Decembers 2014 to 7 May 2015:
Disbursements paid
Externally provided non-professional services
Meeting advertising - ASIC
Couriers
Meals
Parking
Search Fees
Storage costs
Taxi fares
Travel and accommodation expenses
Internal disbursements
Conference call facilities
Facsimile charges
Photocopying - mono
Photocopying – colour
Printing - mono
Printing – colour
Postage
Mileage reimbursement
Telephone calls
Total
Basis
At cost
At cost
At cost
At cost
At cost
At cost
At cost
At cost
At cost
105 pages @ $0.30/page
23,808 pages @ $0.20/page
58 pages @ $0.50/page
12,397 pages @ $0.20/page
1,040 pages @ $0.50/page
At cost
215 kms @ 0.76 per km
At cost
Total (ex GST)
$
298.00
1,550.12
373.380
178.69
159.77
6.12
1,834.27
3,553.18
502.32
31.50
4,661.50
29.00
2,479.30
520
1,327.19
163.40
1,011.00
18,679.16
In relation to disbursements paid from the administration to Ferrier Hodgson for the period
from 17 December to 7 May 2015, we advise the following:

We have undertaken a proper assessment of disbursements claimed for the Company, in
accordance with the law and applicable professional standards. We are satisfied that the
disbursements claimed are necessary and proper.

Where amounts have been paid to Ferrier Hodgson for externally provided services and
costs, those payments are in reimbursement of costs previously paid by Ferrier Hodgson,
either due to a lack of funds in the administration at the time the payment was due, or the
direct invoicing of Ferrier Hodgson by the supplier.

All of the transactions in the above table appear in the summary of receipts and payments
at Part 9 as Voluntary Administrators disbursements. Where payments to third parties are
paid directly from the administration bank account, they are included in the summary of
receipts and payments at Part 9.

Creditor approval for the payment of disbursements is not required. However, the
Administrators must account to creditors. Creditors have the right to question the incurring
of disbursements and can challenge disbursements in court.

Future disbursements provided by Ferrier Hodgson will be charged to the administration
on the same basis as the table in Part 7.1.
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8
Report on progress of the Administration
The Remuneration Approval Request Report must be read in conjunction with the report to
creditors dated 23 July 2015 which outlines the progress of the administration.
9
Summary of receipts and payments
A summary of receipts and payments for the Group for the period 17 December 2014 to
21 July 2015 is set out in the table below:
Receipts and payments
($000s) (incl GST)
Receipts
Opening cash balance on appointment
Retail sales
Proceeds from sale of business
License fee for leasing
Other receipts
Total receipts
Payments
General expenses
Employee expenses (including on costs)
Leased premises rent and outgoings
Stock purchases
Legal fees
Voluntary Administrators disbursements
Payments of commercial necessity / ROT
settlements
Bank / Merchant fees
GST / PAYG payments
Secured creditor dividend payment
Total payments
Closing cash at bank
10
Toman
Investments
Man to Man
(Imports)
Stone
Shoes
30
4,815
1,056
3,749
93
9,743
3
3
0
4
4
33
4,815
1,056
3,749
97
9,750
(461)
(1,345)
(4,945)
(175)
(212)
(20)
-
-
(461)
(1,345)
(4,945)
(175)
(212)
(20)
(115)
-
-
(115)
(37)
(508)
(240)
(8,060)
1,683
(1)
(1)
2
(3)
(3)
1
(41)
(508)
(240)
(8063)
1,686
Group
Queries
If you require further information in respect of the above, or have other questions, please
contact Courtney McLean of this office on (03) 9604 5120.
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11
Information available
The partners of Ferrier Hodgson are members of ARITA. Ferrier Hodgson follows the Code. A
copy of the Code may be found on the ARITA website at www.arita.com.au.
An information sheet concerning approval of remuneration in external administrations can also
be obtained from the Australian Securities & Investments Commission website at
www.asic.gov.au.
Dated this 23rd day of July 2015
James Stewart
Administrator
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Brendan Richards
Administrator
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Annexure
F
ARITA creditor information sheet
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Annual Report to Creditors
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Annual Report to Creditors
23 July 2015 | Page 28