April news digest - business insolvency and turnaround

02 May 2016

The following are summaries of media stories related to business insolvency and turnaround in Australia during April.

29 April 2016

The Australian Financial Review (‘Street Talk’)reports that “GSO Capital has departed Arrium Limited’s long list of creditors in one of the first pieces of stabilising news in the hugely complex administration. The Blackstone-backed fund had extended around $100 million to Arrium as part of the failed recapitalisation package that so enraged Arrium’s banks. Street Talk understands the local big four banks have agreed to the deal, completed last week, to repay the GSO loan, leaving the vulture fund to find another carcass.”

29 April 2016

The Weekly Times reports that “the new SPC Ardmona cannery at Shepparton looks much like the old one. Two years ago SPC was in danger of closing with more than 2000 jobs at risk. The Victorian Government invested $22 million, while parent company Coca-Cola Amatil found $78 million and a business rescue strategy, aptly called Project 100, was born. More than $50 million of the bailout money has been spent and the storage halls of the cavernous, heritage-listed building are filled to the roof with steel cans.”

29 April 2016

INTHEBLACK (CPA Australia) reports that “in 2014 the Productivity Commission stepped into the insolvency law-reform fray with its inquiry into business set-up, transfer and closure … The government has yet to formally respond to the Productivity Commission’s report (submitted on 30 September 2015), but picked up some of its key recommendations with the National Innovation and Science Agenda announced last December – a strong indication that measured bankruptcy and insolvency law reform is on its way.”

29 April 2016

Central Queensland News reports that “three months after 75 Cockatoo Coal workers were made redundant from the Baralaba coal mine site, administrator PPB Advisory says it has received a tax refund which will allow the company to pay the employees their entitlements on or before May 6.”

28 April 2016

Business Insider Australia reports that “Smaller Australian businesses continue to do it tough compared to larger rivals, according to a new report released by the National Australia Bank earlier today. The bank’s quarterly SME business survey revealed that operating conditions for smaller firms remained ‘stable but subdued’ into the first quarter of 2016 with the smallest firms ‘facing the most challenging conditions’.”

28 April 2016

The Guardian (UK) reports that “small businesses in the UK are owed, on average, £12,000 each because of late payments. That works out to be £55bn in the country overall. Up to 23% of SMEs have had to consider insolvency because of payment issues. With the publication of the enterprise bill in 2015, Westminster has committed to tackling the problem by appointing a small business commissioner … It’s a model that has been working in Australia since 2003. The Victorian small business commissioner office, which Geoff Brown has been running for almost five years, was initially set up to help solve retail lease disputes. Today, those cases make up around 60% of the caseload. Businesses are legally obliged to take such complaints to Brown before they can be considered for litigation. The remainder are general business cases, which is a fast growing area.”

27 April 2016

Reuters reports that “Australia's Atlas Iron Ltd averted collapse on Wednesday after shareholders approved a debt-for-equity swap that will hand 70 percent of the company to creditors amid a recovery in iron ore prices. Chairman Cheryl Edwardes had warned ahead of an extraordinary shareholders' meeting of a ‘high risk’ that Atlas would be placed in administration, a form of bankruptcy, unless the deal went ahead.”

27 April 2016

The Courier Mail reports that “the administrator of Linc Energy would like to strike a deal which would let the stricken firm stay afloat. PPB Advisory’s Grant Sparks said that he hopes a deed of company arrangement can be approved by creditors next month.”

27 April 2016

The Australian reports that “Australia’s first online video and DVD rental service Quickflix has been placed in voluntary administration after rival streaming service Stan stonewalled its attempts to raise capital. Quickflix – started in a small office in Perth by chief executive Stephen Langsford more than 12 years ago – has appointed Ferrier Hodgson as administrators.”

