May news digest – business insolvency and turnaround
02 June 2016
The following are summaries of media stories related to business insolvency and turnaround in Australia during May 2016.
31 May 2016
The Courier Mail reports that “if his ambition had become reality, the chief executive officer of Queensland infrastructure outfit Cardno would have represented the US in the Olympics. Richard Wankmuller doesn’t come across as a jock, but he’s a lanky 58-year-old and it’s not hard to envision him running hurdles at high school in his native New Jersey … He’s got many issues to sort through now, and quickly, and Cardno’s problems are far more complex than clearing hurdles on a track. He’s got to revive the Brisbane-based business, a former market darling that lost its top brass and posted $145 million loss last year, and he’s off to a bad start by unveiling two earnings downgrades, including one several weeks ago.”
30 May 2016
Banking Day reports that “payment processor Smartpay has made progress on the re-establishment of its business in Australia after it lost a wholesale taxi payment terminal contract at the end of 2014. However, its efforts are not yet reflected in its earnings.”
30 May 2016
ProPrint reports that “high profile Adelaide print shop Five Star Print has closed its doors and ceased operations after it was placed into voluntary administration. Administrators Andrejs Janis Strazdins and Maris Andris Rudaks from Bri Ferrier have been appointed to the South Australian printer, which is listed as Toneblock Pty Ltd. According to Rudaks, Five Star has been locked out of its Netley premises by the landlord and employees asked to leave. All operations have now ceased; it is listed as permanently closed online; its website is no longer functioning; and its phone line is disconnected.”
30 May 2016
Smart Company reports that “menswear chain Man to Man has called in liquidators, just over a year since it emerged from voluntary administration under new owners. Man to Man appointed voluntary administrators back in 2014. At the time, the 35-year-old retailer citied tough trading conditions as well as a failed investment. Man to Man later emerged from the administration in February 2015, with a group of unnamed local and international investors purchasing all of the company’s 62 retail outlets for an undisclosed amount. However, the business is once again in the hands of external managers, with Peter Vince from Vince & Associates appointed liquidator last week.”
29 May 2016
The Sydney Morning Herald reports that “in good news for insolvency firms but not much else, insolvencies are rising and the number of retailers appointing external administrators is also up. Electronics chain Dick Smith, home furnishings company Laura Ashley Australia and clothing retailer Man to Man are among retailers to have gone under recently. John Winter, chief executive of the industry body Australian Restructuring Insolvency & Turnaround Association, said after a quiet collapse of years, insolvency firms are now hiring staff as the end of the resources boom starts to bite.”
26 May 2016
The Australian reports: “Forget iron ore mines and skyscraper developments. For Australia’s newest billionaire, the path to riches had origins of a much smaller scale. Melbourne toymaker Manny Stul has debuted at number 39 on the BRW Rich 200 List with $1.24 billion in family wealth, thanks to his incredible turnaround of a business that almost forced him into bankruptcy.”
25 May 2016
The Australian reports that, “after announcing a one-year hiatus, it looks like Stereosonic may not be coming back after all, or at least not as we know it. According to documents filed with ASIC, Stereo promoters Totem OneLove Group have been in administration as of Monday. As The Music reports, the Australian Securities and Investments Commission now lists SFX Totem (Totem OneLove Group) as being under external administration, later confirmed by representatives at Totem OneLove.”
25 May 2016
News.com.au reports that “a mammoth sale is around the corner at Target, with the beleaguered department store sitting on huge piles of winter stock … New chief executive Guy Russo has vowed to turn the struggling chain around with a $145 million restructure of the business, which is forecast to lose $50 million this year due to the impending winter mega sale, and lower gross margins. The retailer’s ill fortune, and the cost of its rescue, are expected to all but wipe out parent company Wesfarmer’s full-year profit, to be announced next month.”
25 May 2016
Big Rigs reports that “untangling the web of Heavy Haulage Australia wasn't easy for administrators Ferrier Hodgson. One year on and one public examination later they still don't have full records for some of the businesses associated with well-known TV identity Jon Kelly. A report that came out shortly after the business went into receivership revealed that Kelly had failed to provide books and records for JK Controlled Entities.”
