Family infighting at directional drilling company Arogen has left more than 100 Hunter Valley business millions of dollars out of pocket.
The Kurri Kurri based company was last month placed into administration with debts totalling almost $4.5 million, although the Newcastle Herald today reports this could possibly be as high as $7.3 million.
The dispute behind the company’s downfall is between family matriarch Roslyn O’Meley and her son Tony and his wife Ellie.
According to a report prepared for a creditors meeting on Friday, the tax office is owed about $1million, and trade creditors, the majority of which are small Hunter businesses, are owed more than $4.2million.
In the report, administrator Paul Gidley, from business insolvency firm Shaw-Gidley, said the ‘‘family ownership dispute … legal costs … and general mismanagement of the company’s affairs’’ were significant contributors to the company’s demise.
Another contributing factor is said to be a multimillion-dollar contractual dispute with development giant Leightons.
Last month Gidley said the return of creditors’ money was almost entirely dependent upon a multimillion-dollar payment currently in dispute between the company and development giant Leightons.
In October last year, an adjudicator ruled that Leightons pay Arogen $5.7million following a dispute over a Sydney project.
But uncertainty clouds the payment as Leightons is currently challenging the judgment.
Company records show that Tony O’Meley was a director of Arogen until January 17 this year when his mother Roslyn, the company secretary, had him removed.
After which she took a sole directorship position and moved to place the company into administration.
Tony O’Meley took action, challenging his mother’s administrator appointment in the Supreme Court, but he failed to show up to the first hearing.
The administrator’s report also brings into question large sums of cash taken from company accounts in the months before it entered voluntary administration.
One withdrawal made by Tony O’Meley amounted to almost $500,000 for backpay, which is ‘‘yet to be validated’’.
Another $140,000 payment was made to Park Properties which owned a Sydney property registered to Ellie O’Meley.
There were also two more lump sum payments to Ellie O’Meley totalling $204,666.
‘‘There appears to be no commercial reason for [these withdrawals],’’ Gidley said in his report.
Creditors have also queried other payments, including $150,000 paid to the solicitors representing Tony and Ellie O’Meley.
Gidley confirmed on Wednesday that ‘‘certain monies had been dispersed’’, and those transactions were now being examined.
Gidley has recommended that creditors accept a Deed of Company Arrangement on Friday that would allow the company to continue trading and possibly recoup more money for creditors.
The money is said to possibly come from Leightons and ‘‘related O’Meley entities’’.
In the meantime, creditors would have to accept just 27.56¢ in the dollar owed to them.
‘‘It’s bloody farcical,’’ one Hunter Valley-based creditor told the Newcastle Herald.
‘‘I hope they’re all eating well, because I can’t afford to feed my kids at the moment.’’