UsconPty Ltd (Receivers and Managers ... - grantthornton.ie

© 2013 Grant Thornton | Uscon Pty Ltd | 11 October 2013

Uscon Pty Ltd

(Receivers and Managers Appointed)

(Administrators Appointed)

ACN 058 849 479 (the Company)

Administrators' Report to Creditors

11 October 2013

Shaun McKinnonAdministratorT +61 7 3222 0336E [email protected]

Michael McCannAdministratorT +61 7 3222 0327E [email protected]

© 2013 Grant Thornton | Uscon Pty Ltd | 11 October 2013 2

Glossary

Administrators Shaun McKinnon and Michael McCann, Joint and Several Voluntary

Administrators of the Company appointed under Part 5.3A of the

Corporations Act 2001

ASIC

ANZ

Australian Securities and Investments Commission

Australian and New Zealand Banking Group

ATO Australian Taxation Office

Childcare Entities Pelicans in the Park Pty Ltd and H & S Vision Childcare Pty Ltd

Deed/DOCA Deed of Company Arrangement under Part 5.3A of the Act

DIRRI Declaration of Independence, Relevant Relationships and Indemnities

Director(s) Darlene Elizabeth Ryan, Jennifer Elizabeth Jattke, Udo Jattke, Charles

John Hearne, Janet Hyslop Hearne

Eligible Employee

Creditor

Meaning given by Section 9 of the Act

ERV Estimated realisable value

FEG Fair Entitlements Guarantee Scheme

GST Goods and Services Tax

HKR "Hong Kong refinancier"; Hong Kong commercial entity

k Thousands

m Millions

Non-Childcare

Entities

The Group excluding Pelicans in the Park Pty Ltd and H & S Vision

Childcare Pty Ltd

Section 439A Report Report to Creditors pursuant to Section 439A of the Act, dated 5

September 2013

Statutory priorities The priority for the payment of unsecured creditor claims set down in

Subsection 553, 560 and 561 of the Act

the Act

The Group

Corporations Act 2001

Beachmore Pty Ltd ACN 054 453 851;

H & S Vision Childcare Pty Ltd ACN 117 350 928;

H & S Vision Holdings Pty Ltd ACN 107 554 370;

H & S Vision Pty Ltd ACN 102 250 911;

Paradise Palms (NQ) Pty Ltd ACN 112 797 261;

Pelicans in the Park Pty Ltd ACN 068 884 560;

PTH Vision Pty Ltd ACN 102 250 804;

RAS Vision Pty Ltd ACN 102 250 877;

The Lakes Management Company Pty Ltd ACN 065 156 381;

T.L.D.C. Pty Ltd ACN 068 761 900; and

Uscon Pty Ltd ACN 058 849 479.

Updated Report Updated Report to Creditors dated 23 September 2013

WIP Work in Progress


Contents

Section Page

1. Update to creditors 4

2. Proposal for a Deed of Company Arrangement 7

3. Estimated return to creditors 12

4. Administrators' recommendation 15

5. Remuneration 17

6. Meeting 20

Appendices

A. Proposed Deed of Company Arrangement

B. Administrators' remuneration report

C. Charge out rates

D. Notice of reconvened second meeting of creditors

E. Proof of debt form

F. Proxy form


Section 1 Update to creditors

01. Update to creditors

02. Proposal for a Deed of Company Arrangement

03. Estimated return to creditors

04. Administrators' recommendation

05. Remuneration

06. Meeting


Update to creditors

Update to creditors

Update

This report is to be read in conjunction with the Administrators' Section 439A

Report dated 5 September 2013 ("Section 439A Report") and the Update Report to

Creditors dated 23 September 2013 ("Update Report"). We note that we have no

material changes or subsequent matters to report to creditors other than those detailed in this circular.

As discussed in the Section 439A Report, the Directors of the core H&S Vision

Group entities have been attempting to facilitate a refinance/debt sale of the debt

owed to the secured creditor. This would be via a substantial Hong Kong

commercial entity which we will refer to as HKR for the purposes of this report. Should the refinance/debt sale occur, the Directors are proposing that this would be

a precondition of and be the basis upon which they submit a proposal for a Deed of

Company Arrangement (“DOCA”) which would include a repayment of unsecured

creditors (potentially in full).

At the concurrent second meeting of creditors on 16 September 2013, the solicitor representing the Directors appraised the meeting of the current understanding of the

Directors with regards to the refinance negotiations and requested that an

adjournment of the meetings be sought so as to allow additional time for those

negotiations to progress to a stage whereby the Directors were in a position to

submit a Deed for consideration. The motion to adjourn the concurrent meeting to 30 September 2013 was then put to the meeting and passed by those creditors

attending.

As advised in the Update Report, we received a letter from the Directors on 20

September 2013, which provided an update on the refinance position and included a

DOCA proposal, which included the use of a Creditors Trust.

The Administrators' solicitors wrote to the Directors' solicitors on 23 September

2013, noting that critical preconditions for the DOCA to proceed are that both the

secured creditor and the incoming financier confirm support of the DOCA proposal

and requested further details on the proposed DOCA , in particular in regards to the

use of a Creditors Trust for the purposes of reporting to creditors.

The Administrators further noted that they are required to consider whether there is

a proposal suitable for submission to creditors, and that it will rarely be appropriate

for administrators to submit a DOCA proposal where they do not have sufficient concrete details to comply with all of the disclosure obligations. Significantly greater

disclosure would be required in this instance as the DOCA proposed included a

Creditors Trust, as discussed in the Update Report. Given the timing of the

submission of the proposal, the Administrators did not have adequate time to

prepare a detailed review to submit to creditors at the meeting of 30 September 2013.

During the week leading up to the adjourned meeting of 30 September 2013, the

Administrators sought further details from the Directors regarding the DOCA

proposal and confirmation from HKR and the secured creditor as to the likelihood

of the refinance proceeding.

Advice was received from HKR's solicitors on 26 September 2013 that their client

was currently not proceeding with negotiations.

The Administrators were subsequently advised by the Directors' solicitor on the

morning of 30 September 2013, that the HKR had now advised the secured

creditors lawyers they wished to reopen refinance negotiations. The Directors therefore sought a further adjournment of the meeting to allow time for negotiations

to progress and thus enable the proposed DOCA to be submitted to creditors for

consideration.

The meeting of 30 September 2013 was opened and then adjourned for 30 minutes

whilst the Administrator sought confirmation from the secured creditor as to whether negotiations were continuing to understand whether a further adjournment

was appropriate. After receiving confirmation that the HKR had requested refinance

negotiations be reopened, it was considered appropriate to request the creditors vote

on a further adjournment of the meeting for 21 days. This would allow the

Administrators time to review the proposal in detail and seek further details as to the progress of the negotiations between HKR and the secured creditor before being in

a position to submit the DOCA proposal to creditors. Creditors attending the

meeting passed the motion for a further adjournment.


Update to creditors

Update to creditors

Update continued

On 4 October 2013, the Administrators, via their solicitors, wrote to the Directors'

solicitors requesting further details regarding the DOCA proposal and highlighting

the Administrators' concerns regarding the inclusion of a Creditors Trust.

As outlined in the Update Report the use of a Creditors Trust is generally discouraged by ASIC unless there is a compelling legal and/or commercial reason to

do so and the assessment of any DOCA including a Creditors Trust involves

significant analysis and review before being capable of being presented to creditors.

Following further correspondence and discussions with the Directors' and their

solicitor on 10 October 2013, the Administrators received an amended draft DOCA proposal that importantly removed the requirement for a Creditors Trust and

clarified some of the issues raised by the Administrators.

The Administrators' review of the DOCA proposal follows at section 2.

Second meeting of creditors reconvened

At the second meeting of creditors of the Companies, convened concurrently at

11.00am, Monday 30 September 2013, it was determined by those creditors present

to adjourn the meeting. The continuance of this meeting is now convened as

follows:

Time : 11.00am

Date : Monday, 21 October 2013

Place : Pullman Reef Hotel Casino, 35-41 Wharf Street, Cairns, Qld

Further details of this meeting is provided at Section 6.


