WA based window coverings company Tod Shutters Pty Ltd, trading under the retail brand Boardwalk Shutters, has gone into administration with administrators recommending that the company be wound up.
The business, a wholly owned Australian business supplying internal and external plantation shutters in Perth to residential and commercial clients, operated out of premises in the Perth suburb of Balcatta.
Tod Shutters was incorporated on 21 April 2020 in New South Wales and on 22 April 2020 purchased the business of an unrelated entity, Artex Shutters Pty Ltd (in Liquidation), for $57,200.
The Company employed the previous director of Artex Shutters Pty Ltd, Matthew McLeay, as the general manager of the business and the late Terence O’Donnell (former director of the Company) would remotely operate the business from NSW.
On 12 May 2021, Michelle O’Donnell (Terrence O’Donnell’s daughter) replaced him as director of the Company prior O’Donnell passing away.
Christopher Darin of Worrells Solvency & Forensic Accountants has been appointed administrator and in a report to creditors dated 24 February 2022 said that the Director of Tod Shutters Pty Ltd had placed it into voluntary administration due to a liquidity crisis caused by supply chain issues.
“Due to the Covid pandemic and restrictions on shipment imposed by the Chinese government, the company experienced significant delays in receiving supplies since late 2021, this has resulted in delays by the company to complete customer orders and collecting money from same,” Darin said.
“The company ultimately used up its working capital which led to the appointment of Administrators in late January 2022.”
“Our preliminary review of the company’s business model identified that the company relied on using customer deposits to fund the payment of stock for the next container to be shipped within 30 to 40 days. When supply was disrupted in early December 2021 the company did not have sufficient working capital reserves to meet fixed costs until supply normalised.”
The report said that the vast majority of the products offered by Tods Shutters to its customers were sourced from Eastern Premium Limited, a manufacturer of window treatment products based in China. Other products were sourced from local suppliers. The shutters and blinds, once manufactured, were packed into containers and shipped to Australia.
Customers were required to pay an upfront payment, being a percentage of the contracted sales price, in order for the customised goods to be manufactured and shipped to Australia.
Once goods arrived in Australia, the company would organise for them to be delivered and installed using an outsourced transportation company and sub-contracted installers. The balance of the quoted sales price was required to be paid on or before the goods were delivered or scheduled for installation.
According to the administration report filed with the Australian Securities & Investments Commission (ASIC) on 9 February, Tod Shutters/Boardwalk Shutters’ debts were listed as totalling around $424,385.13.
This includes $47,503.13 owed to employees, listed as priority creditors.
Other debts include $363,204 owed to the Australian Tax Office. Additional creditor debts include around $13,678, listed as aged payables, which typically refers to unpaid purchase invoices.
Companies linked to the aged payables include Accent software, analytics specialist DataTech Solutions and marketing advertising supplier MADD Marketing.
Social media messages secured by WFA indicate numerous customers made substantial payments to the business shortly before it was put into administration.
One message indicated the customer had been told the shutters were being held on a container near Singapore. Another customer said they had been told the installer had their shutters, ready to install, but the shutters had not been delivered.
Another customer confirmed an order for shutters made “12 weeks ago” had never been fulfilled.
End users also aired their complaints on productreview.com.au. One confirmed they had made a deposit payment of “thousands for 15 plantation shutters” in early January, shortly before receiving an email advising that the company had gone into administration.
Upon appointment on 28 January 2022, the Administrators decided to cease trading the business and terminate eight employees. However, engaged two staff to assist with finalising the customer orders for the benefit of creditors from the premises.
“At the time of our appointment, approximately 445 customer orders had not been completed. These customers had advanced payment to the company, either in full or in part.” Darin said in the creditors report.
“Customers were contacted to arrange for payment of the remaining balances, then collect their goods from the Premises and arrange for the installation at their own expense. As the Administrators were unable to facilitate the installation of customer goods, an allowance of approximately 10% of the sales prices, were provided to customers who had an amount owing greater than 10%.”
Since its incorporation in April 2020, the company’s financial performance had been problematic, with the company suffering trading losses throughout its trading life with an accumulated loss of over $1.3 million. A preliminary assessment by the Administrators revealed that the company may have become insolvent from as early as 28 October 2020.
“This is based on analysis of which suggests the Company’s inability to pay down its taxation liabilities since at least 28 October 2020, it also disclosed that the Company started making round payments to the ATO between 15 October 2021 and 24 December 2021 totalling $60,000,” Darin said in the report.
“In forming our opinion on the likely date of insolvency, we have also considered the amount and the timing of funding provided by the former director. Our preliminary review reveals that the company suffered trading losses for the year ended 30 June 2020 and it appears that it was able to obtain limited additional funding since that time.”
Since going into Voluntary Administration the company has been listed for sale, but the Administrator said there had been little interest.
“We have not received any proposals for a DOCA from the director or any other party to date.”
“We recommend that creditors vote to wind up the company…the company is clearly insolvent, and accordingly I cannot recommend that control of the company revert to the director,” Darin concluded.