260.kordamentha Restructuring ILH Group Limited: Report by Administrators

ILH Group Limited
(Administrators Appointed)
ACN 120 394 194
Report by Administrators
20 January 2015
Contents
1
Executive summary.................................................................................................................................... 1
1.1 Appointment of Administrators ............................................................................................................ 1
1.2 Purpose of report ................................................................................................................................. 1
1.3 Administrators recommendation ......................................................................................................... 1
Appointment of Administrators ................................................................................................................... 2

2.1 Progress of Administration .................................................................................................................. 2
2.2 Object of Administration ...................................................................................................................... 3
2.3 Prior involvement with the Company................................................................................................... 4
2.4 First meeting of creditors ..................................................................................................................... 4
2.5 Second meeting of creditors ............................................................................................................... 4
2.6 Receipts and payments of Administration ........................................................................................... 5
Company background ................................................................................................................................ 6

3.1 History of the Company ....................................................................................................................... 6
3.2 Company registration details ............................................................................................................... 7
3.3 Company shareholders ....................................................................................................................... 7
3.4 Security interests ................................................................................................................................. 7
3.5 Company directors .............................................................................................................................. 7
3.6 Company secretaries .......................................................................................................................... 8
3.7 Related entities .................................................................................................................................... 8
3.8 Events leading up to Administration .................................................................................................... 9
3.11 Historical financial performance ........................................................................................................ 11
Realisations of assets .............................................................................................................................. 12

4.1 Realisations summary ....................................................................................................................... 12
4.2 Status of trading subsidiaries ............................................................................................................ 12
Investigations ........................................................................................................................................... 14
5.1 Administrators investigations ............................................................................................................ 14
5.2 Overview of Administrators investigations ........................................................................................ 14
5.3 Approach to preliminary investigations ............................................................................................. 14
5.4 Offences under the Act by the directors ............................................................................................ 14
5.5 Potential recovery actions available to a liquidator ........................................................................... 15
5.6 Offences ............................................................................................................................................ 21
5.7 Limitation of investigations ................................................................................................................ 21
5.8 Conclusion ......................................................................................................................................... 21
Alternatives available to creditors ............................................................................................................ 22

6.1 Explanation of alternatives available to creditors .............................................................................. 22
Estimated return to creditors .................................................................................................................... 23
Remuneration and disbursements of Administrators ............................................................................... 23
Further information ................................................................................................................................... 24
Liability limited by a scheme approved under Professional Standards Legislation
Page i
Appendix 1 Declaration of Independence, Relevant Relationships and Indemnities

Appendix 2 Notice of Meeting
Appendix 3 Form 532 Appointment of Proxy
Appendix 4 Form 535 Formal Proof of Debt
Appendix 5 Summary of receipts and payments
Appendix 6 Group structure
Appendix 7 Historical financial performance
Appendix 8 Remuneration report
Page ii
Executive summary
1.1
Appointment of Administrators
We, Michael Brereton and Cliff Rocke, were appointed as Administrators of ILH Group Limited (the Company or
ILH) on 17 December 2014 pursuant to Section 436A of the Corporations Act 2001 (Commonwealth) (the Act).
1.2
Purpose of report
The purpose of this report is to table the findings of our investigations of the Companys business, property,
affairs and financial circumstances, as well as our opinion on the various options available to creditors in
deciding the future of the Company at the Second Meeting of Creditors scheduled for 10:00am on
Wednesday, 28 January 2015.
1.3
Administrators recommendation
During the week ended 16 January 2015, the Administrators received a number of expressions of interest in
relation to restructuring ILH by way of a Deed of Company Arrangement (DOCA). At this stage, none of the
proposals received are sufficiently progressed to a form such that they may be considered by creditors.
In accordance with Section 439A of the Act, it is the Administrators obligation to make a recommendation to
creditors on which option for the future of the Company is in the best interests of creditors. In this regard, the
Administrators are required to recommend one of following:
The Company to execute a DOCA
The Administration to end, or
The Company to be wound up.
As the DOCA proposals received are at a preliminary stage, have not been thoroughly investigated by the
Administrators and are not in a form incapable of acceptance, the Administrators are unable to recommend
an option that is in the best interest of creditors at the date of this report.
We therefore consider it would be in creditors best interest to resolve to adjourn the Second Meeting
of Creditors for a period not exceeding 45 business days as it will, amongst other things allow:
Further time for interested parties to formulate and put forward a DOCA proposal to creditors and to
allow the Administrators further time to progress the potential restructure of the Company
The Administrators to report back to creditors with sufficient information to accurately determine whether
entering into a DOCA (if one capable of acceptance is received) provides a better return to creditors as
compared to an immediate winding up of the Company.
We note there is no certainty a DOCA proposal will be received which is capable of acceptance. However, in
our opinion, while there are costs associated with adjourning the Second Meeting of Creditors there is
potentially a substantial benefit to creditors from a DOCA that will only be possible if the meeting is
adjourned for a period not exceeding 45 business days.
If creditors elect at the Second Meeting of Creditors to adjourn the meeting, as recommended, the
Administrators will continue to seek expressions of interest for ILH, work with interested parties to develop
DOCA proposals capable of acceptance, and compile a supplementary report to creditors.
If the Second Meeting of Creditors is adjourned, the reconvened second meeting of creditors would
be held on or before Tuesday, 31 March 2015.
Page 1
Appointment of Administrators
2.1
Progress of Administration
Michael Brereton and Cliff Rocke were appointed as Administrators of on 17 December 2014 pursuant to
Section 436A of the Act.
The appointment was limited to ILH. ILH is the listed parent entity for eight subsidiaries (collectively the
Group). ILH held limited tangible assets and undertook minimal trading activity in its own right.
The subsidiaries of ILH, as listed in the table below, continued to operate for a short period of time on a
business as usual basis. This provided the opportunity for the Administrators to effect, where possible,
expeditious sales of the subsidiaries which were necessary to preserve and maximise value for creditors.
ILH subsidiaries
Trading subsidiaries 100% ownership
Rockwell Olivier (Perth) Pty Ltd (Administrators Appointed) (ROP)
ACN 126 990 949
Rockwell Olivier (Sydney) Pty Ltd (Administrators Appointed) (ROS)
ACN 133 488 383
Signet Lawyers Pty Ltd (Administrators Appointed) (Signet)
ACN 152 480 281
Civic Legal Pty Ltd (Civic Legal)
ACN 126 959 206
Law Central Co Pty Ltd (Law Central)
ACN 091 824 225
Capricorn Investment Partners Limited (CIPL)
ACN 095 998 771
Trading subsidiary 49% ownership

Rockwell Bates Pty Ltd (ROM)
ACN 133 027 317
Dormant subsidiaries 100% ownership

Rockwell Olivier Pty Ltd (ROPL)
ACN 160 338 241
RO International Tax Services Pty Ltd (RO Tax)
ACN 168 005 249
On appointment we assumed control of the Companys operations and assets, communicated with all key
stakeholders of the Company including principals and directors of the subsidiaries, employees and major
creditors, and implemented new controls for banking and other areas of critical risk.
It became quickly evident following our appointment that there would be insufficient funds available to
support the continuing operations of ILH, and its subsidiaries. There was limited cash available to the
Administrators, no future cash income and no ability to source funding to maintain operations.
The Administrators strategy was designed around this precarious situation and the need to maximise the
proceeds from asset sales, and to minimise ongoing costs so as to obtain the highest return possible for
creditors.
To minimise costs, all non-essential employees were made redundant shortly after our appointment.
It was critical to the Administrators strategy to complete the sale of individual legal practices as soon as
possible following the appointment due to:
The poor financial position of ILH
The financial position of the subsidiaries, which could not continue operating indefinitely without support
from ILH
The need to ensure that sufficient cash was generated to meet on-going costs
The need to preserve value in the subsidiaries given the value resided in the clients, principals and staff,
all of whom had the ability to walk out the door.
Page 2
Based on the implementation of the asset sale strategy described above, the Administrators expect to realise
proceeds of approximately $4.5 million.
The expected proceeds from the sale of the ILHs assets will be insufficient to meet the debts owing to the
secured creditor or to employees. The secured debt as at the date of appointment was $15.3 million, and ILH
employee entitlements totalled approximately $0.2 million.
The secured creditor has a charge over all of the Group, excluding one dormant entity, and has the ability to
appoint a receiver and manager to each of these entities. We have entered into a deed of forbearance which
permits the secured creditor to appoint a receiver and manager to ILH at any time.
The secured creditor has had oversight of each of the sales completed by ILH, and or its subsidiaries, and
has reviewed and approved each of the sale agreements prior to providing its consent to the release of its
security over the assets being sold.
Given the shortfall to the secured creditor from the realisation of ILHs assets, if the Company is wound up
there will be no return to the unsecured creditors of ILH.
Negotiating the sale of ILHs six trading subsidiaries, in their entirety or in part, to achieve the highest return
for creditors has required extensive resources and has been the primary focus of the Administration. Further
detail on the ILH asset realisations is included at Section 4 of the report.
The other major tasks we have performed since our appointment include the following:
Communicating with principals, employees, customers and creditors
Attending to statutory and ASX notifications and lodgements
Liaising with and providing regular updates to the secured lender in respect of the conduct of the
Administration and proposed sale of the ILH subsidiaries
Calculating employee entitlements and the distribution of employee entitlement packs
Collecting books and records of ILH and completing a forensic backup of servers
Holding the first meeting of creditors of the Company
Undertaking preliminary investigations into the Company
Undertaking preliminary review of various expressions of interest in ILH and DOCA proposals.
Based on the significant amount of work that has been completed in the first five weeks of the
Administration, we believe that substantially all of the major issues have been identified and addressed. The
key remaining tasks for the Administration include a few minor asset realisations, and further exploration of
the expressions of interest and DOCA proposals put forward.
2.2
Object of Administration
Section 435A of the Act states that the objects of the Administration provisions of the Act are to provide for
the business, property and affairs of an insolvent company to be administered in a way that:
1.
Maximises the chance of the company, or as much as possible of its business, continuing in existence,
or
2.
If it is not possible for the company or its business to continue in existence, results in a better return for
the companys creditors and members than would result from an immediate winding up of the company.
This report has been prepared in accordance with Section 439A (4) of the Act.
This report has been prepared from information obtained from the Companys records, the directors and
management of the Company and from our own enquiries.
Our investigations into the Companys affairs have been limited due to the short time period provided under
the Act within which we must issue a report about the Companys business, property, affairs and financial
circumstances for the Second Meeting of Creditors.
Page 3
We have no reason to doubt the information contained in this report. The statements and opinions given in
this report are given in good faith and in the belief that such statements and opinions are not false or
misleading. Except where otherwise stated, we reserve the right to alter any conclusions reached on the
basis of any changed or additional information which may become available to us between the date of this
report and the date of the Second Meeting of Creditors.
Neither KordaMentha nor any member or employee thereof undertakes responsibility in any way whatsoever
to any person in respect of any errors in this report arising from incorrect information provided to us.
2.3
Prior involvement with the Company
Our Declaration of Independence, Relevant Relationships and Indemnities (DIRRI), which was included
with the First Report to Creditors, is attached for your reference at Appendix 1. There has been no change to
the position since the DIRRI was first issued to creditors.
2.4
First meeting of creditors
Section 436E of the Act requires us to conduct a meeting of the creditors of the Company in Administration
within eight business days of being appointed (the First Meeting of Creditors).
The First Meeting of Creditors for the Company was held on 31 December 2014.
At the First Meeting of Creditors, we advised that a Committee of Creditors may be formed for the Company
however due to the limited size and complexity of the Administration we were of the opinion that there was
limited benefit in a Committee of Creditors being formed. There was no proposal from the creditors present
at the meeting to appoint a Committee of Creditors for the Company.
A resolution was passed by the creditors present at the meeting not to appoint a Committee of Creditors.
2.5
Second meeting of creditors
We are required to convene a second meeting of creditors of the Company in Administration pursuant to
Section 439A of the Act (the Second Meeting of Creditors) to consider the future of the Company.
Before the Second Meeting of Creditors, we must prepare a report on the relevant Companys business,
property, affairs and financial circumstances and provide opinions on certain matters, which is the purpose of
this report. This allows creditors to be in a position to vote at the Second Meeting of Creditors on the options
available to them, as to whether it would be in the creditors interests for:
The Company to execute a DOCA
The Administration to end, or
The Company to be wound up.
As discussed in Section 1 of the report, we consider it would be in creditors best interest to resolve to
adjourn the Second Meeting of Creditors for a period not exceeding 45 business days as it will, amongst
other things allow:
Page 4
We advise that the Second Meeting of Creditors will be held at the offices of KordaMentha, Level 5
Chifley Tower, 2 Chifley Square, Sydney NSW 2000, on Wednesday, 28 January 2015 at 10:00am.
Formal notice of the meeting is attached at Appendix 2. Registration for the meeting will commence
at 9:30am.
A Form 532 Appointment of Proxy also accompanies this report at Appendix 3. If you intend to appoint
another person to act on your behalf at the meeting, or you are a corporate creditor, you are required to
complete the Proxy Form appointing your representative. Proxy forms may be sent to KordaMentha, Level 5
Chifley Tower, 2 Chifley Square, Sydney NSW 2000 or by facsimile addressed to Andrew Hudson
+61 2 8257 3099 or by email to ahudson@kordamentha.com no later than 4:00pm, Tuesday, 27 January 2015.
If you are representing a company, please ensure that your proxy is executed pursuant to Section 127 of the
Act or your representative is appointed pursuant to Section 250A of the Act, otherwise you will not be entitled
to vote at the meeting.
Creditors are required to have lodged proofs of debt no later than 4:00pm on Tuesday, 27 January 2015,
failing which they may be excluded from voting at the meeting. A Form 535, Formal Proof of Debt or Claim,
accompanies this report at Appendix 4. Proofs of Debt may be sent to KordaMentha, Level 5 Chifley Tower,
2 Chifley Square, Sydney NSW 2000 or by facsimile addressed to Andrew Hudson +61 2 8257 3099 or by
email to ahudson@kordamentha.com.
Those creditors who have already lodged a Proof of Debt are not required to lodge a further proof
(unless they wish to amend their claim).
Arrangements have been made for creditors outside of Sydney to attend the meeting via conference call
facilities. Creditors intending to use the conference call facility are required to notify us of their intention and
collect conference call details at least 24 hours prior to the meeting.
A copy of this report, together with other information relating to the Company, can be found on the
KordaMentha web site at www.kordamentha.com in the Creditor Information section.
2.6
Receipts and payments of Administration
Attached as Appendix 5 is a summary of the receipts and payments for the period 17 December 2014 to
16 January 2015. Further details in relation to the receipts and payments are available on request, provided
sufficient notice is given to comply with the request.
Page 5
Company background
3.1
History of the Company
ILH became a publicly listed company in August 2007 and was established as a vehicle under which various
professional services firms and related businesses could operate independently but service a national
network of clients.
The initial listed entity was Integrated Legal Holdings Ltd. In May 2013, the business was renamed
ILH Group Limited. At the time of listing, ILH consisted of three Perth based businesses - Talbot Olivier,
Brett Davies Lawyers and Law Central.
Talbot Olivier and Brett Davies Lawyers are legal practises located in Perth, with Law Central a
complementary online business that provides access to standard legal documentation through an online
platform. At the time of listing, ILH had annual revenues of approximately $10 million.
ILHs strategy since listing was to grow both organically and through acquisition of established practices. ILH
has acquired the following businesses and as a result developed a national footprint and a unique position in
the Pacific region:
ILH acquisitions
November 2008
Argyle Lawyers Pty Ltd
Sydney
Legal Services
March 2009
Signet Lawyers Pty Ltd
Sydney
Legal Services
February 2011
Civic Legal Pty Ltd
Perth
Legal Services
July 2011
Pacific Legal Network Pty Ltd
Sydney and Pacific Region
Legal Services
July 2012
Rockwell Bates Pty Ltd (49% shareholding)
Melbourne
Legal Services
September 2013
Capricorn Investment Partners Limited
Sydney
Corporate advisory and

