April news digest
01 May 2017
The following are summaries of media stories related to business turnaround and insolvency in Australia during April 2017.
AUSTRALIA
PROPERTY and CONSTRUCTION
Diploma ‘trading while insolvent for a year’
28 April 2017
The West Australian reports that “Diploma Group’s main construction arm may have been insolvent for at least 11 months before the builder-developer’s $60 million collapse, according to administrators. The Administrator is recommending Diploma’s creditors vote to liquidate the group and two subsidiaries instead of backing a rescue plan of controlling shareholders the Di Latte family. Diploma was put in the hands of receivers and administrators in December leaving hundreds of subcontractors, suppliers and former employees chasing payment. The administrators’ report to creditors said preliminary investigations indicated Diploma Construction (WA) — which carries the lion’s share of the debt — was likely to have been insolvent from at least January 2016.”
ASIC files bankruptcy proceedings against property spruiker McIntyre
27 April 2017
The Sydney Morning Herald reports that “Australia's financial watchdog has filed bankruptcy proceedings against notorious property spruiker Jamie McIntyre and his brother Dennis. The move to bankrupt the McIntyres in the Federal Court of Australia follows multiple investigations by the Australian Securities and Investment Commission into various land banking and property schemes promoted by the pair.”
Building company linked to underworld figure Mick Gatto allegedly ripped off workers
27 April 2017
ABC News reports that “a building company linked to underworld figure Mick Gatto has been targeted in an online campaign by sub-contractors who say the company has ripped them off after they did work on apartment complexes.
The campaign includes a website that accuses the director of the builder, Imagebuild Group, of hiding money and assets while simultaneously refusing to pay tradesman and other sub-contractors.”
Builton creditors left with nothing
13 April 2017
The West Australian reports that “collapsed Perth building company Builton has been placed in liquidation as creditors continue to raise questions over the relationship between the former company director and a series of syndicate companies that financed the construction of apartments. Creditors to Builton Group voted yesterday to wind up the company, with the administrator confirming there would likely be no money left to be returned to subcontractors.
“I would like to have some better news for creditors, but unfortunately that’s the card that was dealt,” the administrator said.”
Watersun Homes 'could have been trading insolvent’
7 April 2017
The Bendigo Advertiser reports that “failed builder Watersun Homes could have been trading insolvent for more than a year before its collapse, accepting money from customers while contractors complained about unpaid bills worth tens of thousands of dollars. More than 800 creditors, including contractors in Bendigo, claim they have been left out of pocket by the shock collapse and liquidation of the Victorian arm of Watersun Homes, WSH Group.”
MINING
Clive Palmer in court battle for nickel refinery assets
19 April 2017
The Australian reports that “Clive Palmer is continuing to fight for millions of dollars’ worth of assets from his liquidated Queensland Nickel company. In a hearing yesterday at the Queensland Supreme Court, the former federal MP’s lawyers said they wanted “to get the property back if we can” in an appeal to a decision last year blocking a legal bid for the assets. Mr Palmer’s companies QNI Metals and QNI Resources, parent companies of the Townsville nickel refinery, are seeking to reverse a decision in September preventing them from suing Queensland Nickel. In that decision, judge John Bond refused permission to the companies to sue Queensland Nickel, saying to do so would be a “startling affront to justice”.”
Pilbara developer has one of her firms put into liquidation
12 April 2017
The West Australian reports that “aggrieved investors claiming to be owed tens of millions of dollars by alleged Ponzi scheme operator Veronica Macpherson have begun the process of trying to reclaim their investments, putting one of her companies into liquidation yesterday. The company, Edkinway Pty Ltd, is one of hundreds of companies set up by Ms Macpherson as special purpose vehicles to manage the money of Malaysian and Singaporean investors. The companies took loans from the offshore investors to develop properties in the Pilbara, promising returns of up to 36 per cent a year. Ms Macpherson’s companies stopped making interest payments on those loans more than a year ago, according to court documents.”
Coast tycoon goes from Rich List to unemployed and bankrupt
11 April 2017
The Sunshine Coast Daily reports that “in 2011 Paul McDonald sold Moy Pocket Quarry to Boral for $81m. Today he is described as an unemployed farmer/labourer with an $8m debt to the Australian Tax Office and a trail of other creditors also in pursuit. Asset transfers have left him with just 1% of a $3.5m Noosa Waters mansion now owned 99% by his wife. The Ferrari and BMW are long gone and his Arctic Circle hi-jinks are a distant memory.”
