July news digest – business insolvency and turnaround
05 August 2016
The following are summaries of media stories related to business insolvency and turnaround in Australia during July 2016.
31 July 2016
The Daily Telegraph reports: “Jaz Daly said she will take some time out from the fashion industry while considering her next move. The company she founded, JDM Agency Pty Ltd, was placed into voluntary liquidation earlier this month, and Daly has hit back at suggestions she is personally responsible for money owed to the long list of creditors.”
30 July 2016
The Sydney Morning Herald reports that “Australia's corporate watchdog has alleged internet search company Uglii's multibillion-dollar earnings projections are a sham and the existing managers should be removed to protect shareholders and creditors. Counsel for the Australian Securities and Investments Commission, Michael Pearce, QC, told a Federal Court hearing on Friday the Victorian firm was a house of cards built on wildly inflated and untested claims by chief executive John Knorr.”
30 July 2016
The Cairns Post reports that “Consolidated Tin Mines (CTM) has entered voluntary administration owing more than $50 million, including wages to more than 50 staff who have not been paid for up to four months. Administrators Hall Chadwick refused media entry to the first creditors meeting of the Mt Garnet based miner and its associated entity Snow Peak Mining in Cairns yesterday. However, several of the 50 people – including staff and creditors – who attended later confirmed the companies owed $43 million, plus $8 million to unsecured creditors.”
29 July 2016
The Sydney Morning Herald reports that “two of Clive Palmer's companies have successfully applied to set aside a money lender's statutory demands over almost $26 million used to buy a private jet. QNI Resources and QNI Metals applied to the Brisbane Supreme Court to set aside a statutory demand from Harrenvale Australasia, formerly GE Capital, over the $25.8 million debt.”
29 July 2016
Perth Now reports that “customers of a Northbridge travel agency that closed its doors this week claim to have been left high and dry after their booked flights were cancelled because the business had not paid for them. And the travel arrangements of up to 40 customers, valued at about $150,000, could be in jeopardy after Global Plus Holidays closed its doors this week. A liquidator may be appointed next week.”
29 July 2016
Smart Company reports that “New Zealand fast fashion chains Valleygirl and Temt are under the control of receivers, after entering voluntary administration last week, but are continuing to trade. The appointment of receivers to the New Zealand clothing retailers does not affect Valley Girl and Temt in Australia, as the Australian businesses are not affiliated with the New Zealand stores.”
28 July 2016
The Australian Financial Review reports that “investment bank Morgan Stanley has secured the mandate to run a sale process for all of the Arrium assets excluding the Moly-Cop mining consumables business. The appointment comes after administrator KordaMentha took pitches from a handful of investment banks. Morgan Stanley's mandate is to recapitalise the whole of the business, including the Whyalla steelworks, as a going concern. Only a trade sale will be explored with an initial public offering not under consideration, sources said. A sale price of up to $1 billion enterprise value is expected.”
28 July 2016
The Sydney Morning Herald reports that “Guvera has shut down its Australian music site after it raised just $4.7 million of the $20 million it needs to survive and pay back creditors. The distressed music streaming service and its subsidiaries owe $14 million to creditors, including staff, the Australian Taxation Office and musicians. Two of Guvera's subsidiaries, Guv Services and Guvera Australia, entered voluntary administration last month.”
28 July 2016
Mining Weekly reports that “nearly 170 companies went bust in the Australian metals, mining and steel industries in the first five months of the year, as demand for their products declined. Citing data by the Australian Securities Investment Commission (ASIC), credit insurance provider Atradius MD Mark Hoppe said on Thursday that the mining industry was still experiencing difficulty.”
28 July 2016
The West Australian reports that “resources contractor Tempo Australia has struck a deal to buy the assets of failed electrical and communications company Cablelogic. Tempo said the agreement would broaden its service offering to resources clients and diversify into the commercial and industrial building industry. The value of the acquisition has not been disclosed. It includes $4 million of existing contracts.”
27 July 2016
The Sydney Morning Herald reports that “Virgin Australia has gone deeper into the red over the past year, as it spends money on refurbishing its planes and other measures to try to turn around its business. Australia's second largest airline revealed a $224.7 million full-year loss on Thursday, compared to last year's $93.8 million loss. But in a silver lining for the company, passenger numbers appear to be improving.”
27 July 2016
Business News WA reports that “Triton Minerals is set to get a second chance after administrators Ferrier Hodgson released control of the business to a private gold company and a corporate finance firm, which will rise a combined $14.1 million and delist the graphite explorer on the ASX. Patrick Burke, of Somers & Partners, and two representatives of Chinese group Minjar Gold have replaced Ferrier Hodgson members as directors of Triton, after creditors approved a deed of company arrangement proposed by the two companies.”