Section 2: Proposal for a Deed of Company Arrangement





05. Remuneration

06. Meeting


Proposal for a Deed of Company Arrangement


Proposal for a Deed of Company Arrangement ("DOCA")

As advised in Section 2 of this report, the Directors provided an updated draft

DOCA proposal on 10 October 2013. This proposal is attached in full at Annexure

A.

We note that the Directors have confirmed they are willing to further discuss the specifics of the DOCA proposal to the extent that the Administrators have any

concerns but have issued the current version in time for it to be reported to creditors

ahead of the creditors meeting scheduled for 21 October 2013.

Contents of the Proposed DOCA

Assumed Pre-Conditions to the DOCA

As previously advised, the DOCA is predicated upon the following key terms :

� A transaction can be completed between the secured creditor and the HKR in

regards to a refinance of the Group's debt;

� That once a refinance has been completed that the HKR agrees to the release of

a residential unit ("the unit") from the security currently provided and the HKR

further agrees to allow payments to the proposed DOCA fund from the sale of

Group assets in advance of the HKR's security over those assets.

The DOCA proposal provides that the directors and the Administrators have 21 days to negotiate and execute the formal DOCA. It further provides that if either of

the above two conditions cannot be met within 60 business days of the execution of

the DOCA, the DOCA will be effectuated (finalised) and the Companies will be

placed into liquidation.

We estimate that the proposal allows until approximately 7 February 2014 for the above pre-conditions to be met during which time the companies will remain under

the control of the Deed Administrators (and Receivers).

Contents of the Proposed DOCA cont'd

Key Terms of the DOCA

In broad terms the DOCA proposes the following (assuming the pre-conditions are

satisfied) key terms :

� The Administrators and the Directors agree final terms and execute a DOCA reflective of the terms proposed within 21 days of the creditors voting for the

DOCA proposal.

� The Voluntary Administrators will become Deed Administrators on the

execution of a DOCA (detailed terms to be negotiated if creditors vote in

favour).

� A DOCA fund ("the Fund') will be established by the Deed Administrators.

� After execution of the DOCA, the Deed Administrators (and Receivers) will

continue to trade the businesses until the secured financier and the HKF

complete a debt sale/assignment (via the Trade Confirmation) and the Directors

execute a debt restructure arrangement with the HKR. At which time the Directors will take control of the business operations of the Group.

� Within a period of 6 months from date of DOCA execution, the Directors will

cause $1.5m to be paid into the Fund from the sale of assets of the Group.

� First mortgage security would be granted to the Deed Administrators, over the

unit owned by Ross Straguzi (Director) and estimated to be worth $2.5m, as security for performance by the Directors obligations under the DOCA.

� Upon receipt of the funds and after the payment of the Deed Administrators'

reasonable fees and expenses, the Deed Administrators will pay the Deed

Creditors amounts equivalent to the respective dividends they would have

received on a winding up, as if the funds were available to the Companies on a pro rata basis, based upon the net asset deficiencies of the respective Companies.

� After further discussions with the Directors on the above point we understand

that their intention is that all creditors are able to claim against the fund equally

although the current drafting may not reflect this.




Contents of the Proposed DOCA cont'd

� Deed Creditors are defined to include all creditors who are entitled to prove in

the liquidation of the Companies, other than ANZ or its assignees, or entities

related to the Directors.

� Employees whose claims may have crystallised due to termination would be dealt with as Deed Creditors, although being afforded priority as if claiming in a

liquidation.

� In the event the Deed Fund does not receive the intended distribution in full

within 6 months, the security over the residential unit could be enforced to

facilitate payment to the unsecured creditors from the sale proceeds of the unit.

� It is also included in the Deed that the sale of the Child Care centre assets is to be

progressed by the Administrators / Deed Administrators while the DOCA

progresses.

The Directors have advised that current employees will remain with the Companies

and their entitlements will be paid from on-going trading.

Therefore employees would not participate in any distribution from the Deed Fund

on the basis that their entitlements would continue to be met by the Companies

once the DOCA has been effectuated, which occurs once the $1.5m or proceeds of

sale of the Unit have been distributed to creditors in accordance with the Deed

Proposed.

Administrators considerations in regards to the proposed DOCA terms

Since the meeting of 30 September 2013, the Administrators requested the Directors to consider a number of issues identified from the initial review of the original

proposal submitted on 20 September 2013. The key issues raised have now been

addressed as follows:

Inclusion of a Creditors Trust

� The Creditors Trust has been removed from the current proposal.

Definition of "Unsecured Creditors"

� A definition of Deed Creditors has been included in the revised Deed.

Employees Position

� Employees will not participate in a distribution from the Deed Fund on the basis

they will continue to be employed by the Companies and once the Companies

have effectuated the DOCA terms the Companies return to the control of the

Directors and would continue to trade. Directors are still to provide evidence

however that the Companies can continue to trade on a solvent basis.

Assets to be Sold to Provide Deed Funds

� The current draft proposal provides for the childcare centre asset sales to

progress but doesn’t specify which assets the $1.5m will be paid from. At the time

of writing we have not received advice from the HKR or the secured creditor

that this would be acceptable.

Valuation of Unit

� The Directors' solicitor has advised that an independent, current market valuation

is being sought.

Possible Sale of Unit Immediately

� The Directors have expressed concern that an immediate sale of the unit may not maximise its realisable value.

� However, the current proposal allows for the enforcement of the Administrators'

charge over the property within 6 months (previously 12 months) if funds from

the sale of Group assets do not eventuate.




Administrators considerations in regards to the proposed DOCA terms

cont'd

Pooling of Creditors Claims

� The Administrators understood from information provided by the Directors and

their solicitors that creditor claims of the Group would be "pooled" and as such

receive an equal distribution.

� The current proposal seems to contemplate that creditors would participate in the Deed Fund relative to the net asset deficiency of the Company in which they

are a creditor. We are seeking further clarification of this issue but initial

discussions indicate that a pooled arrangement may still be acceptable which

would ensure that the full $1.5m would be available to pay creditors across the

entire Group.

Solvency

� As yet, the Directors have not provided evidence that the Companies would be

able to trade on a solvent basis once the Companies were handed back to the

Directors and the Deed was effectuated.

� The Administrators must establish that sufficient funding will be available, possibly as part of the Debt Restructure Agreement with HKR, to ensure that

further debts are not incurred in the Companies and not paid when due.

Fees and Costs of the Deed Administrator

� The current proposal allows for the fees and costs of the Deed Administrator to

be paid from the Deed Fund, in priority to payments to Deed Creditors.

Any Shortfall incurred by Partly Secured Creditors

� It seems that the Administrators concerns regarding any crystallised claim by

partly secured creditors (such as equipment finance and leasing companies) has

been addressed by not excluding them from the definition of Deed Creditors.

Support of the secured creditor and the HKR

� As previously mentioned, due to the terms of the Deed it is a pre-condition that

the secured creditor and HKR support the Deed in order for it to have any prospects of success. In this regard we have sought advice from both parties as to

the status of their negotiations and support for the proposal.

� This is critical because:

− The costs of pursuing this DOCA proposal without success will be material

and will delay the otherwise orderly realisation of assets of the Group and potentially deteriorate the value of those assets and will therefore reduce the

total value of assets available to creditors;

− The Deed proposal requires both the secured creditor and HKR to enter

certain agreements that must be completed for the Deed to succeed; and

− The HKR must release part of their securities (assuming they take an assignment of the securities held by the current secured creditor), for the

benefit of unsecured creditors, in effect subrogating part of their first ranking

security to unsecured creditors.

� At the date of writing this report we are not aware of the status of the

negotiations other than they have recommenced and we understand they are on-going.

� Neither the secured creditor or the HKR has at this stage confirmed support (or

otherwise) for the Deed Proposal. However we will continue to seek advice in

this regard and will update creditors at the meeting of 21 October 2013.


