June news digest – business insolvency and turnaround

01 July 2016

30 June 2016

The Advertiser reports that “authorities will investigate whether the directors of failed construction company Tagara Builders are abiding by their professional licences after it emerged they are working on a development in Adelaide’s west. But the peak builders’ lobby is demanding a wider probe into the actions of Tullio Tagliaferri and John Kassara, before and since their building company went bust a year ago, to determine if they are ‘fit and proper’ to hold building licences.”

30 June 2016

The Newcastle Herald reports that “former Hunter wine boss David James’s companies were unable to pay their debts from June 2011 and could have been trading insolvent from as early as 2006, reports to creditors and the Australian Securities and Investments Commission show. James Estate companies failed to maintain proper books and records from 2006, and Mr James repeatedly failed to respond to liquidator requests for documents after the wine empire collapsed in 2013 leaving debts of more than $25 million, liquidator Shaun Fraser of McGrathNicol in reports from 2013.”

30 June 2016

Channel News reports that “Dick Smith receiver Ferrier Hodgson has sought permission to interrogate former directors and stake holders, the move has ‘got right up the noses’ of former executives according to one source. The receiver wants to publicly interrogate former executives who have been blamed for the $420M collapse of the retail group. Ferrier Hodgson took control of Dick Smith on January 4 after NAB and HSBC withdrew their support at the time Dick Smith had $400 million in debts, including $135 million owing the banks.”

29 June 2016

The Sydney Morning Herald reports that “the collapse of the company running some of Sydney's favourite bars and restaurants has caught up some of the city's high-profile names as investors. Former Ten Network boss Grant Blackley, the head of investment bank JP Morgan, Rob Priestley, and former Wallaby Steve Lidbury are among investors linked to the Keystone hospitality group, which has collapsed owing nearly $80 million. Keystone, which runs venues throughout Australia such as the celebrity chef Jamie Oliver-branded chain Jamie's Italian, as well as Sydney staples Kingsleys, the Sugarmill, Cargo Bar and Bungalow 8, was placed into receivership late on Monday after lenders KKR Asset Management and Olympic Capital Holdings Asia called time on the business, which expanded aggressively nationwide in 2014.”

28 June 2016

The Advertiser reports that “the South Australian government will lend $4 million to Adelaide Hills copper-gold miner Hillgrove in a bid to help the company shore up its balance sheet. The news about the loan and other measures resulting in a ‘successful balance sheet restructure’ sent the company’s shares soaring 14 per cent to 4c.”

28 June 2016

Power Retail reports: “What is happening with Big W right now? The ailing retailer is in the midst of an elusive turnaround strategy that appears to be upsetting both staff and suppliers. Since taking over in January, Big W CEO Sally MacDonald has slashed almost 100 jobs from the retailer’s buying and e-commerce operations, as well as restructuring its overseas sourcing. The moves have been part of MacDonald’s plan to reduce costs, increase earnings and transition Big W to being a product-and-design-led retailer. Sources have claimed that Big W’s redundancies have not been handled properly and that staff have been left in the dark regarding the company’s turnaround plans, according to the Australian Financial Review. Big W has also reportedly pulled dozens of buyer contracts and intentions to buy without explanation.”

27 June 2016

ABC Online reports that “two subsidiaries of music streaming company Guvera have been placed into voluntary administration, and professional services firm Deloitte has been appointed to lead an international restructure. The subsidiaries, Guvera Australia and Guv Services, deal with Guvera's business in international markets.”

27 June 2016

The Australian Financial Review reports that “when Dick Smith administrators release a much-anticipated report into the reasons for its collapse, talk will turn to whether a different insolvency regime and different decisions might have prevented its rapid and controversial demise. In this sorry tale, 3300 people lost their jobs, shareholders torched a fortune, unsecured creditors will be lucky to see a cent and the secured creditors, NAB and HSBC, will fall short of the $135 million they are owed … The release of the report is expected to trigger the reintroduction of a senate inquiry into the causes and consequences of the collapse of listed retailers.”