Focus on Australian mines as Peabody beats bankruptcy
10 April 2017
The Australian reports that “the world’s biggest listed coalminer, Peabody Energy, says NSW and Queensland remain at the heart of the company’s exposure to growth now that it has emerged from bankruptcy. On Tuesday, chief executive Glenn Kellow, a former BHPBilliton executive, brought the St Louis-based Peabody out of a year-long Chapter 11 bankruptcy and relisted on the New York Stock Exchange. His message for investors now is that he runs the only US pure-play coal company, debt has been slashed, costs are under control and the future looks much brighter than it did a year ago.”
RETAIL
Perth online flower seller placed in administration
26 April 2017
The West Australian reports that “a Perth-founded online flower seller facing hundreds of thousands of dollars in payment claims from florists across Australia and overseas has been put into administration. The Hegarty family’s Ready Flowers business has over the past decade also been a subject of customer claims of late deliveries or poor-quality products. Ready Flowers takes orders online and relays them to local florists for delivery in exchange for a commission.”
12 April 2017
Power Retail reports that “over four years ago menswear online retailer Kent & Lime started out because it wanted to make shopping for men easy, but sadly this week the company made a decision to call it quits following issues with cash flow. “We are closing because time and money was against us. We explored every avenue, every possible scenario but the emotional and realistic decision to end Kent & Lime was the right thing to do,” said Kent & Lime in a compelling statement on its homepage (which is no longer operational), thanking its customers, brand partners and all those who supported the business.”
Lights getting dimmer at CHAMP's Gerard Lighting
7 April 2017
The Financial Review reports that “Gerard Lighting Group, Australasia's largest lighting distribution and partnership network, has been battling in a hugely competitive market for some time and the dimmer switch is being turned lower.
The company and its private equity owner CHAMP have been regular meetings with the lending group, led by Westpac, who have had Gerard Lighting on the "troubled" list for some time.”
Allphones’ administration sees 34 store closures
6 April 2017
ARN reports that “the administrators of the Allphones Group have revealed that 34 of the group's stores have been closed, while 50 will continue to trade during the administration process. The mobile phone retail group went into voluntary administration on 6 February, with at least 18 of its stores around the country will close up shop as a result of “insufficient funding”. The move was expected to result in more than 60 redundancies. On February 6, voluntary administrators were appointed for the nine Australian businesses comprising the Allphones Group.”
MANUFACTURING
Melbourne trade printer into liquidation
21 April 2017
Print 21 reports that “Melbourne trade printer Trade Colour Cards has gone into liquidation after 20 years in business and a meeting of creditors will be announced shortly. At a company meeting last week, Trade Colour director John Agarski – who’s also company secretary and the only shareholder – decided to wind up the company and appointed a liquidator.”
K Care receivership leaves more than 100 Perth factory jobs in limbo
10 April 2017
ABC News reports that “more than 100 workers at a healthcare equipment factory in Perth are set to lose their jobs after the company K Care went into receivership. Workers from the Malaga warehouse in Perth's north said they received a text message on Saturday telling them to attend a 5:00am meeting with receivers on Monday to discuss entitlement arrangements.”
LOGISTICS
SCF Group parent placed into receivership by UK backer
13 April 2017
The Sydney Morning Herald reports that “one of Australia's largest container companies, SCF Group, will be restructured after its main backer appointed receivers to the parent companies. British investment giant Intermediate Capital Group appointed receivers to Popeye Holdco and Popeye Bidco, the entities that own SCF Group.”
TOURISM and HOSPITALITY
It's not the last drinks for AM Bar and Cactus Jacks
13 April 2017
The Daily Mercury Mackay reports that “it’s still the same old fun AM Bar" and "one of the last bastions of live music in Mackay". That's according to the general manager of Mackay Grande Suites, Steve Millar, who is the boss of the AM Bar, Cactus Jacks, Mackay Grande Suites and AM Grill. And despite news that the business which controls all of those arms went into voluntary administration, the hotel has been at 90% capacity, the restaurant has been busy with its new chef and the bar flat out.”