Milestone Date Notes

Second Meeting of Creditors 21-Oct-13 Scheduled for 21 October 2013

Execute DOCA 11-Nov-13 Must occur within 15 business days of second meeting

Establish Conditional Mortgage 18-Nov-13 Allow 5 business days from execution of DOCA

Trade Confirmation Negotiations 25-Nov-13 Must occur with 10 business days after execution of DOCA

Debt Restructure Negotiations 25-Nov-13 Must occur with 10 business days after execution of DOCA

Confirmation Date 25-Nov-13 Must occur with 10 business days after execution of DOCA

Agree Terms of Trade Confirmation 07-Feb-14 Agree terms of the trade confirmation within 60 business days of the execution of the DOCA otherwise proceed to Liquidation

Agree Terms of Debt Restructure 07-Feb-14 Agree terms of the debt restructure within 60 business days of the execution of the DOCA otherwise proceed to Liquidation

Payment of $1.5 million into Deed Fund 26-May-14 Must occur within 6 months of execution of DOCA

Pay Dividend to Unsecured Creditors 24-Aug-14 Allow 3 months from when contribution has been made to Deed Fund

DOCA Effectuated 31-Aug-14 Allow 5 business days from when dividend has been paid

- - - - - - OR - - - - - -

Sale of Unit 25-Nov-14 Only to occur if $1.5 million contribution has not been made to the Deed Fund. Enforcement of mortgage then sale can occur 6 months after execution of DOCA

Pay Dividend to Unsecured Creditors 23-Feb-15 Allow 3 months from when contribution has been made to Deed Fund

DOCA Effectuated 02-Mar-15 Allow 5 business days from when dividend has been paid

01-Oct-13 02-Dec-13 02-Feb-14 05-Apr-14 06-Jun-14 07-Aug-14 08-Oct-14 09-Dec-14 09-Feb-15

Second Meeting of CreditorsExecute DOCA

Establish Conditional MortgageTrade Confirmation Negotiations on Foot

Debt Restructure Negotiations on FootConfirmation Date

Agree Trade Confirmation TermsAgree Debt Restructure Terms

Payment of $1.5 million into Deed FundPay Dividend to Unsecured Creditors

DOCA Effectuated- - - - - - - OR - - - - - - -

Sale of UnitPay Dividend to Unsecured Creditors

DOCA Effectuated

Key Events Timeline


The chart below provides a timeline of the key events of the Deed proposal.

The table below provides further information regarding the key events identified in the chart above

7-Feb-14:

Latest date the for trade confirmation to be completed. Proceed to Liquidation if the terms of the debt restructure and trade confirmation have not been agreed upon by this date.

31-Aug-14:

Estimated effectuation of DOCA if sufficient funds received into Deed Fund and distributed to Deed Creditors.

2-Mar-15:

Estimated effectuation of DOCA following the sale of the unit to provide funds for Deed Creditors

Note: The timelines presented below assume the full extent of time available under the Deed is required to complete the Deed. We note that actual timeframes could be less if the relevant conditions of the Deed are completed earlier.


Section 3 Estimated return to creditors





05. Remuneration

06. Meeting


Estimated Return to Creditors

(DOCA Scenario)

Group

DOCA Funds 1,500,000

less: DOCA Fees and Expenses Post Completion of Debt Sale / Assignment (estimate) (150,000)

Total DOCA Funds Available 1,350,000

Deed Creditors

Employee Entitlements -

Partially Secured Creditors (net of asset realisation) 28,263

Ordinary Unsecured Creditor Claims 951,174

Total Deed Creditors 979,437

Estimated Return to Creditors (cents in the dollar) 100

Estimated return from DOCA

Estimated return to creditors

Estimated return to creditors – DOCA scenario � Deed Administrators fees for the period prior to hand over of the businesses are

assumed to be met from trading profits or funding from the secured creditor

where such profits are not sufficient to meet those costs.

� I make the following comments in relation to the estimated return to creditors

under a DOCA scenario:

− Any trading profits are excluded for purposes of this calculation.

− DOCA fees and expenses are an estimate only and are subject to change and

include costs accrued post the business operations being handed back to the directors (in accordance with Deed conditions) including, adjudicating on

creditor claims, issuing a dividend and potentially the costs of realising the

unit (if required) and the ongoing attendance to the Deed Administrators

statutory duties.

− Employee claims are excluded on the assumption all current employees remain with the Company and their entitlements are maintaining by the

Companies in the ordinary course post the DOCA effectuation.

− Partly secured creditor amounts are net of asset realisations and are based on

the book value per the management accounts. This is subject to change based

on any valid future proofs of debt that may be received.

− Ordinary unsecured creditors claims are based on the trade creditor reports

obtained from the Companies' financial systems as at the date of the VA

appointment and/or proofs of debt lodged. It is subject to change.

− Related party (including intercompany) creditor and loan accounts are

excluded.

Based on the proposed DOCA and the information we currently have

available regarding the level of creditors of the Group, Deed Creditors

may receive a return of 100 cents in the dollar if the terms of the DOCA

can be achieved.

Estimated return to creditors – DOCA scenario

� The table above outlines the estimated return to creditors under a DOCA

scenario proposed by the Group's Directors.

� The estimated return to creditors is prepared on a Group basis (i.e. all eleven

Group companies).

� We have assumed that all Deed Creditors of the Group be pooled to claim

against the Deed Funds which is consistent with our discussions with the

Directors but not necessarily the current propose Deed drafting.

� DOCA Fees and Expenses include the Deed Administrators remuneration and

expenses (i.e. legal fees and other disbursements) across all eleven Group companies.

� We have assumed for the purposes of this estimate that DOCA Fees and

Expenses only include Deed Administrators remuneration from the period which

the business operations are handed back to the Directors after completion of the

key DOCA preconditions (i.e. completion of debt sale/assignment).


Beachmore Pty

Ltd

H & S Vision

Pty Ltd

H & S Vision

Childcare Pty

Ltd

H & S Vision

Holdings Pty

Ltd

Paradise Palms

(NQ) Pty Ltd

Pelicans in the

Park Pty Ltd

PTH Vision Pty

LTd

RAS Vision Pty

Ltd

The Lakes

Management

Company Pty

Ltd

T.L.D.C. Pty

Ltd

Uscon Pty Ltd Group

Total BV of Assets

(excluding related parties)228,343 11,096,320 138,674 1,869,111 731,653 844,747 15,109,630 9,013,553 355,510 1,264,040 424,611 41,076,192

Secured Creditor Debt - ANZ (approx.) (51,595,554)

Estimated Asset Surplus/(Deficiency) (10,519,362)

Estimated return from a winding up


� The above table details the book values of assets as disclosed in the latest

management accounts provided.

� Whilst it has been difficult to accurately calculate a return, we are of the opinion

that it is unlikely unsecured creditors will receive a return/dividend in the event the Companies are wound up. This is due to the Group's overall balance sheet

deficiency in assets after the payment of the secured creditor, ANZ who have

cross collateralised security over the Group in respect to no less than $51m of

total facilities held throughout the Group.

� At this stage our estimates are necessarily calculated on book value of assets as we do not have appropriate updated valuations on the core assets of the Group

to consider an alternative calculation. Some of these assets are also under the

control of the receivers and hence we are not in a position to obtain valuations or

understand directly the current trading position of those assets and therefore the

likely realisable value.

� We note that due to the above issues actual asset recoveries may vary from the

book values used in our calculation above.

� Where applicable, the payment and collectability of all related party debtor and

creditor amounts have been excluded as the likelihood of recovery is uncertain.

� The adjacent calculations do not include fees and costs of the Receivers and Managers and the Voluntary Administrators.

� The calculation also excludes interest and other costs which are accruing and are

payable to the secured creditor, ANZ.

It is unlikely that unsecured creditors will receive a distribution from the

Company in the event of Liquidation due to the significant asset

deficiency of the Group.



Section 4 Administrators' recommendation





05. Remuneration

06. Meeting


Administrator's recommendation



As detailed in the Section 439A Report, the following options are available to

creditors to decide pursuant to s439C of the Corporations Act, being that:

1. The Company execute a Deed of Company Arrangement;

2. The administration should end; or

3. The Company be wound up.

Since our Section 439A Report was issued we have received a DOCA proposal from

the Directors as outlined in this report.

