RACA, founded in 1903, owns the prized heritage-listed property at 89 Macquarie Street, which has been valued at $120 million, up from $4.8 million as of June, according to financial reports. It is being re-evaluated. Dysfunction is not unusual, with eight directors stepping down this year and the former CEO suing the club in federal court.
The members-only club costs at least $2,500 for Sydney-based members and has reciprocal agreements in Australia and abroad with the exclusive men’s-only Athenian Club in Melbourne and the Commonwealth Club in Canberra.
Cash outflows rose from $208,000 to $1.39 million in the year to June, but non-bank financing was used to “pay off existing Westpac banking facilities and provide continued working capital for the company”. A new $3 million loan from vendor Guardian Financial helped RACA secure cash. At the bank at the end of the year.
Walker Weiland told the board in March that it should explore a “safe harbor” clause that protects directors from legal action when reorganizing a bankrupt company.
Directors are solid
“As your company’s statutory auditors, we have a duty to report to the Australian Securities and Investments Commission any suspected or actual breaches of corporate law, including transactions that may result in insolvency.” Wali Aziz, a partner at Walker Weyland, wrote in an email to the board on March 14.
Email retrieved by Australian Financial Review, told the board what needed to be done to prevent a bankruptcy transaction. Aziz requested further documents “to form my view as to whether the club is trading while insolvent”.
of financial review There is no suggestion that the company was trading while insolvent or that other directors were in breach of their duties.
Walker-Weyland resigned in June, but the club formally notified members in September, according to a person familiar with the discussions.
Hathaway said Walker-Weyland had been rotated out after more than 15 years with the club and that his resignation as auditor was simply a procedural matter.
“Most auditors should be replaced every four to five years, and the new board and myself as president decided it was time to put out a bid,” he said.
“All auditors should raise their concerns, but there will be no outstanding creditors.”
He denied any suggestion that the club might have been making deals while in bankruptcy.
“I’m a registered liquidator. I know the definition of an insolvency transaction,” Hathaway said. “You have the right to borrow money to meet your obligations. And someone was ready to lend to us so that we could meet the club’s day-to-day obligations.”
The directors argued that the company could continue as a going concern based on the prospects set out in the financial statements and the Guardian loan. In the long term, the club’s survival depended on “an increase in membership, especially young members.”
Development work
They said the club would consider “sale or development” of the heritage floor space, among other “real estate considerations to provide significant funding for restoration… and internal conservation works”.
“The club has a design concept that would add hotel rooms spread across eight floors, which is pending consideration by the authorities,” the directors said.
“If this proposal is successful it will provide an opportunity for further development of the club building which will provide financial benefit to the club.”
Mr Hathaway, who is standing for re-election at the RACA annual general meeting on November 30 after joining the board in 2021, said he was “absolutely” confident the club would survive.
“We are confident that in time we will be able to overcome that debt and build a more viable club with facilities and venues better suited to modern membership,” he said. financial review.
“Nobody pretends that the balance sheet isn’t what it really is,” he said. “But there will be no unpaid creditors. Think about the numbers. We think he has assets worth $120 million, but he only has $3 million to pay back. Just dollars.”
He explained that the property had been revalued 30 times due to the strength of the real estate market and the sale values of comparable buildings in the area.
“We are confident that in time we will be able to overcome that debt and build a more viable club with facilities and venues better suited to our modern membership.”
Voting for the director election began this week, with the results expected to be finalized at the shareholders’ meeting.