The inside story of the Walton Construction collapse
530 Collins Street is one of Melbourne's largest premium office buildings ideally situated in the heart of the corporate precinct.
So says the welcome on the website for the GPT Group-owned and operated 5.5 star energy rated building where the fate of Sunshine Coast sub contractors owed more than $2m by Walton Construction Pty Ltd, was ultimately decided.
Up in the rarified air of the 17th and 18th floors sit the home of a number of companies that have feasted on the juicy bits left over from the Walton collapse.
Of the 40 projects Walton had running this year, 31 were transferred to two companies - Peloton Builders Pty Ltd and Lewton Asset Services - both connected to its former managing director Craig Walton.
In Brisbane Walton Construction (Qld) Pty Ltd's 190 Montpelier Road, Bowen Hills address changed early this month to be that of Peloton in the course of a day.
While subbies from Townsville to Melbourne chase their money, holding faint hopes that they can access funds still held by big Walton clients like Aldi, Coles and Woolies, many of the same people involved in the company's collapse have rebranded and moved on.
How this can be allowed to happen is the question the subbies are desperately trying to get politicians to address.
How it happened is a story that involves two floors of one office building in the heart of Melbourne.
Walton Construction (Australia) Pty Ltd and Walton Construction (Queensland) Pty Ltd were placed under administration on October 4 this year owing millions of dollars to sub contractors across Queensland, NSW and Victoria.
It was clear well before then that the company was in serious trouble.
Its 2012 financial audit, submitted to ASIC on December 19 last year showing a 12-month loss of more than $14m, was heavily qualified.
A Part 2 report in April by auditor GMK partners also raised questions about its viability as a going concern highlighting unaudited management accounts for the eight months from July 1, 2012 to February 28, 2013, of nearly $7m.
Well before Craig Walton on October 2 sent staff a document entitled "Public Announcement" informing that the group was winding up, the ground was being laid to leave the mess behind.
"We have done everything possible to soften the blow,'' Mr Walton said in the statement.
"I feel so sad for the remaining employees and their families and the subcontractors involved in a small number of projects.
"Six months ago we were looking at a disaster scenario. Today is not good, but most of or people have a good future. Those without work today know that their credentials for future work are enhanced by the job they have done for Walton Construction which has enjoyed a great reputation in the industry."
The year before on June 27, 2012 a company called PPJ Group Holdings was registered with the Australian Securities and Investments Corporation.
On August 5 this year it changed its name to Peloton Builders Pty Ltd.
On August 27 Craig Walton was registered as the company's nominated licensee with the Queensland Building Services Authority, able to turnover between $3m and $12m annually.
Peloton Builders Pty Ltd's business address is care-of the Mawson Group, Level 17, 530 Collins Street, Melbourne.
Lewton Asset Services was registered on August 6 this year with Daniel Casey as director and company secretary. Its registered and contact addresses are the 17th and 18th floor of 530 Collins Street.
Mr Casey is the former general manager fitout, Customer Care Division for Walton Construction Pty Ltd.
His company Riu Pty Ltd beneficially holds Lewton's 100 by $1 shares
On September 24 Rudolf Johannes Jona replaced Julian Kirzner as director of Peloton whose 480,100 shares are held by RZL Holdings (Qld) Pty Ltd.
RZL Holdings, which was registered on the same day as Peloton, also gives its address as the 17th level of 530 Collins Street.
Its first director and company secretary Phillip Spry was also appointed on August 5. He was joined as a director by Patrick McCurry on September 26.
On October 9 Mr Spry ceased to be registered as the holder of the company's 100 by $1 shares, replaced by Mawson Beneficiary Pty Ltd.
Mawson Group Holdings, which occupies officers on the 17th and 18th floors of 530 Collins Street, is the hub in the wheel of a group of entities that have replaced Walton and are now servicing its profitable contracts.
Its directors Julian Kirzner, Stephen Knapp and Patrick McCurry are also directors of Mawson Beneficiary Pty Ltd which was registered on April 3, 2012.
The companies Staple Elements Pty Ltd (40 shares) owned by Mr Kirzner, Peemac Corporation Pty Ltd (40 shares) owned by Mr McCurry and Stanala Pty Ltd (20 shares) owned by Mr Knapp, own both Mawson Group Holdings and Mawson Beneficiary Pty Ltd.
Mr McCurry is director of QHT Investments Pty Ltd, also located upstairs at 530 Collins Street.
Its 100 by $1 shares are beneficially held by Providence Growth Solutions Pty Ltd, another inhabitant of the 17th floor.
The directors of Providence are Steve Knapp and Patrick McCurry. Mr McCurry's company Peemac owns the two guardian shares and 80 of its 100 ordinary shares. The other 20 are owned by Mr Knapp's Stenala.