27 June 2016

The Daily Telegraph reports that “Australia’s largest Islamic School has been saved for another term after Federal Government officials agreed to hand over more than $5 million in an 11th hour funding move. Malek Fahd Islamic School, in Sydney’s south west, lost $19 million in taxpayer funding in April after an audit found its board, then run by the Australian Federation of Islamic Councils, was not spending all of the money on educating its 2400 students. A new interim board won a reprieve later that month when the Administrative Appeals Tribunal ruled funding be restored until an appeal was decided. However, the Federal Government continued to withhold funds. On Tuesday last week, Federal Court judge Steven Rares ordered Federal Education Minister Simon Birmingham urgently pay the school $5.2 million after lawyers said it risked trading while insolvent from week’s end.”

27 June 2016

Jeweller magazine reports that “local watch supplier Time Essentials has entered administration, with trading reportedly suspended until further notice. The Melbourne-based business, known for distributing watch brands including Bulova and Jag in Australia and New Zealand, appointed administrators Fabian Kane Micheletto and Michael Carrafa from insolvency accounting specialist SV Partners on 20 June.”

23 June 2016

The Weekly Times reports that “a group of fertiliser distributors has served writs on ­National Australia Bank over $13 million in losses they ­incurred over the collapse of Megafert and Interfert Australia six years ago. The writs were served on Monday as the distributors bring the dispute to a head. It is not clear when the Supreme Court hearings will begin.”

22 June 2016

Smart Company reports that “a New South Wales-based poster manufacturer that was contracted to supply banners for the Labor Party’s election campaign banners has collapsed into liquidation. Roller Poster has been in operation since 1994, claiming on its website it’s ‘still on a roll’.”

21 June 2016

The Western Australian reports that “liquidators of the failed Ellendale diamond mine have launched a legal bid to reclaim $22 million from ASX-listed Kimberley Diamonds and three of its directors, as its chairman yesterday faced committal hearings over charges of misleading the market.”

21 June 2016

Sourceable reports that “even as hundreds of companies go bust every month, no action appears to be likely with regard to insolvency within Australia’s construction sector in the short term as the government has not provided a response to recommendations for significant reform to deal with the issue. With figures from the Australian Securities and Investments Commission showing that 369 building companies went into liquidation or external administration in the first three months of this year – 36 more than for the same period last year – insolvency within the Australian construction sector appears to be rife. Yet despite the senate committee which looked into the issue having handed its report more than seven months ago in early December, the government has yet to provide a response.”

21 June 2016

Australian Mining reports that “liquidator Ferrier Hodgson is seeking funds to investigate the possibility of taking legal action against former directors of the collapsed Forge Group. The legal action could include public examinations of its previous board members, according to the Wesst Australian. The company collapsed in February 2014 following cashflow issues, leaving creditors $800 million in the hole.”

20 June 2016

The Sydney Morning Herald reports that “the corporate watchdog has moved to wind up internet firm Uglii and several of its subsidiaries while alleging the firm breached company laws, in a move that may result in thousands of the firm's shareholders losing their investments. The move by the Australian Securities and Investment Commission was prompted by an investigation by Fairfax Media that alleged the firm and its now former chief executive, John Knorr, had engaged in serious corporate misconduct by misleading investors - including thousands of Victorians - to generate at least $25 million for his struggling online search firm.”

20 June 2016

Renew Economy reports that “one of Australia’s largest rooftop solar installers, Metro Solar, has suffered financial collapse, with notice published last week that the Victoria-based company had been put into liquidation under the administration of accounting group Hall Chadwick.”

17 June 2016

Smart Company reports that “an event company that had sold tickets to a series of motivational seminars with actress Reese Witherspoon has collapsed into voluntary liquidation. Stanley Morgan Accountants were appointed as external managers to The Simpatico Connection Pty Ltd, organisers of the Simpatico Connection Conference, this afternoon.”

