September news digest – business insolvency and turnaround
07 October 2016
The following are summaries of media stories related to business turnaround and insolvency in Australia during September 2016.
30 September 2016
The Townsville Bulletin reports that “a provisional liquidator has been appointed to a Townsville indigenous training organisation amid a legal wrangle over its directorship. Following a hearing, Supreme Court Judge David North SC ordered that liquidator BRI Ferrier take charge of Dreamtime Training Pty Ltd and its assets until a winding up order was made. An injunction forbidding five people connected to the organisation was also issued, forbidding CEO Emmakita Geia, managing director Obadiah Geia and industrial advocate James O’Donnell from attending the business premises at Kirwan.”
30 September 2016
The Australian Financial Review reports that “the man trying to save the Whyalla steelworks and the fortunes of the town of 23,000 people who depend on it has been handed a new $30 million problem. And that is in the short term, with full power not likely to return for up to a week, costing the plant and a related mining operation a total of $4 million a day. And the power blackout which shut down the entire South Australian electricity network on Wednesday may also have darkened the prospects of finding a new buyer. But for now, Mark Mentha, the administrator from KordaMentha, who was given the role in mid-April of trying to find a buyer for Arrium which collapsed under debts of $4 billion, is facing a week without full power at the steelworks which will cost an extra $30 million across the operations.”
30 September 2016
The Australian reports that “a board spill vote at embattled transport group McAleese will no longer proceed after managing director Mark Rowsthorn and chairman Don Telford surprisingly stepped down from the board today. The shock moves support a picture first painted in The Australian that suggested Mr Rowsthorn and Mr Telford were unlikely to survive a spill vote initially slated for August 29. That poll was adjourned in controversial circumstances after the group called in administrators McGrath Nicol on the morning of the planned meeting.”
29 September 2016
ABC Online reports that “credit cards are rapidly becoming one of the most common causes of personal bankruptcy, and there are indications that the major banks have been granting inappropriate credit limits, possibly breaching responsible lending laws. University of Canberra lecturer and former financial counsellor Gregory Mowle has interviewed 26 bankrupts as part of his PhD research into personal bankruptcy. Most finger the plastic for their financial woes.”
28 September 2016
ABC Online reports that “fresh food exporters remain concerned about the flow-on effects of Korean company Hanjin Shipping going into receivership around one month ago. At the time, the company's more than 40 ships were carrying cargo estimated at more than $18 billion ($US14 billion).”
27 September 2016
The Australian Financial Review reports that “insolvency firm PPB Advisory has given Bis Industries' lenders something to think about. PPB, hired by the banks to run the numbers on Bis and consider its outlook, has released a report to the lending group which studied the company's immediate liquidity position. It's understood the ‘Phase 1 Report: Liquidity Review’ didn't turn up too many surprises and was in-line with what Bis had been telling the lender syndicate. Lenders are not expected to make any drastic moves until PPB's next report which will evaluate Bis' long-term sustainable earnings outlook and potential restructuring options.”
27 September 2016
The Australian Financial Review reports that “a dispute between Woolworths and its home improvement partner Lowe's could drag on until the end of the year, endangering a $725 million deal to sell Masters stores and sites to a consortium of property investors. Woolworths will learn on Tuesday whether it has defeated Lowe’s application for the appointment of an independent liquidator to oversee the "equitable" winding up of their joint venture vehicle, Hydrox.”
27 September 2016
Smart Company reports that “Tasmanian electrical and communications company Russell-Smith has ceased trading, after being placed in the hands of external managers at the end of last year. Stewart Free and Bradd Morrelli from Jirsch Sutherland were appointed as voluntary administrators to Russell-Smith Pty Ltd on September 22. It comes only two years after the company’s former parent company, PSG Russell Smith, fell into receivership.”
27 September 2016
The Advertiser reports that “the number of potential buyers of Jamie’s Italian restaurant chain has been whittled down but mum’s the word of who they are or where they’re from. More than 80 parties expressed interest in the purchase of Sydney-based Keystone Hospitality Group — the owner of 16 restaurants and cafes across Australia, including all six of the Jamie Oliver branded eateries — after a syndicate of lenders appointed receivers in late June following a disagreement with the company’s board regarding its finances. The list of private equity players and existing hospitality groups has since been culled significantly, however, Ferrier Hodgson’s Morgan Kelly declined to disclose further detail around the remaining parties.”
26 September 2016
The National Business Review reports that “the man who hired disgraced Blue Chip founder Mark Bryers to work at his Australian accountancy group, Stephen Peter Lacy, has been declared bankrupt owing $A12.8 million ($13.1 million). His main creditors are banks, led by National Australia Bank owed $A3 million. Mr Lacy was managing director of Talos Accounting Group, which collapsed in August last year after its strategy of acquiring other accountancy practices ran out of cash. His bankruptcy notice dated September 2 gives his occupation as ICT project manager and does not mention Talos as an associated entity, although it does cite firms acquired by Talos – Broadview Accounting and Best For Less Tax. Talos liquidator Andrew Cummins of BRI Ferrier has said the Talos group owes creditors ‘many millions’.”
