Nick and Fran van Reit have entered into a licence agreement to continue trading the haulage company they placed into voluntary administration last week.
Earthworks and heavy haulage company NJ Contracting collapsed and administrators Peter Dinoris and Nick Combis of Vincent Chartered Accountants were appointed on July 2.
But the van Reits, who were the owners of NJ Contracting, have formed a new company, NJ Civil which is trading under a licence agreement with NJ Contracting.
Fran van Reit told SmartCompany placing NJ Contracting, based in the Queensland town of Roma, in administration and establishing the new company was not a decision the couple took lightly.
“It’s not a phoenix company,” she says.
“I’m no lawyer but that is where people walk way and all their debt gets disregarded.”
Van Reit says the couple are trying to get the best return for creditors and staff.
“We still have to carry all the Australian Tax Office debt and give our staff entitlements,” she says.
“We are being very transparent about why it is being done like this, we are not walking away from our responsibilities.”
Creditors are owed $3.6 million and van Reit admits some of them won’t be happy with the arrangement.
“It’s happened to us many times and we weren’t exactly happy about it,” she says.
“Obviously there will be upset people but we have had quite a lot of support as a regional business in a smaller town.”
The van Reits describe themselves as “long-term Roma locals” and having operated a business in the region for over 14 years say “we’re not going anywhere anytime soon”.
“With this arrangement the creditors will get a lot more than the alternative that we wouldn’t be trading anymore,” van Reit says.
The couple blame the demise of the business on the collapse of three of NJ Contracting’s clients in the space of two years, which left the business “significantly out of pocket”.
When NJ Contracting lost a major contract in January this year and with it, 47% of the business’ income, the van Reits say “things took a turn for the worse”.
“We’ve had some tough decisions to make since losing that contract,” Nick van Reit said in a statement.
The van Reits say “the majority” of NJ Contracting’s 60 employees will continue their employment under NJ Civil.
“The agreement between NJ Contracting and NJ Civil ensures the best result for employees, creditors and customers,” the pair said in a statement.
“For all intents and purposes, it’s business as usual.”
NJ Contracting’s administrator, Peter Dinoris, told SmartCompany the agreement between NJ Contracting and NJ Civil was entered into prior to the administrators’ appointment and forms part of the administrators’ investigations into the affairs of the company.
“Pursuant to the agreement, NJ Civil is responsible for trading activities and it has assumed various outstanding employee entitlements, excluding superannuation,” he says.
Dinoris says the van Reits have indicated they are considering formulating a deed of company arrangement for presentation to creditors.
“The options available to creditors along with a comparison of the potential net return under any proposal versus liquidation will be addressed in future reports to creditors,” he says.
Dinoris says unsecured creditors will have an opportunity to resolve the future of the company at the second meeting of creditors.
“Our investigations into any voidable transactions, phoenix activities, etc are continuing and the results will be addressed in future reports to creditors,” he says.