Farmer’s money in limbo as agent goes into administration
A MELBOURNE produce agent owing hundreds of thousands of dollars to at least one Bundaberg farmer has gone into voluntary administration.
The move comes after the NewsMail revealed sweet potato farmer Mike Prichard, allegedly owed $263,000 by the company who sold his produce at a Melbourne market, was attempting to wind the company up for non-payment.
It means Mr Prichard, who co-owns B Fresh with his son Ben, may never see his money.
Now, a former staff member of the company that has applied for voluntary administration, LIS Future Developments, has set up a new company which appears to want to start a produce stall in place of the old one.
LIS Future Developments, which was trading at the Melbourne Produce Markets as E&R Produce, filed for voluntary administration on July 7.
The directors of LIS Future Developments were due to appear in the Federal Court on July 29 after being served with a winding up order from Bundaberg family the Prichards.
E&R occupied store 146A and 146B at the Melbourne Produce Markets and the Prichards allege they were not paid for deliveries over a significant period of time.
Ben Prichard said his family held little hope of getting their money back following the administration move.
“If the company has no assets, there is little prospect of them recovering any money, unless they have personal guarantees from the directors,” Bundaberg laywer Michael Madder confirmed.
Mr Prichard said he had asked E&R director Robert Zakaria for a personal guarantee during negotiations prior to the winding up order, but said Mr Zakaria declined.
Voluntary administration is when the directors of a company in trouble go to an administrator and ask them to step in and run them, Mr Madder, a partner at Charltons Lawyers, explained.
“An administrator can go in and check out the company’s trading position and see if there is any prospect of the company being able to continue or resurrect the business and trade out of its position.
“Then they can hand it back to owner if it is apparent that can occur.”
It leaves the Prichards with few options.
“The only other real way that creditors could take the directors on is alleging (LIS) was trading insolvent, but that involves the creditors funding the legal action, or the ASIC stepping in and taking it on,” Mr Madder said. There is no suggestion that was the case with E&R at this stage.
Meanwhile, store 146 at the Melbourne market is wanted by Super Sweet Produce Pty Ltd, a company directed by a former E&R employee, Khaled “Karl” Roumieh.
Mr Roumieh confirmed to the NewsMail that he was previously a part-time employee receiving a wage from E&R Produce.
But his hopes of opening on the same site have been stymied by the market owners, who were aware LIS had applied to go into administration.
“We have not consented to any other party to occupy or trade from the premises and have taken steps to bring the lease to an end now that the company is in administration,” a statement said.
“Once the lease has been brought to an end, any arrangements made by LIS will also cease.”
The phone numbers of E&R directors Robert Zakaria and Elvis Haykal have been disconnected.
Super Sweet was registered with the Australian Securities and Investments Commission on May 25, 2016, and its registered address is Imax Business Group Pty Ltd, the same address to which LIS Future Developments was registered.
Around 35 farmers met with ACCC agricultural commissioner Mick Keogh on Tuesday to voice their grievances with the market system, at a meeting organised with Bundaberg Fruit and Vegetable Growers and grower industry body Growcom.
MARKET GROUPS RUSH TO DEFEND
Fresh Markets Australia has put out a media release saying it is “outraged that false claims being made by rural lobby group Growcom appear deliberately calculated to drive a wedge between producers and Market wholesalers”.
Growcom chief advocate Rachel Mackenzie told the NewsMail, responding to a statement from wholesaler industry body FreshState stating it was “the grower’s job” to ensure they were properly paid, “if the market does not take ownership of these problems, it starts to make you wonder if it’s systemic”.
She emphasised that “there are many good agents that do have healthy relationships (with growers) and positive experiences.”
But Fresh Markets Australia’s Executive Director, Andrew Young, said he was “extremely concerned” by “Growcom’s ongoing campaign to undermine the overwhelmingly co-operative relationship between wholesalers and growers”.
Mr Young has contacted Mr Keogh to repudiate the lobby group’s allegations.
The release continues:
“In an industry as large as horticulture there will be commercial disputes between parties from time to time, but Growcom’s claims that these issues are systemic are false and counter-productive to a collaborative, strong, profitable industry,” Mr Young said.
“The horticulture industry is actually noted for its extremely low level of commercial disputes.
“FMA and Government figures show that, over the past five years, the Horticulture Mediation Advisor managed just 12 mediations and the ACCC received just 35 complaints from growers. This is out of in excess of 60 million transactions conducted across the six central markets, over that five year period. We are talking about over 15,000 growers doing business with over 400 wholesalers in an industry with seasonal production, and fluctuating supply and demand.”
Mr Young said there were “quite powerful” protections for growers who have an issue with a wholesaler, as well as mechanisms for disputes to be independently investigated, and if possible, resolved.
“The FMA would strongly encourage growers who believe they have not been fairly treated to communicate promptly with their wholesaler, in the first instance, and submit a complaint to the relevant State Chamber of Fruit and Vegetable Wholesalers, which are all FMA members,” he said.
“If the matter remains unresolved, they should complain promptly to the Horticulture Mediation Advisor appointed under the Code. If that process fails, they can speak to the ACCC or pursue their own legal action.”
Mr Young questioned why Growcom had allowed the Bundaberg incident to drag on for more than a year before raising any concerns – and then doing so via a media statement.
“If Growcom is concerned about these growers, where has it been for the past 18 months?” he said.
“Taking prompt action, and not letting disputes drag on for months or years, is the key to successful resolution.
“This is basic advice that Growcom should be providing to growers.”
Mr Young said that Fresh Markets Australia expected all parties — growers, wholesalers, and retailers — to follow good commercial practice when transacting business in the Central Markets.
“Our experience is that this is overwhelmingly the case,” he said.
“The vast majority of the more than 400 central markets wholesalers — most of them family-owned small businesses that have been involved in the industry for generations — have trusting, productive relationships with growers built over many years.”
Meanwhile Queensland’s largest fresh fruit and vegetable hub, the Brisbane Markets, has put out a release “asking its closest regional grower partner why it did not raise any issues with them before slamming the wholesaling sector in the media and demanding tougher regulation on an already anti-competitive and unworkable Horticulture Code of Conduct”.
The release continues:
“Bundaberg Fruit and Vegetable Growers has held a Memorandum of Understanding with both Brisbane Markets Limited (BML) and Brismark since 2009 with representatives meeting a number of times a year to raise issues and concerns.
“Yet the key regional organisation has joined Queensland’s regulation-happy grower organisation Growcom to publicly attack the wholesaling sector, saying they had aired grievances directly to the Australian Competition and Consumer Commission Agriculture Commissioner during a regional meeting in Bundaberg.”