The appointed liquidator of Whirlwind, Andrew Hewitt of Grant Thornton, has confirmed to Australian Printer that almost all of Whirlwind’s assets had been sold prior to liquidation.
All that remains are a couple of items of leased equipment, where the payout on the lease was more than what the equipment was worth, a vehicle in Sydney and some small ancillary items, according to Hewitt.
For the creditors of Whirlwind, the only remaining opportunity to see money returned is through the debtor finance facility that was in place. Once the financier has recovered the money it has advanced against the debtors, the remaining amount in the fund can be divided amongst creditors.
Hewitt explains, “The company’s debtors were funded through a secured creditor.
“This means the company, if it generates an invoice for $100, it then lodges that with the funder, and receives around $80 upfront from them. When the debtor pays the $100 owed to the company, the bank is paid the $80 they have funded and then the company receives the remaining $20.”
Essentially, debtor finance allows companies to secure cash flow by using the accounts receivable ledger as collateral.
Hewitt says, “Once the secured creditor has been paid their entitlements under the debtor finance facility, the balance of the ledger is given back to me as the liquidator.”
Staff however, will need to be paid their entitlements through the FEGS scheme, with the liquidators currently assisting them.
Hewitt has been looking into the company for the past week, and when asked about the sale of assets, he said, “My role is to ensure that there was valuable consideration paid for the assets that were sold.”
CMYKhub was the purchaser of the Whirlwind’s equipment, and also offered employment to 50 staff members, while taking on orders still owed by the company, without charge.
Dayne Nankervis, chief operating officer, CMYKhub, says, “The changeover of the production site in Knoxfield is now completed, and it is fully-capable as a CMYKhub facility. It is an additional factory for CMYKhub to use, which we are now pushing work onto. It is expanding our capability, and giving us a lot more capacity.”
The liquidator has told Australian Printer that the early indications are that the purchase of the assets was made at a fair rate, and that the money was used to pay back secured debts.
In Hewitt’s view, “The assets were sold to a competitor at a valuation that was provided by an accredited valuer, and had the approval of Whirlwind’s secured creditor, who held a charge over the assets.
“I do not expect that transaction will be overturned. The bank consented, if they could have got more, I am sure they would have.
“Part of the investigation is to determine when the company became insolvent, and if the directors can be liable for anything that occurred. That is part of our responsibility and we will be reviewing that in due course.”
Hewitt anticipates that will take three months to determine.
Australian Printer has spoken to Andrew Cester, Whirlwind CEO, about what led the company to liquidation, on two occasions. He had pointed to the purchase of high-end printer Lindsay Yates, along with a cyber-attack, and poorer than expected sales performance, as driving its decline.
Speaking on the difficulties of seeing a 23-year business go under, Cester told Australian Printer, “I have to take responsibility for it going wrong and I do.”
Speaking on the liquidation process for print companies broadly, Hewitt says, “Print businesses tend to have high levels of capital equipment that is costly to acquire, but when sold in a forced situation the value drops.
“If you bought a machine for $100k, you will not get that much for it. You often find the realisable value is less than the book value.
“They are generally family-owned businesses, generational, and the industry has changed significantly, those with capital equipment are finding it harder and harder to get a return on that equipment.”
No doubt, this is driving the trend of more businesses moving to the print-broking space, where there are less liabilities between employees and equipment.
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