27 April 2016

ABC Online reports that “furious brides have lashed out at celebrity fashion designer Johanna Johnson, after discovering they could lose their wedding gowns when the business was placed into liquidation. The designer, whose gowns have adorned a bevy of celebrities including Madonna and Mad Men’s Christina Hendricks, has been pursued in court by the Australian Tax Office (ATO) and former employees for more than $1 million. A NSW Supreme Court order to place the Alexandria-based business into liquidation came into effect today. Tim Cook, from court-appointed liquidator Balance Insolvency, told the ABC he would now assess, secure and sell the designer’s assets.”

27 April 2016

The Sunshine Coast Daily reports that “a jury has been discharged from giving a verdict on a man who has been accused of operating the former Sunshine Coast-based whitegoods company Kleenmaid while it was insolvent … Kleenmaid collapsed in April 2009 when the company was placed into administration.”

25 April 2016

The Australian reports that “lenders to McAleese Transport will receive between 50c and 60c in the dollar should they accept a recapitalisation plan of the company by a syndicate including SC Lowy and Sankaty Advisors. In March, McAleese granted the consortium an exclusive due diligence period until April 15 that was later extended to the end of the month. Moelis and KordaMentha have been advising McAleese, which is buckling under $209 million worth of debt owing to lenders that include ANZ, Westpac, HSBC and JPMorgan … McGrath Nicol has been working for the lenders.”

23 April 2016

The Sydney Morning Herald reports that “the good and the bad businesses inside collapsed steelmaker Arrium were in the spotlight on Friday in two states, as administrators KordaMentha race against the clock to come up with a package to entice future buyers and save thousands of jobs. Mark Korda, one of the ‘Marks’ whom the restructuring and insolvency firm is named after, says the east coast steel business which includes an electric arc furnace and mini steel mill at Laverton, near Melbourne, is profitable and a going concern that will power on under any new owner. Mark Mentha, the other Mark, has a much more difficult problem. He held meetings on Friday in Whyalla with the South Australian Treasurer Tom Koutsantonis and other key officials, with heavy cost-cutting planned at the loss-making steelworks in South Australia to try to stem the red ink in the short-term and preserve enough cash to allow for an orderly sale process.”

22 April 2016

The Sydney Morning Herald reports that “liquidators have been appointed to chase down about $200 million in debts owed by Clive Palmer’s failed Queensland Nickel enterprise. FTI Consulting, which earlier this month delivered a damning report about the federal MP’s alleged business conduct at Queensland Nickel, has been tasked with winding up the company after a unanimous vote in Townsville on Friday.”

22 April 2016

Business News (WA) reports that “the corporate watchdog has moved to have McGrathNicol appointed as liquidator to Peter Landau’s troubled listed coal mining company, Continental Coal. The Australian Securities and Investments Commission said today it had successfully applied to the Federal Court for the appointment of a liquidator to the embattled West Perth-based coal miner.”

22 April 2016

Smart Company reports that “women’s clothing retailer Meredith & Moore is closing its doors ‘for good’ after the business collapsed into voluntary administration late last month. Meredith & Moore, which was founded in 1962, called in external managers on March 29.”

21 April 2016

The Australian Financial Review reports that “hundreds of investors who lost money in the collapse of retailer Dick Smith have registered interest in joining a class action suit led by Sydney law firm Bannister Law. Bannister Law is gauging the level of interest in a class action claim against former directors and auditors of Dick Smith, which collapsed in January owing around $400 million to creditors.”

20 April 2016

The Australian Financial Review reports that “Atlas Iron’s debt restructure looks set to get the green light from its lenders on Friday following the receipt of predominantly positive proxies from the miner’s mostly US-based debt holders. But one local lender, Commonwealth Bank of Australia, is said to be holding out on converting its debt for equity in the troubled iron ore miner.”

20 April 2016

The Australian reports that “the July 2 election may be just in the nick of time for the government: cracks are starting to appear in the economy – and small business in particular – that can only get wider … Overall insolvency insurance claims in the first quarter were 80 per cent above the same quarter last year. The highest number of claims was in the advertising, building and hardware sectors.”

20 April 2016

Human Capital reports that “Australian employers should be mindful that the abolition of the RSRT means they will be left to deal with payment disputes on their own. McDonald Murholme Managing Director Alan McDonald says the abolition of the RSRT means there will no longer be a dedicated regulator with the power to handle disputes between drivers and their contractors.”

