The liquidator for the failed catering business of Fiona Wright and Jeremy Paul is close to finalising his investigations, hopeful at least $600,000 will be returned to former employees but resigned to another $2.5 million owed to creditors never being repaid.
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Liquidator Henry Kazar has also decided against pursuing a legal claim against one of the caterers' clients, the National Gallery of Australia, saying there was insufficient evidence to suggest the gallery had led to the financial downfall of the company, Ten and a Half Pty Ltd.
Mr Kazar said while the relationship between the caterers and the gallery became ''fraught'' and even ''toxic'', he had not been provided with enough evidence to attempt to summons key players from the gallery to a court to give evidence.
The liquidator's latest report says ''the predominant factor driving the company's path towards insolvency was the manner in which it was being managed by its directors''.
''I have not discovered, nor have I be furnished with, any evidence that would support any claim against a third party for contribution towards the company['s] financial strife,'' Mr Kazar wrote in the report.
The companies were put into liquidation a year ago after the ACT Supreme Court was petitioned by the ACT Revenue Office.
Ms Wright has maintained that a crucial reason for her catering empire collapsing was the difficulties she faced being the caterer at the gallery, saying it had not followed Commonwealth procurement rules. She said the gallery had not provided her initially with a written contract, had changed the terms under which the company was working and had mishandled basic requirements such as taking bookings for its plush new catering venue, Gandel Hall.
A gallery spokesman confirmed a written contract had not been signed with the caterers until more than a year after they started working there. He denied the gallery had mishandled bookings for Gandel Hall.
Ms Wright said she was ''gutted'' by the liquidator's decision not to take the gallery to court and maintained she had not been allowed to talk to the legal team that investigated whether that could be an option. ''I dispute absolutely that it was mismanagement by myself as a director,'' she said. ''It was the mismanagement of a contract by the gallery.''
The liquidator has also said Ms Wright and Mr Paul had breached their duties as directors by continuing to trade while insolvent but there was ''no commercial benefit to the creditors'' to pursue them as individuals for any claims. Mr Kazar said Ms Wright sold her house to pay her debts but most of the proceeds ''went to the bank'' and were not available to the liquidation process.
Mr Kazar said the breaches had been reported to the Australian Securities and Investments Commission, which in turn had advised it was not going to conduct an investigation but had requested more information. A spokesman for ASIC said it would not comment on the receipt or consideration of any report that was confidential to the commission.
Mr Kazar is in negotiations with the Australian Tax Office to return $600,000 he maintains it was not entitled to take from the company. If returned, that money would be distributed to employees for outstanding wages and superannuation. Another $100,000 was also available to return to employees, including $50,000 returned from the ACT Revenue Office.
''The $600,000 is an amount of money the Tax Office received over and above what it was otherwise entitled to, ahead of other creditors that didn't get paid,'' he said.
Mr Kazar has previously reported that companies run by Mr Paul and Ms Wright owed more than $4 million to employees and creditors.
He has stated that employees of the companies than ran the now-closed Dieci e Mezzo restaurant in Civic and the catering contracts at the National Gallery of Australia and Defence Department were owed $1,233,000 in unpaid wages, superannuation and annual leave.
Mr Kazar now says he is still trying
to determine how much compulsory superannuation went unpaid, saying Ms Wright's ''characterisation of the company's records is largely unreliable in so far as superannuation payments are concerned''.
The money still owed to unsecured creditors including suppliers is more than $2,549,000 and likely will not ever be returned, Mr Kazar said.
Ms Wright maintains her tenure at the national gallery was pivotal to her case.
She said Ten and a Half, in good faith and with the knowledge of the gallery council, invested heavily in renovations at the institution including of the members' lounge. That created cash-flow issues, exacerbated by problems with the Gandel Hall bookings, which were handled by the gallery.
Ms Wright said she had begged to take over the bookings. ''They just didn't reply to emails, to clients, they removed from their website the phone number, so clients couldn't ring to make a direct booking, and we weren't allowed to take bookings,'' she said.
Ten and a Half also had difficulties obtaining finance from its bank, which would have covered its tax and superannuation liabilities, after the terms of their agreement with the gallery changed, she said.
A spokesman for the national gallery said all upgrades to its catering outlets by Ten and a Half were reimbursed by the gallery.
He said the contract signed with Ten and a Half in November 2010 was for a five-year period with a three-year extension at the discretion of the gallery.
Ms Wright maintains she was offered a 10-year contract at the gallery, which was later reduced to three years backdated, giving the company in effect only another 16 months at the institution, which made its position untenable.
She said the five-year contract with a three-year extension was only offered after she made a direct appeal to the then gallery council chairman, Rupert Myer.
When asked about those claims, the gallery said it had no further comments to make.
Mr Kazar has been paid $341,464 for his work and is seeking another $41,734 because of the complexity of the task.
He sought the assistance of solicitors and barristers to investigate the evidence to support the issuing of summonses for the examination of certain employees and officers of the national gallery.
Mr Kazar said the process had been ''relatively costly'' but was a better use of creditors' funds than starting legal proceedings that might fail and expose them to adverse cost orders.
A meeting of creditors is scheduled for Wednesday.