Wealth Management
(and business assets of The Pentad Group

comprising Eaton Capital Partners)
In May 2013, the law firms of Talbot Olivier, Argyle Lawyers and Rockwell Bates combined to become the
national law firm Rockwell Olivier. Pacific Legal Network had been trading as Argyle Lawyers since
acquisition.
In May 2014, Eaton Capital Partners was sold, with shareholder approval given at the annual general
meeting, to Symon Capital Pty Ltd, as the business had not met the Board or managements performance
expectation since acquisition.
As at the date of our appointment, ILH had three complementary business units: Legal Services
(Rockwell Olivier), On-line legal services (Law Central), and Corporate Advisory and Wealth Management
(CIPL).
Rockwell Olivier provided a range of corporate and commercial legal services to companies and
businesses in Australia, across the Pacific region (Pacific Legal Network) and internationally, as well as
private client and personal legal services in the form of advice on superannuation, estate planning, family
law, trusts, taxation, property and employment (Argyle Private).
Law Central provided standard legal documents on the internet for use predominantly by accountants and
financial planners. Law Central also provided a legal information service as well as training and education
products.
CIPL provided advice to individuals and small businesses in areas including financial planning, life
insurance, and share trading and managed funds, and business consulting services.
Page 6
3.2
Company registration details
Detailed below is information regarding the Company as included in a company search obtained from the
Australian Securities and Investments Commission (ASIC) as at the date of our appointment.
Company details
Date of incorporation
Company type
Registered office
Principal place of business
3.3
27 June 2006
Australian Public Company
Level 22, 1 Market Street, Sydney, NSW 2000
Level 22, 1 Market Street, Sydney, NSW 2000
Company shareholders
Detailed below is a summary of the 20 largest shareholders as per the Companys register of members. The
Companys records indicate there were 167 million shares on issue to 920 shareholders. In total the top 20
shareholders represented approximately 49% of the shares on issue by the Company.
Shareholder name
Number of shares held
Class of share
Fully paid up
Lavalhars Pty Ltd

Australian Share Finance Pty Ltd
Legal Australia Pty Ltd
Bobbin Ed Pty Ltd
Capricorn Investment Partners Ltd
Abn Amro Clearing Sydney Nominees Pty Ltd
Mr Michael John Cranny
Alford Consultants Pty Ltd
Mr Lance Livermore & Mrs Pamela Livermore
Primeyield Pty Ltd
Mr John Paul Olivier
Mr Graeme Hilton George Fowler
Mr Graeme Hilton Fowler & Mrs Louise Fowler
Aloa Pty Limited
Yeras Pty Ltd
Mrs Anna Catelli & Mr Gray Porter
Muzbird Pty Ltd
Mr Stephen Peter Skinner and Mrs Erin Skinner
Pango Road Pty Limited
Brendalis Pty Ltd
13,710,281
7,823,673
7,412,821
6,038,405
5,312,031
4,869,313
4,567,669
3,105,392
3,105,392
3,105,392
3,068,340
2,724,996
2,607,711
2,536,428
2,259,913
2,191,672
2,119,812
2,055,000
2,028,782
2,000,349
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Total (920 in Total)
167,611,336
Ordinary
Yes
3.4
Security interests
Detailed below is information regarding the Company obtained from a search of the Personal Properties
Securities Register (PPSR) as at the date of appointment.
Security interests
Westpac Banking Corporation Limited
Registered
PPSR registration No.
30 Jan 2012
201201190088602
Collateral class
All Pap No Except
Westpac Banking Corporation Limited (Westpac) has a registered security interest over the Company and
the majority of its subsidiaries. At the time of appointment the amount due to Westpac was $15.3 million.
3.5
Company directors
Detailed below is information regarding the directors of the Company obtained from ASIC as at the date of
our appointment. Included in this list are details of past directors whose appointment ended within 12 months
of our appointment (collectively the directors).
Page 7
Director name
Appointment date
Cessation date
01-Dec-14
01-Oct-14
01-Oct-14
25-Apr-08
06-Oct-06
06-Oct-06
26-Sep-13
N/A
N/A
N/A
01-Dec-14
01-Oct-14
01-Oct-14
15-Aug-14
Owen Glendower Evans

David Mckay French
Matthew William Driscoll
Graeme Hilton George Fowler
Anne Patricia Tregonning
John Sydney Dawkins
Stephen Moss
3.6
Company secretaries
Detailed below is information regarding the secretaries of the Company obtained from ASIC as at the date of
our appointment. Included in this list are details of past secretaries whose appointment ended within
12 months of our appointment.
Secretary name
Appointment date
Cessation date
Reena Minhas
Jean-Marie Rudd
01-Sep-14
28-Aug-08
N/A
01-Sep-14
3.7
Related entities
A diagram showing the corporate structure including the Company and its subsidiaries is provided at Appendix 6.
Detailed below is a summary of related entities of the Company, who are also debtors or creditors of the
Company. The amounts owed to or owing by these related entities arose in the ordinary course of business
via the intercompany loan accounts maintained by ILH.
Related entity
Nature of claim
Debtor/Creditor
Amount
Rockwell Olivier (Perth) Pty Ltd (Administrators Appointed)
Intercompany loan
Debtor
11,967,425
Rockwell Olivier (Sydney) Pty Ltd (Administrators Appointed)
Intercompany loan
Debtor
4,891,912
Signet Lawyers Pty Ltd
Intercompany loan
Debtor
2,275,933
Total
19,135,270
Related entity
Nature of claim
Debtor/Creditor
Amount
Civic Legal Pty Ltd
Intercompany loan
Creditor
11,156
Law Central Co Pty Ltd
Intercompany loan
Creditor
100,214
Capricorn Investment
Intercompany loan
Creditor
3,053,198
Total
3,164,568
The above creditor claims have not yet been adjudicated. However, if the Company is placed in liquidation
and there are sufficient funds realised for the liquidators to make a distribution to creditors, the related
entities will each be required to provide a Proof a Debt, which will then be adjudicated.
No return from the intercompany debtor position is expected.
Page 8
3.8
Events leading up to Administration
The officers of the ILH have provided the following explanation of the events leading up to the appointment
of Voluntary Administrators:
In September 2013, ILH acquired the shares in CIPL, and the business and assets of The Pentad
Group which comprised Eaton Capital Partners, for consideration of $9.2 million. The consideration
comprised $4.5 million cash and 52.7 million ILH shares with a market value of $0.09 per share, with an
additional contingent consideration of $5.0 million payable over a two year period in scrip and cash if
certain performance conditions were satisfied. This acquisition required ILH to increase its external
borrowings by $4.0 million resulting in total external debt for ILH of approximately $14.0 million.
On 31 December 2013, ILH breached its bank funding interest cover ratio (ICR). This breach was not
rectified until September 2014, when the secured lender agreed to reduce the ICR covenant on the
condition ILH would make certain debt repayments. The first repayment was due on 4 December 2014.
In FY14, ILH incurred one-off acquisition related costs of $1.4 million relating to the CIPL purchase and
a potential international acquisition. The international acquisition was ultimately unsuccessful.
ILHs legal practice significantly underperformed against forecast, in particular the Perth practice, which
recorded a loss before tax of $3.9 million. This was primarily due to the decline in revenue following the
loss of several senior legal professionals and a downturn in economic conditions in Western Australia.
In addition, Eaton Capital Partners significantly underperformed expectations recording a loss of
$447,000 in the year ended 30 June 2014.
On 15 August 2014, ILH announced the sale of the Eaton Capital Partners due to the business not
meeting the Boards expectations.
Between September 2014 and November 2014, the legal practice continued to underperform in
comparison to forecast raising concerns about the overall financial stability of ILH and its subsidiaries.
On 1 October 2014, long standing Board members John Dawkins and Anne Tregonning resigned and
were replace by Matthew Driscoll, an independent director, and David French, Managing Director of
CIPL.
On 1 December 2014, Graeme Fowler resigned as ILH Director and CEO. Owen Evans, a director of
CIPL, replaced Mr Fowler on the Board and David French was appointed CEO.
On 3 December 2014, the ILH Board of directors appointed 333 Capital (an affiliate of KordaMentha) to
assist with the Boards review and implementation of a strategic plan for ILH and its subsidiaries.
As part of the strategic plan the Board sought to divest ROP as a result of the significant deterioration in
business performance. The divestment of ROP, however, was not feasible due to ROPs long term
lease commitment, which was no longer considered commercial, as it was guaranteed by ILH.
In addition, ILH and the majority of its subsidiaries were subject to a Deed of Cross Guarantee which
hindered the divestment of any of the underperforming subsidiaries.
On 4 December 2014, ILH was unable to make a debt repayment to the secured lender of $250,000.
In early December 2014, the Board determined that ILH required $0.5 million of additional funding to
enable ILH and its subsidiaries to operate through to the end of January 2015.
By the 16 December 2014, the Board had exhausted all funding avenues, and as a result, on
17 December 2014 the ILH Board resolved to place ILH into administration.
The officers of ILH have advised the financial position for ILH and its subsidiaries can be attributed to:
A failure to fully integrate the subsidiaries and no attainment of economies of scale
A focus on acquisitions rather than performance improvement, organic growth and integration of the
acquired businesses
Significant corporate overheads and duplication of corporate and support functions across each of the
subsidiaries
Significant deterioration of performance in the legal services subsidiaries against budget in FY14
Page 9
The loss of a number of senior legal professionals in the Perth legal practice and the coinciding
downturn in the Western Australian economy
Limited financial and operating controls in relation to debtors, resulting in ad-hoc collections and
substantial provisioning requirements
Deterioration in working capital and insufficient reserves to trade through the Christmas holiday period.
The Administrators generally concur with the above assertions made by the officers of the Company, and
also note ILH appears to have overpaid on the acquisition of some of its subsidiaries given the consideration
paid and the subsequent earnings achieved.
3.9
Deed of Cross Guarantee
The Group (excluding Rockwell Olivier Pty Ltd) (the ILH Cross Guarantee Group) entered into a Deed of
Cross Guarantee which was registered with ASIC on or about 30 June 2008 (the Cross Guarantee).
The Cross Guarantee provides that each member of the ILH Cross Guarantee Group (Cross Guarantee
Group Entity) guarantees the debt of each other Cross Guarantee Group Entity One of the circumstances
where this guarantee becomes enforceable is on a creditors voluntary winding up under Part 5.5 Division 3
of the Act. This means that currently, each Cross Guarantee Group Entity is responsible for the debts of
each other Cross Guarantee Group Entity, and a creditor of a Cross Guarantee Group Entity is a creditor of
every other Cross Guarantee Group Entity.
3.10 Report as to Affairs

The directors have provided a Report as to Affairs (RATA) to us. A RATA provides information on the financial
position of the Company as at the date of our appointment. This financial information is purely in relation to
the Company and does not include financial information in relation to the subsidiaries.
3.10.1 Extract from the directors RATA

A summary of the RATA is detailed below:
Report as to Affairs
Assets not specifically secured (see breakdown below)
Assets subject to specific security interests (net of specific security interests)
Total assets
Less payable in advance of secured parties
Book or cost valuation
Estimated realisable
value
36,201,274
5,308,317
35,289,415
5,308,317
(54,343)
(54,343)
(13,399,098)
(13,399,098)
Less preferential claims ranking behind secured parties
Balances owing to partly secured parties
(316,087)
Less amounts owing and secured by debenture or circulating security

interest over assets
Balances owing to unsecured creditors

Contingent assets
Contingent liabilities
Estimated surplus/(deficiency) subject to the costs of the Administration
Page 10
The assets not specifically charged comprised of the following:

Assets not specifically charged
Book or cost
valuation
Estimated
realisable value
16,071,931
102,879
95
95
5,343
5,343
Other assets
20,123,905
5,200,000
Subtotal as per directors RATA
36,201,274
5,308,317
Intercompany loans to ILH subsidiaries

Cash on hand
Plant and equipment
We note the directors RATA supports the position that the Company was effectively an ultimate holding
company with limited tangible assets and minimal trading activity in its own right. Substantially all of the
assets and trading activity occurred in the subsidiary entities.
A review of the intercompany loans from ILH to its subsidiaries appear to be significantly overstated as
goodwill on the acquisition for several of the subsidiaries has been erroneously recorded in the loan
accounts.
Other assets primarily comprise of the investment in its subsidiaries, in particular CIPL, which had a book
value of $13.6 million.
In our view the Estimated Realisable Value of the assets is a reasonable estimate.
3.11 Historical financial performance

