August news digest – business insolvency and turnaround

02 September 2016

The following are summaries of media stories related to business turnaround and insolvency in Australia during August 2016.

31 August 2016

Smart Company reports that “it was bonus season for Qantas employees last week when chief executive Alan Joyce announced a record profit of $1.53 billion, up from an after-tax full-year loss of $2.8 billion in 2014. The turnaround is now well-known as an impressive feat in an industry constantly buffeted by shifting customer bases and competitors, and it’s been executed in just two short years. So what can business owners learn from the flying kangaroo’s spectacular comeback? SmartCompany spoke to aviation experts, analysts and the airline itself, and the first tip is to not get to ahead of yourself when transforming a business. No matter how big the comeback, there’s always the future to think about.”

29 August 2016

ABC Online reports that “troubled trucking and logistics firm McAleese has gone into voluntary administration, saying it is insolvent or likely to become insolvent. The move comes after the firm's financiers, led by high-risk debt investor SC Lowy, pulled the pin on a deal struck in early June to recapitalise the company because it did not meet the precondition of having its rents reduced.”

29 August 2016

Smart Company reports that “women’s clothing retailer Seduce has entered voluntary administration and its Australian bricks-and-mortar stores have closed, just weeks after being hit by a wind-up notice from its landlord. Administrators from Deloitte were appointed to Seduce Pty Ltd on August 16, with Michael Billingsley and Neil Cussen acting as joint administrators. Billingsley and Cussen were subsequently appointed as voluntary administrators or liquidators of a number of related entities, including as voluntary administrators of parent company Seduce Group Australia Pty Ltd on August 22.”

29 August 2016

The Australian Financial Review reports that “Australian fashion brand Willow, once estimated to be worth $20 million, will be closing down its shops in a month, less than three years after it ousted its founder Kit Willow. Willow is owned by The Apparel Group, which also owns brands Sportscraft, SABA and JAG. The Willow online store says it will "no longer be trading" from Monday. APG's chief executive Adrian Jones resigned this month and is now looking for a new CEO role.”

28 August 2016

The Sunshine Coast Daily reports that “a judge will decide in the coming weeks whether or not a proper environmental order was given to Linc Energy founder Peter Bond earlier this year, directing him to clean up an underground gas project site near Chinchilla. The Queensland Department of Environment issued Mr Bond with the environmental protection order in May, stating it was not satisfied Mr Bond had taken all the reasonable steps to ensure Linc Energy complied with its environmental obligations. Linc Energy went into voluntary administration in April this year and the company's creditors resolved that it be wound up the following month. But Mr Bond, who was Linc's managing director and the board chairman, claims the state government's environmental order he was given did not contain the proper details, as required by legislation, of how to request a review or appeal.”

27 August 2016

The Herald Sun reports that “crippled by debt, Frankston Football Club has gone into voluntary administration. Only a few weeks after holding a major function at their new social club to celebrate their 50th year in the VFA/VFL, the Dolphins have called in an administrator to work through their financial situation and deal with creditors. Worrells Solvency and Forensic Accountants of Frankston has been appointed administrator.”

26 August 2016

AAP reports that “Clive Palmer has appeared before the Federal Court in Brisbane in a bid to postpone answering questions about the collapse of the company behind the Yabulu nickel refinery. The former federal politician represented himself at a hearing yesterday also attended by lawyers appearing for special purpose liquidators of Queensland Nickel. The company collapsed earlier this year resulting in the loss of hundreds of jobs of the Yabulu nickel refinery, north of Townsville.”

26 August 2016

The Sydney Morning Herald reports that “if your hedge trimmer carks it this weekend, it might be worth waiting until Monday before you buy a new one. That's when failed hardware chain Masters will start burning through more than half a billion dollars’ worth of stock, after announcing this week all stores would close on or before December 11. The Woolworths-owned retailer says it is the biggest liquidation sale in Australian history, with between $600 million and $700 million of hardware needing to be sold.”

