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Kleenmaid to go into liquidation -

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Kleenmaid to go into liquidation

The World Today - Monday, 18 May , 2009 12:38:00

EDMOND ROY: Administrators for the collapsed whitegoods supplier Kleenmaid have recommended putting
the company into liquidation.

The Queensland company which once had 20 outlets across Australia went into voluntary
administration last month.

Now it's been found to have debts in excess of a $100 million and joint administrator John Greig
says no creditors including former Kleenmaid employees, customers, suppliers or banks are likely to
get their money back.

Charlotte Glennie reports from Brisbane.

CHARLOTTE GLENNIE: The company founded by a washing machine repairman 25 years ago is in major
financial strife.

Joint administrator John Greig from Deloitte says thousands of customers have been left in the
lurch.

JOHN GREIG: We consider that the Kleenmaid group has been insolvent from around about June 2007, if
not earlier, and that unfortunately the outcome for creditors is likely to be particularly bleak in
the sense that we are estimating that there will be no funds or any dividend available to creditors
of any kind in the, across the whole Kleenmaid group.

At the moment we have not received any proposal for a deed of company arrangement from the
directors, so that being the case, we can only recommend and have recommended that the companies in
the group should be wound up at the forthcoming creditors meeting in Brisbane next Monday.

CHARLOTTE GLENNIE: Now your report states that the financial position of the group is worse than
you initially expected. In what way is this?

JOHN GREIG: Ah, yes. Well, initially in the few days after our appointment we were indicating that
the creditor position was in the order of $70-million to $80-million. We have now found that it is
slightly in excess of $100-million.

CHARLOTTE GLENNIE: The collapsed Sunshine Coast company owned by brothers Andrew and Bradley Young
now owes 4,5000 customers a total of $27-million for deposits made on kitchen appliances they never
received.

Major creditors - primarily Westpac - are owed $29-million. Suppliers in places including the
United States and Europe are owed another $16-million.

One hundred and fifty former Kleenmaid employees are also now out of work - and out of pocket by $3
million.

John Greig again.

What kind of evidence do you have that the company might have been trading while insolvent?

JOHN GREIG: Well, Charlotte, whilst our investigations have been exhaustive, as administrators it
is only preliminary in the time that we have had to do it, there is much further work that a
liquidator would do if appointed at this second meeting.

But certainly what we have seen is obviously from a balance sheet point of view, this substantial
deficiency of $82-million which is, as I said, that deficiency has been around for some time.

It was also stress from creditor demands and so on that go back to that period as well. So there
are some of the issues that we have identified in our investigations.

CHARLOTTE GLENNIE: What happens now to the Young brothers if it is indeed found that they have been
trading while insolvent?

JOHN GREIG: Well, if it is ultimately proved that they have been trading the group whilst insolvent
then potentially what can happen is that they can be held to be personally liable themselves for
the debts of the group that were incurred during that period of insolvent trading.

So that is the one outcome and if the issue is considered to be serious enough by the regulators,
meaning ASIC, then there could also be criminal prosecutions in relation to insolvent trading.

EDMOND ROY: Kleenmaid joint administrator John Greig ending that report from Charlotte Glennie.