Festival and event staging company ES Group has collapsed amid claims of bad management and excessive wages.
ES Group started in 1998 and turned over between $11 million and $12 million last year.
It was the staging company behind the annual ARIA Awards and music festivals including Good Vibrations, V Festival, Future Musical Festival and Parklife.
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ES Group also staged major corporate, government and sporting events including the Australian Grand Prix, Melbourne Commonwealth Games, the Australian Idol final, Opera Australia events and Myer fashion shows.
The company expanded from Australia to Japan and the UK and ES Group’s website describes it as a “world leader in staging, project management and logistics”.
“The many years we have spent serving the rock and roll industry have left us with a distinctively creative and flexible company culture,” the website says.
“In turn, this has enabled us to develop unique methods of satisfying our clients’ needs on time and on budget.”
Administrator Giles Woodgate of Woodgate & Co told SmartCompany the ES Group entered administration on April 12, leaving creditors $6 million in the red.
Major creditors include 4ken, Crew on Call, Melrose Cranes, Mojo Barriers, Packard Trading, Butlers Events, the Australian Tax Office and Opera Australia.
Fifteen staff have been let go, with two remaining on the payroll and staff owed $195,000 in entitlements.
“The cause appears to be fundamentally bad management, poor cost control, excessive wages and salaries,” says Woodgate.
“For the level of activity and for the way it was project orientated, the ES Group was undercapitalised.”
Woodgate says between February and April this year the ES Group was working on the Grand Prix and a project for Opera Australia, with both projects absorbing “considerable financial resources” it did not have.
Opera Australia has terminated its contract, while the Grand Prix is still on foot.
The company has ceased operating and there will be a creditors’ meeting on June 29 where a deed of company arrangement will be put forward.
If this deed is accepted, Woodgate says creditors will receive around 16 cents in the dollar.
Woodgate says the administrator is investigating circumstances surrounding a change of shareholding in the ES Group that occurred in mid-February; within seven weeks the company was in administration.
“The shareholdings changed between a company called Joe-E Company Pty Ltd and was purchased by persons associated with Butlers Events and Staging,” says Woodgate.
“There was a share transaction, which most people would take to assume that the company was sold at the time, but it appears that it was not. In that regard we are looking at a deficiency of $4 million to $5 million dollars.
“That is despite the reality that when a company enters into an external solvency administration there is a fundamental value shift in assets and liabilities.”