COMPANY LIQUIDATION LEADS TO UNPAID EMPLOYEE WAGES
When a company goes into liquidation, employees are often left without their hard-earned wages. But the Australian government has a guarantee in place to cover these funds when Australian businesses can no longer pay their dues. Menzies Advisory was brought in to assess the stores which were owned by Doughnut Time and identify whether or not the company would be able to provide the funds needed to meet all unpaid employee wages.
This clipping is from 13 March 2018 of The Sydney Morning Herald. Click here to read the full article.
Doughnut Time workers to miss out on unpaid wages as sale deal collapses
Sacked Doughnut Time employees still chasing thousands of dollars in unpaid wages will likely have to go to the federal government for the money amid reports a deal to save remaining stores has fallen through.
Foreign workers could miss out entirely because the government guarantee is only available to Australian citizens.
Eight Doughnut Time companies and ice cream sandwich business Mister Fitz’s Finest Ice Cream were sent into liquidation on Friday, including one which appeared to control a Queensland store previously slated to remain open.
The same day, Victoria state manager Vanessa Gaddi-Chmielewski told workers the entire company would be liquidated, the ABC reported.
Fallen hospitality entrepreneur Damian Griffiths had earlier told Fairfax Media he would sell seven remaining stores, down from a high of almost 30, to his former CEO Dan Strachotta.
“I just received the news from Dan that the deal with the new company has been blocked by Damian,” Ms Gaddi-Chmielewski wrote on Friday.
“He will not sign the Doughnut Time trademark to Dan.
“As a result, the entire company will go into liquidation — including the stores that Dan was supposed to take over. The sale has not been completed.”
Michael Caspaney from Menzies Advisory had been assessing the state of the stores in liquidation ahead of sending out a report to creditors later this month.
On Tuesday, he was still waiting for a report from the companies’ external accountant and could not say with any certainty what stores the liquidated entities related to or how much money was owed to how many creditors.
But MrCaspaney did note the liquidation was unlikely to produce a dividend, leaving unpaid staff and any other unsecured creditors out in the cold.
“If there’s no dividend, the unsecured creditors have to write those moneys off,” he said.
“With employees, there is a government scheme called FEG, the fair entitlement guarantee.
“If the claim is valid it pays three months of unpaid wages and any annual leave and long service entitlements that are verified.
“It doesn’t pay any superannuation.”
The FEG was most recently drawn on when mining magnate Clive Palmer’s Queensland Nickel refinery collapsed, leaving 800 workers owed almost $70 million.
Critically, the guarantee is not available for foreign workers, which some staff have estimated could make up as much as half of the company’s workforce in some areas.
Some former workers have started an online fundraiser in an attempt to raise money for those who can’t be reimbursed.
It was unclear how many of Doughnut Time’s dozens of unpaid workers were associated with the businesses in question.
“The only way that they get their full entitlements and super [from the company] is if there’s a large recovery but that doesn’t appear likely at this stage,” Mr Caspaney said.
Neither founder Damian Griffiths nor new owner Dan Strachotta responded to questions about the liquidation.
Mr Griffiths previously told Fairfax Media about 60 workers were owed money across Doughnut Time stores and the Fair Work Ombudsman confirmed it was looking into the matter.
The Australian Securities and Investments Commission’s Insolvency Notices service
listed nine Doughnut Time-related companies within the 45-year-old’s former empire as being in liquidation but several more remain registered.
The Victorian manager’s comments appeared to suggest the other stores were also covered.
Among those in liquidation is Doughnut Time Mermaid Beach Pty Ltd, which appears to be linked to the Mermaid Beach store Mr Griffiths said would remain open.
The Clayfield store, also previously slated to stay open, was closed on Wednesday, with a For Lease sign in the window.
Mr Caspaney was due to send a report to creditors within 10 business days of the liquidation process starting, with a creditors’ meeting likely to follow.
