Ex-Toll executive’s Rivet Mining Services company collapses
As more Australian businesses go under, there are warnings that the past six months is only the beginning with things set to get worse.
Three Australian companies have collapsed in the past 24 hours with one involved in mining transport and the others responsible for property development.
It comes amid a chilling warning that a wave of insolvencies are about to hit Australian shores this year as the number of companies facing financial headwinds is likely to be significantly larger than during the GFC.
Transport company Rivet Mining Services (RMS), headed by former Toll boss Mark Rowsthorn, was placed into administration on Wednesday but the amount owed to creditors is not yet known.
It was one of the largest providers in bulk haulage and onsite services to mining companies in Western Australia and is the second transport company to fold this month.
Scott’s Refrigerated Logistics – which provided trucks for major supermarkets including Coles – plunged into receivership at the start of March with 1500 jobs lost.
FTI Consulting was appointed to handle the administration of RMS along with holding company Blondie Trading, of which Mr Rowsthorn is the major shareholder.
“Based on a preliminary assessment, it appears RMS has been deeply affected by a number of adverse economic factors including extreme weather events, project delays, labour shortages, and cost pressures,” FTI said.
“RMS will continue to trade on a business-as-usual basis while the receivers conduct an independent assessment of its financial position and seek to sell the business as a going concern.”
Blondie Trading’s last financial report lodged in 2020 said the company made a loss that financial year of $6.57 million.
But FTI said the objective of the appointment to Blondie was to take control of the group at a holding company level to ensure it is sufficiently capitalised and not adversely impacted by the insolvency of the RMS business.
The broader Rivet Group – which provides specialised transport and logistics, equipment hire and maintenance, contract mining and aviation services – were not impacted, according to Chris Hill, Vaughan Strawbridge and Hayden White from FTI.
“The other group businesses will continue to trade in their usual manner and have the ongoing support of their senior secured lender to ensure that customers, suppliers and employees are
not adversely impacted,” they said.
“The isolated appointment to RMS is as a result of financial difficulties experienced in that businesses, which have resulted in the need to appoint voluntary administrators and receivers.”
Meanwhile, an embattled Sydney property developer has been dealt a blow after he placed two of his companies into receivership.
Insolvency firm KordaMentha has been appointed as the receiver and manager of the firms run by Jean Nassif.
The companies are responsible for the giant Skyview apartment complex in Sydney’s north west.
Tenants were initially barred from moving into the 900 unit block built by Mr Nassif in Castle Hill after signs of cracking were found in the complex’s basement.
“The Castle Hill project is partially completed, with two of its residential towers occupied and three towers still under construction,” KordaMentha said.
“The receivers advised work will cease at Castle Hill, while the site is secured, to ensure it is safe.
“They will work with creditors and stakeholders to determine a strategy to enable construction of the remaining three towers as expeditiously as possible.”
Alarm bells have been sounded that the financial uncertainty facing Australian businesses across all sectors is only just beginning and will exceed the worst of the global slowdown in 2008, according to partner Scott Taylor at Australian law firm Taylor David.
“In many ways, what we’ve seen over the last six months is the tip of the iceberg,” he said.
“When you start seeing global banks getting anxious, being sold off or collapsing, it’s a clear indication of wider uncertainty, with more to come.”
“What happens is that people become nervous and start selling down. Term deposits are generating a more certain yield than the stock market. Global markets have been struggling since the middle of last year, and they still have a long way to go. Consumer confidence has declined.”
Mr Taylor said he expects the impact of insolvencies to be felt across most sectors and particularly in construction, manufacturing, and logistics.
The construction sector has been particularly shaken this year including by the collapse of a multimillion dollar firm PBS building, which had a foothold across three states.
Others to go under include Queensland-based National Construction Management and Brisbane-based residential builder Pantha Homes Pty.
In NSW, Allworks Building Pty Ltd failed, while Sydney building company Ajit Constructions finally went under into liquidation earlier this month.
But as Mr Taylor flagged a number of Australian business have been forced into administration including In2Food group, a fresh food distribution company that went bust for a second time in less than two years with up to $20 million in debt and 1000 creditors owed money.
Restaurants have also been hard hit with a popular bar and burger joint in Melbourne’s inner city forced to shut down as post-Covid woes continue to bite the hospitality industry, while a beloved Sydney beachfront cafe went bust following almost two decades of operation.
Cost of living woes also hit local institution Caruso’s Italian Restaurant in Gymea in Sydney’s Sutherland Shire, which was forced to close its doors.
Mr Taylor added interest rate rises, inflation and cost of living pressures were all starting to have a downstream impact on the Australian economy leading many businesses, big and small, to cut back or close entirely.
“Additionally, over 50 per cent of household fixed-rate mortgages are estimated to expire in 2023. These increased mortgage repayments will have a significant impact on households and the wider economy” he said.
With the Covid-19 rescue package payments and tax concessions at an end, the real financial impact of the post pandemic period had started to hit the balance sheets of all businesses, he noted.
“The Australian Taxation Office quite rightly showed some leniency during the Covid-19 period, however there are many businesses that have not paid tax for the last two years,” he said.
“With the ATO now back in enforcement mode, it’s inevitable that many of these businesses will be turning off the lights for good. In a practical sense, there are consequences for business owners who have swept their financial turmoil under the rug.”
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