Understanding the Beechwood Sale

On 29 July Deloitte announced the assets of Beechwood Homes were sold to Resibuildco. It is important to note that the purchaser did not actually buy the three Beechwood companies (LED Builders Pty Ltd; LED North Coast Pty Ltd and LED South Coast Pty Ltd). These 3 companies are still in existance with all Beechwood's liabilities - it is only their assets that have been sold.

The Opposition wants to know what sale price was achieved for Beechwood's assets because we fear there will be no money for unsecured creditors.

We want to know what Vero's role was in negotiating the sale. As the insurer, Vero had a liability to assist consumers up to 20% of the contract price. This liability is capped at $30 million. Specifically, we are concerned Vero has negotiated a special deal to reduce its own costs at the expense of other unsecured creditors.

We are calling for greater transparancy from the Receiver Deloitte; the buyer Resibuildco; and the insurer Vero.

The NSW Fair Trading Minister Linda Burney has a Home Building Service that is supposed to monitor and report on this type of event. We want the Minister to assure Beechwood Victims her Office has been vigilant; the transactions have been fair to all parties; and the new contracts retain all consumer rights and protections.

Beechwood Sale Source Documents:

Deloitte Media Release 29 July 2008
Circular to Home Buyers 30 July 2008
Minister Burney Media Release 29 July 2008
Catherine Cusack Media Release 29 July 2008
Office of Fair Trading Advice to Consumers - updated 31 July 2008
Vero Statement 29 July 2008

Sale Media Reports:

'Finally, a buyer for Beechwood' South Coast Register 30th July 2008
'Beechwood sale approved' Illawarra Mercury 30th July 2008
All newspaper clippings

South Coast Beechwood meeting 24^th July 2008 
South Coast Creditors Media Report

Beechwood "Web of Loans"

Imagine sitting across a table from a friend, and "lending" them a $20 note. Your friend then "lends" the $20 note back to you. You again "lend" the $20 note to them. If you keep pushing the $20 note back and forth eventually you would "owe" your friend $10,000 and your friend "owes" you $10,020. This might sound silly but for Beechwood creditors it is deadly serious. Loaning money back and forth has resulted in companies related to Mr Larry King to be in a position to say they are Beechwood's biggest creditors.

The "web of loans" traces the complex series of loans between companies related to Larry King. As a result, Mr King has the majority voting block at Beechwood creditor meetings. Three companies related to Mr King are even members of the important Creditor Committees. But a close examination of the "web of loans" reveals that companies related to Mr King owe more to Beechwood than Beechwood owes to them.

See the Beechwood Web of Loans - compiled by Catherine Cusack MLC

See the Status of the Web of Loans - extracts from Administrators Report

See Beechwood Web of Debt Media Release

Sun Herald Report on Web of Loans ('King Paid his own trust  $1.5 million from Beechwood')

SMH Report on Web of Loans ('Beechwood Kingpin could reap Millions')

Beechwood Investigation by Administrator

Beechwood Administrator -  Reports 10 July 2008 - Why Beechwood companies collapsed; extent of the debts; what happens next? - All 3 reports available for download
Final Report - L.E.D Builder PTY Limited (Sydney - Liverpool based)
Final Report - L.E.D (North Coast) PTY Limited (Swansea based)
Final Report - L.E.D (South Coast) PTY Limited (Nowra based)

Minutes of the first Beechwood Creditors Meeting on 13 May attended by proxies for Mr and Mrs King and 'related parties' (companies associated with Mr King, represented by Mr Tim Gillespie) - schedule 1 lists the parties and proxies.

Administrators and Receiver Fees  (click for details)
At the 14 August meetings Armstrong Wily will seek approval of creditors to pay fees totalling  between $615,000 and $765,000 plus GST.
The Receiver Deloitte has a $1.5 million budget for the Receivership which is nearly complete.

Is this reasonable? See ASIC Approving Fees: A guide for Creditors

Important Beechwood Links
Beechwood newspaper clippings 
Beechwood Owner - Larry King
Beechwood Receiver - Deloitte
Beechwood Administrator - Armstrong Wily
Beechwood debate in NSW Parliament

About this website

This webpage has been designed to assist Beechwood clients and unsecured creditors whose lives have been profoundly affected by the collapse of the company on 13 May 2008.

The biggest complaint we are hearing is lack of information.

Through this webpage we are sharing as much information as possible, and invite you to send your thoughts, information and scans of documents so they can be posted for others to access.

Please take a moment to complete our SURVEY and CONTACT me at any time with your updates, problems, and ideas.

Regards

 

Catherine Cusack MLC
NSW Shadow Minister for Fair Trading