Former Scott’s Refrigerated employees should soon be eligible for millions in entitlements

Former Scott’s Refrigerated staff who are owed millions of dollars should soon become eligible for payments for unpaid entitlements.

Scott's Refrigerated collapsed in late February.

Scott’s Refrigerated Logistics is likely to be formally liquidated early next month, triggering millions in unpaid entitlements which are owed to its 1500 or so former employees.

The company, which was the nation’s largest refrigerated transport and logistics firm, collapsed in late February, leaving about 1500 employees owed an estimated $15m-$25m.

Documents lodged with the corporate regulator ASIC indicate that some employees are owed in the vicinity of $80,000 while many are owed tens of thousands of dollars.

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Once the company’s creditors vote to liquidate it - which will likely happen at a meeting to be held on April 3 according to administrator Shaun Fraser from McGrathNicol - the federal government’s Fair Entitlements Guarantee Scheme (FEGS) will be triggered.

This means the government will step in to make good on the entitlements owed to former employees, including annual leave and redundancy payments.

Mr Fraser said the book value of employee entitlements was about $15m, but this had not factored in redundancy payments.

Mr Fraser said there had already been engagement with the FEGS which would then facilitate payments to former staff.

It can typically take up to 16 weeks for payments to flow through, Mr Fraser said.

“We have already started the process of trying to calculate employee entitlements, redundancy entitlements and we’re engaged with FEG,’’ Mr Fraser said.

“That process has kicked off on the expectation there will be a liquidation and they will get paid by FEG.’’

Mr Fraser said it was highly likely the company would be liquidated, with no other options on the table currently.

“There’s no other option really, no one had put forward a deed of company arrangement,’’ he said.

Mr Fraser said the company had been quite up to date on its superannuation payments.

Scott’s was the largest provider of refrigerated logistics to the nation’s major supermarket chains before collapsing into administration in late February, with debts owed to unsecured creditors of about $75m.

Mr Fraser, at the first creditors’ meeting held earlier this month, attributed the group’s collapse to the costs of maintaining an ageing fleet, “uncommercial customer arrangements”, disruptions from a software upgrade, the Covid-19 pandemic and extreme weather.

A buyer was unable to be found for the business, which was owned by private equity firm Anchorage Capital Partners, however fellow logistics company Lindsay Australia bought a substantial portfolio of the group’s assets including trucks, containers and rail containers.

Mr Fraser said it was unlikely the unsecured creditors of Scott’s would receive any payments.

“It’s unlikely but we don’t know until the receivership wraps up,’’ he said.