At the October 15 Melbourne meeting of creditors it was revealed that QHT Investments Pty Ltd had purchased for the sum of $30,000 the $18.9 million debt owed by Walton Construction (Australia) Pty Ltd to Walton Construction (Qld) Pty Ltd.
For about one sixteenth of the amount owed each of two sub-contractors on the Nambour Coles project QHT had effectively bought itself control of the Walton administration.
According to one creditor at that meeting who has subsequently lodged a formal complaint with ASIC, the administrator Lawler Draper Dillon told creditors that Walton had been referred to it by Mr McCurry of the Mawson Group.
The creditor said a show of hands resulted in 37 in favour of replacing Lawler Draper Dillon with another administrator Rodgers Reidy with only three against.
He said a lawyer then proposed a poll due to the "closeness" of the vote.
These written ballots were weighted on the basis of individual debt meaning that even though 41 favoured dumping Lawler Draper Dillon as adminstrators with only 23 against - of which 17 were Walton employees - the resolution was deemed to have failed.
The QHT Investments Pty Ltd debt of $18.9m purchased for $30,000 won the day.
A commercial lawyer who spoke in confidence to the Daily said the system of insolvency practice is Australia was long overdue for an overhaul.
"It is part of the legal system,'' he said. The law is like the Ritz Hotel. Everyone is entitled to stay there if they can afford it.''
WHO LIVES ON THE 17th FLOOR
Companies linked to the Walton administration and the businesses that toook over its profitable projects that give their principal place of business as Level 17, 530 Collins Street Melbourne and their ASIC contact address as Level 18 of the same building.
- Peloton Builders Pty Ltd
- RZL Holdings (Qld) Pty Ltd
- Lewton Asset Services Pty Ltd
- Mawson Group Holdings Pty Ltd
- Mawson Beneficiary Pty Ltd
- Riu Pty Ltd
- Staple Elements Pty Ltd
- QHT Investments Pty Ltd
- Providence Growth Solutions Pty Ltd
STATEMENT FROM PAT MCCURRY
Walton Construction desperately needed a white knight to salvage something from the business.
The previous owner was able to preserve the vast majority of the jobs and projects either by completing, transferring projects to competitors or novating via agreement in order to lessen the impact on his employees and creditors specific to those projects.
The aim was to maintain as many projects and jobs as possible.
Peloton is employing two-thirds of the Walton employees in Queensland.
Peloton is providing jobs and contracting work for many Queensland families and there are more projects in the pipeline.
The details of the transactions are commercial-in-confidence until they have been scrutinised by the administrator who has onerous statutory responsibilities. We look forward to the administrator's report
Mawson has and continues to work with many Australian companies and their owners in preserving and maximising value across multiple disciplines, from those seeking to grow their companies to those that are seeking to preserve and turnaround their companies, many of which do not make the press as a result of quiet and successful outcomes.
We have worked with well over a dozen insolvency firms over the past 5 years, the largest recipient of referrals to date would be Rogers Reidy, but typically we would recommend 2 or 3 insolvency firms where a formal appointment is required and requested.
Peloton has not engaged Craig Walton and he has no interest in the Peloton company. As part of the sale agreement he helped in the transition to Peloton. That transition has now finished.
QUESTIONS PUT BY THE DAILY
1. When did Walton Construction first approach the Mawson Group for advice?
2. How would you describe the affairs of that company at that time?
3. Peloton Builders was registered in that name on August 5 this year, its shares owned by RZL Holdings that had the same start date. Were the creation of Peloton Builders and RZL Holdings part of the services provided by the Mawson Group to assist Walton or did Mawson Group shareholders see an opportunity to secure the profitable projects held by Walton?
4. If this process is part of the service provided by Mawson is there an agreed exit date which would see Mawson executives divest their interest and if so to who?
5. In response to questions I put yesterday in relation to the inadvertent sending of advice to 100 trade sub contract creditors, the Peloton general manager said the company had purchased a substantial part of the Walton Construction business including its IT systems. When did negotiations for that sale commence, when was the deal finalized and for what amount?
6. QHT Investments Pty Ltd is a company that has Patrick McCurry as director and is owned by Providence Growth Solutions of which he and Steve Knapp are shareholders through their companies Peemac Corporation and Stenala. When did it acquire the $18.9 million debt owed by Walton Construction to Walton Construction (Qld), for what amount and for what purpose?
7. It is my understanding that Pat McCurry referred Walton Construction to the liquidator Lawler Draper Dillon. On what date did that occur?
8. How many times previously has the Mawson Group referred clients to Lawler Draper Dillon?
9. It has been put to me that Stirling Horne of Lawler Draper Dillon has provided professional advice to Pat McCurry. Can Mr McCurry confirm or deny that?
10. Peloton has engaged the services of Craig Walton as a consultant. Is that an indefinite appointment and if not for what period?