COMMUNICATIONS
Melbourne telco liquidated leaving $2M in debts
27 April 2017
ARN net reports that “Victoria’s Novatel Telecommunications has gone into liquidation, leaving debts of more than $2 million to a range of creditors, including Emersion Software Systems, Wirefree Broadband, Megaport and Loanworks Technology. A liquidator was appointed for the Melbourne-based telecommunications company on 16 March. According to documents lodged with the Australian Securities and Investments Commission (ASIC), Novatel Telecommunications went into liquidation owing more than $580,000 to Wirefree Broadband, nearly $49,000 to Melbourne’s Emersion Software Solutions and $48,000 to Loanworks Technology.”
CONSULTING
Kreab Gavin Anderson set to pay former employees half of their entitled superannuation
4 April 2017
Mumbrella reports that “the company behind the ‘Kevin 07’ PR campaign, which shut its doors in December last year terminating its 14 remaining staff, will repay half of the $278,000 it owes employees in superannuation. When senior staff left Kreab Gavin Anderson late last year to start a competing agency, the administrator advertised in the Australian Financial Review, seeking a buyer for the agency.”
EDUCATION
11 April 2017
The Mercury reports that “the collapse of a Queensland company has left a Hobart dance school chasing more than $30,000 in debts. World Cup Cheer and Dance (WCCD), which has links with a Tasmanian company whose director Jonathan William Parker is under financial investigation in relation to another company, was voluntarily wound up earlier this month. The company, whose sole director is Lyn Parker, is now in liquidation and owes creditors, including two from Tasmania, more than $1.2 million.”
GOVERNMENT
Former Family First senator and Homestead Homes owner Bob Day is officially bankrupt
27 April 2017
The Advertiser reports that “businessman and former Family First Senator Bob Day is officially bankrupt. The former director of failed national building company Home Australia, which collapsed with debts of almost $40 million, was this month declared bankrupt. It follows revelations in The Advertiser that the one time multi-millionaire had just $4000 in the bank.”
Pre-insolvency business advisers investigated by ASIC and ATO over missing millions
13 April 2017
ABC News reports that “their investigation into the activities of a number of business advisers, who help companies avoid paying millions of dollars in tax — and money owed to small mum-and-dad businesses — has uncovered a raft of potentially illegal transactions that are now the subject of investigation by ASIC and the Australian Tax Office (ATO). The six-month investigation has uncovered three central figures in the "pre-insolvency" field, who advise a company's directors how to strip cash and assets from the business and hide them from creditors, including the ATO.”
Liberal candidate for Manly may have traded company while insolvent
1 April 2017
The Illawarra Mercury reports that “the Liberal candidate for next Saturday's Manly byelection, James Griffin, was a director of a company a liquidator found may have traded while insolvent before it was wound up owing the Australian Tax Office $160,000. Mr Griffin, who hopes to replace Premier Mike Baird as Manly MP on April 8, was a director and shareholder in "social media intelligence" startup, SR7, which was bought in February 2014 by consultancy KPMG.”
INVESTMENT
Joseph Gutnick's business dealings worked over in the Federal Court
29 April 2017
The Sydney Morning Herald reports “And so for Joseph Gutnick it came to this. His business life in paperwork stacked in sad, neat Pitcher Partner binders emblazoned with the words: "Bankrupt Estate of Joseph Gutnick." There are many of these books in the Federal Court hearing room, all brimming with documents. They reveal the business affairs of one of Australia's most successful speculative investors and appear at times ad hoc and almost always byzantine.”
LEGAL
12 April 2017
Lawyers Weekly reports that “a global firm has voiced its support for the federal government’s proposed changes to Australia’s insolvency laws, which will have a significant impact on businesses and their legal advisers if passed. Two insolvency experts from King & Wood Mallesons told Lawyers Weekly that they welcomed the reforms proposed recently in the draft legislation. According to KWM partner Samantha Kinsey and national head of restructuring and insolvency Tim Klineberg, these are the most significant reforms to Australia’s insolvency laws since recommendations of the Harmer Report have been implemented in the early 1990s.
Insolvency safe harbour reforms back on the agenda, but more work needed
5 April 2017
SmartCompany reports that “back in April 2016, the federal government proposed amendments to bankruptcy and corporate insolvency laws under its National Innovation and Science Agenda. The government has sat on the proposed amendments for some time now, so it came as a bit of a surprise when a legislation Exposure Draft dealing with safe harbour positions for insolvent trading and ipso facto clauses in insolvency administrations was released last week.”
