GDP misses forecasts; ASIC sues Westpac; The big Virgin IPO question
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In today's news, Australia's gross domestic product misses forecasts, ASIC sues Westpac over 'systemic' failures at RAMS, and a big question hangs over Virgin Australia's sharemarket re-listing.
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AU Financial Review
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ABC News
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Collapsed international student agency GrowPro Experience may have traded while insolvent
An international student agency that collapsed in late February may have been trading while insolvent for more than a year, the liquidator believes. In a statutory report to creditors, liquidator Joshua Taylor estimated GrowPro Experience Pty Ltd owed more than $2.74 million to creditors, including roughly $450,000 to the Australian Tax Office. His report contained preliminary findings and noted further investigations were required. In the report, Mr Taylor stated he was considering reporting alleged breaches in director duties including allegations of failure to use care and diligence, failure to act in good faith, and insolvent trading, possibly opening directors to being personally pursued for money owed to creditors. "Upon the completion of my investigations into the affairs of the Company, I will lodge my report to the ASIC (Australian Securities and Investments Commission)," the report read. To date liquidators had identified 1,134 student clients owed refunds for education, visa and insurance services that were never delivered, with claims totalling about $870,000. Mr Taylor said many students had not lodged claims, and he estimated a true total of $2.4 million was owed back to these clients. The report, sent to creditors on May 26, stated most students — primarily from South America and Spain — would not be entitled to any refund. GrowPro's record keeping was also questioned in the report. The liquidator's report said the company's total assets were unknown because many schools recorded as owing commission payments challenged them, claiming students had not been enrolled or had withdrawn from the courses. GrowPro had two directors — Spain-based Antonio Llobet, known as Goiko, and Australia-based Paul Mansour. In the liquidator's report, the pair attributed the company's failure to increases in visa application fees, ministerial directions to reduce student numbers, and an uptick in visa refusals. Mr Taylor did not disagree with these being contributing factors, but pointed out GrowPro has made consistent trading losses since 2022. Mr Taylor told the ABC GrowPro paid its sales staff once students committed, and often before visas were approved or enrolment completed, which led to refunds being required if enrolments did not happen. GrowPro was criticised by students for only notifying them of the company's difficulties six weeks after its Spanish parent company had filed for voluntary administration and began insolvency proceedings, and for continuing to take payments after those proceedings had begun. Mr Taylor said Mr Mansour had minimal involvement in running the company, had no access to bank accounts, and only dealt with tax matters, and that Mr Llobet essentially ran the business. Mr Mansour declined to comment, but when the ABC approached him in early-March over the company's collapse he said he said he did not know what funds remained in the company bank accounts, what staff remained, or how many students were affected. Mr Llobet did not respond to requests for comment. A spokesperson for Australian Restructuring Insolvency and Turnaround Association (ARITA) said if a director had allowed insolvent trading a court could hold them responsible for debts incurred from the point of the company going insolvent. "It effectively pierces the corporate vale, and makes them have to pay," she said. Proving insolvent trading in court was a long and costly process, however, and liquidators had to consider whether directors had enough money to justify the action. There were defences in the Corporations Act directors could use to argue against liability for insolvent trading, such as being absent for medical reasons. There was no carve-out that exempted directors because they were not involved in the day-to-day running of the company. Mr Taylor previously told the ABC he was investigating "material amounts" of money transferred abroad to affiliated entities abroad. The new report revealed amounts transferred to related parties more than quadrupled between 2022 and 2024, jumping from just over $1.48 million to more than $7.9 million. The report noted Mr Llobet said all transactions were for "bona fide company expenses such as operational wages," but investigations continued into them. Mr Taylor told the ABC he had not ruled out pursuing either director to recover funds, and both would be asked for personal statements of their financial positions. With Mr Llobet having been more involved with running GrowPro's Australian entities, Mr Taylor said it was likely he would face particular scrutiny. The report read: "Upon completion of further investigations where I determine that there is a recoverable action against the director for insolvent trading or unreasonable director related transactions I shall be requesting the director to provide me with a personal statement of their financial position." The report noted a loan made from Mr Llobet to the company, which if verified may be able to be offset against any claims against him. Mr Taylor had conducted land title searches in New South Wales and found neither director owned property, and he said he was considering expanding his search to other states. Any legal action would likely depend upon funding from creditors.
AU Financial Review
2 days ago
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