October news digest – business insolvency and turnaround
04 November 2016
The following are summaries of media stories related to business turnaround and insolvency in Australia during October 2016.
31 October 2016
The Mercury reports: “That’s it, no more handouts for Forestry Tasmania. The Liberals stressed they would cease budget funding. Instead FT received $30 million from TasNetworks in July 2015. That was seen for what it was, a less than honest continuation of the same sins condemned when committed by political opponents. Since, FT has got further cash of $26.5 million from the Government, the latest amount on June 30 being $4.4 million from TasNetworks for a transmission network at the Southwood plant. Now Resources Minister Guy Barnett has announced the Government will take over FT’s superannuation liability of $158 million.”
28 October 2016
The Mercury reports that “administrators for Tasmanian electrical company Russell-Smith believe the company was trading while insolvent from at least January 1 this year, and owes creditors almost $9 million. A creditors meeting will be held today, when administrators Jirsch Sutherland will recommend the company be placed into liquidation. The Mercury reported in August that the company had been accused of not paying suppliers for between six and 12 months. Russell-Smith went into voluntary administration on September 22.”
28 October 2016
ABC Online reports that “administrators have confirmed they are preparing to close the doors at the Bendigo disability agency, Radius, which has had significant financial trouble in recent years. PPB Advisory was appointed earlier this month to take over management of the 60-year-old service. The administrators confirmed they had had to secure extra funding from the Victorian and Federal Governments just to keep Radius functioning until today.”
27 October 2016
Finder.com.au reports that “despite significant rises earlier in the year, personal and business-related insolvencies in regional areas remained stable during the September quarter. The Australian Financial Security Authority (AFSA) has released regional personal insolvency statistics for the September quarter 2016. Personal insolvency cases fell across half of the country's regional areas but gains were recorded in parts of South Australia, Western Australia, Tasmania and the Northern Territory.”
27 October 2016
Smart Company reports that “embattled children’s retailer Pumpkin Patch has collapsed, with receivers appointed for the company and its subsidiaries yesterday. Last week the business, listed on the New Zealand stock exchange, entered a trading halt while it started conversations with stakeholders about how to proceed with its $NZ46 million ($40.7 million) in debts, with a meeting with its bank scheduled for October 31.”
27 October 2016
ABC Online reports that “the administrators of embattled steelmaker Arrium say the company may have traded while insolvent. In a report to creditors, KordaMentha stated it had identified a "number of transactions" entered into by Arrium prior to its collapse that warrant further scrutiny.”
26 October 2016
News.com.au reports that “bankrupt businessman Geoffrey Edelsten faces years of litigation in Australia and the United States, with creditors in both countries lining up to get a piece of his Victorian assets. Edelsten is being chased by more than 40 creditors, including the Australian Taxation Office, for millions of dollars. He also owes National Australia Bank, Bendigo Bank and AFL club Carlton among the 41 creditors, while court documents from 2014 say Edelsten owes more than $10 million to his former US business partner Rafael Mawardi. Edelsten on Wednesday attended the Federal Court in Melbourne to observe a hearing involving his US bankruptcy trustee and the NAB.”
25 October 2016
Business Insider Australia reports that “some of Sydney’s best known bars and restaurants, including Cargo Bar, Bungalow 8 and Kingsleys Woolloomooloo may have new owners soon after receivers Ferrier Hodgson announced the Dixon Hospitality as preferred bidders for seven venues in the failed Keystone Group. Bruce Dixon’s Melbourne-based business has been on its own massive expansion in recent years and now has 37 venues, including a number of Sydney pubs, such as Queenies, The Norfolk and Forresters in Surry Hills and The Oxford in Petersham, as well as the historic South Melbourne gastropub O’Connell’s and Toorak’s 505 Wine Room.”
25 October 2016
CSO Australia reports that “ASX-listed automated debtor management platform IODM today announced a new strategic partnership with national accounting firm and insolvency specialists SV Partners. The deal will see SV Partners integrate its flexible and cost effective fee funding and payment solution business, SmartFee, into IODMs debtor management platform.”
21 October 2016
The Daily Telegraph reports that “a training college shut down over allegations it ripped off disadvantaged students by promising free courses and computers will be pursued by the consumer watchdog. The Phoenix Institute of Australia was placed into voluntary administration in March this year after its registration and approval as an education provider were torn up. It’s alleged that between January and November 2015, Phoenix preyed on prospective students through door-to-door marketing in poor areas, including Aboriginal communities and remote regional towns.”
19 October 2016
Sydney City News reports that “the eastern suburbs’ Coogee Sports Club has been placed under administration. Gregory Parker of Parker Insolvency has been named as the Administrator, taking the role from the 1st July 2016. The Club issued a notice of meeting, the first Annual General Meeting of 2016 for Sunday 23rd October 2016. The listed agenda for the meeting is to consider “whether to appoint a committee of creditors, and if so, who are to be the committee’s members.”