25 May 2016
The Australian reports that “lenders to the equipment hire firm Coates are understood to have sold debt in the cash strapped company about a week ago, as the business remains on watch by insolvency specialists angling for an advisory role. It is understood that debt trader SC Lowy offloaded loans worth between $20 million and $40 million, with the asking price understood to be around 72c-73c in the dollar. Exactly who the buyer was remains unclear.”
24 May 2016
The West Australian reports that “WA’s biggest milk producer is about to be sold for close to $30 million to European investors focused on the export market. It is understood the Foreign Investment Review Board has approved the sale of Lactanz Dairies to interests represented by Melbourne-based AAG Investment Management. Lactanz has been in the hands of receivers Ferrier Hodgson since 2013. It collapsed under New Zealand-based owner Rosmerta with debts of $21 million.”
24 May 2016
The Australian reports that “Australian steelmaker Arrium’s local and overseas businesses will be put up for sale in a process starting late July after several parties expressed interest in buying parts of the beleaguered company … KordaMentha said Tuesday it has stabilised the business and is now focused on ‘the future recapitalisation/sale of the Arrium Group’.”
24 May 2016
The Australian Financial Review reports that “three of Australia's big four banks could be hit by an attempt by bankrupt coal producer Peabody Energy to reclassify some of its long-term debt as current liabilities, which would favour unsecured creditors over secured lenders, including the big banks.”
24 May 2016
The Sydney Morning Herald reports that “a much-trumpeted hardship program set up to help struggling Timbercorp investors has been rocked by the resignation of its independent advocate who cited a disagreement with the way the scheme was being run. Consumer advocate Catriona Lowe was hired by Timbercorp’s liquidator KordaMentha in December 2014 after a slew of adverse media and political attention prompted them to try to strike "compassionate" deals with debt-laden victims of the failed managed investment scheme operator.”
23 May 2016
ABC Online reports that “troubled oil and gas company Linc Energy is to be wound up after creditors unanimously voted to place it into liquidation. The meeting went for just half an hour in Brisbane and the several creditors present did not ask any questions. PPB had recommended to creditors that Linc Energy be wound up. PPB Advisory liquidator Grant Sparks said he expected creditors to get some money back.”
23 May 2016
The Australian Financial Review reports that “Andrew Hagger is on the home stretch of one of the country's biggest corporate transformations. He has 400 staff working on the complex process of ceding control of National Australia Bank’s Life operations to Japanese partner Nippon LIfe, which involves extracting its superannuation business and developing a new technology platform.”
23 May 2016
SmartCompany reports that “a travel agency that was turning over approximately $2 million annually has collapsed into voluntary administration after a proposed merger fell through. The travel divisions of Round the World Experts Pty Ltd and RTWexperts Pty Ltd entered voluntary administration on May 9, with Timothy Mableson and Martin Lewis of Ferrier Hodgson appointed to manage the companies.”
22 May 2016
The Sydney Morning Herald reports that “administrators of failed vocational education group Australian Careers Network are considering pursuing legal action against the government to secure $253 million in funding despite a current criminal case against the company over allegedly forging student applications. The potential legal action came to light at the most recent creditors’ meeting where creditors backed a deed of company arrangement that would allow parts of the business to be sold off.”
20 May 2016
The Australian reports that “Resources Minister Josh Frydenberg says changes to tax and insolvency laws are set to create a culture of entrepreneurship and drive an increase in Australian start-ups. Mr Frydenberg, speaking at the Competitive Advantage Forum yesterday, said Malcolm Turnbull’s innovation statement had more than a billion dollars worth of initiatives that included ‘interesting’ changes around tax and insolvency laws, which were designed to create a culture of entrepreneurship. ‘In terms of the insolvency laws, we are providing a safe-harbour regime for directors who won’t be personally liable for insolvent trading if they have appointed a professional administrator in that event,’ he said. ‘We’ve changed the bankruptcy periods down from a traditional period of three years down to one year. There’s a whole lot of changes on the tax side. There are all these tax and insolvency changes which go to the heart of start-ups.’”
19 May 2016
The Australian Financial Review reports that “receivers PPB Advisory are warning apartment developers to increase their safety parameters around settlement risk but say there is not the same dire consequences as in the Gold Coast apartment market during the financial crisis. Major developers, such as Mirvac which was downgraded because of concerns about settlement risk, are activating plans to deal with foreign buyers and investors who may not be able to access funding from banks following a lending crackdown by CBA, Westpac and the other majors.”
