Struggling car parts manufacturer CMI Industrial has been placed in liquidation, with jobs at risk for about 250 workers in Victoria and 150 in Queensland.
Administrators and receivers took control of CMI Industrial, a key supplier for Ford, in April after talks failed to sort out unpaid bills with its landlord.
Being placed into liquidation might allow a buyer to be found for CMI, which could save its workers from losing their jobs.
Australian Manufacturing Workers Union (AMWU) Victorian secretary Leigh Diehm told SmartCompany that workers had been guaranteed six months more employment following the second creditors meeting yesterday.
“They have been able to shore up contracts for six months for four sites across Victoria to allow the receivers to attempt to sell the sites,” Diehm says.
“We are hopeful that will occur. One of the questions we have is how many people are looking at the business as going concerns; we want to see these sites continue to operate.
“They are profitable sites; it has been the bad directorship of the company director that has put these sites in this position.
“Obviously he has run the company into the ground. He has performed really badly in his duty of care to all employees and to the company itself.”
Diehm says workers are owed up to $1.7 million in outstanding superannuation payments, with the CMI in “a very bad state as far as finances go”, owing between $30 million to $40 million to creditors.
“We are hopeful there will be no further redundancies. There was already 51 redundancies at the sites across Victoria. We have been told there will be no more during the six months,” Diehm says.
Emma Cooney, national communications manager at Grant Thornton, told SmartCompany the administrator was in discussions with a potential buyer, but she was unable to say whether the buyer would buy CMI as a going concern.
“There is no guarantee on the future of the business. We are still in discussions with an interested party,” Cooney says.
“They have not come out with any terms just yet, but there might be a further update later today as discussions are continuing.
“There are no redundancies yet, but the situation is still being monitored and they need to work to monitor the company’s value.”
Keith Crawford, partner at McGrath Nicol, says that, as the receivers, McGrath Nicol’s role is to continue to operate the business and hopefully find a buyer.
“It is early in the process, but we certainly have numerous parties that we are talking to. Obviously those parties are working through information so they can formulate a bid, and then we will hopefully identify one or more preferred bidders and try to put together some sort of transaction,” Crawford says.
“The employees we have working for us will continue to work for us while we are trading. Their future really depends on the success of the sale process and the requirements of the new owners.
“For us, it is still quite early in our process. We have tried to put in place arrangements to buy up to six months of volume commitments to customers; from our perspective it is a business-as-usual method pending the outcome of the sale process.”