The Groups consolidated audited financial statements were last prepared as at 30 June 2014. We note
monthly consolidated management accounts were prepared by ILH, with the last set of accounts prepared as
at 30 November 2014.
Detailed in Appendix 7 is a summary of the comparative consolidated balance sheets and profit and loss
statements of the Group, extracted from the Groups books and records, for the previous three financial
years.
The Groups historical results are analysed in Section 5.
Page 11
Realisations of assets
ILH ceased to trade on appointment of Administrators. Accordingly, since our appointment we have focussed
extensively on asset realisations. This has primarily involved the sale of ILHs shares in the subsidiaries and
or assisting the facilitation of the sale of the business assets to the principals in each of the subsidiaries.
The principals of the subsidiaries are the natural buyers of their practices, and should attribute a higher value
to their practices than an external party. In this regard, following our appointment we met with the majority of
the subsidiary principals to negotiate sales of their businesses. The offers received were considered by the
secured lender.
The secured creditor has a charge over all of ILHs trading subsidiaries, and accordingly is required to
provide its consent to release its security over the assets being sold. Accordingly, the secured creditor has
had oversight of each of the sales completed by ILH, and or its subsidiaries, and has reviewed and approved
each of the sale agreements.
The Administrators of ILH expect to receive proceeds of approximately $4.5 million through the asset
realisation strategy. Several sales for certain business asset have been negotiated at the subsidiary level.
The proceeds from these sales will be for the benefit of the subsidiarys employee entitlements or the
secured lender.
The expected proceeds from the sale of the ILHs assets will be insufficient to meet the debts owing to the
secured creditor or to the ILH employees. The secured debt as at the date of appointment was $15.3 million,
and ILH employee entitlements totalled approximately $0.2 million.
4.1
Realisations summary
Realisations to date (as at 17 January 2015)

Cash at bank on appointment
($000)
133
Asset Realisations
CIPL sale of shares and business assets
3,500
Law Central sale of shares
1,025
4,658
4.2
Status of trading subsidiaries
4.2.1 Capricorn Investment Partners Limited (CIPL)

An unconditional offer for 100% of the CIPL shares and sale of the business assets was received shortly
after our appointment. The offer was an all in-cash offer of $3.5 million, executed on 24 December 2014, with
completion scheduled for 27 February 2015. All CIPL employees were transferred in the transaction.
The sale was supported and approved by the secured lender and net sale proceeds will be applied against
the bank debt.
4.2.2 Law Central Co Pty Ltd (Law Central)

An unconditional offer for 100% of the Law Central shares was received shortly after our appointment. The
offer was an all-cash offer of $1.025 million, executed on 24 December 2014 with completion scheduled on
30 January 2015.
The sale was supported and approved by the secured lender and net sale proceeds will be applied against
the bank debt.
Page 12
4.2.3 Rockwell Olivier (Perth) Pty Ltd (Administrators Appointed)(ROP)

ROP was placed into Voluntary Administration on 4 January 2015. Cliff Rocke, Michael Brereton and
John Bumbak of KordaMentha were appointed as Administrators.
The Administrators have sold certain business assets to the ROP principals. The sales included the transfer
of a significant proportion of the employee entitlements.
We do not expect a return to ILH in respect of its shareholding in ROP. Any surplus proceeds from the
realisation of the ROP assets will be for the benefit of the remaining ROP employee entitlements and the
secured lender.
4.2.4 Signet Lawyers Pty Ltd (Administrators Appointed)(Signet)

John Vouris of PKF Lawler was appointed Administrator of Signet on 13 January 2015.
We do not expect a return to ILH in respect of its shareholding in Signet. Any surplus proceeds from the
realisation of the Signet assets will be for the benefit of the Signet employee entitlements and the secured
lender.
4.2.5 Rockwell Olivier (Sydney) Pty Ltd (Administrators Appointed)(ROS)

Michael Brereton, Cliff Rocke and Rahul Goyal of KordaMentha were appointed Voluntary Administrators of
ROS on 16 January 2015.
Prior to the appointment of Administrators, ROS effected two business asset sales to principals within the
business. The sales included the transfer of certain employee entitlements. The secured lender supported
and approved these sales. The net proceeds of the sales will be applied against the bank debt.
We do not expect a return to ILH in respect of its shareholding in ROS. Any surplus proceeds from the
realisation of remaining ROS assets will be for the benefit of the ROS employee entitlements and the
secured lender.
4.2.6 Rockwell Bates Pty Ltd (ROM)

ILH holds a 49% interest in ROM. ROM is a legal practice located in Melbourne.
We are currently in discussions with the majority shareholder of ROM concerning the sale of ILHs
shareholding in ROM. The realisable value of these shares is currently unknown. Any net sale proceeds from
the sale of the shares will be for the benefit of the secured lender.
Page 13
Investigations
5.1
Administrators investigations
Under the Act, we are required to investigate the Companys business, property, affairs and financial
circumstances.
Pursuant to Regulation 5.3A.02 of the Act, we are also required to investigate and report to creditors on any
possible recovery actions that would be available to a liquidator, if creditors resolve to place the Company
into liquidation. However, we note we currently have limited funds available to us, which would not extend to
pursuing any such actions in the capacity as liquidator, and have incurred costs in acting as Administrators
which would rank in priority to any creditors claims in a liquidation.
Our investigations are at a preliminary stage and we are not in a position to provide any final comments
about potential offences that may have been committed or amounts of money that may be recoverable in the
event of the Company being placed into liquidation. It should be noted that further investigations would need
to be undertaken by a liquidator (if appointed), and independent legal advice sought in order to determine the
likely success of any actions contemplated in respect to the matters detailed below.
5.2
Overview of Administrators investigations
Our investigations to date have focused on the following matters:
Breaches of duty and other offences under the Act by the directors
Potential actions by a liquidator (if appointed).
5.3
Approach to preliminary investigations
Throughout our preliminary investigations, we:
Analysed and where required, maintained the integrity and security of the IT systems of the Company.
We were required to take immediate steps to stop any intrusions into the Companys IT systems.
Held discussions with the directors of the Company
Held discussions with key employees, including the Financial Controller
Held discussions with the principals of the subsidiaries
Identified, reviewed, reconstructed where required, and analysed financial information in both hard copy
and electronic form
Undertook searches of various publicly available databases, including ASIC, ASX and Office of State
Revenue records
Spoke with various external parties, including service suppliers of the Company.
5.4
Offences under the Act by the directors
Section 438D of the Act requires an Administrator to lodge a report with ASIC if it appears that:
A past or present officer, or member, of the Company may have been guilty of an offence in relation to
the Company, or
A person who has taken part in the formation promotion, Administration, management or winding up of
the Company may have misapplied money or property of the Company or may have been guilty of
negligence, default, breach of duty or trust in relation to the Company.
We set out below and our comments as to whether investigations are warranted in relation to particular
offences.
Page 14
5.4.1 Books and records

Failure to maintain adequate books and records may be relied upon by a liquidator in an application for
compensation for insolvent trading and other actions for recoveries pursuant to Division 2 of Part 5.7B of the
Act.
From our investigations to date, we consider the Company has maintained books and records in accordance
with the requirements of the Act and therefore does not warrant a report pursuant to Section 438D of the Act.
However, further investigations may be conducted in the event we are appointed liquidators of the Company.
5.4.2 Care and diligence and duty to act in good faith

The duty to act in good faith includes the following:
To act honestly
To exercise powers in the interests of the Company
To avoid conflicts of interest
To use their position properly
To use information only for its proper purpose.
From our investigations to date, we have not found any evidence the directors have breached their duty to
act with due care and diligence and to act in good faith, nor have they used their position improperly or used
information improperly.
5.5
Potential recovery actions available to a liquidator
5.5.1 Voidable transactions

Unfair preferences
If the Company is placed into liquidation, various provisions of the Act enable the liquidator to recover certain
payments that were made by the Company to a creditor prior to the Company being placed into Voluntary
Administration, referred to as unfair preferences. These are transactions where the payment results in a
creditor receiving more than it would have received in the winding up of the Company. A liquidator is able to
look back at the preceding six months to determine whether or not any such transactions occurred. In this
instance a liquidator is able to review transactions between the period 18 June 2014 to 17 December 2014.
In order to prove a creditor received an unfair preference payment, the liquidator must first show that the
Company was insolvent at the time of the payment.
The creditor has a defence to an unfair preference claim by a liquidator if it proves that it entered into the
transaction in good faith and, at the time the benefit was received, the creditor had no reasonable grounds
for suspecting that the Company was insolvent or would become insolvent through entering into the
transaction and valuable consideration was given, nor would a reasonable person in the creditors position
have suspected that the Company was insolvent or would become insolvent.
A preliminary review of the Company's records indicates that no preferential payments were made to
creditors under the provisions of Section 588FA of the Act. There were however several payment plans
entered into with certain creditors, in particular the ATO, in the months prior to appointment. Payment
arrangements with creditors and demand notices, can be an indicator of preferential payments. We note that
at this stage of our investigation, we are unable to confirm if any recovery actions are warranted and if so,
their likelihood of success.
Page 15
Uncommercial transactions
A transaction of a company is an uncommercial transaction if the following elements are established by a
liquidator:
The transaction was entered into or given effect to within two (2) years of the date of appointment of the
Administrator
At the time the transaction was entered into, or when given effect to, the Company was insolvent or
became insolvent as a result of the transaction
A reasonable person in the Companys circumstances would not have entered into the transaction
having regard to the benefits and detriments to the Company in entering into the transaction and the
respective benefits to other parties.
The defences available to a party involved in an uncommercial transaction claim are, in effect, the same as
those for an unfair preference.
From our investigations to date we are unaware of any uncommercial transactions entered into by the
Company. However, further investigations will be conducted if we are appointed liquidators to the Company.
Unfair loans
Essentially an unfair loan is a loan agreement where the interest or charges are considered to be
extortionate. Unfair loans made to the Company any time prior to the appointment of the Administrators may
potentially be overturned by a subsequently appointed liquidator, whether or not the Company was insolvent
at any time after the loan was entered into.
From our investigations, we are not aware of any unfair loans entered into by the Company. However, further
investigations will be conducted if we are appointed liquidators to the Company.
5.5.2 Insolvent trading

Under the Act, a director is personally liable to the Company if the director fails to prevent a company from
incurring a debt when, at the time of incurring that debt, the Company is insolvent, or becomes insolvent by
incurring the debt, and there existed reasonable grounds to suspect that the Company was or would become
insolvent. This claim must be proven by the liquidator against each individual director. Creditors should be
aware that a successful claim for insolvent trading requires extensive analysis and would generally require
legal action. Further, we would point out to creditors that such proceedings may often be drawn out and
involve significant cost.
Creditors should also be aware that any successful claim may be set-off by the directors against amounts
due to that individual by way of unsecured advances or loan account.
The Act provides a number of possible defences to directors to a claim for insolvent trading. These defences
are:
At the time the debt was incurred the directors had reasonable grounds to expect and did expect that
the Company was solvent and would remain solvent if it incurred that debt and any other debts that it
had incurred at that time.
At the time the debt was incurred the directors had reasonable grounds to believe and did believe that a
competent and reliable person was responsible for providing information about the Company's solvency
and that person was fulfilling that responsibility.
The directors through illness or some other good reason were not taking part in the management of the
Company at the time the debt was incurred.
The directors took all reasonable steps to prevent the Company from incurring the debt.
It is crucial to note that, with the exception of unfair loans, in order for a liquidator to be able to set aside a
transaction or obtain compensation from a director for insolvent trading, the liquidator must first be able to
show that at a relevant point in time the Company was insolvent.
Page 16
The Act states the Company is considered to be solvent if, and only if, the Company is able to pay its debts
as and when they become due and payable. A Company that is not solvent is insolvent.
The Courts have tended to use a cash flow test rather than a balance sheet test for determining insolvency,
however the determination of solvency involves a consideration of the Companys financial position in its
entirety and in the context of commercial reality. A temporary lack of liquidity will not necessary mean that a
company is insolvent. Such a situation is to be contrasted with an endemic shortage of working capital.
Results of investigations
In relation to our investigations into the financial affairs of the Company it should be noted that the Company
did not trade in its own right, rather trading was conducted by the subsidiaries. Our analysis, except where
otherwise stipulated is based upon the financial performance of the Group as presented in its consolidated
accounts.
The Groups annual financial statements are prepared on a consolidated basis and accordingly, all commentary
in respect of the Groups financials are reported on such basis. We understand monthly balance sheets for
the individual subsidiaries of the Group were prepared on an individual basis, excluding shared head office
costs, which were either accounted for separately or were recorded in the accounts of the Group.
The financial analysis below has been undertaken from the Groups annual financial statements, which were
audited by the Groups auditor Ernst and Young (EY). Where financial information is not derived from the
annual financial statements, the various sources of financial information including managements monthly
financial accounts and ledgers have been clearly marked.
In respect of the Group, at the time of writing, an exact date of insolvency has not been determined, however
we make the following comments in respect of the solvency of the Group.
Financial ratios
We have reviewed the current ratio and net assets for the Group from its end of year accounts for the three
years ending 30 June 2011, 2012 and 2013.
Financial year ended
30-Jun-2012
Current ratio
Net assets ($000)
Current assets less current liabilities ($000)
30-Jun-2013
30-Jun-2014
0.90
0.80
0.40
19,062
19,958
14,577
8,325
10,089
(10,547)
Working capital is a critical element of an organisation and sufficiency of working capital is often closely
associated with solvency. A key measure of working capital is the current ratio which is the ratio of current
assets to current liabilities. A current ratio of greater than one would generally indicate the company has a
surplus of short term assets to short term liabilities.
We note in the above analysis the current ratio was lower than one at every point in time reviewed. This
means the Group has historically traded with a deficiency of working capital.
As at 30 June 2014, there was a significant decline in the current ratio. This was attributable to the
reclassification of the Groups bank debt to due and payable under the terms of the funding facility as a result
of a breach of the ICR covenant on the facility as at 30 June 2014. This breach was rectified in
September 2014, following the secured lenders agreement to reduce the ICR covenant on the condition ILH
would make certain debt repayments. Accordingly, by 30 September 2014 the Groups borrowings were no
longer classified as current.
Page 17
Monthly management accounts (unaudited)