26 August 2016

Stock & Land reports that “One Nation WA Senator Rod Culleton has hit back at his critics in the face of mounting legal challenges and manoeuvres aimed at forcing his exit from federal parliament. Mr Culleton spoke to Fairfax Agricultural Media as news broke yesterday that former associate Bruce Bell had lodged a new petition in the High Court seeking to test the Senator’s eligibility for federal parliament, in the Court of Disputed Returns. A liquidator was also appointed to one of Mr Culleton’s companies DEQMO Pty Ltd yesterday by the NSW Supreme Court, while reports have also surfaced showing he and his wife now face a judgement order to pay a long-standing damages claim for $200,000. However, the obstinate former farmer from Williams in south-east WA remains defiant of the external pressures and is confident of repaying all creditors and fending-off various legal challenges.”

23 August 2016

AAP reports that “struggling engineering and mining services group Bradken will restructure its business to focus on mining consumables and special castings for the North American defence and energy markets. Bradken, which like most mining services companies has been hit by the commodities downturn, on Tuesday booked a net loss of $195.9 million for the 12 months to June 30, an 18.8 per cent improvement on the loss of $243.1 million a year earlier.”

23 August 2016

The Sydney Morning Herald reports that “the Federal Court has ordered more than $2 million to be paid to bankruptcy trustees of underworld construction identity George Alex in a case that exposed allegations of standover tactics and dodgy deals across Australia's building industry. The case involved some of the building industry's most colourful characters, including slain standover man Joseph Antoun, Mick Gatto and James ‘Big Jim’ Byrnes, who once worked for Alan Bond. It also exposes the underworld of Australia's booming labour hire industry, which often involves questionable business practices and workers employed on short-term contracts. The case is certain to be closely analysed by corporate watchdog ASIC and the Australian Tax Office in connection to a nationwide inquiry into ‘phoenix’ activity, which involves bankrupt companies shifting assets to new corporate entities to avoid their liabilities. Sydney-based Mr Alex, whom Justice Bernard Murphy said in Monday's judgement tended to operate in a criminal ‘netherworld’, was declared bankrupt in 2011 owing more than $1.2 million to the ATO.”

23 August 2016

Smart Company reports that “the Australian Tax Office has said it will take “timely” and “stronger action” against small businesses with outstanding debts in an effort to reduce the number of businesses trading while insolvent. A spokesperson for the ATO told Fairfax the wider community has requested a ‘firmer treatment of tax debtors’ and that the tax office is rethinking its approach.”

22 August 2016

The Wall Street Journal reports that “a year ago, BlueScope Steel Ltd worried that its Port Kembla steelworks – Australia’s biggest with more than 4,000 workers – no longer had a future. China was flooding the global market with steel made at a fraction of the cost of material produced elsewhere. Governments from the U.S. to Australia risked a global trade war by imposing tariffs on steel imports, fearing inaction would lead to steep job losses. BlueScope’s domestic rival Arrium Ltd became insolvent. BlueScope Chief Executive Paul O’Malley offered Port Kembla’s labor unions a deal: support a radical cost-cutting plan that included 500 job losses, a three-year wage freeze and suspension of bonus payments, and BlueScope would keep the steelworks south of Sydney open. That bet paid off when BlueScope told investors in October an agreement had been reached. With manufacturing operations spanning the U.S. to Southeast Asia, BlueScope has achieved a turnaround that has eluded many of its biggest rivals so far. On Monday, BlueScope reported annual net profit of 353.8 million Australian dollars (US$270.3 million)—its biggest since 2008 and a near tripling on the A$136.3-million profit in the prior financial year.”

22 August 2016

The Australian reports that “besieged textile mogul Philip Bart has warned he could be forced to dismiss more than 200 workers in the Victorian town of Wangaratta unless the federal government halts a legal bid to recoup $3.47 million of taxpayer funds used to fund staff redundancies. Mr Bart has vowed to ‘vigorously defend’ a government-funded action by liquidators of Bruck Textiles to recover money accessed two years ago under the Fair Entitlements Guarantee scheme. He claims the dispute is ‘strangling’ his other businesses.”