As outlined in this report, the critical precondition for the DOCA to have genuine

prospects of success is for both the secured creditor and HKR to be in support of the proposed Deed. We have sought such confirmation and at the time of writing

neither party has been able to confirm such support, although we understand

negotiations are ongoing and the situation may change.

In the absence of confirmation from the secured creditor and the HKR, in regards

to the above issues, we cannot be comfortable that the Deed has a realistic prospect of success.

In the absence of confirmation of support from the secured creditor and HKR

we do not consider that at the time of writing this report that a Deed proposal

exists that is capable of being recommended to creditors.

On that basis, the Administrators recommendation remains as per our initial

Section 439A Report that the Companies be placed into liquidation.

We do however note that should the Directors be able to clarify the issues raised in

this report and obtain confirmation of the support for the proposed DOCA of the

secured creditor and HKR ahead of the reconvened second meeting of creditors

then we reserve our rights so as to change our recommendation to be presented to the meeting.

We will continue to pursue all parties for clarity on these issues so that we

may update creditors at the meeting of 21 October 2013.


Section 5 Remuneration





05. Remuneration

06. Meeting


Remuneration

Enclosed at Appendix B is the Administrators' remuneration report, which provides

details of:

� Remuneration approved to date;

� Voluntary Administrators' remuneration to be approved;

� Liquidators' future remuneration to be approved (if applicable); and

� If a Deed is approved by creditors, the Administrators' remuneration up to the

date of executing a Deed.

Creditors should note that all work has, and will be, performed by the appropriate

level of staff in order to optimise any potential realisations which may be available to unsecured creditors.

Voluntary Administrators' remuneration – Liquidation scenario

The remuneration to be approved has been split between actual fees incurred for the

period 5 September 2013 to 30 September 2013, for which approval has not been

received, and the estimated future fees to be incurred for the period 1 October 2013

to 21 October 2013, being the date of the reconvened second meeting.

Remuneration

Remuneration

Approval Sought

DescriptionAmount

($)

Joint and Several Administrators' actual remuneration incurred for the period 17 September 2013 to 30 September 2013 and not yet approved. ($2,595.00 less discount of $2,500.00)

95.00

Joint and Several Administrators' estimated future remuneration for the period 1 October 2013 to 21 October 2013, being the date of the reconvened second meeting

8,800.00

Voluntary Administrators' remuneration – Deed scenario (if applicable)

The remuneration to be approved has been split between:

� Actual fees incurred for the period 5 September 2013 to 30 September 2013, for

which approval has not been received;

� Estimated future fees to be incurred for the period 1 October 2013 to 21 October 2013, being the date of the reconvened second meeting; and

� Estimated future fees to be incurred for the period 22 October 2013 to 11

November 2013, being the date of execution of a Deed of Company

Arrangement.

Approval Sought

DescriptionAmount

($)

Joint and Several Administrators' actual remuneration incurred for the period 17 September 2013 to 30 September 2013 and not yet approved. ($2,595.00 less discount of $2,500.00)

95.00

Joint and Several Administrators' estimated future remuneration for the period 1 October 2013 to 21 October 2013, being the date of the reconvened second meeting

8,800.00

Joint and Several Administrators' estimated future remuneration for the period 22 October 2013 to 11 November 2013, being the date of execution of a Deed of Company Arrangement

3,200.00


Remuneration

Remuneration

Liquidators' future remuneration (if applicable)

It will be necessary for the creditors to approve the drawing of remuneration for the

Liquidators, should creditors vote that the Company be placed into liquidation.

Liquidators' future remuneration (ex of GST and disbursements)

DescriptionAmount

($)

Joint and Several Liquidators' remuneration for the period 21 October 2013 to finalisation

7,500.00

Deed Administrators' future remuneration (if applicable)

It will be necessary for the creditors to approve the drawing of remuneration for the

Deed Administrators, should creditors vote that the Company execute a Deed of

Company Arrangement.

Deed Administrators' future remuneration (ex of GST and

disbursements)

DescriptionAmount

($)

Joint and Several Deed Administrators' remuneration for the period 12 November 2012 to effectuation of the Deed of Company Arrangement

7,500.00


Section 6 Meeting





05. Remuneration

06. Meeting


Second meeting of creditors

Meeting

Lodging of proxies

Proxies lodged for the second meeting of creditors commenced on 16 September

2013 and 30 September 2013 are valid for this meeting. However, as there has been an update to the motions to be put to the reconvened meeting, it would be

preferable if creditors re-submitted proxies to confirm their voting intentions.

Please ensure that the proxies are signed under seal, where appropriate (if you are a Company) and if the proxy is executed by a power of attorney, that a copy of the

power of attorney is enclosed with the proxy form. The proxy form is enclosed as

Appendix F.

Proxies for the meeting can be lodged in the following ways:

� Post: to arrive no later than 5.00pm on the business day prior to the meeting,

being Friday 18 October 2013.

� Facsimile: to no later than 5.00pm on the business day prior to the meeting,

being Friday 18 October 2013.

� In Person: by person with a person attending the meeting; or

� Email: by email to [email protected] no later than 5.00pm on the

business day prior to the meeting, being Friday 18 October 2013.

If proxies are lodged by facsimile or email, the Act requires that the original proxy

must be lodged with the Voluntary Administrators within 72 hours of lodging the

faxed or emailed copy.

Contact details

Should you have any queries in relation to any matter raised in this report then

please do not hesitate to contact Lyle Fernandes on (07) 3222 0394.

Yours faithfully

Shaun McKinnon Michael McCann

Joint and Several Administrator Joint and Several Administrator

Reconvened second meeting of creditors

The reconvened second meeting of creditors is to be held at the Pullman Reef Hotel

Casino, 35-41 Wharf Street, Cairns QLD 4870 at 11:00am on Monday 21 October 2013. Please arrive 30 minutes before hand to allow sufficient time for registration.

The notice in regards to the meeting is enclosed as Appendix D.

The meeting will be open to creditors for questions and general discussion. Should

you wish to have us address any issue in detail please advise us prior to the meeting

date. This will allow sufficient time to prepare a detailed response to your question.

Please note that attendance at the meeting is not compulsory.

Telephone attendance

Should you not be able to attend the second meeting of creditors in person, creditors are invited to attend via telephone. In order to do so, you will be required

to submit a proof of debt and proxy in favour of the party attending via telephone as

detailed below.

Please contact Lyle Fernandes of this office at [email protected] no later

than 5.00pm on the business day prior to the meeting, being Friday 18 October 2013

to obtain dial in details.

Lodging of proofs of debt

Should you not have already lodged a proof of debt, you are required to complete

the proof of debt as attached as Appendix E.


Appendices




C. Charge out rates


F. Proxy form



Appendices

SAN_113644_1501351

Cnr Shields and Grafton Streets Cairns QLD 4870 | PO Box 5046 Cairns QLD 4870, Australia P 617 4030 0600 | F 617 4030 0699 | E [email protected] | www.macdonnells.com.au

ABN 13 315 585 268

Our Ref: Ian Conrad:113644

10 October 2013 Mr David Monaghan Special Counsel Allens 31/123 Eagle St Brisbane QLD 4000

Email: [email protected]

Various Companies Within the H & S Vision Group (Receivers & Managers Appointed)(In Administration) ("the Companies") – Proposal For Deed of Company Arrangement

Further to our recent communications, we now enclose an amended proposal for a Deed of Company Arrangement for the Companies ("DOCA"). The key changes to the amended proposal are:-

· The proposal no longer includes provision for a creditors trust; and

· Instead, upon satisfaction of certain conditions to the full operation of the DOCA, and the provision of a mortgage over Ross Straguszi's Unit to guarantee payment of the DOCA contribution of $1,500,000.00, the H & S Vision group of companies will be released to the control of the directors.