17 June 2016

The Australian Financial Review reports that “Patties Foods might be famous for its iconic Four'n Twenty meat pies but in February last year it was engulfed in a scandal for a different reason: the Victorian Department of Health announced suspected hepatitis in the company's Nanna's frozen berries. Patties saw its $40 million berries business collapse virtually overnight. Despite no hepatitis ever being proven, Nana's Berries' 60 per cent market share in supermarkets collapsed … Today Patties is resurgent. The stock, which has been trading around $1.40 before the berry recall, and fell as low as $1.05 in February,  touched a high of $1.70 on June 7 after private equity group Private Equity Partners swooped in with a takeover offer for the group.”

17 June 2016

ABC Online reports that “the liquidator of a Newcastle-based airport transfer business is desperately trying to contact customers who have pre-booked trips, so they are not left stranded. Happy Cabby Shuttles stopped operating yesterday after going into liquidation. The size of its debts is not yet clear, but the Australia Tax Office is likely to be the biggest creditor.”

16 June 2016

The Australian Financial Review reports that “a new report into failed stockbroker BBY has exposed a complex web of transactions and the clearest evidence yet on possible misuse of client funds, as directors were subpoenaed to answer questions in court. The report released on Thursday by liquidator KPMG – it will be cited in court proceedings seeking to recover client money – also showed the shortfall in BBY client accounts had swelled to $23.3 million. That was up from $17 million estimated in December. BBY collapsed in May 2015 after failing to repay loans to St George Bank and navigating several run-ins with regulators over governance and capital.”

16 June 2016

Lawyers Weekly reports that “a partner from Australian law firm Henry Davis York has been appointed to the board of the International Insolvency Institute (III). Corporate insolvency and restructuring lawyer John Martin (pictured) is now a board member for the non-profit, invitation-only, global association. The III is dedicated to improving international cooperation in insolvency and promoting greater international cooperation and coordination through improvements in the law and in legal procedures.”

16 June 2016

Perth Now reports that “the maker of a child sling described as the ‘Mercedes of Baby Carriers’ has gone into voluntary administration due to mounting debts. Byron Bay based Hug-a-Bub, which makes baby carriers, slings and wraps was forced to call in administrators on Monday after it was declared insolvent.”

15 June 2016

The Conversation reports that “the proposed federal government changes to insolvency that reduce the bankruptcy period from three years to 12 months need to be questioned. It has been argued the shortened default period will have the desired impact on encouraging entrepreneurial activity and reducing the associated stigma of being a bankrupt. While this may indeed allow a bankrupt a ‘fresh start’, it ignores the reality of what typically causes personal insolvency in Australia. Research indicates alternative reform measures are more effective tools in reducing the stigma of bankruptcy.”

15 June 2016

Sky News reports that “Virgin Australia plans to raise $852 million and sweep the broom through its operations by cutting its aircraft fleet and workforce. Australia's second biggest airline plans to use the capital raising proceeds to pay down debt and improve its operations following a three-month review of its finances … Virgin will target operational and capital efficiencies, which will further deepen its focus on having a low, sustainable cost base.”

14 June 2016

The Herald Sun reports that “the taxman has started bankruptcy proceedings against gangland widow and convicted drug dealer Roberta Williams. Documents recently lodged in the Federal Court reveal Ms Williams owes the tax office almost $300,000. Ms Williams, 47, was married to multiple murderer and drug boss Carl Williams, who was beaten to death with a bicycle seat inside Barwon Prison in 2010.”

10 June 2016

The Australian reports that “the push for a new legal shield for company directors who could otherwise be personally liable for insolvent trading when they try to resuscitate stricken companies has received a potential fillip as a bipartisan approach emerges. As business hits back at Labor’s anti-business rhetoric, Labor said it would be guided by Treasury on the calls for a “safe harbour” shield for directors.”

9 June 2016

Accountants Daily reports that “the corporate regulator has released its fifth annual report into the supervision of registered liquidators, revealing a "strong enforcement focus" on practitioners who flout the law. Report 479 ASIC regulation of registered liquidators: January to December 2015 details the supervisory, enforcement, stakeholder liaison, policy and educative work ASIC undertook in its commitment to continue to improve regulation of the insolvency and restructuring sector.”

