NBN, Vodafone contractor Daly International owing millions spared from liquidations

Former NBN contractor Daly International has been spared liquidation after its director Peter Daly agreed to pay the troubled company’s creditors the proceeds of sales of company assets and guarantee a cash payment for an additional $900,000.

The two payments are the key financial terms of a company deed that Daly successfully put to creditors last Friday. Under the terms of the deed, Daly International will be released from all claims by creditors apart from those by excluded creditors, and Daly will resume control and management of the company — albeit without powers to act as a company officer.

However, it’s not clear whether Daly International will resume trading. The company’s voluntary administrator, Peter Dinoris of Artemis Insolvency, said that it was his “understanding that the director does not intend to recommence trading at the completion of the DOCA”.

Dinoris also told CRN that he was not able to calculate the company’s total debt to unsecured creditors because he was still waiting for formal proof of debt documents from some of them.

As a result, it’s also not clear how much the company’s creditors can expect to recover from the deed fund.

“I [am] not presently in a position to provide you with details of the return to each class of creditors until such time as the company’s property has been fully recovered and the dividends to creditors finalised,” Dinoris said.

In May, the administrator told the company’s creditors it had uncovered claims from unsecured creditors for debts of about $5.1 million alongside $2.1 million worth of unpaid invoices. It also held a debt facility with its secured creditor, ANZ Bank’s cash flow finance provider Hermes Capital, however, Dinoris said it was “discharged in full” during the administration term.

Debts to unsecured creditors included $2.1 million worth of debts to priority unsecured creditors in the form of unpaid superannuation, wages and annual leave to Daly’s former employees. Dinoris said that the DOCA would provide for payment to be made in full to all of Daly’s priority unsecured creditors.

Artemis has also been negotiating with NBN and the NSW Telco Authority over performance guarantees they hold against Daly in the form of term deposits. Dinoris said those negotiations were not expected to impact the deed fund.

“Communications are continuing with NBN and NSW Telco Authority regarding their claims and the release of the bank guarantees,” he said before adding “It is not anticipated that there will be any shortfall experienced by this secured creditor that would be claimed from the remaining pool of funds”.

The list of telecommunications and IT related suppliers laying security claims against Daly is long.

Those appointed to Daly’s creditor inspection committee include Diversified Services, Advanced Network Services, Datatel Electrical & Communications, Goldstar Electrical and Goodwin Midson.

Other companies that have registered security interests include AFC Group, RF Industries, Fuji Xerox Finance and Investec Asset Finance.

 In May, Atremis reported that Daly International was in negotiations with Huawei for a proposal which included “provisions for the novation of debts owed to various creditors” and offers of employment to “various” Daly staff.

Dinoris included the results of his investigation into the dealings between Huawei and Daly in a detailed report to creditors late June. However, he said he was unable to make its contents available to CRN as it contained “information sensitive to the creditors”.