19 April 2016

The Australian Financial Review [‘Chanticleer’] reports that “loss-making global law firm Slater & Gordon looks like it will survive as a going concern after winning the confidence of its banking syndicate which is owed more than $740 million. Chanticleer understands the major lenders to the firm are inclined to support a restructuring proposal and debt reduction plan that must be completed within the next 10 days.”

19 April 2016

ABC Online reports that “less than a week into Australia’s most complex corporate restructure, the administrator of failed iron and steel firm Arrium has said the company’s future hangs on the fate of its Whyalla steelworks. The insolvency firm KordaMentha said, while many of Arrium’s businesses are in ‘good shape’, most are in some way exposed to the survival of the Whyalla operation.”

18 April 2016

The Sydney Morning Herald reports that “a deal that would effectively stop Morgan Stanley’s US court action against Arrium has been brokered between the American banking giant and administrators from KordaMentha. The deal came as administrators warned staff about the need to reduce the cost base of Arrium’s politically sensitive Whyalla steel mill. Fairfax Media understands the deal will see Morgan Stanley join the queue of the other lenders of Arrium, including the steelmaker’s 19 noteholders.”

18 April 2016

ABC Online reports that “a growing appreciation for premium Australian wine has driven the value of wine exports up 13 per cent in the year to March, to $2.1 billion … But while a range of export statistics have painted an increasingly positive outlook for wine exporters, rising values were not improving balance sheets across the industry, with parts of the sector struggling to pay down debts, according to business accountants Ferrier Hodgson.”

18 April 2016

Macro Business reports that “according to the latest data from the Australian Financial Security Authority, pressure is mounting in WA, with personal insolvencies in the March quarter 2016 compared to the March quarter 2015 rising 26.0%, bankruptcies increasing 19.6% and debt agreements in WA are now the highest on record. However, Queensland has the highest number of insolvencies across the states with 2,197 recorded events in the quarter. This is the bellwether for mortgage defaults and house prices.”

18 April 2016

The Courier Mail reports that “the former chairman of bus line Greyhound and several biotechnology companies has finally been declared bankrupt after lengthy court fights. The bankruptcy of Stephen Jones came this month, a day before he turned 70. He now joins two other former directors of Brisbane-based drug developer Invion, who were bankrupted after the company took legal action against them.”

18 April 2016

Ragtrader magazine reports that “womenswear designer Johanna Johnson has spoken out against allegations she underpaid employees. The designer’s namesake business has been placed into administration. In a post to the brand’s Facebook page last week, it was claimed the process would restructure the brand for international expansion.”

15 April 2016

The Sydney Morning Herald reports that “former Australian listed market darling Linc Energy has entered voluntary administration with the oil- and gas-focused company buckling under an ongoing restructure and recapitalisation. Linc, which once boasted a market value of $2 billion when listed in Australia, was worth $US15 million when its Singapore-listed shares last traded on March 24. Linc appointed PPB Advisory as its administrators on Friday.”

15 April 2016

The Australian reports that “Clive Palmer says the federal government is pursuing him over unpaid worker entitlements because it wants him out of parliament. The Turnbull government will unleash one of the nation’s top insolvency experts to chase federal MP Clive Palmer’s assets, as it activates the safety-net scheme for sacked workers’ entitlements.”

14 April 2016

Sky News reports that “there is speculation cabinet will give ASIC extra powers and funding to back government claims the regulator is the ‘tough cop on the beat’. The agency has said budget cuts in the form of efficiency dividends has limited its ability to conduct proactive investigations.”

14 April 2016

ABC Online reports that “Western Australian music artists and crew members from the 2015 Disconnect Festival say they have not seen a cent of the money owed to them. Musicians as well as those who worked behind the scenes have spoken out for the first time, telling the ABC they have not been paid their due and have been ignored by event organisers for four months.”

