Clive Palmer could walk away from the administration linked to his Queensland Nickel refinery without losing the assets and leave creditors out in the cold.

It has been widely observed that Mr Palmer's Queensland nickel refinery fell into the hands of administrators last week. But it did not.

Instead, a shell company with no material physical assets called Queensland Nickel Pty Ltd was put into voluntary administration, with FTI Consulting appointed to the job on Monday last week, shortly after 237 workers at the refinery services were laid off.

Respected insolvency lawyer Beau Deleuil said the use of the structure in which Queensland Nickel operates Mr Palmer's refinery, but does not own any of the refinery assets, employs a well-known technique for insolvency asset protection. 

"When things are going well, everyone gets paid and no one's the wiser," Mr Deleuil, a Sydney-based partner at Quinn Emanuel Urquhart & Sullivan, said.

"The money flows out to the asset owning company, while the operating entity retains just enough to pay its debts.

"But when things go badly, and creditors aren't getting paid, the retained profits and the major assets are all protected in a separate entity, and the creditors are left out in the cold. It's not super-sophisticated, but it generally works."

Two companies own the refinery

Two companies ultimately owned by Mr Palmer, called QNI Metals Pty Ltd and QNI Resources Pty Ltd, own the refinery. Neither company is in administration.

The structure could leave the refinery and Mr Palmer's companies all outside of administration – and with no or few liabilities. 

Mr Palmer told The Australian Financial Review at the weekend that the commentary around the administration was "all just rubbish because the refinery will continue to operate, I believe, and get out of administration and continue to employ a lot of people". He said he had no plans to sell the refinery. 

But when it was put to him that the refinery itself was not in voluntary administration, that it was in fact his services company Queensland Nickel Pty Ltd, he said: "I don't fully understand it myself, to be honest."

"The point about it anyway is that I don't think there is any doubt that the operations will continue there. I put up $250 million in assets to support them."

He has said that money would be used to support the refinery's operations and would be used as security if workers' entitlements weren't recovered.

The first creditors' meeting is being held in Townsville on Friday, January 29.? A circular to creditors and suppliers from FTI Consulting discloses the administrator's involvement in previous work for Mr Palmer, on the liquidation or administration of Palmer Aviation, Coolum Resort, and Gold Coast United. 

Challenged governments

Mr Palmer challenged the federal and state governments to match the $250 million he has promised but said "they won't because they don't care about the workforce in Queensland. They are just full of rhetoric and bullshit."

When asked why the companies that own the refinery, which he is the ultimate owner of, were not put into administration, he said: "It was not my decision, any of that. I can't really comment on why they put anything into administration.

"I don't make any decisions about the group. I'm not a director of any of the companies, so I have no knowledge of it."

But Mr Palmer said: "What I can comment on is the circus that has been going on.

"The sad thing is, 22,000 people in Queensland have lost their jobs in the resources sector in the past 12 months, but the press hasn't covered it, and the Queensland government has no strategy for those [lost] jobs. But this happens and because it's Clive Palmer, it's 200 people, but all of Australia stops. It just seems unbalanced to me."

The "press has got no idea. This is a bigger business than they have ever operated," he said. 

He pointed to heavy job cuts by BHP and Glencore in Queensland, saying "they are not Australian companies and what we are doing is trying to run down our Australian enterprises and hand it over to multinationals".

Not one entity

His Queensland Nickel business has been referred to widely as if it is one entity in the past week. 

While Queensland Nickel Pty Ltd does employ all the workers, contracts suppliers, and owes millions to creditors, it does not actually own the assets.

Rather, Queensland Nickel Pty Ltd has an agreement to run the nickel refinery, called Yabulu, with QNI Metals and QNI Resources.

Mr Palmer bought the refinery, north-west of Townsville, from BHP Billiton in 2009.

He is the director and shareholder of the companies that own the shares in QNI Metals and QNI Resources, but not a director of the companies themselves.

He resigned as director of those companies in February 2015, and appointed relative Clive Mensink, who is also the sole director of Queensland Nickel Pty Ltd.

Queensland Nickel Pty Ltd is understood to have debt of about $70 million. 

Largest creditors

Sources close to the company confirmed the largest creditors include rail company Aurizon, with more than $20 million owed, followed by the Australian Taxation Office ($5 million) and $8 million for smaller suppliers. They also confirmed the 237 workers made redundant earlier in January have not received their outstanding entitlements including annual leave, long-service leave and redundancy payments, worth between $14 million and $16 million. 

Queensland Nickel Pty Ltd donated about $21 million to the Palmer United Party.

If Mr Palmer can keep QNI Metals and QNI Resources out of administration and liquidation – and there is no suggestion he can't – he could keep control of the refinery assets.

Mr Palmer still owns the refinery and does not need to sell it under the current arrangement.

He told Fairfax Media he had no plans to sell it, but "it's not up to me to sell the refinery".

Mr Palmer said the refinery had $1.9 billion in assets but "the big story about the banks is that they don't even want to lend it any money at all, not even $1, because they are frightened of the resource sector".

"They were happy to make money from the resources sector when times were good." 

• [Editor:Juan]