Director faces investigations following Mundella collapse

Mundella collapse leaves millions owed as director faces investigations In short: Milk suppliers and employees have been left empty-handed following the collapse of WA dairy brand Mundella and associated companies. The companies were put into liquidation after a rescue plan put forward by the director was terminated due to a breach of terms. What's next? Liquidators will investigate possible insolvent trading and hundreds of potentially unreasonable transactions related to director Hayden Russell. Creditors say they may not see a cent of the millions owed to them by collapsed West Australian dairy processor Mundella Foods and two other associated companies. Mundella, Margaret River Dairy Company and The Cheeky Cow were put into liquidation this month. Director Hayden Russell is facing investigations by liquidators at Mackay Goodwin following administrators' preliminary suggestions of insolvent trading and hundreds of potentially "unreasonable transactions". Dairy farmer and Mundella Foods milk supplier Phil Hall told the ABC he was owed "enough money to buy a house" and expected to get nothing back from the liquidation. "I don't know what happened to Mundella, but I know this year we basically never got paid," he said. "Myself and another dairy farmer, we both did the same thing, believing in this company. "We wanted this to work because it was the only way forward for the future." The unpaid debt contributed to his family's recent decision to sell their farms at Wokalup in WA's South West and leave the dairy industry after six generations. "I remember being three and running around this farm," Mr Hall said, choking back tears. Failed rescue plan Mundella, Margaret River Dairy Company and The Cheeky Cow were put into liquidation on August 6, following the termination of a Deed of Company Arrangement (DOCA) put forward by Mr Russell in August last year. Mr Hall is among the unsecured creditors still owed millions. They were told they could see a potential return of 68 cents to the dollar under a rescue plan to sell the real estate portfolio of the companies under lease-back arrangements. But administrators told the ABC the DOCA had been terminated as a result of Mr Russell's non-compliance with the terms of the deal. It is not known what breach triggered the termination of the rescue plan. A financial statement seen by the ABC shows more than $620,000 was paid from the administration account during the DOCA period for expenses, including administrator fees, trading costs and supplier payments. Just over $12,000 remained when the deed was terminated. There appears to have been no significant distribution of money to unsecured creditors. The companies' property and remaining assets have been transferred to the mortgagee, Bowral Capital Pty Ltd. Mr Hall said he held no ill-will towards Mr Russell, because he had initially paid dairy farmers 90 cents a litre for milk, compared to 76 cents offered by other processors. "I'm not angry with Hayden because he was trying to do the right thing for the dairy industry,"he said. "None of the other milk companies were offering anything near the price he was offering, and nor are they trying to do anything for the farmers left in the industry." Former Mundella Foods employee Mairee Wall is less forgiving. She said she was still owed about $10,000 of unpaid annual leave and superannuation. Ms Wall worked as a pasteuriser at Mundella Foods' Mundijong manufacturing facility near Perth from 2012, well before the company was purchased by The Cheeky Cow, a company majority-owned by Hayden Russell. "That's when things very quickly unravelled," she said. "Things went drastically wrong. There was no protocol. There was just no structure." Ms Wall said she was once proud of making the Mundella brand of yoghurt, which had previously won national awards. "We put everything into it, and it really broke a lot of people, me being one of them, when things just fell apart and just so quickly,"she said. Thoroughbred purchases Industry reports and bloodstock sale records indicate Mr Russell expanded his involvement in WA's thoroughbred industry during the past year. Thoroughbred Breeders WA reported in November last year that "Margaret River Dairy Company owner Hayden Russell" had purchased a stallion named God Has Spoken, and the ABC has confirmed that purchase agreement. Sale results on online horse auction site Magic Millions list a buyer identified as "Hayden Russell, WA" as purchasing five horses. There is no evidence in the administrators' reports linking Mr Russell's thoroughbred purchases, which had total costs of under $10,000, to the dairy companies' funds or to the transactions flagged for further investigation. The ABC has contacted Mr Russell for comment. Liquidators to investigate In a report lodged with the corporate watchdog, administrators stated that the downfall of the companies was the combined result of "poor financial control/lack of records", "poor strategic management" and trading losses. The liquidation process will involve further investigations of Mr Russell's duties as director. Administrators flagged about 235 transactions worth more than $100,000 that may be considered "unreasonable director-related transactions" across the three companies. The administrators also noted "sufficient evidence to suggest" Mundella had traded while insolvent from July 2024 and Margaret River Dairy Company from December 2023. They estimated about $3.7 million in debt was incurred during that time, and said Mr Russell "may be personally liable for insolvent trading". Administrators said preliminary findings had identified potential offences they intended to lodge with the corporate watchdog.