Investigation of Forge Group collapse underway

Forge Group administrators say it could take 12 months to investigate why the company failed and determine how much of the $800 million owed can be recovered.

More than 300 creditors gathered at a meeting in Perth on Friday where insolvency firm Ferrier Hodgson revealed Forge’s debt was expected to grow as more damage claims are lodged against the collapsed company.

Administrator Martin Jones said Forge’s 1600 employees were owed $15.5 million after they were let go without their final pay cheques or any entitlements.

More than $48.8 million is owed to around 1200 trade creditors while ANZ Bank has a claim of $289 million.

Insurance bond facility liabilities amount to $217 million and a further $24 million for hire-purchase facilities.

Jones said investigations into who was responsible for the company’s collapse would continue but warned it could be some time before there were clear answers, The Australian reported.

"It could take 12 months before we get to the bottom of these claims," Jones said.

He said accusations of questionable spending levelled against Forge managers would also be looked into, but stated the company’s collapse could be a case of poor management.

The creditor meeting comes as shareholders of Forge were asked to participate in a class action against the company.

Commercial litigation funder Bentham IMF announced that it would bankroll a legal claim against Forge, its former directors and management on behalf of shareholders.

The claim relates to the alleged deceptive and misleading conduct of the company’s continuous disclosure obligations in the lead up to its collapse.

Specifically the firm claims Forge should have known and disclosed the issues it was having at two power station projects which ultimately led to the company’s demise.

Forge confirmed it would go into administration after ANZ withdrew its financial support for the company after months of project blowouts and massive writedowns.

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