Mundella Foods liquidators flag A$778,000 in director-related transactions

In a statutory report lodged with ASIC, liquidators from Mackay Goodwin said the A$778,000 includes "frequent cash withdrawals", the ABC reported. They also said Mundella may have been trading while insolvent from as early as 1 July 2024, in transactions worth A$1.3 million. The report makes no final findings. The liquidators said more work is needed to show whether the cash went on running the business, and that any further investigation depends on creditors paying for it.

Former director Hayden Russell denied any improper transactions. He told the ABC he had acted in good faith, spent the withdrawn cash on operating costs and wages, and put several hundred thousand dollars of his own savings into the companies. The liquidators told creditors he was unlikely to have the means to meet any claim against him.

Total debts stand at A$12.5 million, according to the report. Employees, who rank as priority creditors, are owed almost A$940,000 in wages, superannuation and other entitlements; secured creditors are owed A$3 million and unsecured creditors A$8.5 million. At this stage, the liquidators said, no group of creditors is likely to receive a dividend.

They are also examining whether the sale of the Mundella and Margaret River Dairy Company brands, properties and assets to a subsidiary of Artisanal Market was an uncommercial transaction. The mortgagee, Bowral Capital, agreed the sale on 17 July, weeks before creditors voted in August to liquidate the companies after a deed of company arrangement failed. When the sale settled in October, Bowral received A$5.85 million and another secured lender, Bizcap, almost A$1 million. The liquidators said neither was repaid in full and other creditors will get nothing from the sale. Bowral told the ABC it was not party to the deed and was under no obligation to lend more.