92 Victorian companies call in insolvency experts in July

A new restaurant on Port Phillip Bay and a popular burger chain were among some of the businesses liquidated last month. FULL LIST

Hospitality was the hardest-hit sector on the liquidation front in Victoria in July, with one of Melbourne’s newest restaurants closing its doors, while experts are warning the tide could be turning on the tax office’s restrained approach to debt recovery.

Overall, there were 92 business liquidations in Victoria last month — 17 of which were related entities — down on 115 the previous month.

Among the casualties on the hospitality front was Dakota Dining, run by George and Sonia Brewty, which was set up late last year.

The Port Melbourne restaurant, overlooking Port Phillip Bay, offered a modern take on seafood favourites but was placed in the hands of liquidators, with about $120,000 owed to trade creditors.

Liquidator Renee Di Carlo said the pandemic was largely to blame, and the business was now up for sale.

Other casualties in the hospitality game included Goodie Catering, as well as the master franchisee for Burger Edge, with Burger Edge Franchising and Burger Edge IP put into liquidation by creditors.

Some Burger Edge outlets, such as the Wollert location, remain in business, however.

Shop fit-out company Hospitality Construction Pty was also liquidated, with the company, which claimed 20 years in the sector, saying it had worked across “hundreds of well-known brands in major shopping centres, franchises of restaurants, cafes and retail establishments in Melbourne and Victoria wide’’.

A waterfront Port Melbourne restaurant was placed in the hands of liquidators in July.

The company behind Nunawading-based Base Camp Kids, Icemice Pty Ltd, was placed in liquidation on July 13 with creditors voting to wind it up.

That business was an indoor children’s activity centre and playspace.

Travel agency The Travel Haven, based in Ringwood North, was placed in voluntary liquidation after more than nine years in business.

The company had previously advised its customers it had moved to being home based because of the pandemic.

Revive Financial partner Jarvis Archer said the ATO had until recently maintained a restrained approach to debt recovery amid the downturn caused by extended lockdowns.

But Mr Archer said the ATO was now seeking on time payment of debts, rejecting payment plan proposals and refusing requests to waive penalties and interest.

An indoor children’s play centre is among the Victorian firms to collapse in July.

Mr Archer warned that more small business owners were reaching the end of their cash reserves and director conduct was falling below expected standards.

“We’ve seen directors using available company assets to meet their personal expenses, and one director indicated they’re taking a ‘no rules’ approach to what they do,” he said.

“Adding to the desperation, many small business owners feel unfairly looked after by the government compared to big businesses.”

Mr Archer said company insolvency appointments last month were still only about 60 per cent of those seen in July 2019 as struggling businesses indicated they would seek to access government stimulus funds rather than proceed with insolvency appointments.

“We may be well into 2022 before we see insolvency appointments return to pre-Covid levels,” said Mr Archer.

Fellow insolvency expert, Meertens chief executive James McPherson said the real impact of the pandemic on insolvencies may not be known for a year or more.

“I’m not sure anyone will have a firm idea on that until 12 months’ time and once we get through this period of rolling lockdowns – my view is that many businesses have probably just left the keys on the table and walked away,’’ Mr McPherson said.

“I’ve spoken to a number of accountants ... and they all say the same thing – the money from the government has saved so many businesses – certainly saved the top end and I think businesses are still riding that wave.”

Originally published as 92 Victorian companies call in insolvency experts in July