The following table has been prepared using information extracted from the monthly management accounts
of the Group. We note that this financial information has not been audited.
Month ended
Current ratio
Net assets ($000)
Current assets less current liabilities ($000)
31-Aug-14
30-Sep-14
31-Oct-14
30-Nov-14
0.53
1.03
1.01
1.12
14,786
13,985
14,771
16,906
(10,243)
302
154
1,077
Management has advised that the improvement in the current ratio and net assets in November 2014 was
related to the conversion of the $1.5 million cash liability payable to CIPL into ILH shares, as approved at the
AGM in November 2014.
Cash flow analysis
We have reviewed the consolidated cash flows for the Group from its audited end of year accounts for the
three years ending 30 June 2012, 2013 and 2014. These are summarised below:
Financial year ended
30-Jun-2012
($000)
30-Jun-2013
($000)
30-Jun-2014
($000)
Net cash inflow (outflow) from operating activities
(1,338)
(18)
(966)
Net cash inflow (outflow) from investing activities
(2,082)
(2,766)
(4,716)
Net cash inflow (outflow) from financing activities
2,264
2,635
4,000
(1,156)
(149)
(1,681)
Net increase (decrease) in cash and cash equivalents
ILH has recorded a net cash flow shortfall in each of the past three financial years. This cash flow
shortfall has been support by cash reserves.
The net cash flow shortfall is principally attributable net cash operating outflows, indicating the
consolidated Group was loss making over these three years.
The investing activities for ILH have been funded by equivalent increases in external borrowings.
Page 18
Profitability
The Groups profit and loss statements for the three financial years ending 30 June 2012, 2013 and 2014 is
summarised below:
Profit and loss statement for the years ending 30 June 2014
Continuing operations
Revenue
Other income
Occupancy expenses
Salaries and employee benefits expenses
Depreciation and amortisation expenses
Advertising and marketing expenses
Administrative expenses
Other expenses
Finance costs
Share based payments expense
Profit (Loss) before tax from continuing operations
Income tax benefit / (expense)
Profit (Loss) for the year from continuing operations
Discontinued operations
Profit/(loss) after tax for the year from discontinued operations
Net profit/(loss) for the year
Other comprehensive income/(loses) for the year, net of tax
Total comprehensive income/(loss) for the year
2012
($'000)
2013
($'000)
2014
($'000)
31,690
717
(2,815)
(22,325)
(530)
(460)
(3,630)
(836)
(351)
(42)
1,419
(303)
1,116
1,116
(1)
1,115
31,719
590
(2,812)
(21,642)
(610)
(577)
(4,112)
(667)
(523)
(37)
1,330
(309)
1,021
1,021
1
1,022
27,476
782
(3,023)
(22,346)
(715)
(531)
(5,174)
(1,962)
(1,102)
(29)
(6,625)
2,129
(4,496)
(4,459)
(8,955)
2
(8,953)
As explained in the audited financial report for year ended 30 June 2014, the reduction in revenue of
$4.2 million was primarily due to the underperformance of the legal practices, in particular Perth, one off
acquisition costs and the newly acquired corporate advisory arm of CIPL, Eaton Capital Partners, not
meeting Board expectations. Excluding the revenues achieved by the newly acquired wealth management
arm of CIPL, the comparable year on year reduction equates to $7.6 million.
In addition to the decline in revenue, ILH experienced an increase in corporate overhead expenses and
finance costs.
Furthermore, between year ended 30 June 2013 and 30 June 2014 there was an increase in the bad and
doubtful debts of $1.1 million.
Losses from continuing operations (before tax) in the year ending 30 June 2014 totalled $6.6 million, an
increase of $7.9 million from year ended 30 June 2013.
Page 19
Monthly management accounts (unaudited)

The following table has been prepared using information extracted from the monthly management accounts
of ILH. We note that this financial information has not been audited.
Statements of Financial Performance (monthly)
Aug-2014
Sep-2014
Oct-2014
Nov-2014
($000)
($000)
($000)
($000)
2,300
2,409
2,167
1,824
13
13
305
357
343
421
Total revenue
2,610
2,779
2,516
2,258
Total direct costs
1,005
1,554
1,322
1,141
Total gross margin
1,605
1,226
1,194
1,116
18
35
24
1,545
959
1,228
1,374
Operating EBITDA
78
301
(31)
(234)
Net profit after tax
55
134
(173)
(408)
Legal services fees

Business consulting revenue
Wealth management revenue
Total other revenue

Total operating expenses
From a month on month review of the consolidated management accounts, revenue and earnings softened
towards the end of the 2014 calendar year, which is typical in a service based business.
In the two months prior to our appointment the Group experienced net after tax losses of $0.2 million
(October 2014) and $0.4 million (November 2014).
Auditors comments regarding going concern
The Group engaged EY as its auditor for the years 2010 to 2014.
We note that potential risks to the going concern of the Group were identified in the notes to the financial
statements for the 2014 financial year and comments were included in the Independent Auditors report
dated 30 September 2014 as follows:
Emphasis of Matter
Without qualifying our audit opinion expressed above, attention is drawn to the following matter. The
conditions described in Note 2a Basis of Preparation - Going Concern, indicate the existence of a material
uncertainty that may cause significant doubt about the consolidated entitys ability to continue as a going
concern and therefore the consolidated entity may be unable to realise its assets and discharge its liabilities
in the normal course of business.
Causes of the failure of the Company
The officers of the ILH have advised the financial position for ILH and its subsidiaries can be attributed to:
A failure to fully integrate the subsidiaries and no attainment of economies of scale
A focus on acquisitions rather than the performance improvement, organic growth and integration of the
acquired businesses
Significant corporate overheads and duplication of corporate and support functions across each of the
subsidiaries
Significant deterioration of performance in the legal service subsidiaries against budget in FY14
The loss of a number of senior legal professionals in ROP and the coinciding downturn in the Perth
economy
Limited financial and operating controls in relation to debtors, resulting in ad-hoc collections and
substantial provisioning requirements
Page 20
Insufficient working capital reserves to trade through the Christmas holiday period.
In the event we are appointed as liquidators of the Company, detailed investigations will be undertaken to
determine a date of insolvency and whether any action for insolvent trading against the directors will be
pursued.
Any claim for insolvent trading against the directors of the Group would need to be assessed on commercial
grounds including:
Likelihood that pursuing a claim of insolvent trading would be successful, taking into account the
defences available to the directors
Cost of litigation
Likelihood of recovery against the directors of the Group
Further, and as stated above, the Act provides directors with a number of defences to a claim for
insolvent trading.
5.5.3 Costs
The costs of pursuing voidable transactions and insolvent trading would be met out of the assets of the
Company or funding from creditors of the Company. Alternatively, the liquidators could seek litigation
insurance funding.
5.6 Offences
Our investigations to date do not reveal that the directors have committed any offences prior to our
appointment. However, our investigations are incomplete and ongoing and in the event that creditors
resolve that the Company be wound up, further extensive investigations will be completed.
5.7 Limitation of investigations

All opinions outlined in this report are based on investigations undertaken by our office into the Groups
affairs, business and financial position. Our investigations have been based on the following information:
Representations of the directors of the Group
The details of the Groups assets and liabilities as established by our office
The books and records of the Group.
5.8 Conclusion
We are not aware of any serious offences in relation to the Company that may have been committed by the
directors of the Company. We are not aware of any persons, who have taken part in the formation or
management of the Company, misapplying or retaining money or property of the Company. We are not
aware of any persons who have been guilty of negligence, breach of duty or trust of the Company.
Accordingly, we have not reported to the ASIC under Section 438D of the Act.
However, we have concerns regarding the collectability of the Group debtor book, and whether the Group
debtor position was in fact overstated. Given the accounts have recently been issued and audited this may
give rise to a potential claim against the auditors and or directors. This will be further investigated in any
liquidation of the Company.
Page 21
Alternatives available to creditors
6.1
Explanation of alternatives available to creditors
It is our obligation to make a recommendation to creditors on which alternative is in the best interests of
creditors. We make the following general comments in respect to each option:
6.1.1 Deed of company arrangement

During the course of the Administration, the Administrators have been approached by interested parties who
expressed an interest in proposing a DOCA, but required further time to put forward a more formal (and
detailed) proposal.
As the Administrators have not received a DOCA proposal which is capable of creditor acceptance at this
point in time, this option is not available to creditors at this time. However, as noted in Section 1 of the
report, we recommend the Second Meeting of Creditors be adjourned for a period of up to 45 business days
to allow this option to be more fully explored.
6.1.2 Bringing the Administration to an end

It is possible that creditors may consider ending the Administration and returning the Company to the
existing directors. This is not a commercial proposition at this stage given the financial position of the
Company and the professional assistance the Company requires to trade out of its difficulties. The
Companys directors would resume control of the assets and be able to deal with them as they deem
appropriate. This will not prevent creditors from initiating legal proceedings for the recovery of their debts or
petitioning to the Court to have the Company wound up at their own expense.
Should creditors resolve that the Administration be terminated, the Company will be placed in a similar
position to that existing prior to our appointment as Administrators.
6.1.3 Winding up the Company

At the Second Meeting of Creditors, creditors may resolve that the Company be wound up. Should they do
so, the Company will be placed into liquidation and the Company is taken to have nominated us as the
Administrators to be the liquidators. The liquidators are required to realise and distribute the assets in
accordance with Section 556 of the Act (subject to Section 545 of the Act) and will also be required to
complete a thorough investigation into the Companys past dealings and affairs, and the past actions of the
directors.
The effects of the liquidation of the Company include:
1.
The moratorium available under the Voluntary Administration process will cease
2.
The liquidators will be empowered to recover potential voidable transactions, as outlined in Section 5.5
of this report
3.
The liquidators will be required to conduct an investigation into the affairs of the Company pursuant to
Section 533 of the Act and lodge a report with the ASIC in respect of the same.
It is clear at this stage the Company has a deficiency of assets to liabilities and further that it is now
insolvent, in that it cannot meet its debts as and when they fall due.
If the Company is placed into liquidation, employees (other than excluded employees) may be eligible for
payment of their outstanding employee entitlements (excluding unpaid superannuation) under Fair
Entitlements Guarantee (FEG), a scheme operated by the Federal Government.
Given the shortfall to the secured creditor from the realisation of ILHs assets, and the outstanding employee
entitlements, if the Company is wound up there will be no return to the unsecured creditors of ILH.
Page 22
6.1.4 Adjournment of second meeting

As the DOCA proposals received are at a preliminary stage, have not been thoroughly investigated by the
Administrators and are in a form incapable of acceptance, the Administrators are unable to recommend an
option that is in the best interest of creditors at the date of this report.
We therefore consider it would be in creditors best interest to resolve to adjourn the Second Meeting
of Creditors for a period not exceeding 45 business days as it will, amongst other things allow:
We note there is no certainty a DOCA proposal will be received which is capable of acceptance. However, in
our opinion, while there are costs associated with adjourning the Second Meeting of Creditors there is
potentially a substantial benefit to creditors from a DOCA that will only be possible if the meeting is
adjourned for a period not exceeding 45 business days.
If creditors elect at the Second Meeting of Creditors to adjourn the meeting, as recommended, the
Administrators will continue to seek expressions of interest for ILH, work with interested parties to develop
DOCA proposals capable of acceptance, and compile a supplementary report to creditors.
If the Second Meeting of Creditors is adjourned, the reconvened second meeting of creditors would
be held on or before Tuesday, 31 March 2015.
Estimated return to creditors
Given the quantum of amounts owing to employees for entitlements and the secured creditor under its
registered interests, the Administrators do not anticipate a dividend being paid to unsecured creditors if the
Company is placed into liquidation due to:
There being minimal assets available for realisation within the Company
Anticipated costs of administration/liquidation being greater than anticipated recoveries
Limited recoveries anticipated from subsidiaries within the Group.
We are unable to advise at this time what the estimated return to creditors will be under a DOCA proposal as
we have not received a proposal capable of acceptance by creditors.
Remuneration and disbursements of Administrators
In accordance with Section 449E of the Act, the Administrators remuneration report is attached as
Appendix 8. We are seeking approval of our remuneration on a time basis in accordance with the
KordaMentha Sydney 2015 Schedules of Hourly Rates, which are included in the remuneration report. Also
included in the remuneration report are details in relation to disbursements.
Page 23
Further information
Creditors requiring further information regarding the Administration can contact Andrew Hudson on
(02) 8257 3023.
Dated: 20 January 2015
Michael Brereton
Administrator
Cliff Rocke
Administrator
Level 5 Chifley Tower, 2 Chifley Square

