THE former Newcastle Jets may have traded while insolvent for two years under Chinese businessman Martin Lee, the company's liquidator has alleged, as creditors learnt they will receive nothing.
A statutory report to creditors this week from liquidator Jeff Shute, of Shaw Gidley Insolvency Reconstruction, revealed the Jets appeared to have traded at a loss since 2016 when Lee bought the club for $5.5 million.
Mr Shute said there was potential for an insolvent trading claim of about $700,000, but he had no money to pursue it.
"From my preliminary investigations, it is clear that the company has continued to trade at a loss since inception with accumulated losses totalling $10,696,367.38," he said.
The losses were partially funded by advances from Mr Lee's other business interests, but the former billionaire ran into financial difficulties when the US-China trade war hammered his business interests.
His other businesses stopped propping up the Jets in October 2019 and the club's financial position collapsed.
"It is evident without the financial support provided by these related parties the company would have been insolvent and unable to continue to trade," Mr Shute said.
The only good news from the liquidator's final report was that priority employees will receive between 8.77 and 17.88 cents in the dollar for outstanding wages and superannuation.
No other creditors will receive a return without a successful insolvent trading claim, which would be difficult to pursue because Mr Lee lives overseas.
Mr Shute said it was "uneconomical" attempting to pursue a possible insolvent trading claim against former chief executive Lawrie McKinna because he was owed a significant amount of money.
The Newcastle Herald reported in April that McKinna put $365,000 of his own money into helping keep the Jets afloat and will not see a return.
As he was a director of the failed company he is unable to claim under the federal government's Fair Entitlements Guarantee (FEG), which picks up the tab for workers' entitlements when their employer collapses without enough money to cover them.
"I am currently without sufficient funds to commence any actions in relation to the potential Insolvent trading claims," Mr Shute said.
Several small businesses have been left tens of thousands of dollars out of pocket from the liquidation after an already tough time due to COVID-19.
These include Doc's Megasave Chemist at Marketown and Viv Sportings, which supplied uniforms for the team and merchandise.