27 July 2016
Finder.com.au reports that “areas of regional Australia have recorded significant increases in the number of individuals entering into personal and business-related insolvency. The Australian Financial Security Authority (AFSA) has released regional personal insolvency statistics for the June quarter 2016. There was an 11% nationwide increase in the number of debtors who entered a personal insolvency in the three months to June, compared with the previous March quarter.”
27 July 2016
The Sydney Morning Herald reports that “developers are lining up to buy South Sydney's prominent The Mill complex, which has been listed for sale by PPB Advisory with a price range understood to be around $100 million.”
26 July 2016
WA Today reports that “it is not just the Barnett government going broke in west. The hangover from the mining boom appears to be biting West Australians and local businesses, with the state recording the biggest increase in personal and business insolvencies across Australia for June. The number of debtors in Perth rose 22.1 per cent in the three months since March, with Joondalup and Rockingham suffering the biggest increases, while South Perth had the biggest fall, new Australian Financial Security Authority data shows.”
26 July 2016
The Australian reports that “electronics retailer Dick Smith (DSH) may have been insolvent two weeks before it was placed into administration and used rebates to turn a loss into a profit in its final full year as a public company, according to corporate undertakers McGrathNicol. A creditors meeting in Sydney yesterday voted to place the company into liquidation in a move that will step up investigations into who and what was responsible for the collapse of the business just two years after it was floated on the market.”
26 July 2016
The Conversation reports: “News that Australia’s third-largest pizza chain Eagle Boys has been placed in administration suggests a bleak future may lie ahead for the company. Administrators have indicated they “are in the process of identifying restructuring measures". But research by ARITA’s Mark Wellard (formerly from QUT) on the effectiveness of voluntary administration indicates that a sustainable rescue is generally achievable in only a minority of cases.”
25 July 2016
ABC Online reports: “Woolworths has revealed 500 jobs will go in back office and supply roles as part of an overhaul of its business amid tough competition in the retail industry. The retailer has announced that 30 stores will close, including 17 supermarkets in Australia, six supermarkets in New Zealand, four Woolworths metro stores and three hotels. These stores are all expected to shut before the end of the current financial year.”
25 July 2016
Smart Company reports: “A Queensland restaurant that was forced to change its name earlier this year amid backlash from some members of the Vietnamese community has appointed voluntary administrators. Aunty Oh’s Bia Hoi in the Brisbane suburb of New Farm ceased trading in mid-July and Brendan Nixon of Stanley Morgan Solvency Accountants was appointed as administrator to the restaurant’s operating company, Bespoke Hospitality Group, on Friday. The restaurant was originally called “Uncle Ho”, which was a reference to former Vietnamese communist leader Ho Chi Minh. The name sparked anger among some members of the local Vietnamese community, who held protests outside of the venue in early April.”
23 July 2016
The Daily Telegraph reports that “Max Donnelly has performed some of the toughest tasks an insolvency expert could confront, having headed up the nightmarish international chases for the assets of some of Australia’s highest-profile bankrupts, including Christopher Skase and Robert Trimbole. But the Ferrier Hodgson partner is just three days into an arguably tougher assignment: saving the Parramatta Eels club from the most scandal-ridden period in its 70-year history.”
23 July 2016
The Townsville Bulletin reports that “reigning NRL champions the North Queensland Cowboys have again launched legal action against a Brisbane company they claim owes more than $120,000 in sponsorship fees. Cowboys Rugby League Football Limited has sought to wind up Brisclean Pty Ltd, and is seeking to have BRI Ferrier appointed as liquidators. The Cowboys claim Brisclean owes $128,780.10.”
22 July 2016
The West Australian reports that “the six Jamie Oliver Italian franchise restaurants caught up in the collapse of one of the country’s biggest hospitality companies will be be offered for sale as a single lot. The outlets, including WA’s lone Jamie’s Italian in William Street in Perth, are amongst 17 venues to be sold by property agents CBRE on behalf of the administrators of Keystone Hospitality. Joint administrator Morgan Kelly, from insolvency firm Ferrier Hodgson, said today 120 parties had so far expressed interest in Keystone’s properties with a view to recapitalising the company or buying individual or multiple venues.”
22 July 2016
The Australian Financial Review reports that “National Australia Bank's management reshuffle and organisational restructure is all about the more efficient use of precious equity capital. The emphasis on customer service trumpeted by chief executive Andrew Thorburn cannot be ignored as a motivating factor but top-quality customer service is a given at any well-run bank. Capital, however, is a tangible and increasingly expensive resource that needs to be pointed in the direction where it can earn shareholders the optimum return. Thorburn's changes recognise that there is little if any money to be made in stand-alone big ticket corporate lending, especially to property developers.”