22 August 2016

The Australian reports that “if the executives of listed mining company Condor Blanco Mines wanted to get in touch with their newest board member seven days a week they knew where to find the self-confessed ice user — at the bar of the Empire Hotel in Sydney’s Kings Cross, knocking back schooners. A move by aggrieved shareholders to have the recent administration of the company deemed invalid has teased out yet more sleaze connected to the nation’s most dysfunctional ASX-listed company. The NSW Supreme Court on Thursday and Friday last week heard allegations Condor Blanco founder and chief Glen Darby — jailed the week before for three and a half years over an unrelated rape conviction — appointed his Kings Cross drinking buddy and temporary flatmate Timothy Stops to the board to facilitate the appointment of a friendly administrator.”

18 August 2016

Business Insider reports that “profit at Treasury Wine Estates has more than doubled to $179.4 million, a sharp indicator that the turnaround of the once-troubled company is hitting targets. The share price jumped 10% to $10.57 on the full year result. The result for the owner of Penfolds, Wolf Blass and Lindeman’s was on a 20% jump in sales revenue to $2.23 billion, fueled in part by strong demand from Asia … The company is getting better margins as it transitions from an order-taking, agricultural company to a brand-led, marketing group.”

18 August 2016

ABC Online reports that “Adelaide steel fabrication and roofing maintenance company CSM Steel has appointed voluntary administrators. Earlier this week the company's directors appointed administrators Martin Lewis and Tim Mableson of Ferrier Hodgson to assess the business's financial position. The company has a workforce of up to 55 employees and sub-contractors.”

18 August 2016

The Australian Financial Review reports that “lenders to KKR & Co-owned Bis Industries have appointed PPB Advisory to advise them on restructuring talks with the mine site trucking company, as revealed by Street Talk on Thursday. It comes after the lenders, who have $1 billion at risk with the private equity-backed Bis, interviewed insolvency and restructuring advisory firms for the role earlier this week.”

16 August 2016

The Advertiser reports that “a prominent city-based SA-owned bricks and mortar coffee chain franchise is going mobile to cash in on the expected food truck revolution in the suburbs, to attract more young entrepreneurs and build its brand reach. The Bean Bar coffee chain with seven CBD outlets and a pop-up at Adelaide Oval is going mobile in the suburbs with its new $20,000 trailer. Bean Bar franchise owner Nitin Jakhwal said the trailer was a way to help its franchisees join in the food truck revolution in the city as well as create new event-based income streams … The Bean Bar chain, established in 2001, was bought by Mr Jakhwal and his wife Krista in 2014 from BRI Ferrier when former franchisor Basset Holdings was liquidated to recover a tax debt.”

14 August 2016

The Daily Telegraph reports that “he might be known as one of the world’s nicest chefs but Jamie Oliver has hit boiling point over the ­collapse of the Australian company running his six Jamie’s Italian restaurants. It’s understood Oliver demanded executives from the Keystone Group, which fell into the hands of receivers in June, fly to London last week for what insiders described as an “extremely heated sit-down” with Oliver, who is said to be ‘furious’ with the failed hospitality company. It’s understood Keystone executive chairman Richard Facione ­arrived ‘cap in hand’ in a bid to ­explain the collapse of the group. Keystone, which also operates The Cargo Bar, Bungalow 8 and Chophouse in Sydney and Kingsleys in Brisbane and Woolloomooloo, is now in the hands of receivers Ferrier Hodgson, with around $34 million of unsecured debt — $6 million of that owed to trade creditors.”

