Griffin Coal’s biggest creditor has turned on the WA company’s liquidators, moving to dump them as frustration grows over the loss-making coal contracts that are blamed for the miner’s financial problems.
Griffin’s Indian-founded owner Lanco has called a meeting of creditors on August 31 to replace insolvency firm Cor Cordis with new liquidators from Pitcher Partners.
The move, a rare one in insolvency circles, is supported by Griffin’s receivers from Deloitte, who have been running the Collie miner since September last year.
It is understood that Lanco believes Cor Cordis has dragged its feet on taking action against the miner’s contracts with Bluewaters power station.
The receivers have made no secret of their belief that outside of more State Government support, Griffin cannot survive unless the Bluewater contracts are renegotiated or scrapped.
Liquidators have the right to cancel contracts that they believe are not in the best interests of creditors.
While Cor Cordis, with $550,000 of backing from Lanco in January, has flagged legal action against the contracts, it was still finalising a court application when Lanco finally lost patience in late-May.
In a statutory report to creditors on Friday advising of the meeting, Cor Cordis said it was told by Lanco on May 22 that the group would not support its application “for the purpose of seeking directions in the terms proposed by the liquidators” and had demanded the return of the more than $200,000 still remaining from its funding package.
However, the Cor Cordis liquidators have rejected the repayment claim, saying they are under no obligation to return the money given they are still working on their initial mandate.
The firm said also the resolution to replace it was “unreasonable, unwarranted and may substantially prejudice the interests of one or more creditors or a third party”.
“The liquidators reserve their rights in this regard,” they said.
Bluewaters’ two power units, 4.5km north-east of Collie, provide about 15 per cent of South West WA’s power needs and take about two-thirds of Griffin’s coal.
However, the coal is supplied at a loss for Griffin. The company’s last publicly-available financial results, for the 2021-22 financial year, were typical of its performance, showing it spent $154.5m to produce $117.8m in sales for a $49m annual loss.
Bluewaters is owned by Japanese trading houses Sumitomo and Kansai Electric, but it is effectively controlled by the US hedge funds who bought its debt in 2020.
Griffin owes more than $1.4 billion to hundreds of creditors, notably Indian bank ICICI, which has propped up the miner since Singapore-based receivers were appointed six years ago to its parent company, Lanco Resources International, itself a subsidiary of India’s failed Lanco Infratech.
There is no prospect of the debt being repaid, with the bank likely to forgive most of the secured borrowings as part of any restructuring able to be struck by receivers.
Cor Cordis noted in its report that “there may have been discussions between some or all of the Bluewaters companies, ICICI, the receivers and the State regarding a potential restructure of” Griffin.