December news digest

03 January 2017

The following are summaries of media stories related to business turnaround and insolvency in Australia during December 2016.

Nathan Tinkler’s sister slapped with bankruptcy notice over unpaid taxes

31 December 2016

The Courier Mail reports that “bankrupt former billionaire Nathan Tinkler’s little sister is set to join her brother in the financial doghouse. Just days after Tinkler launched his ill-fated attempt to buy his way out of his own $537 million bankruptcy hole, his sister Donna Dennis was slapped with a bankruptcy notice related to $3.7 million in unpaid taxes owed by two failed former Tinkler companies. Ms Dennis, 37, from Kendall on the NSW mid-north coast, was served with the notice on December 13, four days after her former mining magnate brother launched his audacious bid to exit bankruptcy. Tinkler offered his creditors $1 million to settle their $537 million claims, but the deal fell over when he failed to stump up the cash before the creditors meeting on December 21.”

30 December 2016

The Chinchilla News reports that “a Darling Downs hotel that was ravaged by fire last year has gone into liquidation. Origin 57 Pty Ltd, which trades under the name Country Club Hotel went into liquidation on December 15 this year, according to documents lodged with the Australian Securities and Investments Commission. Adam Ward has been appointed as liquidator.”

29 December 2016

The Sydney Morning Herald reports that “a Sydney beauty college run by a prominent political donor and Order of Australia medal recipient has gone into administration, leaving hundreds of students in the dark and up to 80 staff rocked by dismissal letters on the day before Christmas Eve. The Australasian College Broadway, which earned more than $10.4 million in taxpayer funded loans last year, went into administration on Friday, according to documents lodged with the Australian Securities and Investments Commission.”

29 December 2016

The Australian reports that “McAleese shareholders are destined to receive nothing despite creditors reaching an agreement to keep the company’s units in operation. The transport and logistics group fell into administration on August 29, the same day a planned extraordinary general meeting was set to oust high-profile managing director Mark Rowsthorn from the board. Mr Rowsthorn has since exited, making a quiet retreat on a holiday long weekend at the end of September. In the meantime, administrator McGrath Nicol has been looking to salvage what remained of a company that raised $166 million through a float just three years ago.”

27 December 2016

The Gold Coast Bulletin reports that “the building company behind the two tower, resort-style units at Robina has collapsed, sparking fears about money owed to up to 300 subbies. ASIC documents show the Brisbane-based construction company Cullen Group Australia is under external administration. Brisbane insolvency accounting firm Pearce and Heers was appointed liquidator late on Thursday in a voluntary winding up of the builder. The Bulletin has been told the Cullen Group, which is registered as a $30-60 million company, has at least eight major projects underway from Brisbane to northern New South Wales.”

23 December 2016

The Australian Financial Review reports that “the downturn in the Perth housing and construction market has claimed a high-profile victim with listed developer and builder Diploma Group collapsing, owing creditors about $40 million. The 40-year-old company, which is controlled by the Di Latte family, appointed Matthew Donnelly, David Hodgson and Andrew Hewitt of Grant Thornton as administrators on Thursday. The appointments cover the ASX-listed Diploma Group and two of its subsidiaries, Diploma Construction (WA) and DGX Construction. Martin Jones and Andrew Smith of Ferrier Hodgson were appointed receivers on December 21.”

23 December 2016

The Guardian reports that “Senator Rod Culleton has been declared bankrupt by the federal court in Perth, which would disqualify him from parliament, but he has vowed to fight on. Culleton, who was elected as part of Pauline Hanson’s One Nation before quitting the party this week, was found bankrupt following action taken by a creditor. Under Section 44 of the Australian constitution, a person is not allowed to continue as a member of federal parliament if he or she is an undischarged bankrupt or insolvent.”

21 December 2016

SmartCompany reports that “administrators have recommended a security firm that owes creditors more than $1 million be wound up, as workers at the company face an uncertain Christmas. Voluntary administrators from Mackay Goodwin were appointed to Kudos Australasia Pty Ltd, trading as Kudos Audio Visual and Kudos Security Solutions, on November 9, however, SmartCompany understands employees of the company have spent the past year attempting to recoup their entitlements. Kudos Audio Visual provides commercial and domestic installation of audio visual equipment, while Kudos Security Solutions installs security systems and technology including CCTV, security doors and intercom systems. The businesses are continuing to trade. In a report from the administrators seen by SmartCompany, the company’s liabilities are listed at more than $2.5 million, including $1.2 million in unsecured creditor claims.”