12 August 2016

Smart Company reports that “three recruitment companies have been returned to their directors, after parent company Rubicor Group secured a deal with creditors to bring the companies out of voluntary administration. Rubicor Group is one of Australia’s largest recruitment companies and is listed on the Australian Securities Exchange. The group, which was founded in 2005, operates 15 specialist brands in the human resources and recruitment areas. Rubicor subsidiaries Xpand Group Pty Ltd, Locher & Associates Pty Ltd and Challenge Recruitment Pty Ltd were placed in voluntary administration on July 4, with Sule Arnautovic, Glenn Crisp and Chris Baskerville from Jisrch Sutherland appointed to the companies. The three companies traded throughout the voluntary administration process and the companies’ creditors voted to support a Deed of Company Arrangement (DOCA) at the second meeting of creditors on August 8.”

12 August 2016

ABC Online reports that “a former director of collapsed white goods company Kleenmaid has been sentenced to nine years in prison. Bradley Wendell Young was found guilty of fraud and 17 counts of insolvent trading by a Brisbane District Court jury last week. He was found to have dishonestly obtained a $13 million loan from Westpac, and to have incurred debts of around $4.2 million while insolvent. Kleenmaid, based on the Sunshine Coast, employed about 200 people before going into voluntary administration in early 2009. It later went into liquidation owing creditors $96 million.”

12 August 2016

Sky News reports that “self-proclaimed pre-insolvency 'specialists' who allegedly help collapsing businesses from paying tax and employee entitlements have been raided in Queensland and Victoria. ATO and ASIC officers swooped on 13 homes and businesses, mainly in suburban Melbourne and the Gold Coast, on Wednesday and Thursday. The raids were part of an investigation into pre-insolvency advisers who allegedly encourage and help businesses on the brink of insolvency to commit illegal phoenix activity. Phoenix activity is when a company deliberately liquidates to avoid paying creditors, taxes and employee entitlements.”

11 August 2016

The Australian Financial Review (‘Street Talk’) reports that “Arrium administrator KordaMentha has appointed UBS and Macquarie as joint lead managers on Moly-Cop's potential initial public offering, as revealed by Street Talk on Thursday. Credit Suisse, Goldman Sachs, UBS, Macquarie, Citigroup and Bank of America Merrill Lynch all pitched to work on the float alongside Deutsche Bank.”

10 August 2016

The Sydney Morning Herald reports that “the first time Angela Lawson got married, she eloped. So for her second wedding, she wanted the full bridal experience. But her experience has been left somewhat in tatters after the collapse of a Fitzroy bridal boutique, Primrose and Finch. According to Primrose and Finch's New Zealand-based liquidators, at least 79 brides-to-be have been affected, including at least 24 in Australia.”

9 August 2016

The Age reports that “the head of the collapsed Viking Group has been jailed for 11 years for his role in defrauding one of Australia's biggest banks of $33.5 million and trying to trick another bank out of even more money. Steve Iliopoulos​, the owner and chief executive officer of the transport and logistics company that went into liquidation in 2011, was in May found guilty by a Supreme Court jury of 11 counts of obtaining a financial advantage by deception, related to conning the Commonwealth Bank out of $33.5 million between 2008 and 2011.”

8 August 2016

CRN reports that “some 32 staff have been made redundant at Brisbane NBN contractor Superior Broadband Services, which has been liquidated due to ‘cash flow shortages and changes in government policy’. Superior Broadband Services had operated since 2001, and at one point boasted a national field workforce of more than 120 skilled and qualified technicians and project officers. David Ingram and Blair Pleash of Hall Chadwick were appointed liquidators on 13 July 2016. After an assessment, they deemed the company was not in a position to trade and it ceased trading. The provider leaves liabilities of $2.9 million, with $1.7 million owed to unsecured creditors. The company also has a debtor book and assets worth nearly $1 million, reducing the total deficit to $1.9 million.”

6 August 2016

ABC Online reports that “former rugby league star and property mogul Jarrod McCracken has been referred to authorities for allegedly failing to declare his income and travelling overseas while bankrupt. No charges have been laid against Mr McCracken, but both alleged offences would carry potential jail terms. Mr McCracken was declared bankrupt in 2013 with $20 million in debts related to various property developments.”

