Business Just Went under Voluntary Administration

AuQld on 15/03/2023 - 09:44
Last edited 15/03/2023 - 10:51 by 1 other user

Hi, a medium size business in Qld just went into voluntary administration.

From a bit of research about 90% of these companies end up in liquidation and the creditors receive on average of 11 cents per dollar and super isn't top of the list of things that will be paid after the administrator gets his $800 per hour of whatever they're charging.

Unfortunately, some of the employees aren't covered by the FEG scheme and are obviously owed a varying range of entitlements.

I've got my head around most of it except a few things regarding the job moving forward.

Do the salaries moving forward past this date get added to the debt, if the company is liquidated and there's no money left will the administrator still be paying the salaries owed after the date of administration.

What type of notice should be given if any I'd a new job is found during the period?

There's talk of new contracts being issued, should everyone sign them?

Thanks for any information.

Financial

Comments

  • Nugs on 15/03/2023 - 09:58
    +4

    I have been through 18 months of admin after which a buyer was found. Wages were paid as normal with bonuses for meeting targets, to avoid people leaving. YMMV
    I think we were around 200 employees at the time.
    Good luck
    I think it will depend on the admins confidence on selling the business as to how helpful they are to employees
    .

  • AuQld on 15/03/2023 - 10:02

    I didn't think it would drag out that long. Did people give notice if they found a new job or just bail ?

    • thatonethere on 15/03/2023 - 10:22
      +4

      From my experience the administrator will subtly get people to resign for a new job so they can avoid redundancy payouts (if they are large). They can do this by dragging out the proceedings. However during the admin period the administrator has to page wages.

      They may have a spreadsheet to calculate the sweet spot.

    • AuQld on 15/03/2023 - 11:41
      +5

      Interest rates aren't that high, didn't stop the employer selling off assets and not paying super. Companies get pumped and dumped all the time nothing to do with interest rates..

    • Donaldhump on 15/03/2023 - 12:18
      +3

      if a businesses (and mortgage holders) can't cope with 5-6% interest rates, they should never have been in business

      • USER DC on 15/03/2023 - 12:20
        -1

        if a businesses (and mortgage holders) can't cope with 5-6% interest rates

        Is that the only thing they would be coping with ? The real increases are somewhat like 20-60% (may be more)

        Or they coping with INCREASED ELECTRICITY, INCREASED RENT, INCREASED WAGES, INCREASED INTEREST LOANS, INCREASED LOSSES, INCREASED INFLATION etc etc.

        Stop trying to defend Dr Lowe

        • Donaldhump on 15/03/2023 - 14:00
          +1

          i'm not defending him, but i will no have sympathy for someone who though low interest rates were going to be here for ever and took his word literally.

          multiple factors such as inflation decide when interest rates need to rise, the magic dr just doesn't keep them low because he loves us.

          if someone getting a mortgage 2 years ago thought, 2% was too expensive to lock in incase they went to a massive 1% took the risk themselves. What were those peoples / business plans after their fixed rolled off anyway.

          that aside how many business went nutz hiring people due to fomo and over extended

          • AuQld on 15/03/2023 - 14:28
            +2

            @Donaldhump: They bought assets before the pandemic, sold at a profit and then ran the company into the ground while paying themselves bonuses etc.. It had nothing to do with interest rates and more to do with decline property values. They leases everything now.

            • Donaldhump on 15/03/2023 - 15:04

              @AuQld: i'm not the one crying wolf about Dr Lowe

              although i'm sure all "bonuses" would be clawed back one way or another, otherwise any one could open a business, get a loan of some amount, pay at as a bonus, then go bust and pocket the bonus.

        • spc12go on 15/03/2023 - 18:59
          +1

          Increased electricity, rent, wage, and losses has nothing to do with RBA. RBA is trying to tame inflation. Interest rate is relatively low from history point of view. Inflation is caused by prolong low interest rate and all the QE measure the government did.

          What do you think should be done? Or can be done better?

          Inflation is caused by external factors and corporate greed. Just look at all the record profits the big corporates are making. They pass on cost increase plus more to the consumers so they can give them self a good wage rise and bonus and in the mean time give 2-3% wage increase to other employees.

  • happydude on 15/03/2023 - 16:46

    There's talk of new contracts being issued, should everyone sign them?

    Get advice but a little thing to be sure of is it has a redundancy payment clause in there. If it says as per NES don't sign it.

    Reason being is if the number of employees drops below the minimum the administrators can not be liable to pay it.

    It has happened numerous times where a handful employees help turning the lights off but at that point it is a small business and they have no entitlement to redundancy through FEG or otherwise as at the time of redundancy its a small business. I think the limit is 15.

  • Typical16-bitEnjoyer on 15/03/2023 - 16:54

    on average… creditors receive on average of 11 cents per dollar

    That's a well above average figure since 2020 lol

    There's talk of new contracts being issued, should everyone sign them?

    Depends what they say and depends whether it is a phoenix.

    Wouldn't happen to be a subsidiary of a notorious hospitality group would it?

  • thesilverstarman on 15/03/2023 - 16:57
    +2

    FEG scheme should cover all employees. Only contractors would be exempt. But this is the scheme of last resort and only applies if the company is liquitated. Until then your entilements are considered to be a priority to be paid before any unsecured creditors. So until then they are on hold.

    "Do the salaries moving forward past this date get added to the debt, if the company is liquidated and there's no money left will the administrator still be paying the salaries owed after the date of administration"- the administrator will pay you for any work done since the appointment date. If they decide to liquidate the company, they have no responsibility to make payments after the date of liquidation. Whilst under adminisatration, all of your entitlements do not apply. Think of the employment under the administrator as a new job.

    "What type of notice should be given if any I'd a new job is found during the period" - technically none. But is practice I would talk to the administrator. They are the ones who will be paying your entiltements!! (which could take months or over a year, and then you may need to go through other schemes if it isnt all paid)

    "There's talk of new contracts being issued, should everyone sign them?" - entirely up to you. Whilst employed under an administrator, you are technically working for a new employer, except that they dont take on your entitlements, as these remain in the old company.

    https://asic.gov.au/regulatory-resources/insolvency/insolven…

  • AuQld on 15/03/2023 - 18:48

    Thanks for clearing that up, I was looking last night at the Asic and couldn't find some of that information. I'll pass it on, as management don't seem to understand the situation or are just playing dumb.

    Unfortunately unless you're a Citizen or PR the FEG scheme won't cover temporary visas.

  • JIMB0 on 16/03/2023 - 09:40

    It's much easier to get what is owed whilst you are still there. I'd be getting my hands on anything of value while I still could.

    • AuQld on 16/03/2023 - 14:40

      Lol, yea I heard the administrators will take most of everything anyway. Anything worth anything will need a forklift to remove..

  • AuQld on 09/08/2023 - 13:11

    Hi well all the staff was let go and none of them received their annual leave, payment in lue of notice in their final pay and their super was also not paid during their time employed under voluntary administration. I was under the impression that this would be paid by the administrators as they were in control of the company during this time.

    Fair work has not been helpful and seems to job want to close down complaints, their final answer was that the company has now been liquidated and so there is nothing they can do. ASIC don't seem to answer questions just provide links to their website with generic answers.

    Does anyone know if the Administrators should be paying this as they were in control of the company when these employee entitlements were accrued or have all the staff who cant access FEG screwed again..

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