One of the harbingers of the end of the mining boom in Western Australia was the collapse of the Forge Group in early 2014. Forge Group Ltd (Forge) and the companies associated with it were substantial players in the mining services sector. Towards the end of 2013 Forge went into an extended trading halt arising from concerns about its ability to meet debt covenants. In early 2014 the company announced that it had reached a deal with its bank, ANZ, which would ‘solve the liquidity issues and strengthen Forge Group’s balance sheet’.
But when voluntary administrators were appointed a few weeks later, on 11 February 2014, they found 1200 trade creditors were owed a total of nearly $50 million and 1600 employees were owed $15.5 million in employment entitlements. Secured creditors were owed over half a billion dollars, the main one being ANZ, which appointed receivers and managers to the companies on the day the administrators went in.
Forge went into liquidation in March 2014. The size of the collapse and the complexity of the issues faced by the liquidators, and the receivers and managers, mean that while there has already been plenty of litigation involving Forge, there may be a lot more to come.
Litigation over the Forge collapse has already generated a number of interesting and informative decisions in the insolvency space over the past six months, some of which we briefly review here.