Sydney NSW 2000
Page 24
Appendix 1 Declaration of Independence, Relevant Relationships

and Indemnities
Sections 436DA, 449CA
Corporations Act 2001

Declaration of independence, relevant relationships and indemnities
ILH Group Limited (Administrators Appointed)
ACN 120 394 194 (ILH or the Company)
This declaration requires us as the Practitioners appointed to the Company to make declarations as to:
Our independence generally
Relationships, including:
the circumstances of the appointment
any relationships with the Company and others within the previous 24 months
any prior professional services provided to the Company within the previous 24 months
that there are no other relationships to declare.
Any indemnities given, or up-front payments made, to us as the Practitioners.
This declaration is made in respect of us, Michael Brereton and Cliff Rocke, our partners and the
KordaMentha Group.
Independence
We, Michael Brereton and Cliff Rocke of KordaMentha, Level 5, 2 Chifley Square, Sydney NSW 2000, have
undertaken a proper assessment of the risks to our independence prior to accepting the appointment as
Voluntary Administrators of the Company in accordance with the law and applicable professional standards.
This assessment identified no real or potential risks to our independence. We are not aware of any reasons
that would preclude us from accepting this appointment.
Declaration of relationships
Circumstances of appointment
Michael Brereton, one of the administrators, and members of our team, met with and had a number of calls
with David French (Company Director) and Reena Minhas (Company Chief Financial Officer) to prepare for
and plan for a voluntary administration appointment on 17 December 2014, which culminated in the
appointment as voluntary administrators later that evening. The purpose of the meetings on
17 December 2014 were to clarify and explain the nature and consequences for the Company and its
subsidiaries of an insolvency appointment and to provide consents to act.
We did not receive any remuneration in relation to this advice.
In our opinion, these meetings do not affect our independence for the following reasons:
The Courts and the ARITA Code of Professional Practice specifically recognise the need for
practitioners and their staff to provide advice to companies and the options available and do not
consider that such advice results in a conflict or is an impediment to accepting the appointment.
The nature of the advice provided to the Company is such that it would not be subject to review and
challenge during the course of the voluntary administration
The pre-appointment meeting will not influence our ability to be able to fully comply with statutory and
fiduciary obligations associated with the voluntary administration of the Company in an objective and
impartial manner.
Relevant relationships
We, or a member or an associate of KordaMentha, have or have had over the preceding 24 months a
relationship with the following parties:
Secured Creditors
St. George Bank Limited and/or Westpac Banking Corporation Limited provided financial services to the
Company.
Nature of the relationship
KordaMentha has had relationships with the above secured creditor, due to the nature of KordaMenthas
business. This includes business advisory, consulting services and the appointment of KordaMenthas
registered liquidators to companies as a formal insolvency appointment (in some cases by the secured
creditor), where the secured creditor has provided banking facilities, loan facilities and/or leasing facilities to
insolvent companies.
Reasons why not an impediment or conflict
In our opinion, this relationship does not result in a conflict of interest or duty as KordaMentha has never
undertaken any work for the above secured creditor in respect of the Company. This relationship has not
impeded our independence.
Australian Taxation Office (ATO)
KordaMentha undertakes work from time to time on behalf of the ATO and is on a panel of practitioners
maintained by the ATO. This includes the appointment of KordaMenthas registered liquidators to companies
as a formal appointment where the ATO has asked us to consent to act as liquidators.
In our opinion, this relationship does not result in a conflict of interest or duty as we have not identified any
issue in relation to this relationship that would give rise to a conflict in undertaking the administration of the
Company. This relationship has not impeded our independence.
Prior professional services to the company

We, or a member of our firm, have provided the following professional services to the Company in the
24 months prior to the acceptance of this appointment.
Prior to our appointment as Voluntary Administrators, ILH engaged 333 Capital Pty Ltd (333 Capital) to
undertake a strategic review of ILH as well as undertake services typically provided by a mergers and
acquisitions advisory firm. 333 Capital is part of the KordaMentha group.
The 333 Capital engagement commenced on 4 December 2014 and the review was curtailed during the
early phase of the strategic review.
333 Capital received an upfront fee of $10,000.00 (exclusive of GST) in relation to the engagement. There is
no amount outstanding.
Included as Annexure A is a schedule setting out further details on the 333 Capital engagement including
details of meetings and calls with the Company.
In our opinion, this relationship does not result in a conflict of interest as this constitutes an immaterial
professional relationship in accordance with the ARITA Code of Professional Practice due to:
The nature of the report provided to ILH is such that it would not be subject to review and challenge
during the course of the voluntary administration and any subsequent liquidation. The strategic review
engagement will not influence our ability to fully comply with the statutory and fiduciary obligations
associated with the voluntary administration and any subsequent liquidation of the Company in an
objective and impartial manner.
The review being performed over a short period.
The fee was $10,000.00.
The remuneration is unlikely to be considered to be a preference payment.
Other relevant relationships

Neither we, nor a member or an associate of KordaMentha, have identified any other material relationships
within the preceding 24 months with the Company, any associate of the Company, a former insolvency
practitioner appointed to the Company or any person or entity that has a charge on the whole or substantially
whole of the property of the Company.
While it is likely that some of the Companys professional staff are known to some of the KordaMentha
professional staff, given both firms are professional service firms, we have not identified any material
relationships that require further disclosure.
Indemnities
We have not been indemnified in relation to this voluntary administration, other than any indemnities that we
may be entitled to under statute.
Upfront payments
We have not been provided with any upfront payments in relation to this voluntary administration.
General
As required under the ARITA Code of Professional Practice, if circumstances change, or new information is
identified, we will update this declaration and provide a copy to creditors with our next communication as well
as table a copy of any replacement declaration at the next meeting of the creditors of the Company.
Dated: 19 December 2014
Michael Brereton
Voluntary Administrator
Cliff Rocke
Voluntary Administrator
Annexure A
333 Capital met with ILH directors prior to our appointment, as follows:
Mr Paul Spottiswood, an Executive Director of 333 Capital was approached by Mr Driscoll, the
Chairman of ILH in early November 2014, to provide strategic advice to ILH. Mr Driscoll had been
known to Paul for a number of years, but had no previous professional relationship.
333 Capital, met David French, Managing Director of ILH on 13 November 2014 to discuss ILH.
333 Capital was appointed by the board of ILH to act as financial adviser to ILH, which involved a
strategic review of ILH. The mandate also contemplated assets to be sold as part of the review and a
possible subsequent capital raising.
The mandate was agreed and signed as at 1 December 2014, and work on the strategic review
commenced following an introductory meeting on 4 December 2014.
Since 4 December 2014, 333 Capital have had eight (8) meetings with ILH board members and a
number of short phone calls with specific board members.
Appendix 2 Notice of Meeting
Paragraph 5.6.12(2)(a)
Form 529
Notice of Second Meeting of Creditors of Company under Administration
ACN 120 394 194 (the Company)
Notice is hereby given that the Second Meeting of Creditors of the Company will be held on
Wednesday 28 January 2015 at Level 5 Chifley Tower, 2 Chifley Square Sydney NSW 2000. Registration for
all creditors and employees will open at 9:30am with the meeting commencing at 10:00am.
Agenda
1.
The purpose of the meeting is:

a.
To review the Administrators report in connection with the business, property, affairs and financial
circumstances of the Company
b.
To consider the approval of the Administrators remuneration calculated in accordance with rates
charged by KordaMentha for the period of the voluntary administration up to the Second Meeting of
Creditors
c.
For the creditors of the Company to resolve:

i.
That the Second Meeting of Creditors be adjourned for a period of no longer than 45 business
days, or
ii.
That the Administration should end, or
iii.
That the Company be wound up
2.
If the creditors of the Company resolve that the Company is to be wound up or the Administration
should end, to consider the approval of the Administrators remuneration from the Second Meeting of
Creditors to completion of the Voluntary Administration
3.
If creditors of the Company resolve that the Company is to be wound up:
4.
i.
To consider the approval of the Liquidators remuneration calculated in accordance with rates
charged by KordaMentha for the period of the Liquidation
ii.
To consider authorising the Liquidators to compromise debts of the Company under Section
477(2A) of the Corporations Act 2001
iii.
To consider authorising the Liquidators to enter into agreements that may take longer than
three months to complete under Section 477(2B) of the Corporations Act 2001
iv.
To consider authorising, subject to obtaining approval from the Australian Investment and
Securities Commission, pursuant to Section 542(4) of the Corporations Act 2001, the books
and records of the Company be disposed of by the Liquidators six months after the dissolution
of the Company
v.
To consider the appointment of a committee of Inspection and where desired, appoint

members to that committee
Any other business properly brought before the meeting.
Creditors wishing to vote at the meeting, who will not be attending in person or are a company, must
complete and return a Proxy Form by no later than 4.00pm on the last business day prior to the meeting, by
post to KordaMentha, GPO Box 2523, Sydney NSW 2001 or by facsimile on (02) 8257 3099. A Form 532 of
Proxy Appointment is attached.
Michael Brereton
Administrator
Appendix 3 Form 532 Appointment of Proxy
Appointment of Proxy
Form 532
Regulation 5.6.29

1.
Insert Full Name and Contact Details (please print)
Given name
Surname
Company name
Telephone number
Address
2.
Appointment of a Proxy (please complete)
I/We, a creditor of the Company, appoint:

...............................................................................
of .....................................................................................
as my/our proxy, or in his/her absence __________________________, to vote at the meeting of creditors

to be held on Wednesday 28 January 2015 at the Level 5 Chifley Tower, 2 Chifley Square Sydney NSW
2000 at 10:00am or at any adjournment of that meeting.
3.
Voting by your Proxy
Option 1: If appointed as a general proxy, as he/she determines on my/our behalf.

and/or
Option 2: If appointed as a special proxy for some or all resolutions, specifically in the
manner set out below (please tick).
Resolution (please specify the particular resolution)
For
Against
Abstain
General
Proxy to
Vote
1.
That the remuneration of the Administrators for the

period 17 December 2014 to 18 January 2015 in the
amount of $293,128 (excluding GST and disbursements)
calculated on the basis of time at the rates as set out in
the schedule titled KordaMentha Rates National FY15, is
approved for payment
2.
That the remuneration of the Administrators for the

period 19 January 2015 to 28 January 2015 in the
amount of $66,990 (excluding GST and disbursements)
calculated on the basis of time at the rates as set out in
the schedule titled KordaMentha Rates National FY15, is
approved for payment
3.
i. That the Company be wound up; or
ii. That the Administration should end; or
iii. That the Second Meeting of Creditors be adjourned

for a period of no longer than 45 business days.
Please select only one for from the

available three options in resolution 3.
4.
If the creditors of the Company resolve that the

Company is to be wound up or that the Administration
should end, the remuneration of the Administrators for
the period 28 January 2015 to completion of the
Voluntary Administration in the amount of $23,975
(excluding GST and disbursements) calculated on the
basis of time at the rates as set out in the schedule titled
KordaMentha Rates National FY15, is approved for
payment
5.
If the creditors of the Company resolve the Company be

wound up, that the estimated remuneration of the
Liquidators for the period 28 January 2015 to completion
of the Liquidation in the amount of $70,250 (excluding
GST and disbursements) calculated on the basis of time
at the rates as set out in the schedule titled KordaMentha
Rates National FY15, is approved for payment
6.
That the Liquidators be authorised to compromise debts

of the Company under Section 477(2A) of the
7.
That the Liquidators be authorised to enter into

agreements that may take longer than three months to
complete under Section 477(2B) of the Corporations Act
2001
8.
That, subject to obtaining Australian Investment and

Securities Commission approval pursuant to Section
542(4) of the Corporations Act 2001, the books and
records of the Company and of the Liquidators be
disposed of by the Liquidators six months after the
dissolution of the Company
9.
That pursuant to Section 548 of the Corporations Act

2001, a Committee of Inspection be formed comprising
of representatives as nominated at the meeting of
creditors
10. Signature Section (in accordance with Sections 127 or 250D of the Corporations Act 2001)
Signature of individual or person authorised by corporate
resolution to represent corporation
The common seal was affixed hereto in the presence of:
Print Name
Director
Dated ......................................................................
Director/Company Secretary
Certificate of Witness
Please Note: This certificate is to be completed only where the person giving the proxy is blind or incapable
of writing. The signature of the creditor is not to be attested by the person nominated as proxy.
I, ........................................................................ of .........................................................................................
certify that the above instrument appointing a proxy was completed by me in the presence of and at the
request of the person appointing the proxy and read to him before he attached his signature or mark to the
instrument.
Signature of witness: ..........................................................................................................................................
Appendix 4 Form 535 Formal Proof of Debt
Subregulation 5.6.49(2)
Form 535
Formal Proof of Debt or Claim (General Form)
To: The Administrators of ILH Group Limited (Administrators Appointed)
1.
This is to state that the Company was on 17 December 2014, and still is, justly and truly indebted:
To ...............................................................................................................................................................
(name of creditor)
Of
...............................................................................................................................................................
(address of creditor)
For ...............................................................................................................................................................
(amount owed to creditor)
And ........................................................ cents (GST inclusive) GST Amount ..........................................

Particulars of the debt are:
Date
Consideration
Amount ($)
Remarks
(insert date when debt arose)
(state how the debt arose and

attach supporting invoices
and statements of account)
(GST inclusive)
(include details of voucher

substantiating payment)
2.
To my knowledge or belief the creditor has not, nor has any person by the creditor's order, had or
received any satisfaction or security for the sum or any part of it except for the following: (insert
particulars of all securities held. If the securities are on the property of the Company, assess the value
of those securities. If any bills or other negotiable securities are held, show them in a schedule in the
following form).
Date
Drawer
Acceptor
Amount ($ )
Due date
*I am employed by the creditor and authorised in writing by the creditor to make this statement. I know that
the debt was incurred for the consideration stated and that the debt, to the best of my knowledge and belief,
remains unpaid and unsatisfied.
*I am the creditor's agent authorised in writing to make this statement in writing. I know that the debt was
incurred for the consideration stated and that the debt, to the best of my knowledge and belief, remains
unpaid and unsatisfied.
* Delete if not applicable.
Dated this
.......................................................................................................................................................
Signature
.......................................................................................................................................................
Name
.......................................................................................................................................................
Address
.......................................................................................................................................................
Phone:
.......................................................................................................................................................
I nominate to receive electronic notification of notices or documents in accordance with Section 600G of
the Corporations Act at the following email address or fax number:
Email address: ....................................................................................................................................................
Fax number:
....................................................................................................................................................
Appendix 5 Summary of receipts and payments

A summary of the receipts and payments for the period from 17 December 2014 to 18 January 2015
ILH Group Limited (Administrators
Appointed)
Receipts and payments from 17 December 2014 to 18 January 2015
Receipts
Payments
Balance
Opening Balance
Date
17/12/2014
Sweep from pre-appointment bank accounts
22/12/2014
133,362
133,362
Interest received
31/12/2014
90
133,451
Bank service charge
31/12/2014
(11)
133,440
Mail re-direction
09/01/2015
(187)
133,254
Sale of business - deposit
15/01/2015
14,925
148,179
Sale of business - deposit

Sale of business deposit
Employee Wages
15/01/2015
16/01/2015
16/01/2015
35,075
104,000.00
(8,496.26)
183,254
287,254
278,758
Closing Balance
18/01/2015
278,758
Appendix 6 Group structure
Appendix 7 Historical financial performance

