THE owner of Beechwood Homes, Larry King, may have lined his pockets at the company's expense on a greater scale than previously thought, a report by the administrator of the collapsed home builder has revealed.
But Mr King may never face civil action because there are no administration funds left to pursue the case, and the administrator believes he is likely to have nothing left.
A report released last night by the administrator, Armstrong Wily, found that Mr King and his fellow company directors may have repeatedly used their position to "gain an advantage to themselves" to the detriment of the company.
This included writing off a $40 million debt to Denham Properties - a company in which Mr King has a direct financial interest - and forgiving a debt of $13 million to Mr King's long-time business associate, John Carson.
A payment of $1.55 million was also made to Mr King's personal trust just three months before the company collapsed.
It was one of a flurry of loans, or "uncommercial transactions", made to related entities at a time when Beechwood Homes was sinking, which represent clear evidence that the directors were trading while insolvent.
The report further suggests that Mr King and the other directors would have known they were trading while insolvent because the company sustained "significant trading losses" before July 2005, had a shortfall of assets to liabilities over the same period, and refinanced its loan with Westpac after the bank had imposed a debt-reduction program.
The report estimates unsecured creditors are owed $56.8 million, but says that recovering the money is "at best uncertain".
"We presently hold limited funds to commence legal proceedings against the company's directors for insolvent trading, or to pursue asset recoveries and voidable transactions if we are appointed as liquidators."
Creditors keen to fund legal action are asked to come forward.
The administrator is doubtful that legal action would reap rewards. "Our inquiries indicate that, in the event that a successful action could be pursued … they would have a limited capacity to pay any judgment obtained."