26 September 2016
ABC Online reports that “the lobbying business of former New South Wales Liberal Party minister Michael Photios was in voluntary administration six years ago and owed the Australian Taxation Office $350,000, a 7:30 investigation has revealed. The ATO was the biggest creditor of his business MP Consulting Pty Ltd and was paid just seven cents in the dollar on the debt. Former ASIC investigator and insolvency expert Niall Coburn said the deal was favourable to Mr Photios's business.”
26 September 2016
The Conversation reports that “a proposal designed to stop illegal phoenix activity being actively considered in New Zealand could be similarly adopted in Australia, potentially saving billions of dollars. Illegal phoenix activity – which involves directors intentionally liquidating companies after shifting their assets to new (“phoenix”) companies to defraud taxation authorities, trade creditors and employees – is widespread in Australia. A Productivity Commission report last year found there were between 2,000 to 6,000 phoenix companies operating in Australia, costing A$1.8 billion to A$3.2 billion per annum.”
23 September 2016
Business News WA reports that “family-owned Tribute Group has been placed in receivership, just two months after winning what appeared to be a company-making contract with BHP Billiton for its accommodation businesses in Newman. McGrathNicol partners Rob Kirman and Jason Preston were yesterday appointed receivers and managers over a number of entities within Tribute Group, at the request of its directors. This type of appointment is unusual, as directors of troubled businesses usually appoint an administrator whereas receivers are typically appointed by a secured creditor. It followed the appointment on Tuesday of John Carrello of BRI Ferrier Western Australia as liquidator to four companies within the Tribute Group – Tribute Labour Hire, Tribute Supermarkets, Tribute Electrical, and Waybeth Holdings.”
23 September 2016
Business News WA reports that “the parent company of Perth-based mining services company JSW Australia has entered voluntary administration, with representatives of McGrathNicol appointed yesterday. Jason Preston, Shaun Fraser and Jamie Harris were appointed as administrators of Brisbane-based Hughes Drilling, with the intention of keeping the business in operation while they undertake a financial and operational assessment of the firm.”
22 September 2016
ABC Online reports that “chairman of stockbroking firm BBY Glenn Rosewall wrote to his psychic advisor in 2011 saying he was concerned the company faced insolvency, shortly before $12 million was stripped from clients' trust accounts. The NSW Supreme Court has been presented emails and text messages between Mr Rosewall and Nevine Rottinger, where Mr Rosewall appeared to raise concerns about the company.”
22 September 2016
Lawyers Weekly reports that “Herbert Smith Freehills has created a new guide to help companies and lenders navigate the various insolvency regimes in the Asia-Pacific region. The Restructuring, Turnaround and Insolvency in Asia Pacific legal guide, which was released last week, provides an overview of the laws on corporate restructuring, turnaround and insolvency in 14 major jurisdictions across the region.”
22 September 2016
The Advertiser reports that “Adelaide steel fabrication and roofing maintenance company CSM Steel has been placed into liquidation, costing 40 people their jobs. Last month, voluntary administration of the business was taken by Ferrier Hodgson Adelaide partners Martin Lewis and Tim Mableson. A spokesman for Ferrier Hodgson said CSM Steel has proceeded into voluntary liquidation.”
22 September 2016
Business Insider Australia reports that “the ANZ Bank today has reached a commercial settlement with Indian billionaires Pankaj and Radhika Oswal following a dispute about the receivership and sale of Burrup Fertilisers in Western Australia in 2010. The confidential settlement ends a $2.5 billion claim by the Oswals.”
21 September 2016
Business News WA reports that “Citation Resources has appointed KordaMentha as voluntary administrators, while the oil and gas company continues to pursue recovery of funds through a civil action against former director Peter Landau.”
19 September 2016
The West Australian reports that “the Federal Court has rejected a bid by ASX-listed Kimberley Diamonds to examine the liquidators of its failed Ellendale diamond mine in the West Kimberley, slamming the move as an ‘abuse of process’. Kimberley Diamonds sought to haul liquidators Jirsch Sutherland into court to quiz them about the decision to abandon Ellendale last October through the issue of a ‘disclaimer of onerous property’, having failed to find a buyer for the mine as a going concern.”
15 September 2016
AAP reports that “department store chain Myer has shown signs its turnaround plan is working after it more than doubled its full-year profit to $60.5 million. Total sales were up 2.94 per cent to $3.3 billion for the 12 months to July 30, while crucial comparable store sales were up three per cent. Chief executive Richard Umbers said underlying net profit, which was down 10.63 per cent to $69.3 million, was in line with guidance and the results showed that the company's five-year turnaround plan had made good progress in just 12 months.”