Detailed below is a summary of the comparative balance sheets and profit and loss statements of the
Company, extracted from the Companys books and records, for the previous three financial years.
Balance sheet as at 30 June 2014
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Dividends receivable
Work in progress
Income tax receivable
Assets classified as held for sale
Total current assets
Non - Current Assets
Investment in an associate
Plant and equipment
Goodwill
Intangible assets
Deferred tax assets
Other assets
Total non - current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Income tax payable
Provisions
Other liabilities
Liabilities associated with assets classified as held for sale
Total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Provisions
Deferred tax liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
2013
($'000)
1,312
10,789
2,288
31
14,421
1,343
14,590
168
3
16,103
30,524
3,941
676
1,074
404
6,096
4,794
348
107
118
5,367
11,462
19,062
2013
($'000)
1,164
10,749
126
2,929
228
15,196
2,861
983
14,590
666
4
19,105
34,301
3,379
623
991
114
5,107
8,375
388
310
162
9,235
14,342
19,958
2014
($'000)
233
8,579
113
1,784
781
11,490
2,784
728
22,184
973
2,069
28,737
40,226
4,283
14,845
79
1,274
1,476
81
22,037
8
598
3,006
3,612
25,649
14,577
Profit and loss statement for the years ending 30 June 2014
Continuing operations
Revenue
Other income
Occupancy expenses
Salaries and employee benefits expenses
Depreciation and amortisation expenses
Advertising and marketing expenses
Administrative expenses
Other expenses
Finance costs
Share based payments expense
Profit (Loss) before tax from continuing operations
Income tax benefit / (expense)
Profit (Loss) for the year from continuing operations
Discontinued operations
Profit/(loss) after tax for the year from discontinued operations
Net profit/(loss) for the year
Other comprehensive income/(loses) for the year, net of tax
Total comprehensive income/(loss) for the year
2012
($'000)
31,690
717
(2,815)
(22,325)
(530)
(460)
(3,630)
(836)
(351)
(42)
1,419
(303)
1,116
1,116
(1)
1,115
2013
($'000)
31,719
590
(2,812)
(21,642)
(610)
(577)
(4,112)
(667)
(523)
(37)
1,330
(309)
1,021
1,021
1
1,022
2014
($'000)
27,476
782
(3,023)
(22,346)
(715)
(531)
(5,174)
(1,962)
(1,102)
(29)
(6,625)
2,129
(4,496)
(4,459)
(8,955)
2
(8,953)
Appendix 8 Remuneration report
ILH Group Limited

(Administrators Appointed)
ACN 120 394 194
Remuneration Report by Administrators

20 January 2015
Contents
1
Remuneration............................................................................................................................................. 1
1.1 Remuneration of Administrators .......................................................................................................... 1
1.2 Other relevant information re remuneration ........................................................................................ 1
Disbursements ........................................................................................................................................... 2
Other information ....................................................................................................................................... 2
Appendix 1 Schedule of KordaMentha rates .................................................................................................. 3

Appendix 2 Summary of work completed ....................................................................................................... 5
Appendix 3 Calculation of actual fees from 17 December 2014 to 18 January 2015 .................................... 1
Appendix 4 Summary of tasks to be undertaken from 19 January 2015 to 28 January 2015 ...................... 1
Appendix 5 Summary of tasks to be undertaken from 28 January 2015 to completion of the Voluntary
Administration ............................................................................................................................................ 1
Appendix 6 Summary of future tasks to be undertaken from 28 January 2015 to completion of the
Liquidation .................................................................................................................................................. 1
Appendix 7 Remuneration resolutions............................................................................................................ 1
Appendix 8 Disbursements ............................................................................................................................. 2
Appendix 9 Receipts and payments from 17 December 2014 to 18 January 2015 ...................................... 3
Appendix 10 ASIC Information Sheet 85 ........................................................................................................ 4
Page i
Remuneration
In accordance with Section 449E of the Corporations Act 2001 and the Australian Restructuring Insolvency
and Turnaround Associations Code of Professional Practice, we provide the following information in respect
of the Administrators remuneration for the period from 17 December 2014 to 18 January 2015 and for future
remuneration from this date.
The following information is provided to assist creditors consider the appropriateness of the remuneration
claims that are being made. Your approval of this remuneration will be sought at the Second Meeting of
Creditors to be held on Wednesday 28 January 2015.
Declaration
We, Michael Brereton and Cliff Rocke of KordaMentha, have undertaken a proper assessment of this
remuneration and disbursements claim for our appointment as Voluntary Administrators of the Company in
accordance with the law and applicable professional standards. We are satisfied that the remuneration
claimed is in respect of necessary work, properly performed, or to be properly performed, in the conduct of
the administration. We are satisfied that the disbursements claimed are necessary and proper.
1.1
Remuneration of Administrators
Period of remuneration
Amount
(ex GST)
Appendix
reference
$293,128
Resolution 2: 19 January 2015 to 28 January 2015
$66,990
Resolution 3: 28 January 2015 to completion of Administration
$23,975
$70,250
Remuneration to be approved at meeting on 28 January 2015:

Voluntary Administration
Resolution 1: 17 December 2014 to 18 January 2015
Total remuneration Voluntary Administration
Creditors Voluntary Liquidation

Resolution 5: 28 January 2015 to completion of Liquidation
Approval for the future remuneration sought for the period of the liquidation is based on an estimate of the
tasks to be completed. Should additional work be necessary beyond what is contemplated, further approval
may be sought from creditors.
Attached as appendices for each resolution period are schedules of tasks undertaken or to be undertaken
and calculation of remuneration by person for the period of actual remuneration. Information on the main
activities in those relevant task areas is summarised in the schedules to enable creditors to understand the
type and purpose of work being undertaken.
Resolutions to be proposed to creditors in respect of remuneration are detailed in Appendix 7 of this report.
1.2
Other relevant information re remuneration
In the First Circular to Creditors we estimated that fees would total $250,000 to the First Creditors Meeting
held on the 31 December 2014. This remuneration claim was significantly lower than the estimate provided
with fees to that date totalling $187,144.
We advise that we have not received any indemnity, guarantee or contribution from a member, director or
any other party related to the Company for our fees and expenses. We advise that we have not received
funding from any other source.
Page 1
ASIC has produced an Information Sheet entitled Approving fees: a guide for creditors that is attached as
Appendix 10.
Disbursements
Disbursements incurred for the period 17 December 2014 to 18 January 2015 are detailed in Appendix 8.
Where amounts have been paid to KordaMentha from funds in the administration of the Company for
externally provided goods or services, these are reimbursements to KordaMentha for amounts paid by
KordaMentha either because KordaMentha was invoiced directly or because funds were not available at the
time in the Administration. There have been no disbursements paid to date, therefore the disbursements in
Appendix 8 are disbursements that have been incurred by KordaMentha but not yet reimbursed. Where
payments to third parties have been paid directly by the Company, these are only included in the receipts
and payments at Appendix 9.
Disbursements have been categorised as follows:
Externally provided professional services these are recovered at cost. An example of an externally
provided professional service disbursement is legal fees.
Externally provided non-professional disbursements these are recovered at cost. Examples of

externally provided professional service disbursements are travel, accommodation, search fees and
lodgement fees.
Internal disbursements these are recovered on a reasonable commercial basis. These disbursements
are generally charged a cost, though some may be charged at a rate which recoups both variable and
fixed costs. Examples of internal disbursements include printing and postage costs, travel allowance
and data room hosting.
Details of our disbursement policy are included with the attached KordaMentha Rates National FY2015 at
Appendix 1 of this report.
Other information
This remuneration report should be read in conjunction with the Report to Creditors dated 20 January 2015.
A summary of the Administrators receipts and payments from the commencement of the Voluntary
Administration to 18 January 2015 is attached as Appendix 9.
If you have any queries in relation to the information provided for remuneration or a particular disbursement
incurred, please contact Andrew Hudson on (02) 8257 3023 or by email at ahudson@kordamentha.com.
Michael Brereton
Administrator
Cliff Rocke
Administrator
Level 5 Chifley Tower, 2 Chifley Square

Sydney NSW 2000
Australia
Page 2
Appendix 1 Schedule of KordaMentha rates

National
Applicable from 30 June 2014

FY 2015
Classification
$ per hour*
Principal Appointee/Partner/Executive Director
650
Director
595
Associate Director 1
550
500
Manager
475
Senior Executive Analyst
400
Executive Analyst
375
Senior Business Analyst
325
Business Analyst
275
Administration
150
*Exclusive of GST
KordaMentha disbursement policy

Disbursements incurred from third party suppliers are charged at the cost invoiced. KordaMentha does not
add any margin to disbursements incurred through third parties.
There are no charges for internal KordaMentha disbursements, such as internal photocopy use, telephone
calls or facsimiles, except for bulk printing and postage that is performed internally, which are calculated on a
variable cost recovery basis.
In relation to any employee allowances, being kilometre allowance and reasonable travel allowance, the rate
of the allowance set by KordaMentha is at or below the rate set by the Australian Taxation Office.
If a KordaMentha data room is utilised, the fee will comprise an initial setup fee and then a fee based on the
duration and size of the data room.
Certain services provided by Forensic Technology may require the processing of electronically stored
information into specialist review platforms. Where these specific Forensic Technology resources are
utilised, the fee will be based on units (e.g. number of laptops), size (e.g. per gigabyte) and/or period of time
(e.g. period of hosting).
GST is applied to disbursements as required by law.
Page 3
KordaMentha disbursement internal rates and allowances

Description
Charge*
Photocopying, printing (general)
$0.02 per page
Envelopes and postage (varies due to size and

weight)
$0.76 to $1.86 per envelope
Travel Reimbursement
$0.60 per kilometre
Meal per diem, etc.
Up to $91.05 per day per staff member (unless other arrangements made)
Dataroom fee (varies based on MB size)
$1,000 to $5,000 per month
*Exclusive of GST
KordaMentha classifications
Classification
Guide to level of experience
Principal Appointee/Partner/Executive Director
Registered/Official Liquidator/Trustee, his or her Partners. Specialist skills

brought to the administration. Generally in excess of 10 years experience.
Director
More than eight years experience and more than three years as a Manager.
Answerable to the appointee, but otherwise responsible for all aspects of an
administration. Controls staffing and their training.
Six to eight years experience with well developed technical and commercial
skills. Will have conduct of minor administrations and experience in control of
a small to medium team of staff. Assists with the planning and control of
medium to large administrations.
Five to seven years experience with well developed technical and commercial
skills. Will have conduct of minor administrations and experience in control of a
small to medium team of staff. Assists with the planning and control of medium
to large administrations.
Manager
Four to six years experience. Will have had conduct of minor administrations
and experience in control of one to three staff. Assists with the planning control
of medium to large administrations.
Senior Executive Analyst
Three to four years experience. Assists planning and control of small to

medium administrations as well as performing some of the more difficult tasks
on larger administrations.
Executive Analyst
Two to three years experience. Required to control the tasks on small

administrations and is responsible for assisting tasks on medium to large
administrations.
Graduate with one to two years experience. Required to assist in day-to-day

tasks under supervision of more senior staff.
Business Analyst
Undergraduate or graduate with up to one year experience. Required to assist

in day-to-day tasks under supervision of more senior staff.
Administration
Appropriate skills, including books and records management and accounts

processing particular to the administration.
Page 4
Appendix 2 Summary of work completed

Detailed below is a summary of work completed by task area for the period from 17 December 2014 to
18 January 2015.
Task area
General description
Details of tasks
Assets
233 hours
$141,333
Sales of shares and business

assets in
Liaising with purchasers/principals

Assessment of offers and negotiation with purchasers/principals
Preparation of sale agreements
Liaising with legal advisors
Liaising with secured lender
Debtors (pre and post

appointment)
Review and assessment of debtors ledgers for subsidiaries
Intangible assets
Review of intangible assets
Leased assets
Review of leasing documents

Liaising with owners/lessors
Disclaim leases
Creditors
51 hours
$27,813
Creditor enquiries
Receive and follow up creditor enquiries via telephone

Correspondence to creditors via mail, email and facsimile
Secured creditor
Correspondence with secured creditor, including notification of

appointment and update reports
Meetings with secured creditor
Shareholders
Correspondence and discussions with shareholders
Reports to creditors
Preparation of reports to creditors
Proofs of debts
Receipt of proofs of debt

Correspondence with ATO re proofs of debt
Adjudication of proofs of debt
Request further substantiation
Correspondence re outcome of adjudication
Employees
19 hours
$8,225
Employee enquiries
Receive and follow up employee enquiries via telephone and in

person
Correspondence to employees via mail, email and facsimile
Entitlements
Calculation of employee entitlements

Review of employee records, employee agreements and awards
Reconciliation of superannuation accounts
Correspondence with employees re entitlements and general
queries
Legal advice re entitlements
Statutory compliance
Books and records
Receipt of books and records
122 hours
Forensic imaging of electronic files
$55,097
Administration in relation to storage

ASIC
Notifications to ASIC
Correspondence with ASIC
ATO and other statutory

reporting
Notification of appointment
Notifications to ASX
Correspondence
Directors
Correspondence and meetings with directors

Requests for Report as to Affairs and books and records
Meeting of creditors
Preparation of meeting notices, proxies and advertisements
Page 5
Task area
General description
Details of tasks
Correspondence to creditors, including mail distribution
Preparation of meeting documents, including agenda, attendance
register, list of creditors and resolutions
Preparation and lodgement of minutes of meeting with ASIC
Investigation
Collection and review of books and records

Review and preparation of company nature and history
Conduct and summarise statutory searches
Preparation of comparative financial statements and deficiency
statements
Review of specific transactions and liaising with directors re
transactions
Preparation of investigation file
Budgeting and financial

reporting
Review of companys budgets, management reports and financial

statements
Preparation of cash flow forecasts
Administration and risk

mitigation
Planning/review
Engagement planning
97 hours
Discussions re status of administration, strategy and outstanding

issues
$51,128
Discussions with legal advisors in respect of proposed DOCAs

Document maintenance, file
review, checklist
Review of administration
Filing of documents
Update of work programs
File review
Insurance
Identification of potential issues requiring attention of insurance

specialists
Correspondence with insurance brokers re initial and ongoing
insurance requirements
Review of insurance policies
Bank account administration
Opening post appointment bank accounts

