Debts of monster manufacturing group of businesses explode to $78m
It’s a business you probably haven’t even heard of, but is shaping up to be one of Australia’s biggest corporate failures for the year after a sensational collapse.
Companies
Don't miss out on the headlines from Companies. Followed categories will be added to My News.
EXCLUSIVE
It’s a business you probably haven’t even heard of, but is shaping up to be one of Australia’s biggest corporate failures for the year.
The debts of a collapsed group of manufacturing companies based out of a Western Sydney factory have snowballed as liquidators wade through the mess.
In the past few months, 12 companies linked to Sydney-based cabinet making and panelling factory GDK Group have gone into liquidation.
Some of these businesses were named after obscure Lord of the Rings references, “confusing” some staff members and leaving them unaware that some of the companies were in operation.
Four of those businesses now owe an eye-watering $48.7 million to 159 creditors, liquidators have just told news.com.au.
That is on top of $29.8 million that another company linked to the group already owes.
As a result, the total debt figure of the GDK Group of companies now stands at more than $78 million.
News.com.au understands GDK had a number of high profile jobs with well-known companies, including supplying acoustic panelling to Canberra’s law courts, Sydney Dance Company and the Lyric Theatre, and panelling to the NRMA’s head office and Huawei’s offices in Sydney.
All of GDK’s staff were brutally sacked right before Christmas, leaving some in tears and many out of pocket.
Emotions ran high, with one worker telling news.com.au at the time “it was very sad to see grown men crying”.
The last remaining entity of the defunct business group, Joinery Manufacturing Solutions Pty Ltd, was ordered into liquidation in early February over a $315,000 tax debt.
Liquidators from insolvency firm RSM Australia were appointed to wind up the business.
RSM Australia had previously been appointed to oversee the liquidation of four other related companies – GDK Group Pty Ltd, GDK Holdings Australia Pty Ltd, GDK Projects Pty Ltd and Belegaer Pty Ltd – in December.
When they were first appointed, their initial estimates put the debt of those four companies at $15 million.
But deeper investigations in the following months has seen that figure explode by three times the original estimate to come in at $48.7 million.
An RSM Australia spokesperson said they had identified at least 50 staff owed money from unpaid employee entitlements.
Tristana Steedman, of RSM, said she had referred the current and former director of the business to the corporate regulator, ASIC, for failing to comply with her demands.
Do you know more or have a similar story? Get in touch | alex.turner-cohen@news.com.au
We “do not have a current list of all the companies’ assets. This has impeded our investigations and ability to identify any potential unencumbered assets for realisation or recoveries,” Ms Steedman wrote in a report lodged to ASIC.
Failure to provide this information is an offence under the Corporations Act 2001, Ms Steedman noted.
She also noted that the companies appeared to have been trading insolvent since at least July last year.
“As a result, the current and former company directors could potentially face recovery actions for up to $5 million resulting from insolvent trading,’’ she said.
“However, additional funding would need to be secured from creditors, ASIC or a litigation funder to continue investigations into these potential recoveries and any other breaches of the Act.”
Nicholas Kalikajaros and Nikolas Simic, the current and former directors respectively linked to the companies, did not respond to requests for comment.
At its height, GDK Group generated a monthly revenue of $3.6 million and had more than 100 employees.
News.com.au previously reported that 12 businesses linked to the group had entered liquidation.
And in a bizarre twist, several of the companies have been named after obscure references from the iconic book series The Lord of the Rings, such as Himlad, Hithlum, Thargeliou, Belegaer, Ossiriand, Nevrast, Dorlomin and Avernien.
The strange business names left one staff member, who is owed $25,000 from unpaid superannuation, “confused” and unaware of some of the companies.
In May, Himlad Pty Ltd, linked to the GDK Group of companies, went into voluntary liquidation with debts of $29.8 million, according to a statutory report filed with the corporate regulator.
Although the liquidator of Himlad, Daniel Quinn, did not respond to requests for comment, his report to ASIC indicated that staff are owed $2.1 million, including $885,000 in unpaid superannuation.
All workers’ payroll and leave entitlements switched over to Joinery Manufacturing Solutions Pty Ltd.
Since then, the tax office has forcibly wound up multiple other companies in the Federal Court.
In July, three other companies went into voluntary liquidation – Nevrast Pty Ltd formerly trading as Imprint Furniture, Dorlomin formerly trading as Imprint Systems and Avernien Pty Ltd formerly trading as GDK Ventures. Liquidation reports say these companies were part of the GDK Group.
At the end of November, the Federal Court ordered two more companies to go belly up and Henry McKenna of insolvency firm Vincents was nominated as the liquidator.
Hithlum Pty Ltd formerly known as GDK Group (Global) Pty Ltd was ordered to go into liquidation due to unpaid tax debts of $261,000 while Thargeliou Pty Ltd formerly known as Imprint Street (Australia) Pty Ltd had $90,000 in unpaid taxes.
In early December, Ossiriand Pty Ltd was ordered to go into liquidation. The liquidators Alan Hayes and Wayne Marshall of Hayes Advisory have been contacted for comment.
Another slew of businesses collapsed by court order several days later – GDK Group Pty Ltd, Belegaer Pty Ltd, GDK Projects Pty Ltd and GDK Holdings.
alex.turner-cohen@news.com.au
Originally published as Debts of monster manufacturing group of businesses explode to $78m
Company with just $3 in the bank collapses
One company had just $3 left in its bank account when it went under, while a business providing services was forced to sack staff after its bill went unpaid.
Shock in $561 million ‘Ponzi scheme’ collapse
A real estate agent has to personally pay back $7.4 million after encouraging a Sydney family’s involvement in a dodgy property investment opportunity.