13 April 2016

The Australian reports that “The Australian Federal Police has raided the headquarters of the Australian Careers Network, the owner of the embattled training outfit Phoenix Institute. The raid, part of a fraud investigation, comes a month after the company collapsed after the federal government decided to withhold almost $40 million in payments under the scandal-plagued VET FEE-HELP loans program.”

13 April 2016

The Australian reports that “an unlikely alliance between the Australian Workers’ Union and the four big banks last night succeeded in toppling Arrium’s administrator of less than a week, Grant Thornton, installing insolvency specialist KordaMentha.”

13 April 2016

Business Insider Australia reports that “personal insolvencies rose 2% in the March quarter, the fourth increase in a row, mainly due to bad debts in the mining states of Western Australia and Queensland. This is the first time there have been four consecutive quarterly rises since 2009, according to the Australian Financial Security Authority.”

13 April 2016

Business Insider Australia reports that “US companies have a looming problem of their own making, and it may soon come back to crush them. According to Andrew Lapthorne, head of quantitative analysis at Societe Generale, the amount of debt that businesses have accumulated over the 5 to 6 years has put them on the verge of a serious crisis.”

12 April 2016

The Australian Financial Review (‘Street Talk’) reports that “insolvency and restructuring firms may be circling Peabody Energy’s Australian arm, but they are said to be looking in the wrong direction. The United States-listed Peabody Energy flagged that it was on the verge of Chapter 11 bankruptcy last month … Street Talk understands Peabody’s Australian arm is expected to continue to operate as a going concern in Australia.”

12 April 2016

The Australian reports that “Clive Palmer used Queensland Nickel as a ‘piggy bank’ for the rest of his business empire, running the nickel refinery into the ground to prop up his political party and other corporate interests, administrators say. After the release of the administrators’ report today, FTI Consulting’s John Park told media that if Mr Palmer hadn’t spent millions in Queensland Nickel’s money on his associated companies … the refinery may have been able to weather the weakness in the nickel price.”

12 April 2016

ABC Online reports that “Austalian-founded bitcoin exchange Igot appears on the verge of collapse, with dozens of customers and clients claiming to be owed hundreds of thousands of dollars. The company, which buys and sells bitcoins on behalf of customers, has for months been unable to completely deliver on those bitcoins or refund their money.”

12 April 2016

Australasian Transport News reports that “Western Australian freight and logistics operator Star Freightlines has called in administrators who are seeking a quick solution to its financial problems. The company’s business is centred on refrigerated transport and warehousing, servicing regional WA and interstate needs, with a focus on the mining industry catering.”

11 April 2016

ChannelNews reports that “JB Hi Fi has announced a major restructure which CEO Richard Murray said will further strengthen JB Hi Fi’s day to day management team, among the changes is an expansion of JB Hi Fi’s online and digital marketing operations.

8 April 2016

ABC Online reports that “hundreds of families across Australia are facing uncertainty after a company that stores umbilical cord blood went into liquidation. Brisbane-based Stemlife had more than 2,000 samples stored in its facility when it appointed liquidators BRI Ferrier last month.

8 April 2016

The Sydney Morning Herald reports that “the administrators of collapsed steelmaker Arrium say they will have decided by May 13 whether to break the company up, shut it down or continue to trade on.”

8 April 2016

ABC Online reports that “Target’s managing director Stuart Machin has resigned, as parent company Wesfarmers investigates claims of accounting issues in its most recent half-year results. In a statement to the Australian Securities Exchange, Wesfarmers said Mr Machin had decided to resign after eight years with Coles and then Target.”

7 April 2016

The Australian Financial Review reports that “Grant Thornton has been appointed as voluntary administrator of stricken steel group Arrium. It’s understood Grant Thornton managing partner Paul Billingham is overseeing the job.”

7 April 2016

The Australian reports that “construction activity has slipped to a 13-month low on the back of weakness in home building and declining engineering work. The Performance of Construction Index slumped 0.9 points to 45.2 in March, remaining below the 50-point level separating expansion from contraction.”

