November news digest – business insolvency and turnaround
05 December 2016
The following are summaries of media stories related to business turnaround and insolvency in Australia during November 2016.
29 November 2016
Jeweller magazine reports that “the Australian retail stockists of Endless Jewelry have been advised it will be ‘business as usual’ despite the company filing for bankruptcy in Germany. German Insolvency Register records indicated that Endless International GmbH, which is headquartered and registered in Germany, initiated insolvency proceedings on 18 November. A statement issued by Endless International GmbH confirmed the action, explaining that shareholders, board of directors and management had ‘reached the conclusion to declare the company bankrupt’.”
28 November 2016
The Bayside News reports that “the Frankston Dolphins Football Club is out of administration and has its sights set on a quick return to the VFL. Dolphins vice president John Georgiou says control of the football club had reverted back to the board from the club’s administrator on Friday 18 September. The club went into voluntary administration in August after sinking under about $1.5 million worth of debt.”
25 November 2016
Sydney Insolvency News reports that “the Supreme Court of Western Australia has given AE&E Australia’s liquidators some critical breathing space in their fight against Sino Australia by ordering that they can deliver $320,000 required as security for costs for a legal challenge in one lump sum rather than in three tranches. In a judgment handed down last week Justice Ken Martin ruled that BRI Ferrier’s Peter Krejci and Martin Green could have until next year to stump up the cash prior to it hearing the liquidators’ application to set aside an arbitration award made in Sino’s favour in June this year.”
Pie Face goes up for sale after second collapse in two years
24 November 2016
The Australian Financial Review reports that “fast food chain Pie Face – known for its smiley-faced pies – is back on the market after going into receivership for the second time in two years. Insolvency firm O'Brien Palmer is finalising an information memorandum and plans to kick off a sale process next week after partner Chris Palmer was appointed receiver and manager of Pie Face Pty Ltd earlier this month by financier TCA Global. Despite the pie maker's chequered past, O'Brien Palmer has already received approaches from fast food companies, private equity investors and convenience food manufacturers and expressions of interest from would-be franchisees.”
24 November 2016
The Canberra Times reports that “Autolyse's Mickey Gubas has vowed to keep the popular Braddon cafe and bakery operating after it was placed into liquidation. Hayes Advisory confirmed the business went into liquidation on November 15 and was now for sale. The liquidator is trading on the business to enable its sale at a going-concern value to maximise the return to the creditors. Creditors resolved to place the business into liquidation and it's understood the Australian Tax Office is the largest creditor.”
23 November 2016
The Townsville Bulletin reports that “a lack of work is believed to be behind the collapse of an award-winning Townsville builder. Holloway Homes (Aust) Pty Ltd, trading as the Cavalier Homes franchise and a division called Breakfree Homes, was placed in voluntary liquidation on Monday. The collapse has renewed calls for security of payment reforms and for political representatives to ensure the strong involvement of local builders is in projects like Townsville’s CBD stadium. Liquidator Robert Humphreys of BRI Ferrier said the company appeared to have about a dozen residential housing projects under way across Townsville.”
23 November 2016
The Canberra Times reports that “almost 40 prospective Canberra home owners, as well as an unknown number of sub-contractors, face an uncertain future following Today's Homes and Lifestyle Pty Ltd's decision to go into voluntary administration. The Fyshwick-based company, which was first registered in 1994 and trades as Today's Homes, has placed itself in the hands of Deloitte Restructuring Services.”
22 November 2016
The Sydney Morning Herald reports that “more than 1600 jobs at kids retailer Pumpkin Patch will go by February after the retailer's receiver failed to secure a buyer for the chain and announced the immediate loss of more than 60 head office jobs in Auckland. Pumpkin Patch prices will be slashed immediately as receiver Korda Mentha works to claw back as much as it can from the brand's inventory before the shutters start to come down from December.”
22 November 2016
Smart Company reports that “shoe retail chain Payless Shoes has collapsed into voluntary administration but its stores are continuing to trade on a business as usual basis. Payless Shoes was established in 1980 and survived a previous voluntary administration three years ago. However, the 131-store chain is once again in financial trouble. Voluntary administrators from Ferrier Hodgson were appointed to Payless Shoes Pty Ltd on Tuesday, with Jim Sarantinos, James Stewart and Peter Gothard appointed to manage the administration process.”
21 November 2016
Big Rigs reports that “Mackay businessman Keith Price is back on board with McAleese. Mr Price, the former owner of McAleese and the second richest man in Queensland in 2013 due to his share in the company before it was listed on the Australian Securities Exchange, was reappointed to the board on Friday. It has been reported in the Australian Financial Review that Mr Price led a group of Mackay investors who wanted to oust chairman Mark Rowsthorn before the company went into voluntary administration in August but were beaten by the appointment of administrators.”
