Hummmm - so the golden boy BB (who is lawyer!!) - couldn't draft...

Hummmm - so the golden boy BB (who is lawyer!!) - couldn't draft his way out of a paper bag.
TON VA reasons as per the administrators report today:

Our preliminary view is that, in addition to the reasons identified by the Directors, the Company’s
causes of failure are as a result of the following:

 It had entered into several uncommercial contracts which were drafted poorly and created
uncertainty in regard to quantum of claims. This made it difficult for the Directors to clearly
articulate the strategy of the Company and subsequently raise capital in the market.
 A contingent liability that may arise from the determination of the obligation for CGT in
Mozambique.
 The onerous corporate overhead structure that had been established. In particular, the
employment terms that were awarded to certain staff, and which made it difficult to complete
a meaningful restructure of the management group and downsize its costs structure,
particularly with limited funds.
 The strategic direction and inefficient use of funds with regard to the exploration




Oh - and it looks like the directors (read BB) have breached their fudiciary duties - looks like they know heads would roll and redundancy likely so they re-wrote their own contract so that they would get up to 2 years salary if made redundant!!!




Based on our investigations to date, we have identified that the directors may have committed
a breach under section 180 of the Act.

Section 180 of the Act provides that a director or other officer of a corporation must exercise
their powers and discharge their duties with the degree of care and diligence that a
reasonable person would exercise if they:
(a) were a director or officer of a corporation in the corporation's circumstances;
and
(b) occupied the office held by, and had the same responsibilities within the
corporation as, the director or officer.

We understand that certain directors on behalf of the Company varied employment contracts
with three (3) employees. The effect of these variations meant that upon certain events
(including redundancy), liabilities of between $666,000 to $1.3 million would crystallise and
become payable by the Company. The substantial entitlements relate to termination benefits
which include between 12 to 24 months’ salary upon termination.
This should be considered in the context of the Fair Work Act which states that a small business
which employs fewer than 15 employees is not required to pay redundancy when making an
employee redundant.




Note to all ADV holders..... Please keep all this stuff happening on TON in mind. Do not sign off on any contracts that BB has drafted without having an independant solicitor approve.

Good luck guys