Pro-Pac creditors to vote on Bennamon DOCA after $38 Million asset sales

Pro-Pac Packaging Group creditors are set to vote on a deed of company arrangement back by Bennamon, a wholly-owned subsidiary of KIN Group and Pro-Pac’s majority shareholder, after administrators sold most of the failed packaging group’s Australian operations to Knoxcorp and parts of its Perfection business to Labelmakers, producing recoveries that are expected to pay secured and employee creditors in full.

Keith Crawford and Robert Smith of McGrathNicol were appointed voluntary administrators of the Australian Pro-Pac Packaging Group entities on 23 October 2025. The second creditors’ meetings were scheduled for 27 May 2026, leaving creditors to decide whether the group should enter the proposed DOCA, be wound up or be returned to director control.

Pro-Pac, established in 1987, grew into one of Australia and New Zealand’s largest flexible film and packaging manufacturers, supplying food, fast-moving consumer goods, agriculture, logistics, industrial and commercial markets. Its Australian operations were conducted through an entity formerly known as Pro-Pac Group Pty Ltd, which employed more than 450 staff at appointment. The group also had New Zealand operations, separately placed into administration, and a Malaysian entity being wound up in that jurisdiction.

The Australian business comprised four main units: Integrated Packaging Australia, which manufactured and distributed stretch film and food films; Integrated Recycling, which converted waste plastic into infrastructure products; Perfection Packaging, a flexible packaging business serving fast-moving consumer goods, food, health and personal care customers; and Specialty Packaging, a distributor of packaging products including corrugated materials, pallet wrap and tapes.

The administration followed a prolonged deterioration in earnings, liquidity and stakeholder support. The group recorded revenue of $339.1 million in FY23, $295.2 million in FY24 and $265.6 million in FY25, while EBITDA swung from $9.9 million in FY23 to losses of $21.3 million in FY24 and $43.3 million in FY25. Net losses deepened from $10.2 million in FY23 to $53.8 million in FY24 and $69.7 million in FY25.

The administrators attributed the failure to a combination of volume declines, sustained losses in the Perfection business, working capital pressure and failed pre-appointment sale processes. Higher raw material and operating costs were passed through to customers, but those price increases made the group less competitive and contributed to customer attrition, especially as lower-cost imports became available. The group also lost significant revenue from a major Middle East customer and faced weak trading conditions in New Zealand.

Perfection was a central drag on the group. Pro-Pac acquired the business in 2018 for approximately $50 million, when it had been profitable, but by FY23 Perfection had recorded a $10.2 million EBITDA loss. Perfection’s earnings eroded from positive EBITDA in FY20 to FY22 into material losses through FY25, with administrators citing COVID-era disruption, loss of higher-margin customers, a shift toward lower-margin high-volume work, capital expenditure pressure and disruption from the implementation of a July 2024 enterprise resource planning system.

McGrathNicol ran a broad post-appointment sale campaign after earlier pre-appointment processes for the Specialty, Perfection and New Zealand businesses failed to deliver binding transactions. The administrators advertised the Australian businesses in the Australian Financial Review, contacted 132 additional potential buyers, granted 70 parties initial data-room access and received 16 non-binding indicative offers. Eleven parties were shortlisted.

The central transaction was a sale of the Integrated Packaging Australia, Integrated Packaging Australia, and Integrated Recycling businesses to Consolidated Packaging Australia Pty Ltd, a Knoxcorp subsidiary. The business sale agreement was signed 16 January 2026, and completed 27 March. The transaction delivered approximately $31 million in consideration, including working capital adjustments, transferred 251 employees and approximately $14.6 million of entitlements, and avoided approximately $9.8 million of contingent redundancy and notice claims.

The remaining Perfection business was wound down after administrators concluded no acceptable going-concern offer was available and the business could not be turned around quickly. A substantial portion of Perfection’s assets were sold to Labelmakers for $7 million, including printing presses, laminating machines, slitting machines, a regenerative thermal oxidizer and other equipment. The wind-down led to 135 redundancies and crystallised approximately $6 million of employee entitlement claims.

The group entered administration with significant secured debt, but secured claims have since been repaid. ANZ was owed approximately $2 million under an overdraft, ScotPac was owed approximately $29 million under a debtor facility and approximately $3.5 million under an asset facility, and Bennamon was owed approximately $2.6 million under a working capital facility. The administrators said all secured claims have been repaid in full from pre-appointment debtor collections and sale proceeds.

The proposed DOCA has been advanced by Bennamon Pty Ltd, which is wholly-owned by KIN Group and is Pro-Pac’s majority shareholder The proposal would pool the Australian group’s assets and liabilities, accelerate distributions, subordinate Bennamon’s section 560 loan until employee entitlements are paid in full, exclude unsecured claims by Bennamon and KIN Group from distributions, and preserve the possibility that the proponent acquires all shares in the ASX-listed parent, formerly known as Pro-Pac Packaging Limited.

The estimated creditor outcome is only modestly better under the DOCA than liquidation, but the administrators said that difference is enough to support the proposal. Secured creditors and priority creditors are projected to receive 100 cents on the dollar under both scenarios. Ordinary unsecured creditors are estimated to receive between 6.0 cents and 23.0 cents under the DOCA, compared with 4.6 cents to 20.9 cents in liquidation. DOCA-excluded creditors, representing approximately $1.3 million of claims, would receive nothing under the DOCA, compared with the ordinary unsecured creditor rate in liquidation.

The administrators’ investigations do not point to a better litigation outcome in liquidation. McGrathNicol’s preliminary view is that the group remained solvent until or near the appointment date, despite signs of distress including sustained losses, a negative current asset position from February 2025, increased debt, supplier pressure and covenant waivers. The administrators said they had not identified material claims for voidable transactions, insolvent trading or directors’ duty breaches that would be expected to improve recoveries in a liquidation.

In addition, the administrators note that the directors engaged safe harbour advisers in February 2025 and pursued sale and divestment processes, funding support and operational initiatives. A liquidator could investigate further, including whether the decline of the Perfection business involved any breach of duty, but the administrators said the business judgment rule and other defences may be available, and no commercially justifiable claim has been identified at this stage.

McGrathNicol has recommended that creditors approve the Bennamon DOCA. The administrators said the proposal should deliver a faster and slightly higher return to unsecured creditors than liquidation, reduce ongoing costs, pay employees in full, pool the group’s Australian assets and liabilities, and allow a cleaner resolution of the external administration after the major trading businesses have already been sold.

The outcome of the second creditors’ meeting has not been disclosed at this time.

The administrators’ report to creditors can be found here.