New information has come to light about Starleaton business in the creditors report, which has been widely circulated throughout the local printing industry.
These are direct extracts from the Starleaton creditors report created by Andrew Blundell and Simon Cathro of Cathro & Partners.
- “Our investigations identified that the companies were likely insolvent from mid-2023, and possibly as far back as April 2021.”
- “There are transactions and intercompany dealings requiring further investigation, however due to the complexity of the insolvency analysis and the limited timeframe, we have been unable to estimate the value of recoveries at this time.”
- “There has been no Deed of Company Arrangement proposals received from any party in relation to either of the Companies. This means Liquidation is the only realistic option for the Companies.”
- “The administrators traded Starleaton in an endeavour to sell the business as a going concern and to maximise realisations from inventory. As at the date of reporting, a sale of the business or assets has not been finalised, although prospects remain.”
- “The reason for the failure of the business was a deterioration in trading performance, poor cash flow, funds tied up in inventory, poor strategic management, and loss of related party financial support. In the months leading up to appointment, the related party secured creditor indicated they were no longer willing to support the business and wanted the loan repaid. Whilst the directors sought alternative sources of funds, there were none available and attempts to sell the business ‘as-is’ were also unsuccessful.”
- “We consider the reasons for failure are: Inadequate cash flow and working capital; Trading losses depleting equity; Poor strategic management of the business including investing in new divisions requiring substantial working capital at a time when there were inadequate funds; Poor financial control including lack of accurate reliable financial information and records.”
- As at the date of appointment the operations of Starleaton Holdings included three divisions: Consumables (printing consumables including ink); Capital (planning and installation of large- and small-scale printing equipment); and Service (maintaining equipment – tied heavily to the Capital division).
- “These last few years we understand coincided with the business attempting to grow the Capital and Service divisions, which had a significant impact on the trading performance and working capital of the business.”
- According to historical financial analysis revenue grew by over $3 million between 2021 to 2023, peaking at $21.159 million, but due to an increase in total cost of goods sold, there was little change in the profit achieved. Over the same period wages and salaries increased from $3.6 million to $4.5 million, the cost of IT support and equipment doubled, and administration costs grew by 40 per cent causing overheads in the business to increase from $5.9 million in 2021 to over $7.3 million in 2023. While the business made a net profit after tax of $563,271 in 2021, it made a loss of over $1.5 million in 2023.
- Employees are estimated to receive between 17-100 cents in the dollar.
- Secured creditors are estimated to receive between 0-29 cents in the dollar.
- The estimated remuneration by the administrators is $572,576 – with $175,000 of this estimated to be generated from liquidation of the business.
The next creditors meeting will be held on Friday 23 February 2024.