9 June 2016

Lawyers Weekly reports that “a number of lawyers have called for reform to the insolvency regime in Australia, but the most desirable model has divided opinion. The Australian insolvency regime has come under close government scrutiny in recent years, with the Productivity Commission delivering its Business Set, Transfer and Closure report in December 2015 and then the commonwealth government calling for submissions to it ‘Improving bankruptcy and insolvency laws’ proposals paper in April. Barrister Farid Assaf – who recently became a fellow of the International Association of Restructuring, Insolvency and Bankruptcy Professionals – told Lawyers Weekly that the Australian system was in dire need of reform. He urged for the adoption of a "restructuring culture" modelled on the US, where the statutory regime encourages insolvent companies to restructure rather than liquidate.”

8 June 2016

The Australian Financial Review (‘Chanticleer’) reports that “creditors owed more than $300 million by Clive Palmer's insolvent Queensland Nickel have little prospect of an early payout judging from the early machinations involving the two liquidators. It is almost certain that this high-profile corporate collapse will drag on through the courts for years with funding by taxpayers and litigation funders. Chanticleer wonders whether the strategy of appointing two separate liquidators is in the best interests of creditors. It could well lead to inefficiencies and unnecessary legal bills. Qld Nickel has a general purpose liquidator, John Park from FTI Consulting, and a special purpose liquidator, Steve Parbery from PPB.”

7 June 2016

9News.com.au reports: “The ANZ bank pressured Radhika Oswal to sacrifice her own millions of dollars in assets to help get her Indian businessman husband out of trouble, a court has heard. Mrs Oswal went from owing no debt to being personally responsible for a $US568 million debt to the ANZ in the space of 12 days in late 2009, the Victorian Supreme Court heard on Tuesday. The Oswals are seeking up to $2.5 billion in damages from the ANZ and receivers over the sale of their stake in the Australian fertiliser business they founded.”

7 June 2016

SBS reports that “former Australia captain Lucas Neil will not be allowed to return Down Under until after an investigation in to his finances, according to the British insolvency firm appointed to probe his financial affairs. The bankrupt former star, who has kept a low profile in recent years, will be audited by London insolvency firm Begbies Traynor after he was forced to return to the United Kingdom last week.”

6 June 2016

Accountants Daily reports that “a former registered liquidator has pleaded guilty to dishonestly using his position as an employee of an insolvency company with the intention of gaining an advantage for himself. ASIC has announced that Mark Levi admitted to dishonestly using his position as an employee of an insolvency firm with the intention of obtaining payments totalling approximately $92,000 from two cheques from a receivership account, which he used to pay his personal tax liabilities. The offences occurred between April and October 2009, while Mr Levi was a senior staffer at Jamieson Louttit & Associates.”

6 June 2016

The Australian reports that “one of two restructuring specialists, Moelis and McGrath Nicol, are expected to be handed by Friday the lucrative mandate to advise the banking syndicate owed $US3 billion ($4.1bn) on the Wiggins Island Coal Export Terminal. It comes after a group of shippers that own WICET offered Fort Street Advisers the mandate to provide advice.”

6 June 2016

The Sydney Morning Herald reports that “upmarket food chain Jones the Grocer went bust for a second time in Australia last week, and one of its previous owners, Melbourne businessman John Manos, is fuming that what he calls a ‘great Australian food brand’ no longer has a presence in its birthplace after the four remaining stores were shut down.”

6 June 2016

The Sydney Morning Herald reports that “retail prices are set to rise, more big-name companies will fall over or be taken over. But don't fear: Australians will enjoy a golden age of retail in the next decade. As big retailers wrap up their stocktake sales, Andrew Malarkey, partner at insolvency firm KordaMentha, says price rises ‘should be coming through right now’ as currency hedging unwinds and suppliers pass on higher costs.”

6 June 2016

Yahoo!7News reports that “struggling junior iron ore miner Atlas Iron has appointed turnaround specialist Eugene Davis as chairman to replace Cheryl Edwardes. Mr Davis, who was appointed to the company's board in May as part of a financial restructuring agreement, is the founder of a consulting firm specialising in turnaround management. Atlas secured relief from its debt woes in April after shareholders approved a debt-to-equity swap deal, allowing the company to stave off the threat of voluntary administration.”