We have had the benefit of some feedback from you, as to your clients views on the workability of some aspects of the DOCA proposal. This proposal incorporates most but not all of those suggestions. In some instances, there has simply been insufficient time for our clients to fully consider the ramifications of suggested changes, whilst meeting your clients desired time line for provision of the DOCA proposal. Our clients are amenable to discussing further any outstanding concerns of your client, with the possibility of amending the final proposal voted on at the creditors meeting. Yours faithfully MacDonnells Law

Writer: Ian Conrad ½ Senior Counsel Direct: + 61 7 4722 0247 Email: [email protected] Enclosure Liability limited by a scheme approved under professional standards legislation.

DOCA Proposal

SAN_113644_1440118

PARTIES:

The Administered Companies

The Deed Administrators

Ross Straguszi, Peter Hopkins and Rose-Marie Dash (the Proponents)

DEFINITIONS

1. Definitions:-

a. Administered Companies means the companies listed in the Report toCreditors dated 13th August 2013;

b. Completion Date means the date upon which Completion of the TradeConfirmation occurs;

c. Completion of the Trade Confirmation means ANZ either:-i. releasing; orii. unconditionally assigning, transferring or novating to GN each of the

Debts and each of the Securities;d. Conditional Mortgage means the Conditional Mortgage referred to in

paragraph 12;e. Confirmation Date means the date that is 10 business days after execution of

the DOCA or such later date as is agreed to in writing between the DeedAdministrators and the Proponents;

f. Debt Restructure Agreement means a proposed agreement between theProponents and GN under which the terms applicable to the Debts arerenegotiated,

g. Debts means the debts owing under the facilities being assigned or novatedunder the Trade Confirmation;

h. Deed Administrations means the Administrators of the AdministeredCompanies;

i. Deed Creditors means the creditors of the Administered Companies whowould be entitled to prove in the liquidation of those companies, other than theANZ or its assignees, the Proponents or entities related to the Proponents;

j. DOCA means the Deed of Company Arrangement described in clauses 2,3,19,1 and 22;

k. DOCA Fund means the fund set up under the DOCA described in clause 18and 19;

l. Effectuation of the DOCA means effectuation of the DOCA under paragraph24;

m. GN means General Nice Coke & Chemicals (Hong Kong) Co. Ltd.;n. The Mortgage Conditions Precedent are:-

i. Completion of the Trade Confirmationii. Execution of the Debt Restructure Agreement

o. Property means unit 91 'Harbour Lights', 1 Marlin Parade, Cairns,Queensland 4870;

p. Proponents Contribution means the payment into the DOCA Fund referredto in clause 10;

q. Released means the release of the Administered Companies to the control ofthe Proponents as directors under clause 8(d);

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SAN_113644_1440118

r. Securities means the securities being assigned or novated under the TradeConfirmation;

s. Sunset Date means the date that is 60 business days after execution of theDOCA or such later date as is agreed to in writing between the DeedAdministrators and the Proponents;

t. Trade Confirmation means [complete details when available];

DOCA PROCESS

2. The DOCA will include terms typically provided for in a trading DOCA, consistent withthe terms of this Proposal. The terms of the DOCA will be negotiated between theProponents and the Administrators and the DOCA must be executed within 21 daysof approval of this Proposal at the adjourned 2nd meeting of creditors of theAdministered Companies. The Administrators may agree to modify the DOCA fromthe terms outlined in this Proposal where they consider to do so will make the DOCAmore practicable and no creditor will be disadvantaged as a result.

3. The Administrators of the Administered Companies will be appointed as DeedAdministrators under the DOCA.

4. The DOCA will contemplate the continued trading of the Administered Companiesuntil they are Released.

5. The Deed Administrators will in consultation with the Proponents market andendeavour to sell, at market value, the childcare centre assets of the AdministeredCompanies.

6. Continuation of the DOCA beyond the Confirmation Date will be conditional upon:-

a. Ross Straguszi executing and delivering to the Deed Administrators theConditional Mortgage in registrable form; and

b. the Trade Confirmation remaining on-foot as at that date.

7. The Proponents will endeavour to negotiate the terms of a Debt RestructureAgreement with GN. That agreement will be conditional upon, and will come intoeffect on Completion of the Trade Confirmation. The Proponents will notify the DeedAdministrators in writing when the Debt Restructure Agreement is executed.

8. Upon the Deed Administrators being notified in writing of both:-

a. execution of the Debt Restructure Agreement by the parties thereto; and

b. Completion of the Trade Confirmation,

and being satisfied that has occurred and that the relevant Companies would onRelease be solvent, the Deed Administrators shall forthwith:

c. pay into the DOCA Fund the balance cash funds held by the AdministeredCompanies after payment of their proper fees and outlays incurred in theDOCA administration; and

d. Release the Administered Companies to the control of the directors thereof.

9. If the conditions mentioned:-

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SAN_113644_1440118

a. in paragraph 6 are not satisfied by the Confirmation Date; or

b. in paragraph 8a&b are not satisfied by the Sunset Date, the DOCA shall beterminated and the Administered Companies shall be placed in liquidation.

10. The Proponents will subject to the conditions stated in paragraphs 8a&b procure thepayment of $1,500,000 into the DOCA Fund within 6 months of the date of executionof the DOCA.

11. Upon payment out of the DOCA Fund in accordance with clause 19.b the DeedAdministrators shall take such steps as are required under the Corporations Act 2001(Cth) to confirm the Effectuation of the DOCA.

THE CONDITIONAL MORTGAGE

12. The Conditional Mortgage will be negotiated between the Proponents and the DeedAdministrators and will include the following terms:

a. The mortgage will provide a first registered mortgage over the Property;

b. The obligations secured under the mortgage will be the obligations of themortgagor to make the Proponents' Contribution ;

c. The rights of the mortgagee shall be conditional upon and arise only uponsatisfaction of the following conditions precedent:

i. Execution of the Debt Restructure Agreement;ii. Completion of the Trade Confirmation; andiii. an Event of Default of the Proponents as defined under the DOCA.

THE DEBT RESTRUCTURE AGREEMENT

13. The Debt Restructure Agreement will be negotiated between the Proponents andGN, will be executed by the Confirmation Date and will:-

a. permit the orderly sale of certain assets of the Administered Companies; and

b. permit the payment of the Proponents' Contribution to the DOCA Fund afteragreed debt reduction targets are met.

14. The Deed Administrators shall have the discretion to waive any of the requirementsof paragraph 13 if they consider it is in the interests of Deed Creditors to do so.

15. The terms of the Debt Restructure Agreement will be confidential and the finaldocument will be provided to the Deed Administrators in strict confidence, for the solepurpose of verifying compliance with clause 13.

SALE OF CHILDCARE ASSETS

16. The Deed Administrators will continue to market and endeavour to sell the childcarecentre assets of the Administered Companies as a going concern and will in doing soonce the Trade Confirmation is unconditional except for FIRB approval:-a. Liaise and consult with the Proponents on that marketing program;b. Take advantage of the Proponents' knowledge and understanding of those

centres, the market for those centres and their marketing expertise;

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SAN_113644_1440118

c. Consult with the Proponents on the terms of any proposed sale;d. With the assistance of the Proponents, endeavour to negotiate with the co-

owner of the Innisfail child care centre, the sale of that Innisfail child carecentre as a package with the other child care centre assets; and

e. Not sell the child care centre assets at less than any going concern valuationobtained by them in respect thereof without the consent of the Proponents,which shall not be unreasonably refused.

17. The Proponents will:-a. Provide the assistance referred to in the previous clause without charge; andb. Not interfere with the proper sale of the child care centre assets by the

Administrators in accordance with the previous clause.

THE DOCA

18. The DOCA Fund will be established by the Deed Administrators after the DOCA isexecuted and before the Confirmation Date.

