There was just $61 left in the company’s bank account and all its attempts to stay alive ultimately failed, leading to 150 staff being sacked on the spot.
A major plumbing company has quietly collapsed into liquidation, with all 150 of its employees losing their jobs on the spot because of its demise.
In March, Victoria’s largest privately-owned plumbing contractor Richstone Group Pty Ltd and seven related entities went into voluntary administration to urgently restructure the business.
The restructuring attempt ultimately couldn’t turn things around. News.com.au can reveal that on June 19, the company filed liquidation papers.
David Coyne and Peter Krejci of insolvency firm BRI Ferrier were the joint administrators and are now serving as its liquidators.
Documents submitted to the corporate regulator and obtained by news.com.au show that Richstone Group owes $22.399 million to creditors.
Despite the staggering figure, there was just $61 left in the bank when they took over the company.
The firm’s total assets are estimated to be around $10 million and unsecured creditors are expected to receive between 0 and 15 cents for every dollar they are owed.
Liquidators sold the “majority” of the company’s assets for $4.8 million, in a sale that the Supreme Court of Victoria approved.
In a casual note lodged with ASIC, Richstone’s liquidators stated that following a creditor’s meeting in June voting in favour of winding up the plumbing company, “150 employees had been terminated”.
Not only did staff lose their jobs, but they are also owed a substantial amount by their former employer.
According to the report, employee liabilities are estimated to be $816,000.
Of that, $16,000 is due from unpaid wages, $8,800 and $6,800 in superannuation and salary sacrifice, and then a further $96,141 from annual leave and long service leave entitlements.
On the company’s balance sheet, it appears to owe $5 million to the ATO.
However, liquidators said the ATO had submitted an even higher claim of $12.8 million, which could see Richstone’s debts climb even higher.
Richstone Group had been in operation since 2003 prior to its collapse as a commercial plumber with large contracts to building companies including Maxcon and Hickory Construction.
However, its financial statements show that since the Covid-19 pandemic hit, the firm’s viability as a business started to wither rapidly.
The liquidators said Richstone’s financial position “deteriorated significantly” from 2019 onwards.
By June 2020, it had racked up $16 million in deficits. But by the time of its collapse, this number had blown out to $50 million.
“Trade debtors decreased from $50 million as at 30 June 2020 to $2.6 million as at the date of our appointment, reflecting the company’s decline in trading performance during this period,” the report added.
The firm’s revenue went from $65 million in 2020 to just $25 million in the latest financial year, “which may reflect poorer market conditions, including the Covid-19 pandemic”.
Richstone Group appears to be another victim of Australia’s troubled building industry.
It attributed its failure to debts not being paid back in full as well as rising supply costs and increased market pressure.
Earlier this year, news.com.au revealed that another major plumber had gone bust, CDC Plumbing and Drainage, resulting in 197 people losing their jobs.
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