Unsecured creditors unlikely to get a return from collapsed cleaning giant Reflections Group

The bulk of the 3,500 staff of collapsed cleaning giant Reflections Group will keep their jobs after the defunct company’s contracts were put out to tender, but unsecured creditors are unlikely to receive a return as the business now has no tangible assets.

Reflections Group, which collapsed in early August, was one of Australia’s largest contract cleaners, providing cleaning services to more than 450 sites on a daily basis, including an estimated one third of all shopping centres.

The company had revenue of $150 million a year and about 3,500 staff.

While receivers KordaMentha had originally hoped to sell the business as a going concern, this did not prove viable.

Over the last three weeks, the company’s contracts have been re-tendered, with bidders asked to agree to re-employ staff where possible.

While the tendering process has worked well for staff, the news is not so good for unsecured creditors, the bulk of which are cleaning products distributors and suppliers.

Jack Juresko of insolvency firm JP Downey and Co, which was appointed as the company’s administrators prior to the appointment of receivers, confirmed the company would be liquidated with little prospect of a return for unsecured creditors.

Juresko says that without its contracts, Reflections Group does not have much in the way of tangible assets.

Gerry Goldberg, president of the National Cleaning Suppliers Association, says his members that have been affected by the collapse are largely resigned to not receiving a return from the liquidation process, but warns the ripple effects will be felt throughout the industries.

Goldberg, who also owns and runs a cleaning supplies manufacturer called Pall Mall Manufacturing, says he is already encountering distributors having trouble paying their bills, but says it is too early to say whether companies could go to the wall.

“To some suppliers, $200,000 is a lot of money and they will fight. But to other people, $100,000 is enough to send them broke. But some of our customers are already struggling to pay.”

Goldberg says industry scuttlebutt suggests Reflections Group’s total debts could be as high as $50 million, which has many in the sector asking what happened in the lead-up to the collapse.

“There is a lot of money at stake here. The question is, what happened to the $50 million?”