19. The provisions relating to the DOCA Fund will include the following terms:

a. The DOCA Fund will include:-i. any surplus of funds paid into the DOCA Fund by the DeedAdministrators at the Completion Date, after payment of theirreasonable fees and expenses;

ii. any other funds paid into the DOCA Fund under the DOCA; andiii. the Proponents Contribution of $1,500,000 which is to be paid within 6

months from execution of the DOCA; oriv. subject to the satisfaction of the conditions listed in sub-clause 12.c,if

the Proponents fail to cause the Proponents' Contribution to be paid ifrequired under clause 10, the proceeds of sale of the property subjectto the Conditional Mortgage.

b. Upon receipt of those funds, the Deed Administrators will pay the DOCA Fund:i. firstly in payment of the Deed Administrators reasonable fees and

expenses incurred in administering the DOCA; andii. then to the Deed Creditors in shares equivalent to the respective

dividends they would receive on a winding up, were that trust funddivided between the Administered Companies in liquidation pro ratato the total proven debts of Deed Creditors accepted by the DeedAdministrators.

20. Upon satisfaction of the conditions precedent to the Conditional Mortgage theAdministered Companies will be released to the control of the Proponents asdirectors of those companies.

21. The Deed Creditors' provable claims against the Administered Companies arisingprior to the appointment of the Administrators to those Companies will be subject to amoratorium during the term of the DOCA and compromised under the DOCA bypayment to the Deed Creditors of their entitlement under the DOCA and shall uponthat compromise arise solely under the DOCA.

22. The rights of creditors related to the Proponents arising against the AdministeredCompanies arising prior to the administration shall not be compromised by the DOCAand shall survive the administration of the Administered Companies, provided that

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SAN_113644_1440118

there shall be a moratorium on enforcement of those rights during the term of theDOCA.

23. The Proponents may:

a. cause any Deed Creditors of any Administered Company to be paid in full; orb. negotiate with any Deed Creditors of any Administered Company the written

release of their entire entitlement in the Deed Fund,prior to payment of those creditors from the Deed Funds and upon provision ofevidence of such payment to the reasonable satisfaction of the Deed Administratorsof such payment or release, those Deed Creditors who have been so paid or haveprovided such a release shall have no further claim under the DOCA Fund.

24. Where all of the Deed Creditors of an Administered Company are paid in full orprovide releases as contemplated in clause 23, the Deed Administrators shall releasethat company from Administration and confirm the effectuation of the DOCA inrespect of that company.



Appendices

Uscon Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed)

Remuneration Request Approval Report Page 1 of 20

Part 1: Declaration

We, Shaun McKinnon and Michael Gerard McCann, of Grant Thornton Australia Limited have undertaken a proper assessment of this remuneration claim for our appointment as Grant Thornton Australia Limited, of Uscon Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed), in accordance with the law 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.

Part 2: Executive Summary To date, the following Administrators’ remuneration has been approved: (a) For the period 12 August 2013 to 4 September 2013 in the amount of $12,897.00 (excluding GST); and (b) For the period 5 September 2013 to 30 September 2013 in the amount of $9,401.00 (excluding GST). No remuneration approved by creditors has been drawn as at the date of this report.

Period Report

Reference Amount (ex GST)

Current remuneration approval sought:

Voluntary Administration Resolution 1: 05/09/2013 – 30/09/2013 Section 5 $11,996.00 Less: Discount: 05/09/2013 – 30/09/2013 Section 5 ($2,500.00)

01/10/2013 – 21/10/2013* Section 5 $8,800.00

Less: Fees previously approved: 05/09/2013 – 30/09/2013 ($9,401.00) Total Resolution 1 $8,895.00 Liquidation (if applicable) Resolution 2a: Commencement of liquidation to finalisation* Section 5 $7,500.00



Period Report Reference

Amount (ex GST)

Voluntary Administration (if a Deed is approved by creditors) (if applicable)

Resolution 2b: From meeting of creditors to execution of the Deed*

Section 5 $3,200.00

Deed (if approved) (if applicable) Resolution 3: For the period of the Deed of Company Arrangement to its effectuation*

Section 5 $7,500.00

* 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. Please refer to report section references detailed above and on the previous page for full details of the calculation and composition of the remuneration approval sought. The remuneration for the period 17 September 2013 to 30 September 2013 was more than the estimate of costs provided in the previous report to creditors of $2,500.00. This increase of $2,595.00 is attributable to additional time spent dealing with the following:

- Preparing reports to creditors;

- Investigations into the proposed establishment of a creditors trust including the regulatory guide for Administrators issued by the Australian Securities and Investments Commission. Refer Regulatory Guide 82 a copy of which can be obtained from the following web address: http://www.asic.gov.au/asic/pdflib.nsf/lookupbyfilename/creditors_trusts_guide.pdf/$file/creditors_trusts_guide.pdf



- Liaising with the Directors (and their representatives) along with the Administrators legal representatives in respect to the proposed Deed/creditors trust; and

- Preparing for the second meeting of creditors.

Please note that the additional remuneration being sought has been decreased from $2,595.00 to $95.00 as the Administrators have agreed to discount their remuneration for this period by $2,500.00.

Part 3: Description of work completed and to be completed

Resolution 1

“The remuneration of the Administrators, their partners and staff, incurred in relation to the Administration of Uscon Pty Ltd for the period 5 September to 30 September 2013, not previously approved, and for the period 1 October 2013 to 21 October 2013, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton – Recovery & Reorganisation Services (plus GST). Such remuneration is to be capped at $8,895.00 plus GST and should be drawn to the extent of available funds.”

Company Uscon Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed)

Practitioner(s) Shaun McKinnon and Michael Gerard McCann Firm Grant Thornton Australia Limited

Administration Type Voluntary Administration

Period From 05/09/2013 To 30/09/2013

Task Area General Description Includes

Creditors (25.30 hours) ($9,098.50)

Creditor Enquiries Receive and follow up creditor enquiries via telephone

Maintaining creditor enquiry register

Review and prepare correspondence to creditors and their representatives via facsimile, email and post




Secured creditor reporting

Preparing updates to secured creditor

Responding to secured creditor’s queries

Dealing with proofs of debt

Receipting and filing Proofs of Debt when not related to a dividend

Meeting of 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

Administration (5.2 hours) ($2,117.50)

Correspondence

Document maintenance/file review/checklist

Filing of documents

Updating checklists

Planning/Review Discussions regarding status of administration

Investigations (0.1 hours) ($23.00)

Conducting investigation

Preparation of comparative financial statements

Assets (1.6 hours) ($584.00)

Forecasting Prepare cash flow forecast

Statutory (0.8 hours) ($173.00)

ASIC Forms Preparing and lodging ASIC forms

Correspondence with ASIC regarding statutory forms






Period From 01/10/2013 To 21/10/2013


Creditors ($6,300.00)









Meeting of Creditors Preparation of circular to creditors to advise of adjourned meeting of creditors

Consider the Deed of Company Arrangement proposed

Preparation of adjourned meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting

Employees ($500.00)

Employees enquiry Receive and follow up employee enquiries via telephone

Maintain employee enquiry register


Calculation of Calculating employee entitlements




entitlements Reviewing employee files and company’s books and records

Reconciling superannuation accounts

Reviewing awards

Administration ($1,000.00)

Correspondence


Filing of documents

Updating checklists

ASIC Form 524 and other forms

Preparing and lodging ASIC forms including 505, 524, 911 etc


Statutory ($1,000.00)

ATO & other statutory reporting

Preparing BAS’

Completing PAYG Payment Summaries/group certificates



Part 4: Calculation of Remuneration Please find attached a calculation of remuneration by staff and task area. Uscon Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed)

Part 4 Calculation of remuneration by staff and task area - 5 September 2013 to 30 September 2013

$/Hr (excl. GST) Total Hours Hrs $ Hrs $ Hrs $ Hrs Hrs $

550 1.1 0.40 220.00 0.70 385.00 - - - - -

550 3.3 2.70 1,485.00 0.60 330.00 - - - - -

450 5.8 - - 5.80 2,610.00 - - - - -

450 3.5 - - 3.50 1,575.00 - - - - -

365 2.3 - - 0.70 255.50 - - - 1.60 584.00

365 0.9 0.10 36.50 0.80 292.00 - - - - -

365 1.8 - - 1.80 657.00 - - - - -

330 1.0 - - 1.00 330.00 - - - - -

270 0.1 0.10 27.00 - - - - - - -

270 0.3 - - 0.30 81.00 - - - - -

270 6.5 - - 6.50 1,755.00 - - - - -

230 0.5 - - 0.50 115.00 - - - - -

230 0.6 - - 0.10 23.00 - - 0.50 - -

230 3.5 0.30 69.00 3.00 690.00 0.10 23.00 0.10 - -

175 0.4 0.40 70.00 - - - - - - -

175 0.2 - - - - - - 0.20 - -

175 1.1 1.10 192.50 - - - - - - -

175 0.1 0.10 17.50 - - - - - - -

GROSS WIP 33.0 $11,996.00 5.2 $2,117.50 25.3 $9,098.50 0.1 $23.00 0.8 $173.00 1.6 $584.00

LESS DISCOUNT ($2,500.00)

NET WIP (EXCL. GST) $9,496.00

$949.60

NET WIP (INCL. GST) $10,445.60

AVERAGE HOURLY RATE (EXCLUDING GST) $363.52 $407.21 $359.62 $230.00 $216.25 $365.00

IPAA Tasks

Statutory Assets

Employee Position $

Total Cost excl.