21 December 2016

ABC Online reports that “despite three strong years of growth and consecutive record macadamia crops, north coast nut company Macaz has stopped processing and is in voluntary administration. More than 40 farmers, dozens of businesses, and three Chinese companies are owed more than $4 million by the Alstonville-based business. Schon Condon from the Condon Associates Group has been appointed administrator.”

20 December 2016

SBS reports that “the number of Australian companies to fall into insolvency this year has declined to an eight-year low, in a positive sign for the economy. In the first 10 months of 2016, 7,365 companies slipped into voluntary administration, liquidation or receivership - 1,300 fewer insolvencies compared to the same period a year ago, new figures from FTI Consulting show. The count is the lowest since 2008, FTI's analysis of insolvency statistics from the Australian Securities and Investments Commission has found.”

19 December 2016

The Courier Mail reports that “the administrative company behind Maroochydore-based national training organisation SmartCity Vocational College has gone bust, leaving more than 300 staff across Australia jobless and students in limbo about the future of their studies. Worrells Solvency and Forensic Accountants partner Paul Nogueira this morning confirmed to the Sunshine Coast Daily that Worrells had taken charge of SC Admin late on Friday night, after SC Admin — directed by James Spong — was placed into voluntary liquidation. Mr Nogueira said staff had been notified this morning SC Admin Pty Ltd had ceased trading and staff employment would not continue. Staff were advised via a series of emails last week that SC Admin’s future was in doubt after projected cash flow issues for the business as a result of changes to government funding for private training colleges.”

18 December 2016

The Sydney Morning Herald reports that “after analysing the financial health of retailers with more than 4000 stores, Macquarie says ‘profitability for apparel retailers remaining challenging’, particularly for unlisted companies, as retail sales moderate and the lower Australian dollar raises import prices … Macquarie said some unlisted retailers were unprofitable. These were RSH Australia, which owns jeans brand Westco and shoes brand Novo, and Fast Future Brands, which owns clothing brands Valley Girl and TEMT.”

16 December 2016

SmartCompany reports that “a medical institute that was included in this year’s Shonky Awards has entered voluntary administration. However, the business is continuing to trade while administrators seek potential buyers. GTC Medical, trading as the Medical Weightloss Institute (MWI), is a Sydney-based medical business that has previously been the subject of complaints to both healthcare and consumer protection bodies. On Thursday, the company appointed administrators from Hall Chadwick Chartered Accountants, who told SmartCompany they were ‘continuing to trade the business of the company, whilst also seeking expressions of interest for the sale of the business’.”

15 December 2016

ABC Online reports that “Payless Shoes, one of Australia's largest independent shoe retailers, will close 132 stores across the country and let go of 730 staff, the company's administrator Ferrier Hodgson said. Ferrier Hodgson said all Payless Shoes stores will be transferred or closed in February 2017. Administrators James Stewart, Jim Sarantinos and Peter Gothard were appointed to manage the company in November — the second time in four years that the business had been placed into administration.”

15 December 2016

Business News WA reports that “two Perth-based gold miners have run into trouble, with Troy Resources striking problems at its mine and Kingsrose Mining falling into voluntary administration. Kingsrose told the market it had appointed Michael Ryan and Ian Francis of FTI Consulting as voluntary administrators of the business, while its Talang Santo gold mine in Indonesia would be placed on care and maintenance. In a statement, Mr Ryan said the voluntary administration process would provide Kingsrose and its stakeholders with breathing space and protections to make the decisions about the future of the company.”

15 December 2016

The Canberra Times reports that “the Canberra Club is expected to be officially wound up at what is expected to be a final members' meeting with the liquidator on Thursday, two years after the club went into administration. The club went into voluntary administration in December 2014, after patrons and membership declined, and two efforts to merge the capital's oldest licensed club also failed due to the club's constitution. RSM Australia Partners' liquidator Frank Lo Pilato said the company had been hit with a $34.5 million creditors’ claim, but after the club rejected the claim earlier this year, no appeal to the rejection was lodged in court.”

