Aussie chain in trouble with $17.5m debt

A company that offers an essential service and employs more than 320 Aussies has been forced to call in administrators.

An Australian childcare chain’s future is being questioned, with panicked parents pulling their children out of one centre as they fear the service is about to go under.

The company is facing debts estimated at $17.5 million and 320 jobs are at risk.

The chain, which has centres in Victoria and New South Wales, was placed into administration in February.

It trades under the names HEI Schools as well as ILO Early Learning. The news comes at a time when another childcare chain with at least 27 sites around Australia has seen mass resignations and staff walking out over unpaid wages.

Parents were informed on 10 March that an “urgent assessment” of HEI Schools was being undertaken, leaving them stressed about whether centres will remain open.

An example of a HEI Schools childcare centre. Picture: Supplied

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Kids are already being pulled from the centre’s Waurn Ponds site, which is located in the south of Geelong.

One parent, Greg* said the Waurn Ponds centre was being built during Covid and once opened there had always been a high turnover of staff, with very little or no notice that they were leaving.

But he said there had never had been “any rumblings there were financial problems in the background”.

Greg has two kids in the HEI Schools site at Waurn Ponds and said the couple had been left scrambling to find alternative care for their 4-year-old and 18-month-old children.

His wife in particular was “tearing her hair out” with the stress of touring and trying to find a place for both kids as she looks to move from three days back to full-time work.

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Centres are still operating but parents are worried about the future. Picture: Facebook

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They now know of at least two other families that are pulling their children out of the Waurn Ponds centre.

“I’m sure most people are smart enough that they are looking at alternative options because if it does fall over you are at the back of the line for a placement,” he told news.com.au.

“It’s very stressful because there is so much unknown. I sympathise with staff as they are in same boat, because if kids keep pulling out it puts their positions in jeopardy, and they have been fantastic supports for our kids and the centre director has been very good with communication, so you feel for them.”

However, he said the Waurn Ponds site lost its four-year-old kinder government funding this year for “unknown” reasons.

This would have meant the family would have been left $2000 to $3000 out of pocket so they had already moved their four-year-old to a different centre for some days.

Greg believed the centre’s woes would put a “squeeze on services” in the area and the couple wanted to be on the “front foot”.

320 jobs are at risk. Picture: Facebook

But he has been left confused by what has gone wrong when the early childhood sector is so in demand in Australia.

“There is a lack of centres being opened,” he noted. “If you look in Geelong our population has increased substantially and we’re not seeing that from a childcare perspective opening. We built in one of largest growth areas in Victoria and it’s one of the largest estates with about 20,000 to 30,000 people and there are only three or four daycare centres.”

The voluntary administration covers 16 entities including 11 centres that are operating.

These include regional Victorian sites in Dandenong North, Ballarat and Emerald, Charlotte in Brisbane’s CBD, Gosford on the Central Coast in NSW, St Leonards in the north of Sydney, as well as Brunswick East in Melbourne.

All these centres were trading under the HEI Schools brand. Its concept is “inspired by Finnish early childhood education which enhances the child’s perspective and active participation, curiosity and creativity as well as embodying the importance of play and exploring”, the website states.

Eleven centres are impacted. Picture: Facebook

Other centres in administration include Kurunjang in Melbourne, Norlane in Geelong and the regional Victorian town of Ballan and Longwarry. These sites were under the ILO Early Learning brand.

Alan Walker, Nicholas Charlwood and Glenn Livingstone from WLP Restructing have been appointed as administrator.

The administrator’s focus now is on the sales process, which is progressing well, with negotiations underway, news.com.au was told.

“All childcare centres within the network continue to operate as usual with no anticipated change to care services, resources, operating hours or staffing,” the administrators said.

“The priority of the administrators is to ensure continuity of care for families and stability for staff while the process is undertaken.

“The administrators are working closely with centre directors and managers, parents, staff and stakeholders, and appreciate their patience and support. This collaborative approach has helped ensure occupancy levels are unaffected across centres, and we will continue to engage with parents throughout this process.”

A letter from Mr Walker obtained by news.com.au sent earlier this week urged parents to continue to support the centre.

“We understand that you may have concerns regarding this process. However, we kindly ask for your continued support of the centre and the dedicated centre directors, educators, carers and staff who work tirelessly to provide a nurturing environment for your children,” he wrote.

Meanwhile, documents filed with the corporate regulator show that more than 320 people are employed under the group.

The HEI Schools early learning centre in Lara, which has been sold after it went into liquidation. Picture: Supplied.

Mr Walker said in his letter to parents the urgent assessment of the company was to “stabilise and preserve the business of the centre to ensure that the educators can continue to provide care for your children into the future”.

“First and foremost, we wish to assure you that the dedicated director(s) and staff at the centre remain fully committed to maintaining the high standard of care they provide daily,” the letter read.

“The centre director(s) and their management teams will remain responsible for day-to-day operations and will work closely with us throughout the administration process. We are committed to maintaining transparency and will keep families informed regarding any developments and the reasons behind them.”

A new centre under development in Kew for HEI Schools is not listed as being in administration, according to ASIC, while another HEI Schools centre in the Geelong suburb of Lara was placed into liquidation late last year before being sold.

*Name has been changed

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Originally published as Aussie chain in trouble with $17.5m debt