Manufacturer, health care group and NSW resort in receivership as collapses surge

A South Australian manufacturer, a hospital group with operations in New South Wales, Victoria and Queensland and a resort in the Blue Mountains are the latest victims of what insolvency experts are calling a surge in company collapses.

Vantage Performance managing director Michael Fingland and JP Downey principal Jim Downey have both reported a spike in inquiries since the middle of February and also point to a surge in the number of collapsed businesses being advertised for sale in national newspapers.

“I certainly believe this is the surge that we have been predicting for some time now,” Fingland says.

“There are a lot people heading for us at the moment,” Downey agrees.

A number of factors are contributing to the surge in collapses.

The first few months of the year typically see the largest numbers of insolvency actions, as the seasonal summer cashflow crunch forces struggling companies to the wall.

Downey has noticed a sharp increase in activity from the Australian Taxation Office. After helping many struggling firms through the downturn with debt agreements and interest holidays, Downey is seeing the ATO send out a growing number of director’s penalty notices (which make director’s personally liable for tax and often trigger administrations) and launch winding up action against creditors.

“I think the ATO’s hand has been stayed a little bit, probably with orders from above, but I think that’s less so now,” Downey says.

“They are going to have to bit of catching up do, because things did get out of hand a bit, as they always do.”

Perversely, the recovering economy may also be adding to the spike in collapses, according to Fingland. Improved credit conditions means banks are more likely to put a company into receivership because they know they will get a return.

“Distressed assets are being release to the market because other companies can raise finance to actually buy them.”

The latest three collapses highlight how the surge in collapses is hitting a range of industries.

South Australian manufacturer NuKorc, which is the world’s second largest manufacturer of synthetic wine closures, has been offered for sale by administrators PPB after collapsing into administration last week.

The company, which has been in business for 10 years, has subsidiaries in the US and Spain, although these are not under the control of administrators.

Administrator Mark Hall said yesterday the company has been hit by the downturn in the wine industry and the strong Australian dollar.

Another company on the sale block is the Owen Ferguson Health group, which ran the Canada Bay Private Hospital in Sydney, Lismore Private Hospital in northern New South Wales, the Pioneer Valley Hospital in the Queensland town of Mackay and the Cliveden Hill hospital in East Melbourne.

Receivers from Ferrier Hodgson were appointed to the group last week after the owner of the Melbourne hospital revealed he was having trouble collecting rent.

The Lismore hospital was closed on Friday, with more than 40 staff laid off.

Finally, receivers from Deloitte are attempting to sort out the affairs of the York Fairmont Resort in the Blue Mountains, which also fell into receivership last Friday after the Commonwealth Bank called in the corporate undertakers.

According to reports, the property is currently on the market, although two recent attempts to sell the iconic property have failed.