15 September 2016
Business News WA reports that “Perth-controlled motor vehicle stacking business Car Parking Solution has gone into liquidation. While the business has its headquarters in Victoria, its ownership has a distinctly Western Australian flavour, with Perth-based Bob Candler and former Perth resident Leon Weston having started the WA branch in 2006 and bought out the national operation in 2008. Mr Weston has run the business from Melbourne, where it is understood about 60 people lost their jobs this week after the appointment of liquidators Glen Kanevsky and Sal Algeri of Deloitte Restructuring Services partners.”
15 September 2016
Australasian Lawyer reports that “the number of financial restructuring and insolvencies is on the rise in the Asia Pacific region and, despite low interest rates helping to cushion borrowers, depressed commodity prices have taken the number of global corporate defaults to their highest levels since 2008. For lawyers, an increase in work with respect to distressed situations is only likely to continue, Herbert Smith Freehills partner Paul Apáthy told Australasian Lawyer.”
Going bankrupt is a life changing decision – so why is the process to do it so easy?
14 September 2016
The Conversation reports: “The process to go bankrupt is too easy and does not allow for the debtor to explore all their options. As part of my research I interviewed 29 people who had recently declared bankruptcy. We discussed the process. I found that at least half of the people interviewed did not have to go bankrupt.”
14 September 2016
The Sydney Morning Herald reports that “the family of recently bankrupt business man ‘Diamond’ Joe Gutnick is back in the mining game after the Northern Territory government gave clearance for Merlin Diamonds to start exploring a deposit formerly owned by Rio Tinto. Merlin Diamonds announced this week that it is planning to recommence operations at the Merlin diamond mine, 900 kilometres south east of Darwin. Mr Gutnick stepped down as chairman of Merlin Diamonds days ahead of entering into bankruptcy, leaving the company in the hands of his eldest son Mordechai. Mr Gutnick still has a nearly 40 per cent stake in Merlin through various entities owned jointly with his son Mordechai and wife Stera.”
14 September 2016
The Australian Financial Review reports that “the Peppers Airlie Beach resort on Queensland's Whitsunday Coast operated by Mantra Group has been listed for sale by receivers with expectations of about $15 million.”
13 September 2016
Smart Company reports that “the Australian economy is facing headwinds for the remainder of 2016 and into 2017 following the decline in commodity prices. Local bankruptcies are expected to rise by 8%, according to Atradius forecasting, so it makes good business sense to look for ways to reduce risk exposure to let the company trade confidently. Australian businesses must start implementing strategies to avoid being another bankruptcy statistic.”
10 September 2016
The Age reports: “Doug Constable claims to be an "insolvency expert", who helps ailing businesses stave off creditors and avoid bankruptcy. The 66-year-old businessman, who wrote a book called How to Not Pay Your Debts, says he is ‘passionate about helping people draw a line in the sand in times of financial distress.’ So how did Mr Constable respond when owed money by a former staff member? In the case of a recent $9000 debt, Mr Constable employed Stephen Gillingham, a former cruiserweight boxer and Bandidos outlaw motorcycle gang enforcer.”
Wine Grape Growers Australia will restructure after a unanimous vote to continue on
8 September 2016
The Advertiser reports that “Wine Grape Growers Australia will change its name to Australian Vignerons and restructure after a unanimous vote at a special general meeting yesterday. The Adelaide-based, nationally-focused wine grape grower lobby group had said that it was likely to be wound up if a restructure and new direction was not supported by members. But following the unanimous vote it will now adopt a new constitution aimed to set it on a path to financial viability.”
6 September 2016
ABC Online reports that “failed retailer Dick Smith had too much inventory, including a 10-year supply of self-branded batteries, a court has heard, as executives were questioned by receiver Ferrier Hodgson over the collapse of the company.”
6 September 2016
The Daily Mail Australia reports that “he attended a court hearing in Melbourne, Victoria by himself on Monday. And on Tuesday, Geoffrey Edelsten hit out at reports that he was a 'tired old man' representing himself during an ongoing financial dispute and that he was bankrupt.”
6 September 2016
The Guardian reports that “a breakdown in Clive Palmer’s relationship with administrators of his Queensland Nickel business was evident around the time a dispute flared over a private jet, the company’s former financial chief has told the federal court. The court hearing by liquidators into the collapse of Queensland Nickel was shown an email stating that FTI Consulting’s John Park had ‘upset Clive P on the phone this evening’ during a conversation about the administrator’s seizure of a Cessna Citation aircraft.”
6 September 2016
The Herald Sun reports that “former Melbourne Storm boss Ron Gauci has been called in to help save the Frankston Dolphins. Crippled by debts of about $1 million, the VFL club went into voluntary administration recently.”
5 September 2016
The Australian Financial Review reports that “Grant Thornton's restructuring team has scored a small role at McAleese. Amid the drama which saw McAleese head into voluntary administration last week, it is understood secured creditor SC Lowy brought in Grant Thornton's head of financial advisory Said Jahani and fellow partner Gayle Dickerson as receivers to two specific parts of McAleese.”