20 July 2016
ABC Online reports that “embattled celebrity fashion designer Johanna Johnson has agreed to quarantine hundreds of thousands of dollars’ worth of personal assets after a New South Wales liquidator took her to court. The designer's Alexandria-based company was placed into liquidation in April, owing more than $1 million to the Australian Tax Office … The court-appointed liquidator Tim Cook, represented by lawyer David Armstrong, applied to freeze Johnson's personal assets in the Federal Court on Friday, after learning she had sold her Vaucluse home.”
20 July 2016
Australian Mining reports that “Valence Industries, owner of the Uley graphite mine south west of Port Lincoln, has entered voluntary administration after failing to raise capital. The company suspended trading in November, and in December, ceased production at the Uley site. It required $7 million in capex and up to $5 million in working capital to recommence operations, according to a report by The Advertiser. A nine for one rights issue was announced by the company in March, aiming to raise $18 million to alleviate mounting debt. However, it has been cancelled. The shut down has been attributed to poor selection of consultants, failure to identify deficiencies to prevent cost overruns, and poor project management. Laurie Fitzgerald and Michael Humphris of William Buck have been appointed administrators.”
19 July 2016
The West Australian reports that “the company behind the nationwide Eagle Boys pizza chain has collapsed. Administrators from Brisbane insolvency firm SV Partners were appointed to Eagle Boys Dial-a-Pizza Pty Ltd on Thursday, but the appointment does not include the chain’s nearly 130 stores, which are owned by franchisees.”
19 July 2016
The Advertiser reports that “catchy and kitschy television advertisements helped build the Gotta Getta Group into a household name but founding director Sean Disbury could be facing action, and even criminal charges, after the collapse of his home-improvement empire. A liquidators’ investigation into Disbury Holdings Pty Ltd – the one-time controlling company behind the Gotta Getta Group – has concluded the firm was trading insolvent since at least June 30, 2014, until it was put into liquidation on April 8 last year.”
18 July 2016
The Australian Financial Review reports that “signs of recovery in the coal mining sector have come too late for former BRW Rich 200 member Mark Ackroyd, whose National Plant & Equipment went into voluntary administration on July 13. KordaMentha has assumed control of the mining equipment sales and leasing business, for which Japanese giant Mitsui paid $150 million for a 49.9 per cent stake in 2012.”
18 July 2016
The West Australian reports that “a WA family business which went to the rescue of a failed Wanneroo poultry wholesaler a year ago has itself gone under, with the loss of more than 30 jobs. Flown Pty Ltd was put into the hands of administrators Simon Theobald and Melissa Humann from PPB Advisory on Friday.”
16 July 2016
The Australian reports that “in Australia’s courts, the man they call Diamond Joe is a frequent flyer. He once even sued his sister and brother-in-law — and won. But in the Indian Farmers Fertiliser Cooperative, Joe Gutnick may have met his match. Since May last year Gutnick’s legal battle with the world’s largest fertiliser co-op, over a 2008 deal gone wrong, has spiralled out of control, resulting in the collapse of his Legend International empire and, last Friday, personal bankruptcy with debts of $275 million.”
15 July 2016
The Sydney Morning Herald reports that “tyre king Bob Jane has declared bankruptcy after Harold Mitchell, his mate of four decades and one of Australia's most prominent businessmen, pursued him over a $200,000 debt. The former race car champion owes millions of dollars and says his fortune has been whittled down to $15 cash and a Holden Commodore. Mr Jane, 86, is about to have his home sold from underneath him as creditors circle to recoup debts.”
15 July 2016
The Sydney Morning Herald reports that “a legal victory for Timbercorp investors could be short-lived with liquidators to the failed managed investment scheme operator preparing a High Court challenge. Last month in the Court of Appeal in Victoria a group of Timbercorp investors won a major technical victory in their battle against the liquidator of the financing arm of the collapsed agribusiness operator. The Court of Appeal found the investors, who participated in a failed class action against Timbercorp, could defend bankruptcy and other legal actions brought against them as individuals by the liquidator. The legal victory means Timbercorp Finance liquidator Craig Shepard of KordaMentha is facing the prospect of sifting through more than 1000 defences to the bankruptcy and other legal claims he has brought on behalf of the creditors of Timbercorp.”
14 July 2016
The Sydney Morning Herald reports that “the number of Australians becoming bankrupt or insolvent has jumped for the first time since the global financial crisis. In a week that saw business identity ‘Diamond Joe’ Gutnick go bust, new statistics show the ranks of Australians taking financial measures of last resort has swelled. Personal insolvencies jumped 13.7 per cent in the three months to June, compared to the same period last year, and bankruptcies increased 7 per cent, according to the Australian Financial Security Authority.”
