Future of major childcare operator HEI Schools Australia under a cloud

The childcare centres are at risk of shutting down, after several entities under popular Finnish curriculum-based childcare operator HEI Schools Australia collapsed into administration.

A cloud hangs over the future of childcare operator HEI Schools Australia after several entities under the company collapsed into administration. Picture: Facebook

A cloud hangs over the future of childcare operator HEI Schools Australia after several entities under the Finnish curriculum-based company collapsed into administration.

Nine Victorian childcare centres are at risk of closure, with insolvency experts from WLP Restructuring now operating HEI Schools Group after being appointed administrators last month.

WLP partners Nicholas Charlwood, Alan Walker and Glenn Livingstone are sifting through the financial details of 16 entities that own and operate 11 centres across Victoria and New South Wales.

A WLP Restructuring spokesperson told the Herald Sun the administrators were assessing the financial position of the business, with an urgent sale process underway to find a buyer for one or all of the centres.

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

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

“The administrators are working closely with centre directors and managers, parents, staff, and stakeholders, and we appreciate their patience and support.”

The companies under administration include Victorian HEI centres located in Brunswick East, Dandenong North, Ballarat, Emerald and Waurn Ponds.

A new centre under development in Kew is not listed as being in administration, records lodged with the Australian Securities and Investments Commission show.

It’s understood the centres are owned by parent company Finnish Early Childhood Education (Australia), which trades under the HEI brand and is majority owned by Hong Kong-based investors.

Also on the list of entities under administration is ILO Early Learning Australia – another Finnish early education brand – including Victorian ILO centres in Kurunjang, Ballan, Norlane, Longwarry and Hampton Park, which has since been shut down.

There are more than 320 workers employed by the group under administration, minutes from a creditors meeting lodged with the corporate regulator reveal.

“Employees of the entities that continue to operate early learning centres will continue their employment with the centres as usual during the administration,” Mr Walker said.

“There are a small number of employees who were either made redundant at the beginning of the appointment or had their contracts amended to reduce costs.”

The companies under administration include Victorian HEI centres located in Brunswick East, Dandenong North, Ballarat, Emerald and Waurn Ponds. Picture: Facebook

Mr Walker said initial estimates for total liabilities across the group totalled $10m.

“The administrators have been advised by the director that he made the decision to appoint administrators due to the unpaid statutory demands received, which might lead to winding up petitions concerning several entities within the group,” he said.

Mr Walker said each entity was legally separate, with sale proceeds and creditors debts being considered on a stand-alone basis.

HEI centres are known to incorporate Finnish early childhood education concepts, listing the University of Helsinki as its academic partner.

“We view the child as a whole person and take into account every part of the child’s development and wellbeing,” the organisation’s website says.

“We pay close attention to children’s socio-emotional, physical, creative and cognitive growth and character development.

“The HEI Schools curriculum supports children to be active agents in their own learning and development so that they learn to love learning.”

The Lara-based HEI Schools centre in Geelong was placed into liquidation late last year before being sold.

The centre, which opened in late 2019, has a capacity for 131 children aged from six weeks to five years old.

Mr Walker said initial estimates for total liabilities across the group totalled $10m. Picture: Facebook

It was sold to Vantage Education, which trades under the brand Kidscape, for $1.2m, the Herald Sun can reveal.

At the time of collapse the director listed employees as being owed more than $440,00, the majority in superannuation ($261,925).

The director listed 31 unsecured creditors being owed over $1.5m, including the tax office owed about $525,000.

A complex web of interrelated party loans were also detailed in Dye & Co liquidator Nicholas Giasoumi’s report, with four related parties listed as owing the Lara entity a total of $980,530.

One parent who had previously enrolled their child at the HEI centre in Brunswick East told the Herald Sun the business had only recently started taking enrolments, despite it having been built on the ground floor of the Ettaro apartment complex several years ago.

He claimed the delay in taking enrolments came as a result of a dispute with regulators, who raised concerns about fire safety and outdoor play space.

“Management at that centre told parents it would only be taking enrolments for around 25 children, despite the centre being designed for almost double that number,” he said.

Finland has long been recognised as a world leader in early education through a focus on encouraging “creative play” and the health and social and emotional wellbeing of children.

Various independent studies have found Finland’s education system to be the best in the world with students hitting top grades throughout their studies.

HEI Schools was contacted for comment.

Originally published as Future of major childcare operator HEI Schools Australia under a cloud