XL Group - Case Update

Kelly Trenfield, Joanne Dunn and Ross Blakeley of FTI Consulting, the voluntary administrators of collapsed logistics giant XL Group, have released a report revealing just how long it appears the company traded while insolvent, and just how big a claim against the company’s director could be.

The Queensland-based group of companies were founded in 1990 and operate a logistics service across Australia. At the time of the administrators’ appointment on 27 June, the companies had approximately 200 employees.

According to the administrators, the companies have been facing issues since 2023. They have incurred losses since that time and taxation debts of approximately $3.5 million, and are continuing to experience cash flow difficulties. Colin Mallory, the companies’ director, held discussions with a secured lender to provide further funding to help pay down the companies’ debts, but these discussions were unsuccessful.

On 23 June, the companies were locked out of their Smithfield premises for non-payment of rent, and the administrators’ appointment followed shortly thereafter.

According to their preliminary investigations, the companies were likely insolvent from at least January 2023 and remained so up to their appointment. Potential unfair preferences total over $550,000 and payments to related entities total nearly $540,000. While the administrators do not believe the director has breached his duties, their investigations have identified a potential claim for insolvent trading in the order of approximately $13.2 million. At this time, it is unclear whether the director would have the capacity to meet a successful insolvent trading claim, since he guaranteed substantial company debts.

The administrators have recommended the companies be placed into liquidation to pursue any potential claims. A DOCA proposal has not been received.

Read the report HERE.