Australian Jobs lost - Adelaide businesses enter Administration

28th April, 2018

Over the past few weeks, I was asked to help 4 businesses in Adelaide in financial difficulty being Blackburn Taxi Trucks (Transport), Exalted Property Services (Property Maintenance), Moniz Constructions (Construction) and DFO LEDS (Solar) and all were situated at 535 Prospect Road Gepps Cross SA.

Unfortunately the Director was recently diagnosed with Multiple Sclerosis (MS) and in addition to major health issues, the companies (and their businesses) couldn't continue and were placed into Voluntary Administration on Tuesday, in part as their customers didn't pay their accounts and the company experienced serious cash flow issues as a result.

Many people have now lost their jobs resulting in the staff, contractors and their associated families now experiencing distress and uncertainty about their future.

The Company purchased Blackburn Taxi Trucks in September 2017 and following settlement, investigations revealed Electrolux immediately changed its payment terms from 30 days to 90 days (without the company's approval) and justifying its decision as the company was a new vendor, even though the business and most of the drivers remained the same. The Company paid their drivers weekly, however couldn't continue due to their outstanding debtors not paying within agreed payment terms, including Electrolux who did not pay within their own payment terms. A photo with some of the drivers at Tuesday briefing is attached, and suffice to say the drivers are not happy with Electrolux is an understatement

The Company also reported that Maincom (insurance) and Brunnings (fertilisers) also failed to pay their accounts on time, and in its solar business its customers SunEnergy, Target Solar and Green Engineering also failed to pay with sizeable debtors now sitting at 99 days + outstanding.

Together this similarly caused the company to suffer major cash flow issues as well.

Also concerning to the Company is that the Government of South Australia's (Housing SA) own contractor Doherty (now Lake Maintenance) also failed to pay their accounts within their own payment terms (in significant arrears), and Doherty advised the Company that Housing SA had not paid them, and in turn they were unable to pay their respective supplier accounts. If proved true this is an extraordinary statement and completely unacceptable for a Government Department and further investigations are urgently required.

Cor Cordis (Voluntary Administrators) are now investigating, but there are serious issues with Companies across Australia not having their accounts paid on time, and many vendors and businesses are suffering cash flow problems as a result.

In this particular case the company was concerned about causing problems for their clients and their ongoing works. Although the accounts team constantly pursued their outstanding debtors, payments were either not paid, delayed or a fraction of the outstanding payments were made, and in any event this caused the companies insolvency and cash flow crisis, and ultimately caused the company to not be able to meet its own payroll obligations.

I would like to advise those that find themselves in a similar position that it's important that you immediately engage professional advice, as time is of the essence and likewise, your cash flow, your profitability and the potential for your business to fail (including increased liability) rises during this time.

Having worked in the insolvency and turnaround sectors (specialising in operations) for the past 21 years, I have seen not only the best of humanity and those in genuine distress (as in this case), but also the worst of humanity and those seeking to deceive others, i.e. Creditors, the ATO, Banks, Financiers, Suppliers and Customers. Most importantly time is of the essence if you ever find yourself in a similar situation, and I urge you to please get help at your earliest opportunity.

It's time for change Australia. Were Australian and we look after one another and if you do the work, you deserve to be paid. Please also beware of extending credit to your customers, and most importantly please keep a close eye on your cash flow.

Philip Couper