LOCAL BUSINESS
6 April 2017
The Gold Coast Bulletin reports that “more than 500 Gold Coast businesses are likely to fold within 12 months due to falling tourist spending and poor financial management, new data shows. Gold Coast comes a dubious second in the country when it comes to likelihood of failure, with analysis of business credit and corporate activity predicting 527 of all Gold Coast businesses, or 3.6 per cent, are likely to fold within a year. Parramatta in western Sydney is the only area with a higher percentage of likely failures.”
MEDIA
Lachlan Murdoch's Ten decision will shape the television industry
30 April 2017
The Financial Review reports that “News Corporation co-chairman Lachlan Murdoch faces a choice that could reshape the television industry: allow Network Ten Holdings to fall into receivership or put another $100 million or so of his own wealth on the line. Both options could resolve a blight on the mini-mogul's investing record. Even by the standards of media stocks, the investment by Rupert Murdoch's son in the perennially smallest television network has been remarkably unsuccessful.”
NOT FOR PROFIT
South Head in voluntary administration, rabbi terminated
28 April 2017
The Australian Jewish News reports that “South Head Synagogue’s board has appointed a voluntary administrator, Rabbi Benzion Milecki’s contract has been terminated and three members have loaned the shul $500,000 to ensure the bank can’t sell the property. Shul president James Hochroth informed members on Thursday night that the administrator has terminated Rabbi Milecki, who has been South Head’s rabbi for more than 30 years in Sydney.
“Rabbi Milecki was one of the highest paid rabbis in Australia – terminating him will save a great deal of money. We will go without a rabbi for a period and expect the costs of a new rabbi to be more modest,” Hochroth said.”
RSL SA members want audit results after state branch enters administration
14 April 2017
International Business Times reports that the “RSL national office has announced that its South Australian branch would enter voluntary administration as it experienced cash crisis. The national office vowed that the Anzac Day commemorations would go as planned but its SA members were requesting for the release of a detailed forensic audit of the state branch.”
TECHNOLOGY
E3 Style Boss Forms New Company After $250K Claim By Powermove + Court Action With Crest
27 April 2017
Channel News reports that “Brisbane based Vanessa Garrard founded E3 Style in 2006, she called in the administrators in 2016, now the former CEO, who is currently in a major legal battle with Brisbane based distributor The Crest Company, is trying to kick start a new business called SourceHub. She claims that this company was formed because of the damage caused by ChannelNews exposing her actions against the Crest Company and the fact that she was being sued by Adelaide based Powermove, a company who she claims that she has an option to “sue for $2M dollars” following a failed business deal.”
Plastc goes bankrupt without delivering all-in-one card
21 April 2017
CNet reports that “Plastc, the company behind an effort to create a single card to replace multiple credit and bank cards, has gone belly up without delivering its product. Plastc raised more than $9 million in preorder sales, according to a Magnify Money blog. But its 80,000 early backers learned Thursday that the company would shut down immediately, file for bankruptcy and not fulfill preorders.
How IT firms can protect themselves against insolvency
13 April 2017
PC World reports that “a key element of surviving in an increasingly competitive IT channel is adaptability. Given that there has been a spate of insolvencies within the IT channel in recent months, it seems an appropriate time to explore the steps IT resellers and distributors can take to help insulate themselves against the threat of financial collapse. There are a number of processes companies can implement before they get into difficulties that greatly reduce the likelihood of ending up in that dire situation.”
Stochastic to be sold by receivers
13 April 2017
Business News WA reports that “oil and gas software developers Stochastic Simulation is expected to be put up for sale, two weeks after it was put into receivership. Stochastic, which provides a series of products that simulate reservoirs, drilling and gas flows, is continuing to trade but under control of receivers.”
Hopes for buyer bids amid Cloud DC liquidation
11 April 2017
ARN reports that “Cloud DC’s chief financial officer, Desmond Robinson, remains hopeful that the company, which entered liquidation on 28 March, will find a buyer for its remaining assets and intellectual property. The Queensland-based hosted desktop provider, which counted Amazon Web Services (AWS), Microsoft, Citrix and Trend Micro among its vendor partners, entered voluntary administration on 22 February, with more than $380,000 owing to creditors. The company’s creditors include Safetynet Communications and the Beltane Family Trust, according to documents lodged with the Australian Securities and Investments Commission (ASIC).”