13 December 2016

The Advertiser reports that “Edinburgh-based KJM Contractors has been placed in liquidation with debts of almost $80 million. The former national Ernst & Young Entrepreneur of the Year Award winner in the services category was already in the hands of a receiver however Clifton Hall have now been appointed as liquidators. Clifton Hall said the receivers were currently still operating the business and had control of its property. According to the liquidators’ report the company owes $73.9 million to Goldman Sachs subsidiary MTGRP LLC, $2.3 million to Toyota Finance, $1 million to Caterpillar Financial Australia and $1.76 million to unsecured creditors.”

12 December 2016

The Australian Financial Review reports that “instability in the electricity grid and concerns about the long-term fix needed for South Australia's power infrastructure are complicating the sale process for Arrium's Australian assets, as the big banks sign off on payments of $1 million per week for administrators KordaMentha to run the group. While KordaMentha secured a solid price of $1.6 billion for Arrium’s Moly-Cop business in a sale in early November to private equity firm American Industrial Partners, the complexities around the sale process for the Australian assets and issues surrounding the power grid have pushed the timetable for a potential deal well into late February 2017 … A committee of creditors including Australia's big four banks (ANZ, Commonwealth Bank of Australia, NAB and Westpac), Spanish banking group BBVA and US legal adviser Morgan Lewis, which is representing the interests of US noteholders, have signed off on the latest round of weekly remuneration for the administrators … The creditors' committee passed a resolution for remuneration of $1.082 million for the administrators for what they term "week 29" – from October 24 to October 30. The three following weeks had payment sums of $1.002 million, $1.033 million and $1.003 million. Arrium went into administration in April this year.”

12 December 2016

The Brisbane Times reports that “the company at the centre of a wages stoush at a premier racetrack redevelopment where two workers died has gone under, owing millions of dollars. Multiple subcontractors went unpaid at the Eagle Farm Racecourse project with claimed debts in the hundreds of thousands of dollars as Landfill Logistics struggled to stay afloat.”

11 December 2016

The Australian Financial Review reports that “three years after Bryan Tyson and partners staged a mass walk out at Kreab Gavin Anderson after a failed attempt at a management buyout to start competitor Newgate Communications (PR advisers to Ardent Leisure), KGA has entered voluntary administration. The first meeting of its creditors is set for Friday at the Sydney office of corporate undertaker PKF. Besides a whopping win advising the French defence giant DCNS on its successful bid to build the Royal Australian Navy's new fleet of submarines, KGA's local market presence has been scarce in recent times. There have been rumours of another attempted MBO (KGA is owned by US media giant Omnicom and a Swedish family company). If true, they've gone nowhere.”

11 December 2016

The Sydney Morning Herald reports that “Howards Storage World has been tipped into administration weeks before Christmas, with a restructuring team from Deloitte appointed to the specialist retailer on Friday. Voluntary administrators Vaughan Strawbridge and David Lombe were appointed to companies that run 29 of the retailer's stores in New South Wales, Queensland, South Australia and Victoria. The troubled business is also the franchisor of a further 30 Howards Storage World outlets. The immediate focus of the administrators will be an ‘urgent’ assessment of the business, and the Australian Financial Review reported they are eyeing a sale of the retail chain.”

11 December 2016

The Australian Financial Review reports that “among the standard corporate chest beaters, Medibank Private's Craig Drummond is building a reputation as one of the more downbeat chief executives getting around … It's not unusual for a new chief executive to come in and stamp their authority with a strategy overhaul, asset sales or massive write-downs that mark the beginning of a new era. For companies in trouble it is supposed to herald a turnaround, but the curious thing in Medibank's case, is this is the turnaround that isn't. Not that you would know that from reading about the $8 billion company. The narrative has shifted dramatically from two years ago when it was privatised by the government and spruiked heavily to retail investors, plenty of whom are probably now reading the commentary and wondering if they were sold some little white lies.”

