Ruth Tarvydas' fashion business had just $200 cash in the bank and may have been trading while insolvent when it collapsed last month.
The revelations came in a creditors report by administrator Kim Wallman and published on the HLB Mann Judd (Insolvency WA) website yesterday. The report painted a grim picture of the size of the task facing Tarvydas, who hopes to recapitalise her business, RTI (WA) Pty Ltd. According to the report Tarvydas' financier ANZ is owed $800,000, trade creditors $200,000 and her King Street landlord $426,000. Tarvydas' records showed $1.2 million in unpaid wages to herself, although Mr Wallman said he had "yet to form a view in relation to this amount".
Mr Wallman wrote in the report he believed Tarvydas "may have traded while insolvent because at the time transactions were entered, there may have been reasonable grounds to believe the company may not have been able to pay its debts as and when they fell due".
"Given rental and taxation liabilities have been in arrears for some time, I will need to investigate whether the company has incurred credit where there were reasonable grounds to believe the company could not meet its obligations as and when they became due," he said. "Having said this, the director may have valid defences to insolvent trading actions."
Tarvydas told _WestBusiness _ that before the company's collapse she was still hopeful it could trade its way out of difficulty and secure an investment lifeline.
"At that stage there was a lot of interest in investment," she said.
Mr Wallman has asked for a second creditors meeting to be delayed to give him more time to go through the books and review a deed of company arrangement proposed by Tarvydas.
Few details of the proposed DOCA were contained in the report but Tarvydas said she hoped to sell an interest in an intellectual property asset, which was being considered by an unnamed third party."For commercial reasons I am unable to divulge details of this asset but have provided the administrator with sufficient information to confirm its existence," she said in a statement included in the report.