The administrators of failed Covid-19 testing firm Ellume have...

The administrators of failed Covid-19 testing firm Ellume have been granted leave to hold an urgent creditors meeting in a bid to save its $56m bailout deal with Hough Pharma.
A federal court judgment will allow the administrators to hold a meeting on Friday, April 28, with a shortened amount of time required to alert creditors that the meeting will take place.

The creditors will be asked to vote on extending the “long stop date” under the current deed of company arrangement (DOCA), to allow Hough more time to secure funding for the $US38m deal.

Brisbane-based Ellume called in administrators FTI Consulting in August after a bid to take on the US market resulted in losses of more than $100m.

Founded in 2009 by Sean Parsons, the company rose to prominence with its rapid testing technology and large contracts with the US government.

At the time it was placed in administration Ellume owed creditors an estimated $49m and employees about $1.69m. Convertible note holders, which included biotech Qiagen, were owed about $89m.

Ellume’s creditors, at a meeting held in December, voted overwhelmingly to back the deal with Hough, however the “end date” of the deal, of April 4, was not met.

“The deed administrators and Hough agreed to a number of extensions to extend completion of the DOCA to April 28, 2023 to allow Hough additional time to finalise its overseas funding of the contribution amount,’’ the judgment says.

However if the conditions of the deal are not met by April 28 - the so-called “long stop date” - the company will be wound up under the terms of the DOCA.

“Yesterday, the deed administrators received a request from Hough to vary the definition of long stop date to June 12, 2023,’’ the judgment says.

“That request was made on the basis that Hough requires additional time to finalise its funding of the contribution amount in order to attend to completion.’’

The judgment says under the DOCA creditors will receive returns ranging from 100 per cent for secured creditors to 0c-20c for unsecured creditors, but if the deal were to fall over, there would be no return to creditors at all.

“Based on current information, the deed administrators consider that if the DOCA is completed, there will be a likely return to priority creditors of 100c in the dollar, secured creditors of 100c in the dollar, Qiagen ... of 47c in the dollar, small claim creditors (whose claims are less than $20,000) of 50c in the dollar, noteholder creditors of between 15c to 35c in the dollar and other unsecured creditors between 0c to 20c in the dollar,’’ the judgment says.

“If the DOCA is not completed and the company is wound up and the assets of the company are sold, there would be no return to creditors (including priority creditors) other than a possible return to secured creditors, which would be less than would be received pursuant to the DOCA.’’

Federal Court Justice Kylie Downes agreed to the abridged notice for the meeting, which will now allow it to go ahead on Friday.

The judgment says Ellume has 965 creditors.