GST ($)

Admin Creditors Investigations

Michael McCann Partner $605.00 -

Shaun McKinnon Partner $1,815.00 -

Alison Harness Senior Manager $2,610.00 -

Shane Smith Senior Manager $1,575.00 -

Jonathan Kairuz Supervisor $839.50 -

Lauren McMullan Supervisor $328.50 -

Paula Smith Supervisor $657.00 -

Thomas Wood Senior Accountant $330.00 -

Aaron Previte Accountant $27.00 -

Camille Grassick Accountant $81.00 -

Lyle Fernandes Accountant $1,755.00 -

Caitlin Wilkinson Graduate $115.00 -

Courtney Butler Graduate $138.00 115.00

Holly Millman Graduate $805.00 23.00

Emily Midson Secretary $70.00 -

Lynelle Guerin Secretary $35.00 35.00

Pippa Hocken Secretary $192.50 -

Tanya Brow n Secretary $17.50 -

GST



Part 5: Description of work from the commencement of liquidation to finalisation

Resolution 2a

“That should the Company be wound up, that the remuneration of the Liquidators, their partners and staff for work carried out in relation to Uscon Pty Ltd be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $7,500.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.”




Period From 21/10/2013 To Finalisation






Correspondence with committee of inspection members if appointed




Creditor reports Preparing reports to creditors



Corresponding with OSR and ATO regarding Proofs of Debt when not related to a dividend




Final Meeting of Creditors

Preparation 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 minutes of meetings with ASIC

Responding to stakeholder queries and questions immediately following meeting

Employees ($2,000.00)

Employees enquiry

Receive and follow up employee enquiries via telephone



Preparation of letters to employees advising of their entitlements and options available

Receive and prepare correspondence in response to employees objections to leave entitlements

FEG Correspondence with DEEWR in respect to FEG

Preparing notification spreadsheet

Preparing DEEWR quotations

Preparing DEEWR distributions

Calculation of entitlements

Calculating employee entitlements

Reviewing employee files and company’s books and records

Reconciling superannuation accounts

Reviewing awards

Employee dividend Correspondence with employees regarding dividend

Correspondence with ATO regarding SGC proof of debt

Calculating dividend rate

Preparing dividend file

Advertising dividend notice




Preparing distribution

Receipting Proofs of Debt

Adjudicating Proofs of Debt

Ensuring PAYG is remitted to ATO

Investigation ($1,000.00)

Conducting investigation

Reviewing company’s books and records

Review of specific transactions and liaising with Directors regarding certain transactions

Liaising with Directors regarding certain transactions

Preparation of investigation file

Lodgement of investigation with the ASIC

Preparation and lodgement of supplementary report if required

Litigation / Recoveries (if applicable)

Internal meetings to discuss status of litigation

Preparing brief to solicitors

Liaising with solicitors regarding recovery actions

Attending to negotiations

Attending to settlement matters

ASIC reporting Preparing statutory investigation reports

Liaising with ASIC

Dividend ($1,000.00)

Processing proofs of debt (if applicable)

Preparation of correspondence to potential creditors inviting lodgement of Proofs of Debt

Receipt of Proofs of Debt

Maintain Proofs of Debt register


Request further information from claimants regarding Proofs of Debt

Preparation of correspondence to claimant advising outcome of adjudication

Dividend procedures Preparation of correspondence to creditors advising of intention to declare dividend




(if applicable) Advertisement of intention to declare dividend

Obtain clearance from ATO to allow distribution of Company’s assets

Preparation of dividend calculation

Preparation of correspondence to creditors announcing declaration of dividend

Advertise announcement of dividend

Preparation of distribution

Preparation of dividend file

Preparation of payment vouchers to pay dividend

Preparation of correspondence to creditors enclosing payment of dividend

Administration ($1,000.00)

Correspondence


First month, then 6 monthly administration review

Filing of documents

File reviews

Updating checklists

Bank account administration

Preparing correspondence closing accounts

Requesting bank statements

Bank account reconciliations

Correspondence with bank regarding specific transfers

Finalisation Notifying ATO of finalisation

Cancelling ABN / GST / PAYG registration

Completing checklists

Finalising WIP





Books and records/ storage

Dealing with records in storage

Sending job files to storage


ASIC Form 524 and other forms

Preparing and lodging ASIC forms including 505, 524, 911 etc



Preparing BAS’

Completing PAYG Payment Summaries/group certificates



Part 6: Description of work from the meeting of creditors to execution of the Deed

Resolution 2b

“That should the Company’s creditors vote in favour of a Deed of Company Arrangement, that the remuneration of the Administrators, their partners and staff for work carried out in relation to Uscon Pty Ltd for the period 22 October 2013 to 11 November 2013, being the period to execution of the Deed, be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $3,200.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.”




Period From 22/10/2013 To 11/11/2013






Correspondence with committee of inspection members if appointed





Dealing with proofs of Receipting and filing Proofs of Debt when not related to a dividend




debt Corresponding with OSR and ATO regarding Proofs of Debt when not related to a dividend

Employees ($500.00)

Employees enquiry




Administration ($500.00)

Correspondence


Filing of documents

Updating checklists

Bank account administration

Bank account reconciliations

Correspondence with bank regarding specific transfers



Deed of Company Arrangement

Various correspondence to stakeholders and solicitors relating to the Deed preparation

Review of draft Deed

Execution of Deed

Compliance monitoring of the requirements of the Deed


Preparing BAS’



Part 7: Description of work for the period of the Deed of Company Arrangement to Effectuation of the Deed

Resolution 3

“That the remuneration of the Deed Administrators, their partners and staff for work carried out in relation to Uscon Pty Ltd for the period 12 November 2013 to the effectuation of the Deed, be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $7,500.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.”



Administration Type Deed of Company Arrangement

Period From 12/11/2013 To Effectuation of the Deed








Employees ($500.00)

Employees enquiry



Review and prepare correspondence to creditors and their representatives via facsimile, email and post Statutory ($2,000.00)

Deed of Company Arrangement

Various correspondence to stakeholders and solicitors relating to the monitoring of the Deed terms

Filing of Deed with ASIC




Compliance monitoring of the requirements of the Deed

Any other tasks associated with the Deed including its finalisation


Preparing BAS’

Dividend ($4,000.00)

Processing proofs of debt (if applicable)

Preparation of correspondence to potential creditors inviting lodgement of Proofs of Debt

Receipt of Proofs of Debt

Maintain Proofs of Debt register


Request further information from claimants regarding Proofs of Debt

Preparation of correspondence to claimant advising outcome of adjudication

Dividend procedures (if applicable)

Preparation of correspondence to creditors advising of intention to declare dividend

Advertisement of intention to declare dividend

Obtain clearance from ATO to allow distribution of Company’s assets

Preparation of dividend calculation

Preparation of correspondence to creditors announcing declaration of dividend

Advertise announcement of dividend

Preparation of distribution

Preparation of dividend file

Preparation of payment vouchers to pay dividend

Preparation of correspondence to creditors enclosing payment of dividend



Part 8: Schedule of remuneration methods and hourly rates

Remuneration Methods

There are four basic methods that can be used to calculate the remuneration charged by an Insolvency Practitioner. They are:

a. Time based / hourly rates This is the most common method. The total fee charged is based on the hourly rate charged for each person who carried out the work multiplied by the number of hours spent by each person on each of the tasks performed.

b. Fixed Fee The total fee charged is normally quoted at the commencement of the administration and is the total cost for the administration. Sometimes a Practitioner will finalise an administration for a fixed fee.

c. Percentage The total fee charged is based on a percentage of a particular variable, such as the gross proceeds of assets realisations.

d. Contingency The practitioner’s fee is structured to be contingent on a particular outcome being achieved.

