Ann: Sale of RevRoof Pty Ltd and Credit Loss Provisioning, page-33

Grant Thornton as receiver reported that Rev Roof made steel coil products for customers, granted security to the customers over them, then created a second invoice for Earlypay's factoring. Meanwhile the customers were only required to make payment for the goods if and when they ordered finished product. (I guess they ramped up order and production to create workflow which in turn could be paid for by factoring, without putting their customers out of pocket.) Grant Thornton said that $8.5 mil may be in jeopardy, from June to December, but the scheme could have been running earlier. Rev Roofing's lawyers claim that an Earlypay employee was aware of the scheme at all times which included the addition of labour and product costs before invoicing and factoring. It was uncovered by a forensic accountant investigating as part of a dispute between secured creditors and the report states that the 'Customer Owned Materials' invoices totalling $8.5 mil would not be available to receivers for creditors.

The sale of the business to Design Group was approved by a court recently but the court also ordered that only $5 mil (inc. $3.8 mil to Earlypay and $1.5 mil to NAB) be disbursed, with the remainder (unknown) to be held in trust pending the outcome of a dispute between secured creditors.

Very messy.