18 May 2016
AAP reports that “Clive Palmer says he’s not worried about a special purpose liquidator pursuing him for almost $70 million in taxpayer funds that will flow to his sacked nickel workers. The Federal Court has approved a Commonwealth request to appoint top insolvency practitioner Stephen Parbery, who’ll go after assets held by the embattled federal MP and his companies.”
18 May 2016
The Sydney Morning Herald reports that “the board of a Perth junior resources company, Citation Resources, has taken the extraordinary step of suing former director Peter Landau to recover about $2 million it believes went missing from the company's coffers.”
17 May 2016
The Sydney Morning Herald reports that “at least three potential buyers circling the unprofitable Whyalla steelworks owned by the collapsed Arrium could receive sizeable financial assistance from the South Australian government. South Australian Treasurer Tom Koutsantonis said a Steel Task Force set up late in 2015 and headed by Bruce Carter was working closely with all parties.”
16 May 2016
The Australian reports that “the Australian Securities & Investments Commission has been told that the chief executive of Bruck Textiles, a fabric manufacturer placed into liquidation after being stripped of nearly $30 million in assets, offered to pay entitlements owed to redundant workers if the corporate regulator ceased an investigation into its affairs.”
16 May 2016
Money Management reports that “proposed changes to Australia’s bankruptcy and insolvency laws will push Australians to declare bankruptcy, which means ‘the federal government is essentially incentivising people into insolvency’, according to the Personal Insolvency Professionals Association (PIPA). The new law would reduce the current default bankruptcy period from three years to 12 months.”
13 May 2016
ABC Online reports that “one of Australia's wealthiest, largest and oldest cemeteries is in disarray amid claims of serious misconduct, bullying and internal division. The board of the Rookwood cemetery, in Sydney's west, has been dissolved and the New South Wales Government has appointed an administrator in its place. Robert Wilson, the chair of the Rookwood General Cemeteries Reserve Trust Board, resigned on Wednesday night but refused to tell the ABC why.”
13 May 2016
Business Insider Australia reports that “Perpetual Investments sees troubled supermarket player Woolworths as a buy with turnaround potential under its new management … ‘We are buying because we think (newly appointed CEO Brad Banducci and chairman Gordan Cairns) are putting in place strategies to improve the execution in food and liquor, which has been sorely lacking for the last few years,’ Perpetual Investments portfolio manager Vince Pezzullo told Fairfax Media.”
13 May 2016
The Australian Financial Review [‘Street Talk’] reports that “one of the country’s longest-standing vegetables suppliers, Oakville Produce, is expected to be prepared for sale after entering receivership this week. Sources told Street Talk that Deloitte’s insolvency team took the reins at Oakville Produce and associated companies on Wednesday, after being appointed as receiver by the group’s secured creditors. Rival firm McGrathNicol was earlier appointed as administrator by the company’s directors.”
10 May 2016
The Sydney Morning Herald reports that “the number of Australian companies going into administration has surged over the past year, largely because of weakness in mining and retail. Analysis of the corporate watchdog’s insolvency statistics puts the number of companies entering external administration for the 12 months to March at 10,299, an increase of 18 per cent on 8,751 in the prior corresponding period.”
10 May 2016
ABC Online reports that “retrenched central Queensland coal workers say they are relieved to have been paid their entitlements after waiting for more than three months. Administrators of Cockatoo Coal suspended production at the Baralaba Coal Mine in February, putting more than 70 workers out of a job. Despite several assurances from administrators PPB Advisory, the workers only received their entitlements late last week.”
9 May 2016
The Australian Financial Review [‘Chanticleer’] reports that “Origin Energy chief executive Grant King knows better than most how risky it can be to get in on the ground floor with a new technology that promises huge growth potential. He was finishing his civil engineering degree at the University of NSW in the mid 1970s when he and a couple of fellow students founded Solar Technics, one of the first companies to offer solar heating for swimming pools. The company went broke and he lost everything. The abiding lesson he learned was the importance of having sufficient working capital.”
