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Australia – Rubicor enters voluntary administration

12 August 2019

Australian recruitment firm Rubicor Group Limited has entered voluntary administration.

The ASX-listed firm last week announced that it appointed business advisory firm FTI Consulting as voluntary administrator of Rubicor Group and all of its Australian subsidiaries.

“After exploring a number of options, the directors believe this step will provide the best opportunity to protect the future of the business and the interests of its clients and employees,” Rubicor stated.

In a subsequent update, the company announced the appointment of voluntary administrators who are “continuing to operate the businesses within the group with a view of assessing possible restructuring options.”

The company had suspended trading earlier this year and delayed its half-year financial statements which were scheduled to be released in March 2019.

In its last annual report from 2018, the company reported revenue for the year was AUD 189.1 million (USD 127.7 million), 5.3% below the previous year. Statutory EBITDA decreased to a AUD 1.2 million (USD 0.8 million) loss, compared with a AUD 14.6 million (USD 9.8 million) profit the previous year which was largely due to the reversal of deferred tax assets and impairment of assets. The company reported a statutory after-tax loss of AUD 13.6 million (USD 9.2 million) (FY 2017: AUD 15.5 million (USD 10.2 million) profit).

In November 2018, Rubicor restructured its senior management team appointing Sharad Loomba as Chief Executive Officer. Previous CEO David Hutchison assumed the role of Executive Chairman.

According to IT News Rubicor states it has 165 employees, and the contractors on its books, who are potentially owed money and will likely have to queue up with other creditors.

Rubicor listed Google, Commonwealth Bank, Goldman Sachs, the National Australia Bank and the federal government as major clients.

In a blog post published last week, recruitment industry blogger Ross Clennet, who has documented Rubicor’s financial troubles in the past, pointed to warning signs of the company entering administration.

Clennet also called the company’s Board of Directors ‘incompetent’ and accused them of ‘self-serving hypocrisy, obfuscation, lying and withholding of material information’ and said Rubicor’s 2018 Annual Report was ‘full of lies’.

“Comparing the 2018 financial year (the last one for which results are available) with the 2016 financial year (the first full year of the Hutchison-led board) it is demonstrably accurate to say that all the directors personally extracted rapidly increasing amounts of money from Rubicor while at the same time presiding over the rapidly declining health of the company,” Clennet said.

In the post, Clennet also mentioned that proposed management buy-out of Xpand, a subsidiary of Rubicor, was never revealed. He also notes that during 2018, Rubicor’s temps, contractors and employees gradually began to discover the extent of their respective missing superannuation payments. Unhappy temps and contractors then spoke to their on-site employer about the missing money.

Rubicor has said that administrators are currently assessing the firm’s remaining assets and assembling a list of creditors.

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