Hospitality crisis underlined in latest SA insolvency figures

The hospitality crisis is underlined in the latest SA insolvency figures, with two Adelaide eateries falling into liquidation – as liquidators also look to sell a sand supplier.

Administrators are looking for buyers to take over a sand-mining and supply operation in Adelaide’s north following its collapse which has left creditors chasing close to $6m in unpaid debts.

Dry Creek-based Sloans Sands and related companies All Purpose Sands and Trenel own two quarries at Sandy Creek and Lyndoch, and a sand-washing plant, supplying their sand products to foundry operators and other industrial users across the state.

However all three are now in administration following a fall in demand from a major customer.

Stuart Otway from SV Partners said a formal sale process for the business group would begin this week in a bid to continue operations.

“They (company directors) put a new sand-washing plant in, which enabled them to supply to a glass bottle manufacturer just down the road,” Mr Otway said.

“However that major customer decreased their requirements this year, and so the cash flow took a major hit.”

The companies were among 31 business insolvencies reported in South Australia in April, down slightly from the 34 administration and liquidation appointments in March, but up from 24 in April last year.

The crisis facing the state’s hospitality sector was again evident, with Japanese restaurant Kosho in North Adelaide and Foam Coffee in Rundle Place both closing after falling into liquidation.

The dining room at Kosho, North Adelaide

Prawn dumplings at Kosho, North Adelaide

Mr Otway said cost of living pressures continued to pose a challenge for cafes, restaurants and other hospitality operators, particularly in the CBD.

“Cost of living is probably the reason for many of the restaurants, the cafes, and those sorts of businesses finding it tough at the moment,” he said.

“But really each case is unique as to why they’re not doing well. If you look at the CBD there’s not too many cafes actually opening up, so that tells you how difficult things are.”

Other business insolvencies in April included electrical contractors, plumbing businesses and Torrensville-based Titan Steelfixing, which provided steel fixing services to major civil, commercial and residential projects before it ceased trading late last year.

Leigh Prior from Agile Business Advisory said that while the construction industry had stabilised in recent months following a surge in labour and materials costs, the flow on effect from previous business failures was still being felt across the industry.

“The building industry seems to have stabilised but that’s not to say that suppliers to the building industry who were caught out have fully recovered from the Felmeris, the Qattros,” he said.

“The ATO is certainly more aggressive in its collection activities, both in relation to companies and directors personally.”

Mr Prior was recently appointed to wind up Section Six Architects, which designed major developments including defence giant Kongsberg’s $25m manufacturing headquarters currently under construction at Technology Park in Mawson Lakes.