2019 in Review: Awesome financial arrangements
Byzantine, brazen, or plain brilliant: some print businesses and individuals went to great lengths in their attempts to grow their businesses, keep them afloat, or increase their margins – unfortunately usually at the expense of the rest of the industry and the taxpayer, with Picton, Clear Skies / Skope, Dark Horse / Maverick, and the general manager of NSW Life Saving among those incurring the ire of the rest of the industry this year for their efforts.
The long running attempt to keep embattled Perth printer Picton Press afloat through its controversial Deed of Company Arrangement (DOCA) despite its $10m worth of debts ended in July, with its own administrator torpedoing the company by organising a creditors’ meeting which voted for liquidation.
The DOCA is questionable at the best of times – a mechanism allowing debt-ridden companies to park their debts outside the business and carry on, albeit after agreeing a payment schedule with the creditors. The problem is that in a competitive world like print, it effectively means that the company has a massive advantage in the market, as while it will pay only a fraction of its debt to the ATO and paper merchants, its rivals are paying 100 per cent. The rest of the Perth printing community was in uproar over Picton's survival tactics.
In Picton's case, it went a step too far with its DOCA, offering the mighty ATO – and the paper merchants – a paltry 1c-2c in the dollar, while offering smaller creditors and employees 100c, to get the votes to get the DOCA over the line. The ATO was looking at a maximum of $26,000 for the $1.3m it was owed, and was clearly enraged, it spent a year in repeated court actions to block the arnegment, until it came up with the masterstroke of naming the Cor Cordis administrators themselves as part of its action. Shortly afterwards it was all over for Picton.
On the other side of the country, Melbourne outfit Dark Horse Print & Design put itself into liquidation with debts topping $2m – but not before spending the previous few weeks transferring all the presses and production kit across town to a new business Maverick Print, which coincidentally was owned by Sorcha Hopmans, the fiancée of Dark Horse owner Steve Roberts.
Hopmans claimed no affiliation existed between the two businesses – although she was the first registered owner or Dark Horse, and worked there until at least three months before setting up Maverick, which has since changed its name to MVP Print.
Hopmans is also director of Australian Trade Printers, which operated from the same premises as Dark Horse and which has now moved into the same building as Maverick, which is the old Longbeach premises.
Meanwhile, the sign industry was spewing as Clear Skies – t/a signmaking outfit Skope Group Manufacturing Services – was successfully steered into a DOCA, which saw 70 per cent of its $2.3m debt disappear from its books, a debt which will now be pushed onto the taxpayer and the rest of the signage industry.
Under the terms of the DOCA, Clear Skies got three years to pay $500,000 to creditors and two years to pay $288,000 to the ATO. The $2.3m debt is now 70 per cent lighter, with the company able to produce the same products and operate from the same premises, with the same equipment and the same staff, providing the same services, but being $1.5m better off.
Skope manufacturing was closely associated with Skope Services. Essentially Skope Services sold signage solutions, while Skope Manufacturing produced them and sold them to Skope Services on what the administrator described as “uncommercial” terms. According to a scathing report by its administrator, in which he described the relationships as “unusual”, he revealed that Skope Manufacturing had a dummy director, with Skope Services director Ann Orren, a shadow / de facto director of Skope Manufacturing – she signed the cheques, dealt with the accountants, and signed the leases.
Clear Skies racked up enormous debts in the last three years: It lost $116,000 in 2017, $853,000 last year, and $842,000 this year. However, the DOCA reduced the $2.3m owed to less than $800,000. Orren promptly bought the $1.5m-better-off Clear Skies for $100,000.
And any year's hall of financial fame would be incomplete without a man in authority making a motza through dummy printing business story, so this year step forward former NSW Surf Life Saving general manager Matthew Hanks, who police allege set up a dummy printing company as part of a decade-long scheme to funnel a handy $2.7m in cash to himself.
According to the cops, Hanks allegedly sent all Surf Life Saving print work to the dummy printing company, which would then farm out the actual printing to legitimate companies operating on commercial rates. Police allege that Hanks would then put a supersonic mark-up on the print jobs, and invoice NSW Surf Life Saving accordingly.
The practice of using print businesses to overcharge for invoices with kickbacks to the purchaser has been used on many occasions over the years by various politicians, union leaders, and various people in positions of trust. It is unlikely to end with the latest case.