Former director pleads guilty to breaching directors’ duties

Mr Andre Kunz of Kenthurst, NSW has pleaded guilty to breaching his directors’ duties.

Mr Kunz is the former director of Total Hoarding Supplies Pty Ltd ACN 107 987 271 (Total Hoarding Supplies) and Sybab Pty Ltd ACN 144 935 311 (Sybab) which later became Abbar Pty Ltd. The companies supplied components for hoardings and overhead protection structures for construction sites.

Following an ASIC investigation, Mr Kunz was charged with breaching his directors’ duties for dishonestly and recklessly transferring $2,017,299.12 in assets from Total Hoarding Supplies to Sybab between 1 July 2010 and 13 July 2011. The consideration for the asset transfer was a 20-year loan at 8% interest per annum with the principal and interest payable at maturity and no repayment to be made before such time. By entering into the asset transfer and 20-year loan with Sybab, Total Hoarding Supplies was unable to continue to trade and generate cash flow to be able to meet its liabilities leading to the company’s insolvency.

At the time Total Hoarding Supplies was being pursued by the Bendigo and Adelaide Bank for outstanding loans totalling $1,636,170.55.

Transferring assets from one company to another without paying for the assets is commonly known as illegal phoenix activity.

Mr Neil Cussen of Deloitte Australia was appointed the liquidator to Total Hoarding Supplies on 28 January 2014. ASIC commenced its investigation after receiving a supplementary report from Mr Cussen which was funded from the Assetless Administration Fund.

The matter is being prosecuted by the Commonwealth Director of Public Prosecutions.

Background

At the time of the conduct, a contravention of s184(2) of the Corporations Act 2001 attracted a maximum penalty of 2000 penalty units or imprisonment for five years, or both.

The matter was heard at the Downing Centre Local Court on 10 November 2020 and was adjourned for sentencing on 22 December 2020.

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