Freezing of pre-appointment bank accounts
Bank account reconciliations
Correspondence with bank
Banking of deposits
Preparation of transactions
Process of receipts and

payments
Processing of receipts, payments and journal entries into

accounting system
ASIC reporting
Preparation and lodgement of ASIC forms
General administration
Risk assessment
Set up of client
Processing in relation to client accounting
Remuneration
Recording of time, including details

Preparation of remuneration schedules
Trading
Media
Preparation of ASX releases
Trade on Management
Attendance at offices
22 hours
Meetings with employees
$9,533
Regular review of cash position of subsidiary entities

Preparation of receipts and payments
Correspondence with employees of subsidiary entities
Page 6
Appendix 3 Calculation of actual fees from 17 December 2014 to 18 January 2015

Calculation of actual fees from 17 December 2014 to 18 January 2015
Administration & risk

mitigation
Name
Title
Michael Brereton
Samantha Findley
Cliff Rocke
Mark Korda
Paul Spottisw ood
Tony Ocallaghan
Matthew Okeefe
Fergus Calder
Sophia Spiliotopoulos
Andrew Hudson
Sheriden Bacon
Anna Mai
Kate Mcleod
Sam Hyles
Melissa Galletta
Tomas Berry
Adora Gaddi
Claire Dickinson - Temp
Diana D'Amato
Dilani Chandrasena
Tamara Kow alski
Theresa Mohr
Tracey Craw ford
Executive Director
Director
Partner
Partner
Executive Director
Managing Director
Associate Director
Manager
Manager
Executive Analyst
Executive Analyst
Executive Analyst
Administration
Business Analyst
Administration
Administration
Administration
Administration
Administration
Administration
Administration
Total remuneration
Assets
Creditors
Employees
Total
Trading
Standard
rate ($)
Hours
Hours
Hours
Hours
Hours
Hours
Hours
650
595
650
650
650
650
550
475
475
375
375
325
325
325
275
275
150
150
150
150
150
150
150
10.1
29.5
7.6
6.0
17.9
1.0
9.8
7.5
0.2
0.9
1.0
0.5
2.0
0.2
3.0
6,565
17,553
4,940
3,900
9,845
475
3,675
2,813
65
293
150
75
300
30
450
4.3
26.6
1.7
23.9
60.5
4.1
0.3
0.2
0.4
-
2,795
15,827
935
11,353
22,688
1,333
83
30
55
-
91.9
52.4
7.8
42.5
0.5
12.2
6.0
3.8
15.8
0.4
-
59,735
31,178
5,070
27,625
325
6,710
2,850
1,805
5,925
110
-
17.1
13.5
3.1
1.2
3.7
4.7
0.6
2.5
4.5
-
11,115
8,033
2,015
660
1,758
1,763
195
813
1,463
-
1.0
4.7
0.2
13.2
-
595
2,585
95
4,950
-
0.2
2.5
4.1
0.1
14.1
1.0
-
130
1,488
2,255
48
5,288
325
-
123.6
125.5
18.5
6.0
42.5
0.5
41.8
6.0
32.7
118.1
7.5
5.9
3.4
4.5
0.3
0.4
1.0
0.2
0.5
0.4
2.0
0.2
3.0
80,340
74,673
12,025
3,900
27,625
325
22,990
2,850
15,533
44,288
2,813
1,918
1,105
1,463
83
110
150
30
75
55
300
30
450
97
51,128
122
55,097
233
141,333
51
27,813
19
8,225
22
9,533
544
293,128
Page 1
Appendix 4 Summary of tasks to be undertaken from

19 January 2015 to 28 January 2015
Detailed below is a summary of work expected to be undertaken by task area for the period from
19 January 2015 to 28 January 2015.
Task area
General description
Details of tasks
Assets
52 hours
$28,575
Sale of shares and business

assets of subsidiary
Assessment of offers and negotiation with purchasers

Liaising with purchasers
Preparation of sale agreement and review of associated DoCA.
Sale of listed entity
Sales of shares and business

assets of subsidiary
Completion of share sales in subsidiaries

Liaising with secured lender
Debtors (pre appointment)
Correspondence with debtors

Review and assessment of debtors ledgers
Liaising with debt collectors and solicitors
Creditors
5 hours
$2,095
Creditor enquiries

Secured creditor
Correspondence with secured creditor for update reports

Shareholders
Correspondence and discussions with shareholders
Reports to creditors
Preparation of reports to creditors
Proofs of debts

Correspondence with ATO re: proofs of debt
Employees
22 hours
$9,350
Employee enquiries
Receive and follow up employee enquiries via telephone and in person

Entitlements
Review of employee records, employee agreements and awards

Correspondence with employees re entitlements and any queries
Other employee issues
Correspondence with superannuation funds, ATO and state revenue

offices
Completion of PAYG Summaries
Statutory
compliance
40 hours
$19,840
Books and records
Receipt of books and records

Retrieval of books and records from company
ASIC
Notifications to ASIC
ATO and other statutory reporting
Notifications to the ASX

Communication with the ATO
Correspondence
Second Meeting of Creditors
Finalise Section 439A report and appendices

Preparation of meeting notices, proxies and advertisements
Correspondence to creditors, including mail distribution
Page 1
Task area
General description
Details of tasks
Preparation of meeting documents, including agenda, attendance
register, list of creditors and resolutions
Preparation and lodgement of minutes of meeting with ASIC
Administration
and risk
mitigation
13 hours
$7,130
Document maintenance, file

review, checklist
Filing of documents
File review
Banking of deposits
Process of receipts and payments
Process of receipts, payments and journal entries into accounting system
ASIC reporting

Correspondence with ASIC regarding statutory forms
Preparation of BAS

Word processing
Remuneration

Invoice preparation
Page 2

Calculation of fees from 19 January 2015 to 28 January 2015
Adm inistration & risk

m itigation
Statutory com pliance
Nam e
Title
Michael Brereton
Samantha Findley
Andrew Hudson
Total rem uneration
Executive Director
Director
Executive Analyst
Standard
rate ($)
650
595
375
Assets
Creditors
Em ployees
Total
Hours
Hours
Hours
Hours
Hours
Hours
5.0
4.0
4.0
13.0
3,250
2,380
1,500
7,130
8.0
12.0
20.0
40.0
5,200
7,140
7,500
19,840
17.0
20.0
15.0
52.0
11,050
11,900
5,625
28,575
1.0
4.0
5.0
595
1,500
2,095
5.0
17.0
22.0
2,975
6,375
9,350
30.0
42.0
60.0
132.0
Page 1
$
19,500
24,990
22,500
66,990
Appendix 5 Summary of tasks to be undertaken from

28 January 2015 to completion of the Voluntary Administration
Detailed below is a summary of work expected to be undertaken by task area for the period from
28 January 2015 to the completion of the Voluntary Administration.
Task area
General description
Details of tasks
Statutory
compliance
20 hours
$9,590
ASIC
Notifications to ASIC, including cessation of appointment

Various correspondence with ASIC including preparation and
finalisation of form 524 reports (receipts and payments)
Books and records
Cataloguing and archiving of books and records

Administration in relation to storage of books and records
Administration
and risk
mitigation
20 hours
$10,635
Correspondence
Ceasing to act
Notification to ASIC
Planning/review
Engagement finalisation planning

Discussions re status of administration and DOCA, strategy and
outstanding issues
Document maintenance, file review,

checklist
Review of administration
Filing of documents
File review
Closing accounts and transferring funds to liquidators account

Correspondence with bank re specific transactions
Process of receipts, payments and journal entries into accounting

system
ASIC reporting

Preparation of BAS
Closure of client account and BAS portal
Remuneration

Invoice preparation
Finalisation
Notification statutory authorities of finalisation

Cancellation of registrations, such as ABN
Completion of checklists
Creditors
5 hours
$1,875
Creditors
Employees
5 hours
$1,875
Employees
Correspondence with creditors via telephone, mail and email

Correspondence with secured creditor
Correspondence with employees via telephone, mail and email
Page 1

Calculation of fees from 28 January 2015 to completion of Voluntary Administration

mitigation
Name
Title
Michael Brereton
Samantha Findley
Andrew Hudson
Total remuneration
Executive Director
Director
Executive Analyst
Standard
rate ($)
650
595
375
Hours
Hours
5.0
8.0
7.0
20.0
3,250
4,760
2,625
10,635
2.0
7.0
11.0
20.0
1,300
4,165
4,125
9,590
Assets
Creditors
Hours
Total
Hours
Hours
Hours
5.0
5.0
1,875
1,875
5.0
5.0
1,875
1,875
7.0
15.0
28.0
50.0
Employees
Page 1
$
4,550
8,925
10,500
23,975
Appendix 6 Summary of future tasks to be undertaken from

28 January 2015 to completion of the Liquidation
Detailed below is a summary of work expected to be undertaken by task area for the Liquidation period from
28 January 2015 to completion of the Liquidation.
Task area
General description
Details of tasks
Assets
31 hours
$17,675
Sales of shares in subsidiaries
Liaising with major shareholder of Rockwell Olivier (Melbourne) Pty Ltd

Completion of share sales of CIPL and Law Central
Managing any post sale completion issues
Liaising with secured creditor
Debtors (pre appointment)
Correspondence with debtors

Review and assessment of debtors ledgers
Liaising with debt collectors and solicitors
Employees
20 hours
$9,150
Employee enquiries
Receive and follow up employee enquiries via telephone

Fair Entitlement Guarantee
Correspondence re FEG
Preparation of notification spreadsheet
Preparation of FEG quotations
Preparation of FEG distributions
Statutory
compliance
52 hours
$25,055
Entitlements
Correspondence with employees re entitlements and any general

queries
Books and records
Retrieval of books and records from storage

ASIC
Notifications to ASIC of appointment of liquidators

Notification of appointment of liquidators

Ongoing correspondence
Preparation of BAS
Investigation
Review of books and records

Review and preparation of company nature and history
Conduct and summarise statutory searches
Preparation of comparative financial statements and deficiency
statements
Review of specific transactions and liaising with directors re
transactions
Preparation of investigation file
Preparation of statutory investigation report and lodgement with ASIC
Preparation and lodgement of any supplementary reports
Liaising with ASIC
Examinations
Review of examinations required, if any
Litigation/recoveries
Review of potential recoveries

Preparation of brief for solicitor
Additional attendances and document preparations as and if required
Administration
and risk
mitigation
Document maintenance, file review,

checklist
Filing of documents
File review
Page 1
Task area
General description
Details of tasks
20 hours
$12,340
Insurance
Correspondence with insurance brokers re insurance requirements

over duration of engagement
Opening and closing accounts

Correspondence with bank re specific transactions
Banking of deposits
Process of receipts, payments and journal entries into accounting

system
ASIC reporting
Preparation and lodgement of ASIC forms, including six monthly

accounts
Preparation of BAS

Word processing
Remuneration

Invoice preparation
Finalisation
Notification to creditors and statutory authorities of finalisation

Cancellation of registrations, such as ABN
Completion of checklists
Creditors
13 hours
$6,030
Creditor enquiries

Secured creditor
Proofs of debts

Correspondence with ATO re: proofs of debt
Page 2

Calculation of fees and disbursments from 28 January 2015 to completion of Liquidation

mitigation
Name
Title
Michael Brereton
Samantha Findley
Andrew Hudson
Total remuneration
Executive Director
Director
Executive Analyst
Standard
rate ($)
650
595
375
Assets
Creditors
Employees
Total
Hours
Hours
Hours
Hours
Hours
Hours
8.0
12.0
20.0
5,200
7,140
12,340
5.0
19.0
28.0
52.0
3,250.00
11,305.00
10,500.00
25,055
10.0
15.0
6.0
31.0
6,500.00
8,925.00
2,250.00
17,675
1.0
4.0
8.0
13.0
650.00
2,380.00
3,000.00
6,030
2.0
5.0
13.0
20.0
1,300.00
2,975.00
4,875.00
9,150
26.0
55.0
55.0
136.0
16,900.00
32,725.00
20,625.00
70,250
Page 1
Appendix 7 Remuneration resolutions

At the Second Meetings of Creditors to be held on Wednesday 28 January 2015, creditors of the Company
will be asked to consider the following resolutions:
In respect of the period 17 December 2014 to 18 January 2015:
That the remuneration of the Administrators for the period 17 December 2014 to 18 January 2015 in the
amount of $293,128, excluding GST, calculated on the basis of time at the rates as set out in the schedule
titled KordaMentha Rates National FY2015, is approved for payment.
In respect of the period 19 January 2015 to 28 January 2015:
That the estimated remuneration of the Administrators for the period 19 January 2015 to 28 January 2015 is
determined and approved for payment on a monthly basis in arrears or as required, up to a maximum of
$66,990, excluding GST, calculated on the basis of time at the rates as set out in the schedule titled
KordaMentha Rates National FY2015.
If the creditors vote for the Company to be wound up or the Administration to end, creditors of the Company
will be asked to consider the following resolution:
In respect of the period 28 January 2015 to conclusion of the Voluntary Administration:
That the estimated remuneration of the Administrators for the period 28 January 2015 to the conclusion of
the Voluntary Administration is determined and approved for payment on a monthly basis in arrears or as
required, up to a maximum of $23,975, excluding GST, calculated on the basis of time at the rates as set out
in the schedule titled KordaMentha Rates National FY2015.
If the creditors vote for the Company to be wound up and placed into Liquidation, creditors of the Company
will be asked to consider the following resolution:
In respect of the period 28 January 2015 to the finalisation of the Liquidation:
That the estimated remuneration of the Liquidators for the period 28 January 2015 to the finalisation of the
Liquidation is determined and approved for payment on a monthly basis in arrears or as required, up to a
maximum of $70,250, excluding GST, calculated on the basis of time at the rates as set out in the schedule
titled KordaMentha Rates National FY2015. However, if the value of the work performed exceeds the capped
amount, then we reserve the right to seek further approval of fees from creditors.
Page 1
Appendix 8 Disbursements
Disbursements paid or incurred during the period
17 December 2014 to 18 January 2015
Externally provided professional services
Basis
At cost
Legal Gadens Lawyers
90,734.96
Total Externally provided professional services

Externally provided non-professional disbursements
Actual $
(excluding GST)
90,734.96
At cost
Travel
1,073.03
Meals
60.65
Per Diem
227.55
Accommodation
449.55
Lodgement fees
149.00
Total Externally provided non-professional disbursements