18 October 2016
ABC Local reports that “a big central Victorian disability support agency has immediately cut about 40 jobs after going into voluntary administration. Radius Disability Services provides supported employment and disability care in Bendigo, and made the shock announcement to staff yesterday.”
17 October 2016
The Australian Financial Review reports that “Australia's largest builder of ambulances, Byron Group, has been placed in administration, according to documents filed with the Australian Securities and Investments Commission on Friday.”
17 October 2016
Sourceable reports that “one of the biggest building industry lobby groups in South Australia has hit out at reports that the Australian Securities and Investment Commission (ASIC) will not investigate one of the state’s biggest construction company collapses despite allegations that the company may have been trading whilst insolvent. Following advice from liquidators Clifton Hill that the Australian Securities and Investments Commission would not be investigating the June collapse of Tagara Builders, the Master Builders Association of South Australia has expressed outrage and called for an investigation to occur.”
17 October 2016
The Advertiser reports that “Family First senator Bob Day has announced he will resign from Federal Parliament following the collapse of his building company, Home Australia. The South Australian property developer made his announcement as his Home Australia Group — which includes Homestead Homes (SA), Collier Homes (WA), Newstart Homes (Qld), Ashford Homes (Vic) and Huxley Homes (NSW) — was placed in liquidation.”
16 October 2016
The Sydney Morning Herald reports that “the bitter dispute between the Parramatta Eels rugby league club and its former major sponsor Dyldam will be played out in court after the club launched legal action in the District Court over Dyldam's alleged failure to meet its financial commitments. The controversial developer, recently announced as a major sponsor of the Central Coast Mariners, is being pursued by the Australian Taxation Office after investigations by insolvency expert Stephen Hathway found what he told Fairfax Media was an attempt to mislead the ATO by deliberately misstating the true nature of financial dealings within the Dyldam empire.”
14 October 2016
ABC Online reports that “a surge in debt agreements has heightened concerns that consumers in financial hardship may be exacerbating their problems by adopting expensive techniques of escaping debt. Figures released Australian Financial Security Authority show, while total personal insolvencies in the September quarter have risen by 1.1 per cent over the year, debt agreements are up 7.3 per cent.”
14 October 2016
ABC Online reports that “business owners in central west New South Wales say they are not sure whether they will recover millions of dollars owed by a mining company that has gone into receivership. The Mineral Hill mine, north of Condobolin in the Lachlan Shire, has been put into care and maintenance after the owner KBL Mining Limited went into voluntary administration and receivership last month. Prior to that, the mine employed about 80 people. The ABC understands the company owes about $50 million to its creditors, including Condobolin contractors and businesses.”
13 October 2016
Adelaide Now reports that “Trudy and Craig Marshall should this year be celebrating the 20th anniversary of their Wingfield roofing company. Instead they continue to count the cost of the collapse of Tagara Builders, which blew a $230,000 hole in their finances, forced them to halve their workforce and plunder their savings to keep their family-run business afloat.”
13 October 2016
The West Australian reports that “the Building Commission has taken the unusual step of engaging a professional services firm to help investigate Diploma Group. McGrathNicol’s forensic unit has written to third parties seeking information about claims of unpaid work done for subsidiary Diploma Construction (WA). The email sent on Tuesday asks subcontractors for copies of contracts, payments and invoices.”
12 October 2016
The Australian Financial Review reports that “listed law firm Slater & Gordon is facing a class action that is $100 million bigger than its market cap, but it is unlikely to drive the law firm to insolvency, says Maurice Blackburn. On Wednesday, Maurice Blackburn filed a $250 million class action on behalf of more than 3000 shareholders, including over 80 institutional investors and super funds. The action is backed by litigation funder International Litigation Partners.”
12 October 2016
ITWire reports that “Australian Prime Minister Malcolm Turnbull has hailed the multi-technology mix national broadband network being rolled out by his government as "one of the great corporate turnarounds in Australia's history’. Responding to a question from opposition shadow communications spokesman Michelle Rowland in parliament on Tuesday, Turnbull said the NBN was a complete catastrophe and a failed project under the Labor Party before the Coalition had changed its direction.”
11 October 2016
The West Australian reports that “a WA businessman whose company is in liquidation owing $16 million has emerged as the fly in the ointment of a $300 million deal by Chinese gold play Hanking Holdings. Steven Parnell has claimed Hanking failed to meet minimum exploration expenditure requirements and should forfeit three core mining tenements near Southern Cross. The tenements are a key part of the $300 million-plus sale of Hanking’s gold operations. Mr Parnell lodged the so-called Warden’s Court “plaints” as Macquarie was recently preparing the first round of the sales process.”
10 October 2016
CRN Australia reports that “Queensland Google partner Chromeworx, which formerly traded as Rype Ideas, has entered voluntary liquidation owing $200,000 to the cloud vendor. BRI Ferrier’s Ian Currie was appointed as liquidator on 4 October 2016, with a creditors report outlining debts of $292,745, the lion's share of which is owed to Google Asia Pacific. Currie told CRN that Google was not likely to recoup its money from Chromeworx. ‘At this time unsecured creditors are unlikely to receive a dividend, this is however subject to debtor realisations and any recoveries that may arise as a result of my investigations.’ Chromeworx’s assets and customers have been acquired by itGenius, a Google Apps platform integrator based in Sydney. Peter Moriarty, director of itGenius, said prior to Chromeworx’s liquidation, his company had actually been in talks to acquire it in August.”
