Court hears claims Kleenmaid directors plotted fraud
A YEAR before former Sunshine Coast-based appliance chain Kleenmaid collapsed, it underwent a major restructure.
But the restructure was part of a plan to mislead Westpac Bank and defraud the bank out of $13million, the Brisbane District Court has heard.
Former Kleenmaid directors Andrew Eric Young, 62, and Bradley Wendell Young, 44, on Monday pleaded not guilty to defrauding Westpac out of a $13-million loan and operating a company while it was insolvent.
Andrew Young is also accused of withdrawing $330,000 from company accounts just before administrators took over.
The trial is set to run for 12 weeks.
The court heard Kleenmaid owed about $96million to creditors when it entered voluntary administration.
Crown prosecutor Stephen Keim said Kleenmaid's collapse was "some years in the making".
"The Crown case is … the directors dishonestly defrauded Westpac on a loan application in November 2007 of $13million," he said.
"Thereafter the directors dishonestly traded while insolvent and additionally … Andrew Young committed a further fraud just prior to the administrators' arrival by having $330,000 removed from the business's bank account."
The court heard the Kleenmaid operation was made up of two business groups - the Orchard Group and the Corporate Group.
The Corporate Group included spare parts arm Edis.
Mr Keim said Westpac agreed to lend Edis $13million after Bradley and Andrew Young and fellow director Gary Collyer Armstrong withheld from the bank the financial struggles of the Orchard Group and how intertwined it was with Edis.
Mr Keim said Mr Armstrong would be a witness for the Crown, and the court would also hear from the Deloitte administrator who investigated Kleenmaid after the collapse.
The trial continues.
The Kleenmaid brand was sold in 2009 to Compass Capital Partners, and the company now operates out of Sydney.
- ARM NEWSDESK