Christian Community Ministries paid $30 million for Brindabella Christian College. Photo: Region.
The former directors of the company that ran Brindabella Christian College could face criminal charges from numerous breaches of the Corporations Act, according to the second creditors’ report from the administrators.
Deloitte’s Sam Marsden and Sal Algeri believe that Brindabella Christian Education Ltd was trading while insolvent from as far back as January 2021 before finally calling in administrators in March when it could no longer pay staff.
The report found the directors, headed by board chair Greg Zwajgenberg, breached a host of directors’ duties under sections 180 to 184 of the Corporations Act, and may warrant further investigation by ASIC with a view to potential criminal prosecution.
They suggest BCEL failed to maintain adequate books and records.
The college is now in the hands of Christian Community Ministries as a result of the administrators successfully seeking a buyer for the Lyneham private school.
CCM paid $30 million, which will enable all creditors to be paid in full.
$15 million was paid to the administration with a further $15 million to be paid to Brindabella Christian Education sale proceeds trust.
CCM also assumed various liabilities reducing the claims against BCEL by about $8 million, including employee entitlements ($2 million), tuition fees paid in advance ($4 million), several operational, equipment and finance leases which were either novated to CCM or paid out and all liabilities associated with the car park litigation (currently unknown).
The report recommends that BCEL be placed into liquidation so creditors can be paid out.
It found that BCEL’s financial difficulties were the result of ongoing trading losses, insufficient cash flow, and/or high cash usage, failure to pay statutory liabilities, poor strategic management of the business, inadequate financial controls, undercapitalisation, and poor governance by the board.
It rejected the directors’ view that blamed the situation on the cost of ongoing legal issues, government payments being moved to a monthly basis, NAB not extending loans resulting in these being reclassified as ‘current liabilities’, and a targeted campaign against the board by Reform BCC, the media and various government agencies.
The report identified potential criminal offences in the forward invoicing with an 11 per cent discount for early payments, without proper recognition of this in the company’s accounts, as well as the purchase of Boston Dynamics’ ‘Agile Mobile Robot’ and associated travel expenses, which were also identified as potential criminal offences.
“Providing a significant discount on annual fee revenue for FY25 further exacerbated the financial strain, leaving the company in a position from which it could not realistically recover,” it said.
“This conduct was undertaken while the company was clearly insolvent, without signed financial accounts or complete books and records, demonstrating a reckless disregard for proper financial management.”
It also appeared that the discounted fees were motivated primarily by a desire to relieve the directors of personal liability relating to outstanding tax notices.
“These payments appear to have prioritised the directors’ personal financial interests over those of the company and its creditors,” the report said.
The administrators say the robot costs were also incurred when the company was clearly insolvent.
“The robot was not a core operational requirement and had no clear link to the college’s curriculum or educational outcomes,” the report said.
“The total expenditure of over $460,000 – including business class flights, extended overseas travel and luxury accommodation – was substantial and appears disproportionate given the company’s financial constraints.”
The report also found that between 2021 and 2024 around $30,000 in political donations to the Liberal Party were charged to the company’s corporate credit card held by Mr Zwajgenberg, in breach of ACNC regulations that prohibit registered charities from supporting political parties.
BCEL went into administration owing more than $23.8 million to creditors, comprising $1.4 million to employees, $9.5 million to secured creditors, including NAB ($9.3 million), $4.1 million to parents (for tuition fees paid upfront), $6.1 million to the ATO and $2.7 million to suppliers.
The future of BCEL will be decided at the second creditors’ meeting on Thursday, 31 July.
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