THE director of a local engineering company placed in liquidation with alleged debts of $11.5 million, is still in business.
Rohan Arnold, who headed up north Goulburn firm, Mass Steel (trading as Old MS Pty Ltd), is trading under another of his companies, which has its head office in Sydney’s CBD.
Mass Steel was put into liquidation in June, 2012, owing former employees $1.42m in entitlements and superannuation and more to suppliers.
Mr Arnold is a director of Solutions 4 Steel Pty Ltd, formerly known as Developments Camden Pty Ltd, liquidators Kazar Slaven and the Australian Securities and Investment Commission (ASIC) have confirmed.
Last March, the company changed its name to Solutions for Steel Imports Pty Ltd.
“Since 1996 Rohan Arnold has owned and operated the business which has grown to now be one of the major structural steel suppliers on the eastern seaboard,” the Solutions for Steel website states.
“S4S is dynamic and staying ahead of the market has merged with a structural steel importer delivering steel Australia wide at arguably the best prices available.”
The website points to several ‘ongoing’ projects including the Australian Institute of Police Management, Canberra Hospital’s acute mental health building and Cessnock Correctional Centre. All of the projects have been completed and were also previously listed on Mass Steel’s website.
Kazar Slaven supervisor Michael Lawless was aware the company was operating.
“And there’s nothing (legally) stopping a director whose other companies have been placed in liquidation from doing so, unless he/she has been banned by ASIC,” he said.
“We won’t know what action ASIC will take until after the public examination (of various related companies’ affairs).”
It might not be illegal but one former local creditor said there should be a law against the practice.
Mr Arnold said the website was outdated and didn’t reflect its current business. He described Solutions 4 Steel Imports Pty Ltd as a consultancy firm.
“I consult and give advice to tier one contractors on the import of steel,” he said.
“It’s a completely different business to Mass Steel because I’ve learnt my lesson through the Mass Steel experience and had a change of life.”
Mr Arnold blamed Mass Steel’s demise in part on competition from cheaper steel imports.
The liquidators have applied to the Federal Court to examine Mr Arnold’s alleged breaches of the Corporations Law, including that he traded Old MS Pty Ltd while insolvent and that he engaged in phoenixing activity. This is where business and assets are transferred between related companies to avoid paying tax and other liabilities.
Kazar Slaven is investigating links between Old MS Pty Ltd and Solutions 4 Steel Pty Ltd, noting several transactions.
Mr Lawless said it could be a relevant factor if there were numerous transactions between the two companies but his firm did not have full access to financial details at this stage.
“We would look into getting those after the public examination and look at what went on between the two companies,” he said.
Kazar Slaven’s creditors’ report stated that Mr Arnold claimed his related companies were owed $3.3m. This included $1,574,877 to Developments Camden Pty Ltd, the name by which Solutions 4 Steel Imports was previously known. Developments Camden was registered in October, 2004, subsequently changed its name to Solutions 4 Steel and again in March this year to Solutions 4 Steel Imports Pty Ltd.
Mr Lawless said phoenixing was illegal under the Corporations Act.
Liquidator Michael Slaven’s creditors’ report last month stated: “I am of the opinion that Mr Arnold has been involved in phoenix activity and that it is apparent that contract work initially awarded to the company (Old MS Pty Ltd) was transferred to related entities for little or no consideration.
“Mr Arnold’s (alleged) actions represent a misuse of his position as a director of the company and a breach of section 182 of the Corporations Act.”
The liquidators were preparing an affidavit for the Federal Court, aimed at convincing it there were grounds for a case.
Mr Lawless said if this went ahead, ASIC would advise on any action against Mr Arnold and his companies after the case.
The liquidators have recommended summons be also issued to the company’s external accountant and some former employees.
Mr Arnold did not wish to comment on this allegation or the contents of the liquidators’ report, saying it was only an interim finding and there was still a process to go through. “If they take it further then we’ll assess what we need to do then,” he said.