Dairy farmers likely to lose all money owed by milk processor

Country Valley, owned by John and Sally Fairley, ceased trading in April and went into voluntary administration in May, 21 years after it was established and a year after launching locally produced Jamberoo Valley Milk to community acclaim.

Earlier this month, creditors decided to wind up the company and liquidate its assets, which at the highest estimate came to less than $290,000.

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In a creditors report, liquidator Aaron Lucan said employees were owed entitlements of $246,549 while debts to unsecured creditors were as high as $1.6 million.

But Mr Lucan has forecast a best-case dividend of 6.6 cents in the dollar for unsecured creditors - a probability he rates as very low - and a high probability they will receive zero cents.

Employees are also unlikely to see their outstanding entitlements.

Steven Downes told the Mercury he has given up dairy farming at his Jamberoo property for the time being as a result of his experience with Country Valley, saying he and several others from the region are collectively owed more than $600,000 for the milk they supplied.

The report says secured creditors are owed over $2 million.

Mr Lucan said the Fairleys reported the company began to experience difficulties after a 40 per cent decline in business, which stemmed from quality issues.

"My investigations have confirmed that the reasons given by the directors for the company's financial difficulty are accurate, however these issues were exacerbated by the company being both highly leveraged and having insufficient working capital at the time it encountered financial difficulties early in 2023," Mr Lucan said.

He determined the company became insolvent from at least late February.

Country Valley's records, outlined in the report, show it recorded a loss of over $600,000 in the year to April.

Mr Fairley told the Mercury that bad milk quality as a result of wet weather was behind a 42 per cent drop in sales since last winter.

"I'm just really sad how it's all gone - it's incredibly bad for all of us," he said.

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Mr Fairley said whether he would be able to repay the money owing depended on what was left after liquidation.

In his report Mr Lucan said an insolvent trading claim could net $456,899 to $656,747, depending on the Fairleys' ability to pay it, but noted there was potentially a defence available to them that they reasonably believed the company was solvent.

Mr Lucan also said the Fairleys possibly breached the Corporations Act in allowing their son Thomas to incur a debt of over $900,000 for milk supply to a business, named countryvalley@canberra, which he operated as a sole trader.

Mr Fairley said his son had had nothing to do with this company for several years and only his name remained on the company title.

The report indicates the younger Mr Fairley owes his parents' company more than $1 million in total but Mr Lucan has deemed he cannot repay this debt.

The Australian Securities and Investment Commission has advised it does not intend to pursue further action, a decision that has frustrated Mr Downes.

Country Valley produced award-winning milk and other dairy products, claiming gongs at every Royal Easter Show between 2005 and 2019.

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