The Pindan group paid EY $120,000 to conduct a review of its business in 2019 and again engaged the firm's insolvency experts to provide restructuring assistance in May last year.
The Pindan group paid EY $120,000 to conduct a review of its business in 2019 and again engaged the firm's insolvency experts to provide restructuring assistance in May last year.
The details of the restructuring assistance sought were not revealed in a letter sent to hundreds of Pindan creditors late yesterday and obtained by Business News, but EY revealed the 2019 independent business review took six weeks to complete and the results had been provided to Pindan, owner Oxley Holdings, and financier Bankwest in August 2019.
It is not yet clear what prompted the review or what it revealed, but Pindan did scale back its financing business in 2020 and handed back its Australian Financial Services Licence.
It also identified some financial issues in 2020 that required the group to seek assurances from Oxley that it would continue to ensure all companies in the Pindan group could remain solvent.
According to the letter to creditors, administrator Sam Freeman met with the group in May 2020 and was provided with an update on its position and the need for restructuring assistance. At a follow-up meeting the following month, the same matters were discussed and an engagement letter was executed.
But EY has confirmed that the engagement never eventuated. They say no work was ever undertaken, no advice was provided, and no fee was paid.
In the letter, EY confirms Mr Freeman was engaged again on May 3 2021, attending a meeting with the Pindan group and solicitors from Squire Patton Boggs. At that meeting, it was agreed that EY should be engaged to review its current position and prepare for a possible administration if efforts to sell the group were unsuccessful.
An engagement letter was issued two days later at a subsequent meeting.
From May 6 until May 13, meetings and phone calls were held as part of the preparatory engagement before EY was appointed administrators of three group companies and liquidators of another nine on Tuesday.
EY told creditors it did not believe that its pre-appointment meetings presented a conflict of interest that would preclude it from accepting the appointment as administrators.
Both EY and the Pindan group have declined to comment on the pre-appointment meetings.
As revealed by Business News yesterday, businesses affected by the construction giant's collapse will gather next Friday morning for Pindan’s first meeting of creditors.
On Wednesday, EY confirmed it had been forced to lay off almost half of the company’s workforce in its first 24 hours as administrators.
Across the group, Pindan had 68 active projects and 280 staff; but there are understood to be a further 500 subcontractors and 400 trade suppliers affected.
Business News revealed on Monday that subcontractors had walked off the company's construction sites after being told Pindan could not pay them.
Business News is a registered creditor of Pindan in relation to a small advertising contract.