21 November 2016
Lawyers Weekly reports that “Australia should follow in Singapore’s footsteps and push ahead with restructuring and insolvency law reforms, according to Herbert Smith Freehills experts. The Singaporean government is moving ahead with changes to its restructuring and insolvency laws and has unveiled draft legislation that includes adopting a number of concepts from the United States’ Chapter 11 process. Two Herbert Smith Freehills’ restructuring, turnaround and insolvency experts have said that Australia needs to do the same so that greater flexibility can be provided and viable businesses can be rescued.”
18 November 2016
Business Insider Australia reports that “the struggling Pizza Hut brand is planning a major fightback against market leader Domino’s after a trio of private equity-backed Australian fast food execs bought the licence as well as the failed Eagle Boys pizza chain. The Eagle Boys group, with 114 stores, slipped into voluntary administration in July, following a failed bid to take the business to an IPO by Queensland private equity firm NBC Capital. Now the Eagle Boys name will disappear 30 years after it was founded, as its new owners convert those stores to the Pizza Hut brand.”
18 November 2016
ABC Online reports that “Victorian milk brokering company National Dairy Products has appointed a voluntary administrator, a week on from farmer suppliers staging a mass exodus because they were owed money. NDP managing director Tony Esposito said he hoped Deloitte Restructuring Services would help to ‘restructure the business and continue on’. Along with farmers and transport companies Mr Esposito said he owed money to ‘a number of testing companies, there might be courier companies, I couldn't tell you’.”
18 November 2016
The Advertiser reports that “Arrium’s administrators have entered into a fixed power contract to avoid volatility that has struck the South Australian electricity market in recent months. The contract is in place for at least the first quarter of 2017, by which time it is hoped the company, which has the Whyalla steelworks as its highest-profile asset, will be sold.”
17 November 2016
Smart Company reports that “a sportswear manufacturer and retailer that has contracts with six AFL clubs is in receivership after entering into voluntary administration this week. BLK Sport has contracts with the Richmond, Adelaide, Brisbane, Gold Coast, and Greater Western Sydney football clubs, and had recently signed a deal with St Kilda for 2017, reports Fairfax. Administrators were appointed to the manufacturer’s parent company, World Rugby Specialists, on Monday, and the company was placed in receivership on Tuesday.”
16 November 2016
The Australian reports that “a Federal Court judge has slammed Clive Palmer’s companies for months of delays in handing over documents relating to the collapse of Queensland Nickel. In a stern rebuke, Justice James Edelman told solicitor Sam Iskander, representing Mr Palmer’s QNI Metals and QNI Resources, that months of delays in disclosing documents to liquidators was unacceptable.”
16 November 2016
Sourceable reports that “the extension of Adelaide’s O-Bahn guided busway has been blamed for the closure of a city hotel with the loss of 20 jobs. The Royal Hotel has shut its doors and the leaseholder has gone into voluntary administration after an 80 per cent drop in trade since the start of the nearby busway construction and roadworks. Administrator Nick Cooper says the business has relatively minor debts, mainly to a secured creditor and the tax office, but the leaseholder is not prepared to continue operating at a loss. Attempts are being made to sell the lease for the hotel.”
16 November 2016
ABC Online reports: “A company contracted to Queensland Government power stations was hired with no industry experience and insignificant funds to complete the job, a liquidator’s report finds. In 2014, Coal Reuse was awarded a 10-year exclusive contract to take and resell coal by-products from Stanwell Corporation's Tarong and Tarong North power stations in the state's South Burnett, so the facilities were more environmentally friendly. It was wound up by Supreme Court order in September 2015 after it failed to pay several sub-contractors for months of work at the Tarong power stations.”
14 November 2016
CRN Australia reports that “SMS Management and Technology has opened up on the confluence of events which led to an ‘extremely disappointing’ 2016. Earnings in the 2016 financial year plummeted 45 percent to $15.7 million, while revenue sunk eight percent to $328.7 million. Chairman Derek Young admitted that a business restructure in 2015 led to its sales pipeline collapsing. On 1 July 2015, the company implemented a ‘national sales and delivery restructure’ to realign its state and regional sales under a national structure. This led to a ‘serious deterioration’ of SMS sales pipeline, and a loss of focus on its core Advisory and Solutions business.”
14 November 2016
The Sydney Morning Herald reports that “green groups are calling for more underground coal gasification projects to be stopped after the Queensland government charged five Linc Energy executives. The five executives will face court in Dalby later this month over the failed company's operation of an underground coal gasification site in the Darling Downs … The company went into voluntary administration in April and the following month it was revealed creditors were owed $289 million.”