4 June 2016

The West Australian reports: “How does $7 million of large plant, equipment and materials go missing at a Pilbara mine construction site? An 18-month-old insurance claim has yet to reach a resolution on what happened to the gear — understood to include a crane, truck and about 4000 tonnes of scaffolding — at the Sino Iron project in 2013 … Contractor Construction Industries Australia hired the equipment from Concreting Australia for work on building the Citic Pacific-operated $10 billion magnetite mine … CIA was a subsidiary of the listed Allmine Group, which suffered a financial collapse in June 2013. CIA has since been in liquidation. A meeting of CIA creditors in April heard that the equipment had allegedly been stolen.”

3 June 2016

Mumbrella reports that “independent digital agency, Bluearc, and its sister companies are set to be wound up almost two-and-a-half years after first going into voluntary administration. Placed into administration at the end of 2014, Bluearc was able to continue trading after agreeing to a deed of company arrangement – a formal arrangement between the company and its creditors, which included staff made redundant at the time, who had agreed to the plan to enable the company to keep trading. However, last month it was placed back into administration, with the company telling creditors there was insufficient work to continue trading.”

3 June 2016

The Mandarin reports that “AFSA statistics show only 19% of personal bankruptcies are due to business-related reasons. CPA Australia’s chief executive urges caution before ripping out public interest disqualifying rules in the guise of promoting innovation.”

2 June 2016

ASIC reports that its “quarterly insolvency statistics for the third quarter of the 2015/16 financial year show a decrease of 15.7% in companies entering external administration (EXAD). Appointments totalled 2,106 compared to 2,499 in the previous quarter. The quarterly total was 6.8% higher than the 2015 March quarter (1,971). The percentage of companies entering EXAD for the quarter, relative to new incorporations, remains around 4% compared to the long-term trend of around 6%.”

2 June 2016

The Australian reports that “troubled steelmaker Arrium has been caught up in yet another feud after its administrators, KordaMentha, marched off to court to prevent Blackstone’s credit arm, GSO, from demanding millions of dollars in fees that were attached to a recently repaid $US100 million loan. The latest scuffle has drawn sharp criticism from politicians and unions, with independent Senator Nick Xenophon deriding GSO action’s as an ‘obstacle’ to KordaMentha’s efforts to ‘get this company back on track’.”

1 June 2016

The Australian reports that “facing a looming default on its debt, Australia’s Linc Energy has put its US oil-and-gas business into bankruptcy and plans to sell its Gulf Coast, Alaska and Wyoming holdings. Linc USA GP and several affiliates, which filed for chapter 11 protection on Sunday, were due to make their first appearance in the Houston bankruptcy court today.”

1 June 2016

The Australian Financial Review reports that “restructuring specialists KordaMentha have been appointed to advise the directors of the Australian Retail Income Opportunity fund, a wholly owned division of Engage Capital, which is seeking to sell $160 million worth of shopping centres across southeast Queensland.”

1 June 2016

ABC Online reports that “potato growers have reportedly gone unpaid since Australia's largest potato supplier went into receivership. The majority Chinese-owned company Oakville Produce went into receivership in early May. Oakville, which was formerly known as the Moraitis Group, is now under the control of administrators at McGrathNicol and receivers at Deloitte Australia.”

1 June 2016

The Illawarra Mercury reports that “the tax man is moving to wind up NSW Air – the commercial arm of the Illawarra’s charitable Australian Aerial Patrol – over a $115,678 debt. In documents lodged with the Federal Court of Australia earlier this month, the Deputy Commissioner of Taxation asks that the Albion Park-based pilot school and charter flight company be wound up in insolvency. The matter will have its first airing in the Federal Court next week. The deputy commissioner will ask the court to appoint a liquidator – BRI Ferrier director Geoffrey Granger – and will seek an order that costs of the liquidation process are paid out of NSW Air’s assets.”