13 July 2016
Smart Company reports that “a furniture retail chain with nine stores in Queensland has collapsed into voluntary administration. Far Pavilions was founded in 1995 and specialises in affordable furniture and homewares from other countries. Administrators were appointed to the company on July 8, with Michael Owen and Martin Ford of PPB Advisory appointed to manage the administration.”
11 July 2016
Smart Company reports that “three recruitment companies that count both small and large companies among their clients have been placed in voluntary administration amid a corporate restructure by their parent company. The companies are all subsidiaries of Rubicor Group, one of Australia’s largest recruitment companies, which is listed on the Australian Securities Exchange. Rubicor was founded in 2005 and currently operates 15 specialist brands in the human resources and recruitment areas. Administrators from Jirsch Sutherland were appointed to manage Xpand Group Pty Ltd, Locher & Associates Pty Ltd, Challenge Recruitment Pty Ltd on July 4, with Sule Arnautovic, Glenn Crisp and Chris Baskerville appointed to the companies.”
Hunter vegetable producer’s glasshouse plan on hold after being placed into voluntary administration
11 July 2016
ABC Online reports that “an ambitious project to build Australia's largest glasshouse is now in doubt, with the business put into voluntary administration. Maria's Farm Veggies at Williamtown, north of Newcastle, was to include a glasshouse covering 16 hectares, producing 15,000 tonnes of vegetables each year. But devastating floods that hit the Hunter region in January have damaged large parts of the building project. The business' major shareholder Cor Disselkoen said the only option was to place the company into voluntary administration.”
8 July 2016
Lawyers Weekly reports that “a former partner from Johnson Winter & Slattery has been snapped up by a rival firm. Gerard Breen has moved on to join Mills Oakley’s Sydney office. Mr Breen is an insolvency and restructuring specialist who has worked on some of the largest corporate collapses in Australia.”
6 July 2016
ABC Online reports that “the liquidator of troubled oil and gas company Linc Energy has finalised a contract to sell the majority of its assets to an unnamed buyer. Creditors voted to wind up Linc Energy in May and sell its assets to recover debts of $320 million.”
5 July 2016
The Sydney Morning Herald reports that “the end of Australia's mining boom continues to wreak havoc, with a 15 per cent jump in the number of companies going bust. The total number of companies that went into administration rose to 10,258 for the 12 months to April from 8899 over the same period a year earlier, according to business advisory firm FTI Consulting.”
4 July 2016
The Australian reports that “Arrium’s administrators will press forward with a dual-track sales process of the group’s Moly-Cop grinding media business as they look to find a sustainable path for the troubled firm. KordaMentha — appointed as administrators on April 12 as Arrium buckled under the weight of a $2 billion-plus debt load — said a review of the group’s assets had now been completed, with the Moly-Cop divestment to run parallel to a plan for a sale or recapitalisation of Arrium Australia’s combined steelworks, port and mining operations in Whyalla.”
4 July 2016
Smart Company reports that “the parent company of retail brands Rodney Clark and Gordon Smith has collapsed into voluntary administration, however, the brands are reportedly continuing to operate under a license agreement. Gordon Smith Marketing was founded in 1992 and its women’s clothing brands include Gordon Smith, Amoire, Hammock & Vine, Nouvelle Woman, Kiki & Lulu and Basic. The brands are sold in 15 Rodney Clark retail stores, located on the east coast of Australia, as well as through a Rodney Clark-branded online store. According to records from the Australian Securities and Investments Commission, administrators were appointed to Gordon Smith Marketing Pty Ltd, Rodney Clark Pty Ltd and Rodney Clark Retail Pty Ltd on June 27, with Andrew Schwarz from AS Advisory managing the administration. The first meetings of the companies’ creditors is scheduled to be held in Sydney on July 7.”
4 July 2016
CRN Australia reports that “Dick Smith receivers Ferrier Hodgson will publicly interrogate the retailer's former directors as part of its investigation into its collapse. Corporate watchdog Australian Securities and Investments Commission reportedly granted permission last month for Ferrier Hodgson to question the electronic reseller's former powerbrokers.”
1 July 2016
The Sydney Morning Herald reports that “Guvera's chair and founders are on a positive public relations campaign to hit back at media coverage, as administrators look for a way to repay $15 million owed creditors by two subsidiaries. Neil Cussen of Deloitte Australia said 60 employees of Guvera Australia and Guv Services were sacked this week, but some may have been offered re-employment in other parts of the Guvera group. A creditors meeting has been organised for July 7 in Parramatta, NSW. One of the largest creditors is the tax office. Including employees about 150 creditors are collectively owed $15 million.”