8 December 2016

The Australian Financial Review reports that “property developer and mining contractor Watpac has lashed insolvency firm KordaMentha after launching legal action against three of its partners as it seeks $3.2 million for work on an iron ore mine. In a writ filed with the Supreme Court of Western Australia, Watpac claimed the amount owed was agreed to by the defendants; KordaMentha partners John Bumbak, Cliff Rocke and Janna Robertson. Watpac claims it is owed $3.2 million for mining services work carried out, at the request of KordaMentha, at Pluton Resource's Cockatoo Island iron ore mine in Western Australia in late 2014 and early 2015.”

8 December 2016

The Australian Financial Review reports that “insolvency firm McGrathNicol has released its report on the financial state of troubled law firm Slater & Gordon concluding that a restructure may be required subject to further forecasts about its financial performance. The report comes as original lenders to the company have offloaded their loans to distressed debt funds and investment banks, amid a growing perception that a debt-for-equity swap will be needed to recapitalise the operation. The report, titled Group Forecast Review and Recapitalisation Discussion Paper, was drafted by the insolvency firm that was appointed by Slater & Gordon's two major lenders National Australia Bank and Westpac in January. The report says that the fundamental business is in fair shape but the capital structure needs to be reset, according to sources.”

8 December 2016

The Star reports that “Australian oil and gas producer Santos Ltd will cut costs and put some assets up for sale as it looks to cut debt over the next three years, in a turnaround strategy announced on Thursday. The company, which counts China's ENN Group as its largest shareholder, has been under pressure to cut debt that peaked last year as it completed its flagship Gladstone liquefied natural gas project, just as oil and gas prices slumped.”

6 December 2016

The Australian reports that “insolvency practitioners already under heavy scrutiny as one of the gatekeepers of the financial system are now saying ASIC is examining their declarations of independence in the ‘most minute’ detail. In September, McGrathNicol found itself in the regulator’s crosshairs for incomplete disclosure of pre-insolvency advice it gave to former secured creditors of the collapsed transport group McAleese. The firm had to release a second, updated version of its DIRRI (Declaration of Independence, Relevant Relationships and Indemnities) in time for McAleese’s first creditors’ meeting. ASIC representatives attended the meeting and creditors were told about the watchdog’s intervention. Despite this, the creditors voted to retain McGrathNicol as voluntary administrator.”

5 December 2016

The Australian Financial Review reports that “Paladin Energy shares have been looking sick for more than five years, but since the company flagged delays to the sale of a stake in its flagship uranium mine the stock has been positively radioactive. Paladin shares have now lost more than 98 per cent of their value since the Fukushima nuclear meltdown sent uranium prices plummeting in 2011. UBS last week told investors that going into administration was now ‘a real risk’ for Paladin, but Street Talk can reveal the miner has engaged KordaMentha to help stave off that threat. It is understood KordaMentha's work with Paladin is not, however, in an insolvency capacity. Instead, KordaMentha has secured an advisory role, and particularly around helping the uranium miner negotiate with bondholders ahead of a key debt maturity date in April 2017. Trying to refinance with some of the biggest bondholders could give the miner a temporary reprieve.”

4 December 2016

The Australian Financial Review reports that “a home lending company that is 30 per cent owned by KordaMentha and has just acquired a $240 million loan book from Members Equity Bank has all but banned lending for apartments among its customer base of tradesmen, small business operators and architects. RedZed Lending Solutions says its arrears are at record low levels but it is now being extra cautious as its lending book expands to $840 million and, unless there are special circumstances, has effectively barred lending to customers who want to buy investment apartments. Mark Korda, one of the principals of restructuring and insolvency firm KordaMentha, said the firm had been a seed investor in the company in late 2006 and owns a 30 per cent stake. The acquisition of the $240 million business and asset finance book from ME Bank was part of an expansion strategy, but the core focus was on home lending to the self-employed.”

1 December 2016

The Advertiser reports that “dozens of investors in the $300 million New Mayfield development will be able to terminate their contracts and seek refunds ending years of uncertainty over the future of one Adelaide's largest apartment and hotel projects. The receivers for Sturt Land, the failed developer behind the Sturt St project, has today written to investors advising them that the development’s financier will not extend the ‘proposed practical completion date’ of the project. ‘Many purchasers are already frustrated with project delays and lack of clarity about the project’s future,’ BRI Ferrier wrote in a buyers’ update.”