Halifax director Jeffrey Worboys is enjoying the use of a Bentley while the administrators of the failed derivatives trading group say the company was trading while insolvent since at least January 2017.

Morgan Kelly, Stewart McCallum and Phil Quinlan of Ferrier Hodgson, who were appointed as voluntary administrators of both the Australian and New Zealand arms of the Halifax group in November, say the only outcome available is for investors and creditors to vote to place Hailfax in liquidation.

They estimate the shortfall between what investors and other creditors are owed and available funds will be about A$19.7 million, but stress that may change.

That’s a narrowing of their estimate in January of a A$15-25 million shortfall.

The tale contained in their latest update to Australian investors and creditors says there was “extensive co-mingling of client monies” with incoming money from clients used to fund Halifax’s operating losses and other bills.

There was “no pattern” behind how funds were transferred and there appears to be “substantial contraventions of the Client Money Rules,” the report says.

A number of payments totalling almost A$4.8 million have been earmarked as “uncommercial transactions” that a liquidator would be “very likely” to investigate further.

These include the A$39,377 payout of the lease of a Bentley “which we understand is in the possession” of director Jeffrey Worboys, and payments totalling A$3.4 million made to Warboys and former director Matthew Barnett on Nov. 21, two days before the Australian arm went into voluntary administration.

Another A$100,000 was pre-paid in rent on a residential property occupied by Worboys with half of this – A$49,631 being rent and A$6,087 being a rental bond – counted as a company expense. The remainder was a loan to the director.

“The director has advised that this payment (was) made by Halifax on the basis that the premises was being used as a home office,” the administrators’ report says.

Another payment of A$40,200 was paid to Halifax America and “we understand that this payment was made in order to pay a fine imposed by the Financial Industry Regulatory Authority. We have not seen any evidence to demonstrate that there was any commercial benefit to the company in entering into this transaction,” the report says.

“Further, we understand that Halifax is a previous shareholder of Halifax Australia and that the director (Warboys) has a financial interest in this entity.”

One spot of good news for investors and creditors is that the equity value of open positions across Halifax’s three platforms has risen from A$211.2 million on Nov. 23 last year to A$227.7 million at Feb. 28 this year.

If a court determines that claims against Halifax should date from the administrators’ appointment, this “has the effect of reducing the overall deficiency to investors,” the report says.

Because there appear to be contraventions of both the Client Money Rules and the Australian Corporations Act 2001, the administrators say they are working closely with the Australian Securities and Investments Commission on these and other lines of investigation.

Halifax NZ’s managing director was Andrew Gibbs. The administrators intend to publish a report for New Zealand investors and creditors later today.

The administrators have called a meeting of creditors in Sydney for Wednesday, March 20 and in New Zealand on March 22.

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