$1.3m Unaccounted For From Peats Ridge As Stakeholders Hunt Promoter

Over $1.3 million of ticketing revenue from the defunct Peats Ridge festival is still unaccounted for as musicians and the industry become resigned to the fact that they won't be receiving money owed from the collapsed festival.

Matt Grant, promoter of the New South Wales New Year's Eve festival, announced in January that the event was to cease, prompting a thorough investigation of the festival's practices and hunt for owed funds. The result of the investigation by liquidators Worrells, who were specifically appointed after a creditor's committee took the remarkable action of dumping original firm Jirsch Sutherland after they had done the initial investigations, gathered $158,975 in company assets – not enough to even cover the fees of the two liquidation firms.

INVESTIGATION HITS SIX MONTH POINT

• $1.4 million in ticket revenue still unaccounted for
• Creditors resigned to not getting paid
• ASIC yet to act on alleged illegal behaviour
• Email database, files deleted from company computer
• “There is a litany of illegal behaviour, we believe, by the director”

Creditors who have spoken to theMusic.com.au in recent days have expressed a resignation that they won't be receiving money, but wanted to continue the investigation into the company's practises. In particular, revenue from tickets sold.

In the latest report to creditors – issued mid-June – the liquidators outlined the destination of the $1.4 million in ticket revenue. Third party OzTix were engaged to handle the ticketing, with revenue deposited into the Peats Ridge Pty Ltd's bank account. At some point this was changed to a merchant facility (that is, a service for accepting payments on credit or debit cards) operated by another of Grant's companies, The Festival Company Pty Ltd, which is still registered.

Worrells say that the majority of the funds – all but $73,000 of the $1.4 million – were then transferred into a bank account in the name of The Festival Company. They have demanded the money from The Festival Company, but received no response.

Worrells' Christopher Darin, who was leading the liquidation, wrote that he had completed a report for the Australian Securities And Investment Commission [ASIC] regarding section 533 of the Corporations Act 2001, which requires liquidators to notify ASIC if there is the suggestion of illegal activity by a director or company representative. At the time ASIC advised that they would not be holding their own investigation.

Darin completed a supplementary report “detailing potential offences committed by Grant”. Worrells believes that Grant may have breached codes of the Corporations Act related to insolvent trading when he was promising creditors that forthcoming events would raise enough capitol to pay 2011 and 2012's debts while previously using the new 2011 company to pay debts incurred by the company used to hold the 2010 event.

The Commission have since advised Worrells that they are interested in taking action against Grant, however they indicated they  were waiting to recieve section 533 certificates before moving forward to ban Grant. Other companies which Grant is a director of are currently being wound up, including MRG Operations whose liquidation is being handled by Jirsch Sutherland.

Andrew Spring of Jirsch Sutherland told theMusic.com.au this afternoon that they had also lodged a section 533 report with ASIC 7 June and believed that there were other such 533 submissions made in regard to Grant in recent years.

John Butler is one of the artists who still hasn't been paid. Pic by Chris Frape

Mal Tulloch, Director of Entertainment, Crew and Sport at the Media, Entertainment & Arts Alliance today denied to theMusic.com.au that the money chase had been a failure and said that a number of outcomes were being sought in regards to the music industry. “We're asking the regulators to ensure the companies are being wound up as they should be,” he said.

“This whole process was to investigate how people in the industry are able to get away with ripping people off… There is a litany of illegal behaviour, we believe, by the director.”

Now that Worrells have tabled their report for ASIC, and the money from the liquidation process has run out, it is now up to the creditors to push the issue.

“ASIC will be far more responsive to effected creditors expressing their disappointment that no action will be taken,” Tulloch said today. “They will need to do that in writing to ASIC and ask the obvious question as to why the regulator is prepared to turn a blind eye to illegal behaviour in the industry. Worrells have completed their detailed report it is up to ASIC to investigate.”

On top of potential preferential payment and insolvent trading offences, Worrells have alleged that the company also committed offences in their record keeping. An IT expert employed to extract information from a company computer concluded that “someone had deliberately attempted to delete information” and “the entire email database had been erased”.

The festival has marketed itself as a New Year's escape at the Glenworth Valley. Pic by Andrew Matthews

As well as the ticketing funds Grant has a personal loan with the company to the amount of $28,745.45. A letter of demand has been issued with no response. $9,542.17 is also owed by Unseen TV, the debt believed to arise from fees related to the licensing rights to stream the festival's 2011/12 event on YouTube. That amount has been written off after the company was deregistered in January this year.

The total amount of money owed to companies, which include artists, major booking agents, infrastructure companies, police and the taxation officers, is believed to be $1,589,617.83. Proof of debt forms total $742.641.28 of that figure.

Grant, who theMusic.com.au was last able to make contact with in January, has left the country for France but returned to Australia in May. Tulloch said today that Grant had declared himself bankrupt, meaning he was currently unable to run a company, but he could potentially be a employed consultant.

Story updated 3.40pm to update Jirsch Sutherland response and clarify Section 533.