5 August 2016

ABC Online reports that “Virgin Australia has plunged to a $225 million full-year loss, having bitten the bullet on restructuring its business and fleet. The vast bulk of the loss comes from $440.5 million in restructuring charges as the airline has sought cost-cutting measures, including the simplifying of different aircraft in its fleet from nine to six.”

5 August 2016

The Advertiser reports that “he once owned Adelaide United and for decades lorded over one of South Australia’s most successful businesses. Now Nick Bianco has more modest ambitions — he wants his own home. Five years since he lost control of the construction supply empire he had built over 40 years, Nick has spoken exclusively to The Advertiser about his new business venture and how a dating agency led him to love … This month marks a year since the Italian immigrant emerged from four years of bankruptcy, during which time he lost his home and had to find new purpose at age 64.”

4 August 2016

News.com.au reports that “Southeast Queensland’s construction industry is on the brink of implosion … with more than 400 businesses tipped to hit the wall in the next 12 months. The construction hotspot of the Gold Coast is tipped to suffer most, the August 2016 Commercial Risk Outlook Report by insolvency experts SV Partners predicted, with more than 600 businesses on the state’s Glitter Strip facing potential financial ruin in the next year.”

2 August 2016

Smart Company reports that “more than 1,200 Australian retail businesses are at risk of financial failure over the next 12 months, including seven major retailers with annual turnover of more than $100 million, according to a commercial risk assessment analysis produced by advisory firm SV Partners. While SV Partners’ August 2016 Commercial Risk Outlook Report does not name the major retailers it says are on the brink of collapse, the group includes one large supermarket and grocery chain, two large computer retailers, one large clothing retailer and a large retailer of newspapers and books. The Australian retail sector has already been hit hard in 2016, with well-known brands such as Dick Smith and Laura Ashley running into financial strife.”

2 August 2016

The Sunday Times (‘Perth Now’) reports that “Rockingham is now the most bankrupt region in Australia following an 88 per cent increase in personal insolvency in the last year. Australian Financial Security Authority’s latest statistics show in the last quarter Rockingham had 112 insolvencies — 96 of which were personal while 16 were business related. Wanneroo residents were also under financial hardship last quarter with 74 personal insolvencies and 23 business insolvencies. The statistics showed cases of bankruptcy were soaring in WA with more cases recorded in the Greater Perth, Wheatbelt, Pilbara and Bunbury regions. Nationally, the number of bankruptcies increased seven per cent in the June 2016 quarter compared to the same time last year.”

1 August 2016

ZDNet reports that “NEC Australia (NECA) continued to recover from the previous year's business restructure, reporting operating profit for the full year ending March 31, 2016 reached AU$4.3 million, after recording a small operating profit of AU$0.1 million in the previous year. The company also reported revenue grew 15 percent from AU$386 million to AU$443 million year on year. The company noted its operating profit is a key metric of its operational success, and said the improvement in overall results was partly due to significant improvement in the managed services division, which saw the commencement of three major ongoing contracts, along with growth in other business divisions.”

1 August 2016

Appliance Retailer reports that “Gerry Gibbs Camera House in Cannington, south-east of Perth in Western Australia, entered liquidation on Friday. Consumer Protection confirmed that only the Cannington store is affected and all other Camera House stores in WA are independently owned and remain operating. Consumer Protection acting commissioner, David Hillyard said the liquidator, Melsom Robson Chartered Accountants, has advised Consumer Protection that customers who have fully paid for purchases or repairs should be able to collect their items.”

1 August 2016

CRN reports that “telecommunications provider Geelong Telephone Company (GTC) has gone into voluntary liquidation after not getting paid for a major project. GTC, which was established in 1980, provided VoIP, unified communications, structured cabling, data networking, cloud and CCTV and was an iiNet authorised reseller, and an accredited partner of AAPT Business Connect, NEC and Aria Technologies.”