Kleenmaid directors may face insolvent trading charges

19 May 2009

The directors of the Australian appliance maker Kleenmaid could be personally held liable for debts of $82 million if it can be proved that the company was trading while insolvent.

A full creditors report issued yesterday showed that the company traded for nearly two years even when it knew of a substantial gap between its assets and liabilities. (See: Kleenmaid collapse leaves thousands in lurch)

The report, released yesterday by administrator John Greig of Deloitte, revealed that in June 2007, the company had a shortfall of $20 million in assets to liabilities. The shortfall increased to $82 million in March this year and has now surpassed $100 million.

Greig said that the company had continued to trade for some time even when the directors were fully aware of the position. He added that under the Corporations Act it was the duty of the directors to prevent just such insolvent trading.

He said that given the length of time the group had been insolvent according to their investigations, it was highly probable that the company was trading while being insolvent for a period of time.

Meanwhile, the full creditors report had nothing in it for creditors, employees or suppliers of the stricken company and according to Greig the company's financial health was actually worse what had been initially suspected.