Administrators have been appointed to cleaning giant Swan Services after the business suffered losses from a number of unprofitable contracts.
Anthony Elkerton and David Young of Pitcher Partners were appointed as administrators to Swan Services this week along with Cleaners QLD, Cleaners SA, Cleaners ACT, Superior Cleaners WA, Cleaners New South Wales and Cleaners Vic.
All of the companies have ceased to trade and the employment of the 2379 cleaners employed by the companies has been terminated unless otherwise advised.
Swan Services employs 2466 people nationally and was run by founder and owner Robert Swan for a period of 43 years.
It had 901 staff in NSW, 578 in Victoria, 583 in Queensland, 64 in the ACT, 156 in South Australia and 184 in Western Australia.
Swan Services’ directors say the company had a turnover of $92 million in the last financial year.
But Elkerton told SmartCompany despite its strong cashflow, Swan Services was affected by both short- and long-term issues.
“We are instructed that the company did have a number of unprofitable contracts and had moved to renegotiate to make them more profitable and was reasonably successful in doing so, these would not take effect until the new financial year,” he says.
Elkerton says Sawn Services had a “major IT disruption” in February which affected its cashflow and over the last week rumours of the company’s financial position were in the marketplace.
These rumours were compounded by slow payment to debtors to the extent that Swan Services was unable to make its payroll run on Wednesday, May 22 and had to enter administration.
Elkerton says the administrators are working with Swan Services’ customers and the union to try to organise a smooth transition of contracts to other cleaning companies.
“We are hopeful that the majority of employees will be recontracted by the new suppliers,” he says.
Elkerton says the highly competitive nature of the cleaning sector has led to a number of businesses entering into unprofitable contracts.
“There have been a number of cleaning companies which have gone down over the last two to three years and unprofitable contracts are a recurring theme and it appears people have quoted for cashflow rather than profit,” he says.