7 April 2016

The Australian reports that “litigation funder IMF Bentham will back an investigation into collapsed stockbrocker BBY, as liquidator KPMG looks to pursue claims against the directors of the failed firm. BBY, controlled by Glenn Rosewall and his father, the tennis great Ken Rosewall, collapsed in May last year and KPMG has estimated there is a $16m shortfall of assets against creditors’ claims.”

7 April 2016

The Motley Fool Australia reports that “Slater & Gordon Limited [ASX: SGH] has until the end of the month to convince its bankers to amend its debt facilities, or else it could all be over for the embattled law firm. Slater’s fall from grace over the last 12 months or so has been savage. From a high of $8.07, the shares lost as much as 97.2% to a low of just 22.7 cents.”

7 April 2016

ABC Online reports that “capital city rental prices have fallen 0.2 per cent over the past 12 months, in a worrying sign for the property market bloated with investors.”

6 April 2016

Sky News reports that “troubled steel and mining group Arrium has moved closer to the edge after suspending trading in its shares on the ASX.”

6 April 2016

The Sydney Morning Herald reports that “Dick Smith stores are being described as desolate, eerie places as the electronics chain limps towards its death this month.”

6 April 2016

Sky News reports that “the cost of student debt owed to the taxpayer is predicted to soar from $1.7 billion to 11 billion within a decade.”

6 April 2016

Australian Broker reports that “both the global banking regulator and Australia’s banking regulator have warned another financial crisis is imminent.”

5 April 2016

The Australian Financial Review reports that “an independent expert’s report has warned beleaguered iron ore producer Atlas Iron is likely to become insolvent if a company-saving debt-for-equity deal is not approved by lenders and shareholders this month.”

5 April 2016

The West Australian reports that “the corporate watchdog has applied to wind up ASX-listed Continental Coal, alleging the South African coal developer is ‘not being properly managed’.”

5 April 2016

Pro Bono Australia reports that “the country’s longest running charity, The Benevolent Society, released its restructuring plans on Monday, with the aim of improving service delivery and doubling its operational revenue to almost $200 million by 2019.”

4 April 2016

The Australian Financial Review reports that “federal taxpayers will have to pick up the tab for most of Queensland Nickel’s $110 million in debts if it is placed in liquidation later this month. With Clive palmer failing to officially lodge his $250 million rescue plan and proponents of a community and worker buy-back deciding they will not submit a proposal, administrator FTI Consulting is expected to be left with little choice but to recommend to creditors the company be wound up.”

4 April 2016

ABC Online reports that “the directors of the failing Kleenmaid company deliberately hid its dire financial position from Westpac bank in securing a $13 million loan, a Brisbane court has heard.”

4 April 2016

CIO magazine reports that “Optus is restructuring its consumer and enterprise divisions, which the telco said on Monday would result in redundancies. Reports have suggested that up to 480 jobs could be cut as part of the restructure. The announcement follows a strategy put in place this time last year to strengthen its core communications business and create a content-driven, multimedia brand, the company said.”

4 April 2016

ABC Online reports that “the body responsible for promoting tourism across most of north and western New South Wales has gone into administration. Inland NSW was formed in 2011 in a merger between local tourism groups in the New England, Riverina and central and far west regions.”

2 April 2016

The Irish Times reports that “Alan Joyce, the Irish executive of Australian airline Qantas, has passed the toughest test of his career with flying colours. The company has just announced record €620 million profits and intends to return half of it to shareholders. In 2014, his transformation plan for the airline seemed grounded by huge losses and critics were calling for his head. Three years earlier his proposal to cut 5,000 jobs at Qantas had sparked industrial unrest. They are eating their words now.”

2 April 2016

The Sydney Morning Herald reports that “the corporate watchdog is closing in on failed retailer Dick Smith as it digs into the stocks write-down, profit downgrades and desperate discounting of the company’s final months to build a picture of the once iconic chain.”

2 April 2016

The Sydney Morning Herald reports that “Defence Housing Australia has received another setback with the managers of a $50 million pilot unlisted defence housing property fund set up by rugby union legends Phil Kearns and Andrew Mehrtens being wound up.”