8 May 2016
The Australian reports that “the federal government’s innovation package includes wide-ranging changes to insolvency laws that will have a major impact on corporate activity in Australia. While the changes have been largely welcomed by the innovation and start-up industry for encouraging a more risk-taking investment culture, the Australian Bankers Association will be closely studying the proposals for their implications for major lenders.”
6 May 2016
ABC Online reports that “the news headlines have made Clive Palmer look down and out, but his recent court manoeuvrings around Queensland Nickel show the litigious businessman-cum-MP has a few tricks up his sleeve … Palmer's latest roll of the dice began in January, when he and his close associates met representatives of insolvency firm FTI Consulting at his suite at the glitzy Versace Gold Coast hotel complex. They discussed the financial problems at his Queensland Nickel refinery. Palmer wanted FTI's people to take it over as administrators. The details of what transpired have emerged in a court battle between Palmer and the administrators in the Supreme Court in Brisbane.”
5 May 2016
The Australian reports that “National Australia Bank has stabilised its business lending margins after a brutal plunge, restoring faith in the turnaround of the group’s biggest division amid fears of a prolonged and expensive exercise as the book is repriced down.”
5 May 2016
Commercial Dispute Resolution reports that “third-party funder Vannin Capital has targeted the Australian insolvency market with its latest hire, expanding its nine-month-old Sydney office. Vannin Capital has hired a Sydney insolvency litigator, a move which expands the dispute resolution funder’s nine-month-old Australian operation and signals its intention to target large insolvency claims. Tom McDonald joins the firm as counsel from Ashurst, where he was a senior associate in the restructuring and special situations group.”
4 May 2016
The Sydney Morning Herald reports that “a Bendigo paddock at the centre of a collapsed land-banking scheme run by property spruikers Jamie McIntyre and Henry Kaye is on the market. The 146-hectare block in the hamlet of Bagshot on Bendigo's outskirts was part of a scheme in which hundreds of investors sunk millions of dollars into so-called ‘options’ with the lure of windfall profits once the land was developed. The project failed, leaving $25 million in investors' funds missing or unaccounted for.”
3 May 2016
The Australian reports that “Peabody Energy Australia may struggle to continue as a going concern, despite being excluded from the bankruptcy of its US parent, if lenders and other counterparties exercise rights related to the US insolvency.”
3 May 2016
The Sydney Morning Herald reports that “Arrium’s administrators have won an extension for the next creditors’ meeting until early 2017 after revealing a creditor claim from US hedge fund GSO Capital could have led to the collapse of the steel maker’s most profitable business, Moly-Corp.”
2 May 2016
Insurance & Risk reports that “Trade credit risk for Australian businesses has never been higher, according to specialist trade credit insurance broker NCI. NCI’s latest Trade Credit Risk Score for the first quarter of 2016 was characterised by some large insolvency activity, including My Baby Warehouse, Dick Smith and mining and steel manufacturer Arrium Ltd. The Index also reveals an 80% increase in claims lodged in the first quarter of 2016 when compared to the same period a year ago, while advertising, building and hardware businesses had the highest value of claims received. Further insolvencies are being predicted by NCI, given the high level of overdue reporting.”
2 May 2016
SBS reports that “former Socceroos captain Lucas Neill is expected to be interviewed by administrators appointed after he was declared bankrupt in the UK. London-based insolvency firm Begbies Traynor said the amount of Neill’s debt was yet to be determined.”
2 May 2016
The Sydney Morning Herald reports that “Slater & Gordon remains a ‘high risk investment’ despite reaching a last-minute deal with its bankers, with one analyst describing its debt agreement as merely a mechanism to ‘buy the company more time’.”
2 May 2016
The West Australian reports that “the State Government-appointed administrator controlling $1.8 billion in Bell Group litigation winnings has missed a deadline for a crucial report amid attempts to revive peace talks.”
2 May 2016
The Courier Mail reports that “transport outfit Heavy Haulage Australia, which starred in the pay-TV show MegaTruckers, was unable to pay for a series of vehicles it ordered before going broke.”
1 May 2016
The Daily Telegraph reports that “embattled fashion designer Johanna Johnson asked Foreign Affairs Minister Julie Bishop to help her delay her tax obligations, but the celebrity dressmaker’s star client claims she refused.”