Court told Kleenmaid owed more than $100 million in debt
KLEENMAID owed Westpac Bank about $28 million when it collapsed, a court has heard.
In the second day of his opening address, Crown Prosecutor Stephen Keim told the Brisbane District Court that auditors and accountants were not told the full extent of Kleenmaid's financial difficulties and how intertwined its businesses were.
Former directors Andrew Eric Young, 62, and Bradley Wendell Young, 44, have pleaded not guilty to charges of fraud and operating a company while it was insolvent.
Mr Keim said the expected 60-day-long trial will hear from multiple accountants who examined Kleenmaid's books.
He said in 2009, Westpac Bank tasked investigative accountant Jamie Harris with looking into the books of Kleenmaid's spare parts arm Edis after the bank lent it $13 million.
Mr Keim said Mr Harris would testify to the court that Kleenmaid's Corporate Group, which included Edis, was far more dependent on the other part of Kleenmaid, the Orchard Group, than the directors had claimed when negotiating the loan.
Mr Harris will allege the Orchard Group controlled Kleenmaid's cash flow and the Corporate Group's main asset was a loan to the Orchard Group.
Mr Keim said Westpac later expanded Mr Harris's investigation into the Orchard Group and found it had been using about $20 million of owed customer deposits as working capital.
The court will hear Mr Harris found Kleenmaid was insolvent and recommended Westpac place the company into administration.
Mr Keim said at the time, Kleenmaid owed Westpac about $28 million, including the $13 million loan.
On Monday, the court heard Kleenmaid owed $96 million to creditors when it collapsed.
Mr Keim said the court will also hear from auditor Wayne Wessels, who looked into the Corporate Group's books in June 2008.
Mr Keim said Mr Wessels would tell the court he was never made aware of the degree the Corporate Group relied on the Orchard Group - a factor that would have changed his audit report.
The Kleenmaid brand was sold in 2009 to Compass Capital Partners, and the company now operates out of Sydney.
The hearing continues.
- ARM NEWSDESK