Liquidators of the Ellendale diamond mine are poised to launch civil action against parent company Kimberley Diamonds and the officers of its collapsed subsidiary.
In an update circulated to creditors, liquidators from Jirsch Sutherland says they expect to begin legal action in early October, targeting ASX-listed Kimberley Diamonds (KDL) and “various officers” of subsidiary Kimberley Diamond Company, which was sent into administration at the end of June owing staff and trade creditors tens of millions.
The insolvency firm would not comment on details of the proposed action yesterday.
But Jirsch Sutherland’s Sule Arnautovic had previously raised concerns about a range of issues at Ellendale before he was installed as administrator in late June.
These included concerns about payments to related parties of directors, KDL’s move to register a secured debt over Ellendale’s assets only a month before calling in administrators, and the fact that KDL took possession of $5.8 million from the sale of diamonds only a day before sacking Ellendale’s workers and closing down the mine.
In the update, Mr Arnautovic told creditors the process of recovering cash from Ellendale’s remaining assets was continuing.
The auction of the mine’s remaining plant and equipment in early September had raised about $3 million, he said, with the sale of its remaining diamond stocks — estimated in July at about 26,000 carats — likely to raise further cash for repayment of creditors.
Ellendale’s liquidators also had some good news for the company’s sacked workers, saying the Federal Government’s Fair Entitlement Guarantee scheme had paid in $3.2 million to cover some unpaid employee entitlements.
Mr Arnautovic said about 65 of Ellendale’s sacked workforce had received payments under the scheme, with further payments to the remaining eligible employees likely in the near term.
In a sign the September 16 arrest of KDL chairman Alex Alexander in Sydney on charges of misleading the sharemarket last year has not ended the corporate watchdog’s interest in the affairs of the one-time high flying diamond company, Mr Arnautovic told creditors he was still working with the Australian Securities and Investments Commission on an investigation into the workings of the company.
KDL Price at posting:
7.1¢ Sentiment: None Disclosure: Not Held