10 October 2016
CRN Australia reports that “former Dick Smith chief executive Nick Abboud has spoken for the first time since leaving the retailer in January after its fall into administration. During an examination into the collapse in the Supreme Court of NSW on Friday, Abboud was questioned about unpaid invoices to Synnex. The distributor halted supply of iPads to Dick Smith in November, he said. Abboud denied that the retailer could not pay its invoices to Synnex, and claimed there had been issues with delays in inventory getting from Apple to Synnex to Dick Smith. Despite nine months passing since the retailer filed for administration, receivers Ferrier Hodgson are still yet to reveal details of Dick Smith's $260 million unsecured debts.”
9 October 2016
The Sydney Morning Herald reports that “thousands of Australian investors who ploughed millions into illegal fundraising outfit Astra Resources will have to seek recourse in Britain after a court ruling. Liquidators from Grant Thornton's London office last week secured orders from Federal Court judge Richard White for a single liquidation process operated out of England. Astra Resources – a British company with operations in Adelaide – was placed in liquidation in Britain earlier this year after a petition from Credit Veritas over unpaid retainer fees of $US600,000.”
7 October 2016
The Sydney Morning Herald reports that “one of Australia's largest private colleges has gone into voluntary administration leaving up to 16,000 students in limbo, just two days after the federal government announced it would put an end to the scandal-ridden VET-FEE HELP scheme. The Australian Institute of Professional Education took in $110 million in public funding in 2014, enrolling 8000 students that year while graduating only 117 of them – at a cost of close to $1 million per diploma. On Friday, AIPE announced it had appointed insolvency firm Ferrier Hodgson as administrators, becoming the first college to go into liquidation in the wake of the government's crackdown on the industry this week.”
6 October 2016
The Advertiser reports that “administrators of FaB Cleaning Services Australia are hopeful of selling the business as they pursue assets of its director who owes up to $1.7 million to trade creditors. PKF Kennedy insolvency partner Robert Spiby said ‘poor management’ was to blame for the Kilburn company entering voluntary administration with an estimated debt of between $2m and $2.1m, of which between $1.4-$1.7m is owed to franchisees, suppliers and contractors.”
5 October 2016
Lawyers Weekly reports that “soon to land in Australia, global firm White & Case has recently released an Asia-Pacific insolvency guide to assist a range of struggling Asian markets, including Australia. As a range of markets in Asia struggle with lower commodity prices and the slowdown in China’s growth, among other issues, White & Case has taken the liberty of releasing a second edition Asia Pacific Restructuring & Insolvency Guide, following the first edition in 2009. The guide gives a detailed overview of the restructuring and insolvency laws in 16 key jurisdictions, being Australia, England and Wales, Hong Kong, India, Indonesia, Japan, Macau, Malaysia, China, the Philippines, Singapore, South Korea, Taiwan, Thailand, the United States of America and Vietnam. ‘Strong, functioning restructuring and insolvency regimes are the cornerstone of a modern market economy and a key factor in bringing investor confidence and financial stability,’ the guide reads.”
4 October 2016
Lexology reports that “a US$12.35 million award against Legend International Holdings[1] has unwittingly become caught between the United States and Australian insolvency regimes. Having filed for Chapter 11 protection in the United States some two days before the hearing of a winding-up application by an Australian court, the enforcement of the award will now effectively benefit from a temporary global stay, bringing into sharp focus the impact of insolvency appointments on the enforcement of obligations. Enforcement against a company that is subject to the appointment of an external administrator appointed pursuant to Australian law can raise some interesting and specific issues that may not arise in other jurisdictions.”
4 October 2016
The Australian reports that “subscription video-on-demand (SVOD) provider Quickflix has found a new buyer, with US-based Karma Media Holdings set to take full control of the business that went into administration in April for $1.3 million. The sale comes after Quickflix’s creditors approved a deed of company arrangement (DOCA) proposed by Karma Media. The arrangement will see Karma Media take control of the Quickflix business and its assets in exchange for payment of $1.3 million into a deed fund. Deloitte’s Jason Tracy, who was appointed joint voluntary administrator in May, said the agreement offers the best outcome for Quickflix’s creditors, its staff and customers.”
3 October 2016
Good Food reports that “nearly 18 months after it closed its doors, a report to creditors paints a bleak picture of the financial state of fallen Sydney restaurant Fish Face. The onetime seafood jewel owed creditors in excess of $600,000 when it ceased trading in May 2015. ‘My view is that the company was insolvent from at least the financial year ended June 30, 2014,’ liquidator Andrew Cummins, from BRI Ferrier, states.”