STARLEATON LIQUIDATED AS DOCA FAILS DUE TO NON-PAYMENTS
Stricken wide-format supplies business Starleaton has finally been placed into liquidation, with the company not making any of its $33,000 a month payments required under its DOCA for the past three months.
The former $20m a year family-owned business initially placed itself into voluntary administration in January last year, and then successfully gained its DOCA (deed of company arrangement) two months later.
Starleaton went into administration with debts totalling $17.5m, and with only $1.93m in realisable assets, unsecured creditors were facing the prospect of zero cents in the dollar on their outstanding invoices. Trade creditors were owed $3.56m
The Starleaton DOCA was supported by an $800,000 fund from company founders Peter and Leanne Eaton and from Starleaton Pty Ltd, the entity not in admin. Managing director Ben Eaton intended to allocate $33,000 a month for 24 months to get the business running again. He paid up, until February, when the payments from the fund suddenly stopped.
The employees were owed $1.38m. If the DOCA had not been passed they would have got most of it, excluding super, from the government under its Fegs scheme, with the government then trying to claw back as much as possible from the remaining assets, or even the directors themselves. The employees will now turn to Fegs for their entitlements.
The collapse of Starleaton, and especially the dealings in the run-up to voluntary administration, with print business placing large deposits for equipment they never received, caused disquiet around the industry, with managing director Ben Eaton eventually penning an open letter to the industry.
The liquidators estimate it will take two years to sort our Starleaton’s affairs.
Unsecured creditors who include its suppliers – the hardware and consumables developers – some of whom are owed hundreds of thousands of dollars, will see at most three cents in the dollar, and it may be just one cent.
The vexed question of print businesses who handed cash over to Starleaton in the weeks and months before it hit the skids, and did not receive the equipment or goods they paid for, remains unresolved. Several are already in litigation, fighting for a return of their money, which is reported to top $1m in total. Print businesses from NSW, VIC and QLD were among those hit.
Under its DOCA Starleaton was a much slimmer operation. It closed all its warehouses, apart from Sydney, retrenched all but six of its 35 staff, and exited hardware supplies entirely, focusing only on consumables. Its former overseas suppliers, most of whom were owed significant sums by Starleaton, quickly entered new partnerships with local companies, or in the case of Zund, started a new direct subsidiary for ANZ.