Last year saw the dramatic fall of Nathan Tinkler and toward the end of the year his largest remaining asset Aston Metals was placed in administration and receivership.
Tinkler’s fall occurred hard and fast and losing a business in these circumstances is never desirable.
It’s a sign of the tough business environment when the past 18 months have seen some of Australia’s most respected designers fall into administration.
Everyone from Lisa Ho to Ksubi, Kirrily Johnston, Snowgum and more have faced cash flow difficulties.
In January 2014 much-loved retailer Peeptoe Shoes collapsed, as a result of high overheads and increased competition.
Nikki Hager first started the business in 2007, but a few years later Peeptoe came under pressure when the concept was no longer original.
“There are also a number of businesses doing custom shoes like Shoes of Prey. The overheads for the business were also quite high. It had too many stores and they were not making the money Nikki was expecting,” administrator Rahul Goyal from KordaMentha told SmartCompany at the time.
With the current influx of international retailers like H&M and Uniqlo, the woes for domestic retailers are far from over.
Iconic Victorian retailer Dimmeys was also placed in administration in January this year, after it copped a $3 million penalty for breaching product safety laws.
Administrator Richard Cauchi from SV Partners told SmartCompany the likely cause of Dimmeys voluntary administration was the high penalty.
“It’s safe to say it’s probably as a consequence of the fine… All the stores will continue to trade as normal and we intend to keep them under control for the time being,” he says.
“In essence, neither the stores nor the business had a large debt. The principal debt is really to the related parties for stock supplies. There are very few external creditors.”
In almost every collapse, one of the largest creditors is the Australian Taxation Office.
Tax is generally one of the first debts to be neglected, even though the ATO is frequently responsible for asking the courts to wind up a company.
In April last year telecommunications company Infratel Networks collapsed with over $3.5 million in debt.
The company’s largest creditor was its parent company, Infratel Networks (NZ), after which the ATO was owed almost $500,000.
In December last year a New South Wales-based risk management business went in administration after the market uptake of one of its products was significantly under projected figures.
Veritas Advisory administrator Murray Godfrey for CorProfit Systems told SmartCompany the business had debts of close to $1 million.
“Lots of money was invested in R&D and in getting the product to market, but it’s had a slower than expected take up in the marketplace,” Godfrey says.
“Lots of money was invested by people to fund the program, so you have a situation where the business has run out of cash.”
Godfrey says CorProfit Systems’ mistake was having an incompatibility between the amount invested in sales and product development.
“In any business which has a new product and you invest everything in the product, rather than in sales, you have a mismatch,” he says.
