Producers' nightmare as big guns demand cash
A "BLOODY nightmare" is how one Warwick livestock producer described receiving a letter this week insisting he repay more than $150,000 for sheep he sold to Killarney Abattoir four years ago.
The producer, who withheld his name, is one of a string of suppliers to the former Leitch Pastoral-owned abattoir to receive letters from global accounting firm Grant Thornton this week asking for a "redemption of preferential payments to unsecured creditors".
These letters called for unsecured creditors - in this instance those who supplied goods or services to the former abattoir - who received what Grant Thornton claims under law are "preferential payments", to refund the monies by Monday of this week.
It remains unclear if that is the deadline given to all the creditors being targeted.
Under current laws those with first call on the assets of a company being wound up are the Tax Office, a secured creditor such as Leitch financier Rural Bank, and company employees.
The Grant Thornton demand is a devastating twist in a saga which started when Killarney Abattoir suspended operations in February 2010 putting more than 130 locals out of work.
By March the business group, which included Condamine River Meats and Pittsworth Food Processors, was in receivership owing 200 creditors more than $7m.
The collapse came just months after Leitch Pastoral Group owner Dudley Leitch had publicly reassured livestock producers and other business suppliers his operations were financially viable.
Yesterday one anxious local producer said he was struggling to understand how it could happen.
"It is a bloody nightmare, it just makes you want to throw your hands up and give in," he told the Daily News.
"We supplied lambs in good faith to Killarney Abattoir and we were paid for them and now they want the money back.
"I have sought legal advice and under the Corporations Act of 2001; Grant Thornton can legally redeem this money in the interests of the secured creditors, or in this case the Rural Bank.
"For some rural people, who are already depressed this could be what pushes them to go all the way. It's that stressful."
He said he had enlisted the services of a lawyer specialising in company insolvency and was keen to see locals join forces with him to keep their payments.
"The only way we can fight this, is if we stand together."
Another Southern Downs primary producer who received a letter from Grant Thornton, has warned if the case for redemption was successful it could forever alter the way the livestock industry does business.
"If Grant Thornton is successful and we are forced to pay back this money, it could have serious implications for our industry," he said.
"I sold livestock this morning. Before I deliver them should I ring and get a director's guarantee they are trading solvently?
"There is no way that could work commercially if you had to do it before every transaction. It just makes me think we should all have a $2 trading company so if something like this happens again there are no bickies in the tin. when they try to rattle it."
Other creditors who have received a Grant Thornton demand are understood to be seeking legal advice, with suggestions yesterday a united action could be formed.