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Registered Liquidators are experienced accountants, licenced and regulated by the Australian Securities and Investments Commission (ASIC). They are appointed to take over the running of insolvent or failed companies and oversee the final period before all affairs are finalised and the trading body is dissolved. Registered Liquidators must be appointed in the event of a Creditors Voluntary Liquidation to resolve any debts accrued by the company in the most efficient way possible. A Creditors Voluntary Liquidation (CVL) is the most common liquidation appointment type. In the event of a company entering insolvent external administration through CVL, it is the task of a Registered Liquidator to manage the finances and affairs of the body in a fiduciary capacity. After an Extraordinary General Meeting between the shareholders of a company, a Special Resolution will be passed which symbolises the instigation of the process by which the company will be wound up: liquidation. The directors, creditors and shareholders then step away from the organisation which has entered liquidation and their responsibilities are passed to a Registered Liquidator. This professional winds up all ongoing affairs which can include the collection of any outstanding debts and the disposal of company-owned assets. A Registered Liquidator must provide a document titled Consent to Act as Liquidator before they are appointed. Throughout all liquidations, the Registered Liquidator must file relevant documents with ASIC as well as providing ASIC with their yearly return. This enables the Commission to ensure only the highest quality of Registered Liquidators are operating and providing services throughout Australia. ASIC keeps a Register of Liquidators under the Corporations Act 2001 upon which every person is provided with a Registered Liquidator Number. In order to be registered, the person must demonstrate their relevant qualifications, experience, abilities and knowledge. Each registration is valid for 3 years, after which the Liquidator must reapply to maintain a valid license. All Registered Liquidators hold an accountancy degree as well as valid membership to the Institute of Chartered Accountants and/or CPA Australia. In the event of an organisation becoming insolvent, the appointment of a qualified, experienced and professional Registered Liquidator will ensure the subsequent process of winding up the company is completed correctly and responsibly. A Registered Liquidator is capable of completing this complex task efficiently and with minimal unnecessary stress to the directors and shareholders. For more information, contact Menzies Advisory Liquidators & Receivers where our Principal is a Registered Liquidator, Official Liquidator and has been a Certified Practicing Accountant for over 35 years.
Sometimes shareholders and company directors decide to cease trading despite the continued viability of the company. When this decision has been made, it is best to bring in external administrators to complete the Members’ Voluntary Liquidation process. By hiring qualified and experienced professionals, the process of finalising all company affairs, deregistering your company and the distribution of remaining funds amongst shareholders will be completed in a timely, commercially beneficial and legally correct fashion. While the terms ‘administration’ and ‘liquidation’ are most often associated with insolvent companies, it is also possible for the affairs of solvent companies to be wound up in this matter. There are various reasons why a business may choose to wind up rather than be sold as a going concern or continue trading. These include: Redistributing capital tax free Restructuring a company Business is no longer trading/required Bringing a company to its legal end – once deregistered it cannot be reinstated When a reason is decided upon, the majority of directors are obliged to sign a Declaration of Solvency form, stating the company is in a position to pay all existing debts within the upcoming year. Dormant companies may also be deregistered through this external administration process. Winding up a solvent company through external administration is easier and simpler than an insolvent company because, by definition, the company is in a position to repay any and all outstanding debts. 75% of company members are required to vote in favour of bringing in an external administrator at a meeting in regards to the Special Resolution. Once a company has entered the Members’ Voluntary Liquidation, the company can begin to be wound up by an external administrator. The appointed administrator will meet with any creditors and take care of any legal paperwork with the court, government and ATO. Once a company has been wound up, the remaining value of the assets can be distributed among shareholders. At this point the company will be legally deregistered. The external administrator is, by definition, independent and impartial. Their sole task is to preserve the company’s assets, comply with all legal obligations and return all funds to creditors and/or shareholders. Therefore, the external administrator cannot be someone with a conflict of interest or some form of duty within the company itself. Impartiality ensures the correct protocols are followed and the liquidation is completed in compliance with all laws. If you are considering placing your solvent company into voluntary external administration, contact Menzies Advisors today and find out more about how our expert liquidators and administrators can help wind up your company as quickly and commercially successfully as possible.
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
Menzies Advisory in Gold Coast Brisbane Melbourne and Sydney are specialist Liquidators