10 November 2016
The Daily Telegraph reports that “the Australian arm of trendy fashion retailer American Apparel has gone into voluntary administration with the stores set to close within a matter of weeks. The clothing manufacturer, designer and distributor from Los Angeles California is famous for its raunchy sexualised advertising campaigns and at one time was popular with hipsters and millennials. Administrator McGrathNicol took control of the Australian arm of the company yesterday morning informing employees in its three Aussie stores that stock would be liquidated.”
9 November 2016
The Advertiser reports that “embattled franchise cleaning firm FaB Cleaning Services Australia has been sold. Rival firm AMC Commercial Cleaning, which operates in Australia and NZ, purchased FaB last week in an undisclosed deal. FaB was put into voluntary administration in September with debts of almost $2m and accountancy firm PKF Kennedy was instructed to sell the company.”
9 November 2016
CRN reports that “Brisbane connectivity and industrial networking provider Ethernet Australia has entered voluntary liquidation, with debts totalling close to $3 million. The company ceased trading after key supply contracts with customers were terminated without warning, and appointed liquidator David Clout and Associates on 28 October, with a creditors meeting taking place on Tuesday, 8 November. As part of their investigations, liquidators are in the process of estimating the company's value.”
8 November 2016
The Australian Financial Review reports that “the Federal Treasury has announced it will push ahead with law changes to better protect the funds of individual foreign exchange and derivatives traders. The proposed changes will remove an existing exemption that allows brokers to use funds held on behalf of retail clients for derivatives trades, or for working capital. The move comes after an extensive push by a group of brokers backed by the corporate regulator. ‘Prohibiting a firm's use of client money in this way will ensure that clients' money is held in trust, and will be repaid to clients in the event of the firm's insolvency’, financial minister services minister Kelly O'Dwyer said in a statement.”
4 November 2016
Business News WA reports that “failed fertiliser supplier Superfert Dongbu has gone into liquidation, 18 months after it had been put into voluntary administration. Business News reported last year that farmers and other unsecured creditors could expect 7 cents in the dollar in a deed of company arrangement in which the major secured creditor, South Korean company Hannong, agreed to allow unsecured creditors get the first tranche of payments. Unsecured creditors were returned around $800,000 when it was executed, or 8 cents in the dollar, while employees were returned around $400,000. That DOCA included provisions to wind up Superfert after that payment had been finalised, with Dongbu Farm Hannong expected to receive about $900,000, or around 3 cents in the dollar after liquidation. It had been owed more than $30 million.”
4 November 2016
AAP reports that “more than 150 unsecured creditors of former senator Bob Day's failed building company in South Australia will not be paid the millions of dollars they are owed. These 157 creditors are owed $4.9 million by Homestead Homes and they include subcontractors as well as customers who paid deposits on homes that remain unfinished.”
4 November 2016
ABC Online reports that “creditors of a collapsed company of which One Nation Senator Rod Culleton is a director, have no hope of getting their money back, the liquidator says. The information is contained in a report to creditors of Elite Grains, written by PPB Advisory liquidator Jeff Herbert, and leaked to the ABC. It comes as the Federal Government prepares a High Court challenge to the validity of Senator Culleton's election.”
3 November 2016
News.com.au reports that “Jamie Oliver has bought his six namesake Jamie’s Italian restaurants across Australia after striking a deal with the liquidator. After launching in the Sydney CBD five years ago, Jamie’s Italian restaurants subsequently opened in Canberra, Parramatta, Perth, Brisbane and Adelaide. They were part of the $100 million restaurants and bars in the Keystone Hospitality Group, which collapsed in June after being unable to refinance an $80 million debt to private equity firms KKR and Olympus Capital.”
1 November 2016
The West Australian reports that “India’s Lanco Infratech claims it overpaid more than $500 million for Collie miner Griffin Coal because of insolvency firm KordaMentha’s alleged misleading and deceptive conduct. The lawsuit was filed last year but the value of the damages claim has been publicly disclosed for the first time in discovery hearings ahead of a 15-day trial set down to begin in March. Trial judge Kenneth Martin has described the action as ‘undoubtedly complex’ and of ‘considerable forensic dimension and financial magnitude’. Lanco bought Griffin out of the wreckage of Ric Stowe’s business empire from its administrators from KordaMentha for $740 million in December 2010. However, it is now arguing KordaMentha engaged in misleading and deceptive conduct during the sale by withholding two reports suggesting the Griffin coal deposits were smaller than first thought.”
1 November 2016
The Morning Bulletin reports that “small business traders in Rockhampton are faring well financially against their Central Queensland counterparts, while non-business related insolvency rates are on the rise. This is reflected in the Australian Financial Security Authority's latest regional personal insolvency and business-related insolvency rates for the September quarter. Released yesterday, a snapshot of Central Queensland revealed Rockhampton experienced the most significant decrease in sole and partnered trader debtors, down 55.55% from 18 individuals entering insolvency in June to eight in September. It was a drastic change from the increase of 28.57% experienced in the June quarter.”