Total disbursements
1,959.78
92,694.74
Page 2
Appendix 9 Receipts and payments from 17 December 2014 to

18 January 2015
ILH Group Limited (Administrators
Appointed)
Receipts and payments from 17 December 2014 to 18 January 2015
Receipts
Payments
Balance
Opening Balance
Date
17/12/2014
Sweep from pre-appointment bank accounts
22/12/2014
133,362
133,362
Interest received
31/12/2014
90
133,451
Bank service charge
31/12/2014
(11)
133,440
09/01/2015
(187)
133,254
15/01/2015
14,925
148,179
Sale of business - deposit(1)

Sale of business - deposit(1)
Employee Wages
15/01/2015
16/01/2015
16/01/2015
35,075
104,000
(8,496)
183,254
287,254
278,758
Closing Balance
18/01/2015
278,758
Mail re-direction
Sale of business deposit
(1)
(1)
These amounts relate to the sale of business assets of one of ILHs subsidiaries. These deposits are held on
trust for the secured lender.
Page 3
Appendix 10 ASIC Information Sheet 85
Page 4
INFORMATION SHEET 85
Approving fees: a guide for creditors

If a company is in financial difficulty, it can be put under the control of an independent external
administrator.
This information sheet gives general information for creditors on the approval of an external
administrators fees in a liquidation of an insolvent company, voluntary administration or deed of
company arrangement (other forms of external administration are not discussed in this information
sheet). It outlines the rights that creditors have in the approval process.
Entitlement to fees and costs

A liquidator, voluntary administrator or deed administrator (i.e. an external administrator) is entitled
to be:
paid reasonable fees, or remuneration, for the work they perform, once these fees have been
approved by a creditors committee, creditors or a court, and
reimbursed for out-of-pocket costs incurred in performing their role (these costs do not need
creditors committee, creditor or court approval).
External administrators are only entitled to an amount of fees that is reasonable for the work that they
and their staff properly perform in the external administration. What is reasonable will depend on the
type of external administration and the issues that need to be resolved. Some are straightforward,
while others are more complex.
External administrators must undertake some tasks that may not directly benefit creditors. These
include reporting potential breaches of the law and lodging a detailed listing of receipts and payments
with ASIC every six months. The external administrator is entitled to be paid for completing these
statutory tasks.
For more on the tasks involved, see ASICs information sheets INFO 45 Liquidation: a guide for
creditors and INFO 74 Voluntary administration: a guide for creditors.
Out-of-pocket costs that are commonly reimbursed include:
Important note: This information sheet contains a summary of basic information on the topic. It is not
a substitute for legal advice. Some provisions of the law referred to may have important exceptions or
qualifications. This document may not contain all of the information about the law or the exceptions
and qualifications that are relevant to your circumstances. You will need a qualified professional
adviser to take into account your particular circumstances and to tell you how the law applies to you.
Australian Securities & Investments Commission, December 2008
Page 1 of 5
APPROVING FEES: A GUIDE FOR CREDITORS
legal fees
valuers, real estate agents and auctioneers fees
stationery, photocopying, telephone and postage costs
retrieval costs for recovering the companys computer records, and
storage costs for the companys books and records.
Creditors have a direct interest in the level of fees and costs, as the external administrator will,
generally, be paid from the companys available assets before any payments to creditors. If there are
not enough assets, the external administrator may have arranged for a third party to pay any shortfall.
As a creditor, you should receive details of such an arrangement. If there are not enough assets to pay
the fees and costs, and there is no third party payment arrangement, any shortfall is not paid.
Who may approve fees

Who may approve fees depends on the type of external administration: see Table 1. The external
administrator must provide sufficient information to enable the relevant decision-making body to
assess whether the fees are reasonable.
Table 1: Who may approve fees
Creditors
committee
Creditors
Court
Administrator in a
voluntary administration
31
Administrator of a deed of
company arrangement
31
Creditors voluntary
liquidator
31
35
r3
Court-appointed liquidator
31
34, 5
32
1
2
3
4
5
If there is one.
If there is no approval by the committee or the creditors.
Unless an application is made for a fee review.
If there is no creditors committee or the committee fails to approve the fees.
If insufficient creditors turn up to the meeting called by the liquidator to approve fees, the liquidator is entitled to be paid
up to a maximum of $5000, or more if specified in the Corporations Regulations 2001.
Creditors committee approval

If there is a creditors committee, members are chosen by a vote of creditors as a whole. In approving
the fees, the members represent the interests of all the creditors, not just their own individual interests.
There is not a creditors committee in every external administration. A creditors committee makes its
decision by a majority in number of its members present at a meeting, but it can only act if a majority
of its members attend.
To find out more about creditors committees and how they are formed, see ASICs information sheets
INFO 45 Liquidation: a guide for creditors, INFO 74 Voluntary administration: a guide for creditors
and INFO 41 Insolvency: a glossary of terms.
Creditors approval
Creditors approve fees by passing a resolution at a creditors meeting. Unless creditors call for a poll,
the resolution is passed if a simple majority of creditors present and voting, in person or by proxy,
Visit our website: www.asic.gov.au
Page 2 of 5
indicate that they agree to the resolution. Unlike where acting as committee members, creditors may
vote according to their individual interests.
If a poll is taken, rather than a vote being decided on the voices or by a show of hands, a majority in
number and value of creditors present and voting must agree. A poll requires the votes of each creditor
to be recorded.
A separate resolution of creditors is required for approving fees for an administrator in a voluntary
administration and an administrator of a deed of company arrangement, even if the administrator is the
same person in both administrations.
A proxy is where a creditor appoints someone else to represent them at a creditors meeting and to
vote on their behalf. A proxy can be either a general proxy or a special proxy. A general proxy allows
the person holding the proxy to vote as they wish on a resolution, while a special proxy directs the
proxy holder to vote in a particular way.
A creditor will sometimes appoint the external administrator as a proxy to vote on the creditors
behalf. An external administrator, their partners or staff must not use a general proxy to vote on
approval of their fees; they must hold a special proxy in order to do this. They must vote all special
proxies as directed, even those against approval of their fees.
Calculation of fees
Fees may be calculated using one of a number of different methods, such as:
on the basis of time spent by the external administrator and their staff
a quoted fixed fee, based on an upfront estimate, or
a percentage of asset realisations.
Charging on a time basis is the most common method. External administrators have a scale of hourly
rates, with different rates for each category of staff working on the external administration, including
the external administrator.
If the external administrator intends to charge on a time basis, you should receive a copy of these
hourly rates soon after their appointment and before you are asked to approve the fees.
The external administrator and their staff will record the time taken for the various tasks involved, and
a record will be kept of the nature of the work performed.
It is important to note that the hourly rates do not represent an hourly wage for the external
administrator and their staff. The external administrator is running a businessan insolvency
practiceand the hourly rates will be based on the cost of running the business, including overheads
such as rent for business premises, utilities, wages and superannuation for staff who are not charged
out at an hourly rate (such as personal assistants), information technology support, office equipment
and supplies, insurances, taxes, and a profit.
External administrators are professionals who are required to have qualifications and experience, be
independent and maintain up-to-date skills. Many of the costs of running an insolvency practice are
fixed costs that must be paid, even if there are insufficient assets available to pay the external
administrator for their services. External administrators compete for work and their rates should reflect
this.
These are all matters that committee members or creditors should be aware of when considering the
fees presented. However, regardless of these matters, creditors have a right to question the external
administrator about the fees and whether the rates are negotiable.
It is up to the external administrator to justify why the method chosen for calculating fees is an
appropriate method for the particular external administration. As a creditor, you also have a right to
question the external administrator about the calculation method used and how the calculation was
made.
Page 3 of 5
Report on proposed fees

When seeking approval of fees, the external administrator must send committee members/creditors a
report with the notice of meeting setting out:
information that will enable the committee members/creditors to make an informed assessment of
whether the proposed fees are reasonable
a summary description of the major tasks performed, or to be performed, and
the costs associated with each of these tasks.
Committee members/creditors may be asked to approve fees for work already performed or based on
an estimate of work yet to be carried out.
If the work is yet to be carried out, it is advisable to set a maximum limit (cap) on the amount that
the external administrator may receive. For example, future fees calculated according to time spent
may be approved on the basis of the number of hours worked at the rates charged (as set out in the
provided rate scale) up to a cap of $X. If the work involved then exceeds this figure, the external
administrator will have to ask the creditors committee/creditors to approve a further amount of fees,
after accounting for the fees already incurred.
Deciding if fees are reasonable

If asked to approve an amount of fees either as a committee member or by resolution at a creditors
meeting, your task is to decide if that amount of fees is reasonable, given the work carried out in the
external administration and the results of that work.
You may find the following information from the external administrator useful in deciding if the fees
claimed are reasonable:
the method used to calculate fees
the major tasks that have been performed, or are likely to be performed, for the fees
the fees/estimated fees (as applicable) for each of the major tasks
the size and complexity (or otherwise) of the external administration
the amount of fees (if any) that have previously been approved
if the fees are calculated, in whole or in part, on a time basis:

o the period over which the work was, or is likely to be performed
o if the fees are for work that has already been carried out, the time spent by each level of staff
on each of the major tasks
o if the fees are for work that is yet to be carried out, whether the fees are capped.
If you need more information about fees than is provided in the external administrators report, you
should let them know before the meeting at which fees will be voted on.
What can you do if you think the fees are not reasonable?
If you do not think the fees being claimed are reasonable, you should raise your concerns with the
external administrator. It is your decision whether to vote in favour of, or against, a resolution to
approve fees.
Generally, if fees are approved by a creditors committee/creditors and you wish to challenge this
decision, you may apply to the court and ask the court to review the fees. Special rules apply to court
liquidations.
You may wish to seek your own legal advice if you are considering applying for a court review of the
fees.
Page 4 of 5
Reimbursement of out-of-pocket costs

An external administrator should be very careful incurring costs that must be paid from the external
administrationas careful as if they were dealing with their own money. Their report on fees should
also include information on the out-of-pocket costs of the external administration.
If you have questions about any of these costs, you should ask the external administrator and, if
necessary, bring it up at a creditors committee/creditors meeting. If you are still concerned, you have
the right to ask the court to review the costs.
Queries and complaints

You should first raise any queries or complaints with the external administrator. If this fails to resolve
your concerns, including any concerns about their conduct, you can lodge a complaint with ASIC at
www.asic.gov.au/complain, or write to:
ASIC Complaints
PO Box 9149
TRARALGON VIC 3844
ASIC will usually not become involved in matters of commercial judgement by an external
administrator. Complaints against companies and their officers can also be made to ASIC. For other
enquiries, email ASIC through infoline@asic.gov.au, or call ASICs Infoline on 1300 300 630 for the
cost of a local call.
To find out more

For an explanation of terms used in this information sheet, see ASICs information sheet INFO 41
Insolvency: a glossary of terms. For more on external administration, see ASICs related information
sheets at www.asic.gov.au/insolvencyinfosheets:
INFO 74 Voluntary administration: a guide for creditors
INFO 75 Voluntary administration: a guide for employees
INFO 45 Liquidation: a guide for creditors
INFO 46 Liquidation: a guide for employees
INFO 54 Receivership: a guide for creditors
INFO 55 Receivership: a guide for employees
INFO 43 Insolvency: a guide for shareholders
INFO 42 Insolvency: a guide for directors
INFO 84 Independence of external administrators: a guide for creditors
These are also available from the Insolvency Practitioners Association (IPA) website at
www.ipaa.com.au. The IPA website also contains the IPAs Code of Professional Practice for
Insolvency Professionals, which applies to IPA members.

Page 5 of 5

260.kordamentha Restructuring ILH Group Limited: Report by Administrators

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260.kordamentha Restructuring ILH Group Limited: Report by Administrators

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ILH Group Limited

Appointment of Administrators ................................................................................................................... 2

Company background ................................................................................................................................ 6

Realisations of assets .............................................................................................................................. 12

Alternatives available to creditors ............................................................................................................ 22

Estimated return to creditors .................................................................................................................... 23

Remuneration and disbursements of Administrators ............................................................................... 23

Further information ................................................................................................................................... 24

Liability limited by a scheme approved under Professional Standards Legislation

Appendix 1 Declaration of Independence, Relevant Relationships and Indemnities

Liability limited by a scheme approved under Professional Standards Legislation

The Company to execute a DOCA

The Administration to end, or

The Company to be wound up.

ACN 126 990 949

Rockwell Olivier (Sydney) Pty Ltd (Administrators Appointed) (ROS)

ACN 133 488 383

Signet Lawyers Pty Ltd (Administrators Appointed) (Signet)

ACN 152 480 281

Civic Legal Pty Ltd (Civic Legal)

ACN 126 959 206

Law Central Co Pty Ltd (Law Central)

ACN 091 824 225

Capricorn Investment Partners Limited (CIPL)

ACN 095 998 771

Trading subsidiary 49% ownership

ACN 133 027 317

Dormant subsidiaries 100% ownership

ACN 160 338 241

RO International Tax Services Pty Ltd (RO Tax)

ACN 168 005 249

The poor financial position of ILH

Prior involvement with the Company

First meeting of creditors

Second meeting of creditors

The Company to execute a DOCA

The Administration to end, or

The Company to be wound up.

Receipts and payments of Administration

History of the Company

Argyle Lawyers Pty Ltd

Signet Lawyers Pty Ltd

Civic Legal Pty Ltd

Pacific Legal Network Pty Ltd

Sydney and Pacific Region

Rockwell Bates Pty Ltd (49% shareholding)

Capricorn Investment Partners Limited

Corporate advisory and

(and business assets of The Pentad Group

Company registration details

Number of shares held

Lavalhars Pty Ltd

Total (920 in Total)

PPSR registration No.

Owen Glendower Evans

Rockwell Olivier (Perth) Pty Ltd (Administrators Appointed)

Rockwell Olivier (Sydney) Pty Ltd (Administrators Appointed)

Signet Lawyers Pty Ltd

Civic Legal Pty Ltd

Law Central Co Pty Ltd

Events leading up to Administration

Deed of Cross Guarantee

3.10 Report as to Affairs