ASIA
MANUFACTURING
Airbag maker Takata shares plunge nearly 20% on bankruptcy report
27 April 2017
7 News reports that “Takata shares dropped nearly 20 percent on Thursday after a media report said the embattled Japanese airbag maker was considering filing for bankruptcy protection and then rolling its key businesses into a new company. The stock price fell 19.53 percent to 412 yen ($3.70) -- the daily limit loss of 100 yen -- after the Tokyo Stock Exchange lifted a trading suspension in the afternoon. Trading in Takata's shares was temporarily halted Thursday after Japan's Nikkei business daily reported on a scheme to split the company.”
CONSULTING
Three Asian countries look to conquer more of the insolvency market
3 April 2017
Australasian Lawyer reports that “experts are seeing three Asian countries push for a bigger slice of the insolvency market, taking concrete steps, including reforming national insolvency regimes, to attract more business. The insights come from John Batchelor, FTI Consulting senior managing director in Hong Kong, Maria O'Brien, Baker McKenzie partner in Sydney, and Miles Grant, ANZ Lending Services senior corporate lawyer in Sydney, on Baker McKenzie’s “Crossing Borders” podcast, the first business podcast produced by a law firm for the Asia Pacific region.”
NORTH AMERICA
RETAIL
Lingerie firm Agent Provocateur clear to sell assets
13 April 2017
The Australian reports that “the US arm of British lingerie company Agent Provocateur has filed for chapter 11 bankruptcy to execute a sale of its assets, stranded when the company went bankrupt in Britain. Agent Provocateur filed for bankruptcy in the US yesterday, having reached an agreement to sell 12 of its US stores to Four Marketing Group. Fashion agency Four Marketing, which bought Agent Provocateur’s British operation, agreed to provide the US company with a $US500,000 ($667,000) bankruptcy loan and serve as a stalking horse bidder during a bankruptcy auction for stores.”
MANUFACTURING
Debt-riddled Toshiba doubts it can go on
12 April 2017
The Australian reports that “Toshiba expressed doubt yesterday for the first time over whether it can continue as a going concern, citing huge losses at its US nuclear subsidiary, which filed for bankruptcy last month. The company issued the warning alongside its earnings for the December quarter. It released the earnings after two delays, but it had to do so without the approval of its auditor.”
TECHNOLOGY
Financial woes worsen as Avaya attempts turnaround
24 April 2017
ARN reports that “Avaya has unveiled worsening financial numbers as it continues to combat rising debt levels, with declining revenue rates expected for the second fiscal quarter ended 31 March, 2017. The results follow the filing a chapter 11 plan of reorganisation, which outlines a path to “significantly reduce” Avaya’s pre-filing debt, in a move designed to strengthen the vendor’s balance sheet, improve financial flexibility and position it for long-term success.
Yet such attempt at progress comes at a time of worrying financial results, with the vendor facing declining revenue rates across the board.”
Mad Catz files for bankruptcy; all directors and officers depart
1 April 2017
ESPN reports that “gaming hardware company Mad Catz Interactive Inc., known for its fightsticks and other gaming peripherals, announced Friday that the company has made a voluntary assignment in bankruptcy. Its wholly owned subsidiary, Mad Catz Inc., also filed for relief under Chapter 7 of the United States Bankruptcy code in order to liquidate all assets and has ceased all operations. Mad Catz announced that all the directors and officers of the company have resigned as of Thursday.”
BANKING
With execs in hot seat, Wells Fargo gets OK for bankruptcy plan
24 April 2017
Yahoo Finance reports that “retail banking giant Wells Fargo has fixed problems in its 2015 bankruptcy plan and will now be allowed to open new international branches, US banking regulators said Monday. The reprieve comes a day before a high-stakes shareholder meeting at which the bank's board is facing a no-confidence vote. Wells Fargo has struggled to right itself since September, when it reached a $190 million settlement with federal authorities over its sham accounts scandal. The bank admitted to opening millions of accounts and moving money without customers' permission.”
EUROPE
GOVERNMENT
Breakthrough for Greece's bailout talks
7 April 2017
Skynews reports that “Greece and its international creditors have taken a big step toward an agreement that will ensure the cash-strapped country gets the money it needs in time to avoid a potential bankruptcy this summer. For months, the bailout discussions have stalled amid disagreements over what reforms, including to pensions, tax and the labour market that Greece should take in order to get the money due from its most recent international rescue. Without the money, Greece would once again be facing the prospect of having to exit the eurozone - so-called Grexit.”