Method chosen

Given the nature of this administration we propose that our remuneration be calculated on a time based / hourly rated basis. This is because:

• It ensures that creditors are only charged for work that is performed. Our time is recorded and charged in six minute increments.

• We will be required to perform a number of tasks that do not specifically relate to asset realisation.

Explanation of Hourly Rates

The rates for our remuneration calculation are set out in the attached table together with a general guide showing the qualifications and experience of staff engaged in the administration and the role they take in the administration. The hourly rates charged encompass the total cost of providing professional services and should not be compared to an hourly wage. Refer Appendix C.



Part 9: Statement of Remuneration Claim Resolution 1 “The remuneration of the Administrators, their partners and staff, incurred in relation to the Administration of Uscon Pty Ltd for the period 5 September to 30 September 2013, not previously approved, and for the period 1 October 2013 to 21 October 2013, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton – Recovery & Reorganisation Services (plus GST). Such remuneration is to be capped at $8,895.00 plus GST and should be drawn to the extent of available funds.” Resolution 2 (whichever is applicable) (a) Description of work from the commencement of liquidation to finalisation “That should the Company be wound up, that the remuneration of the Liquidators, their partners and staff for work carried out in relation to Uscon Pty Ltd be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $7,500.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.” (b) Description of work from the meeting of creditors to execution of the Deed “That should the Company’s creditors vote in favour of a Deed of Company Arrangement, that the remuneration of the Administrators, their partners and staff for work carried out in relation to Uscon Pty Ltd for the period 22 October 2013 to 11 November 2013, being the period to execution of the Deed, be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $3,200.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.”



Resolution 3 (if applicable) Description of work from execution of the Deed to Effectuation of the Deed

“That the remuneration of the Deed Administrators, their partners and staff for work carried out in relation to Uscon Pty Ltd for the period 12 November 2013 to the effectuation of the Deed, be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $7,500.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.” Part 10: Disbursements Disbursements are divided into three types: A, B1, B2.

A disbursements are all externally provided professional services. These are recovered at cost. An example of an A disbursement is legal fees.

B1 disbursements are externally provided non-professional costs such as travel, accommodation and search fees. B1 disbursements are recovered at cost.

B2 disbursements are internally provided non-professional costs such as photocopying, printing and postage. B2 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.

I have undertaken a proper assessment of disbursements claimed for the Company, in accordance with the law and applicable professional standards. I am satisfied that the disbursements claimed are necessary and proper.

All disbursements are claimed at cost except for faxing which is charged as follows:

- Local - $1 per page

- National - $2 per page



- International - $3 per page.

Creditors have the right to question the incurring of disbursements and can challenge disbursements in court.

Part 11: Report on Progress of the Administration Please refer to the attached report and the report to creditors dated 16 September 2013 for an update on the progress of the Administration.

Part 12: Queries Arrangements can be made to inspect the time and costs records which give greater detail of the work performed by contacting Lyle Fernandes of this office on (07) 3222 0394. We would appreciate it if this could be done no later than 2:00pm on Friday, 18 October 2013 to allow sufficient time for a review of the information.

Part 13: Information Sheet

The ASIC Creditors Information Sheet (INFO 85) that outlines further information regarding the remuneration approval and payment process can be obtained from the following web address: www.asic.gov.au/insolvencyinfosheets.


C. Charge out rates

Appendices

Grant Thornton Recovery and Reorganisation Services

Charge Rates

Staff Classification Rate Per Hour (QLD)

from 1/7/13*

Partner/Director/Appointee $550 Associate Director $495 Senior Manager $450 Manager $405 Supervisor/Client Manager $365 Senior Accountant $330 Accountant $270 Graduate $230 Under Graduate $190 Secretary $175 EDP $175

* Rates are exclusive of GST



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F. Proxy form

Appendices

FORM 532 Regulation 5.6.29

Corporations Act 2001 (Cwlth)

APPOINTMENT OF PROXY CREDITORS MEETING

USCON PTY LTD

(RECEIVERS AND MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) ACN 058 849 479

I/We (Note 1)________________________________________________________________ (name of creditor)

Of________________________________________________________________________ address of creditor)

A creditor of Uscon Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) hereby appoint:

_______________________________________________________________________(name of proxy)(Note 2)

Of__________________________________________________________________________(address of proxy)

Or in his absence,_____________________________________________________(name of alternative proxy)

Of_________________________________________________________________(address of alternative proxy)

As my/our special/general (Note 3) proxy to vote at the concurrent meeting of creditors to be held in the above matter on 21 October 2013 or at any adjournment thereof. If special proxy please select ONE of

the following:

To vote specifically in the following manner: FOR AGAINST ABSTAIN

1. The remuneration of the Administrators, their partners and staff, incurred in relation to the Administration of Uscon Pty Ltd for the period 5 September 2013 to 30 September 2013, not previously approved, and for the period 1 October 2013 to 21 October 2013, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton – Recovery & Reorganisation Services (plus GST). Such remuneration is to be capped at $8,895.00 plus GST and should be drawn to the extent of available funds.

2. That should the Company’s creditors vote in favour of a Deed of

Company Arrangement that the remuneration of the Administrators, their partners and staff for work carried out in relation Uscon Pty Ltd for the period 22 October 2013 to 11 November 2013, being the period prior to execution of the Deed be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $3,200.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.

3. Please choose one of the below

a) That the Company execute a Deed of Company Arrangement; OR

b) That the Company be Wound Up; OR

c) That the Voluntary Administration should end.

FOR AGAINST ABSTAIN

4. Please choose one of the below a) That should the Company execute a Deed of Company

Arrangement, that the Committee of Inspection be appointed; OR

b) That should the Company be wound up, that a Committee of Inspection be appointed.

5. Please choose one of the below

a) That should the Company be wound up, that the remuneration of the Liquidators, their partners and staff for work carried out in relation to Uscon Pty Ltd be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $7,500.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service; OR

b) That the remuneration of the Deed Administrators, their partners and staff for work carried out in relation to Uscon Pty Ltd for the period 12 November 2013 to the effectuation of the DOCA, be hereby calculated by reference to the current and future hourly rates of Grant Thornton – Recovery and Reorganisation Services. Such remuneration is to be capped at $7,500.00 excluding GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any increase to hourly rates charged will not exceed 10% of the current hourly rates of Grant Thornton – Recovery and Reorganisation Service.

6. That should the Company be wound up, the Liquidator be authorised

to destroy the books and records of the Company six months after the date of its deregistration, subject to consent of the Regional Commissioner of the Australian Securities and Investments Commission in accordance with Section 542(4) of the Corporations Act 2001.

DATED this day of 2013 Signature ___________________________(Note 4)

CERTIFICATE OF WITNESS (NOTE 5)

I, of , 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 before he attached his signature or mark to the instrument. DATED this day of 2013 Signature of Witness____________________________ Description ___________________________________ Place of Residence ______________________________ NOTE: 1. If a firm, strike our “I” and set out the full name of the firm. 2. Insert the name, address and description of the person appointed. 3. If a special proxy add the words “to vote for” or the words “to vote against” and specify the particular resolution. 4. The signature of the creditor, contributory, debenture holder or member must not be attested by the person nominated as proxy. 5. This certificate is to be completed only where the person giving the proxy is blind or incapable of writing.

UsconPty Ltd (Receivers and Managers ... - grantthornton.ie

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UsconPty Ltd (Receivers and Managers ... - grantthornton.ie