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Scott’s Refrigerated Logistics Enters Liquidation with Unpaid Employees and Contractor Claims

Scott’s Refrigerated Logistics, a major player in the Australian transport and logistics industry, has entered liquidation after creditors voted to wind up the group of six interconnected companies due to consistent monthly losses averaging $8 million from 2021 onwards.


The company’s failure has left many employees and contractors unpaid, with concerns being raised about food safety as suppliers try to offload frozen produce. The administrators at McGrath Nicol have cited inflation pressures, intense competition, insufficient investment in the transport fleet, and reliance on external funding as the primary reasons for the company’s collapse. The Transport Workers Union has called for industry reform to prevent future failures and ensure proper pay and conditions for workers. This article delves deeper into liquidation and the reasons behind the company’s failure and the urgent need for industry reform.

What is liquidation?

Liquidation is a process in which a company’s assets are sold to pay off its debts and obligations. It occurs when a company is unable to meet its financial obligations and has no reasonable prospect of turning things around. The process is usually initiated by the company’s creditors, shareholders, or directors, who apply to the court to wind up the company. Once the company is in liquidation, a liquidator is appointed to manage its affairs and to sell off its assets. The proceeds from the sale are used to pay off the company’s creditors in accordance with the priority set out in the Corporations Act 2001. Any surplus remaining after all the creditors have been paid is distributed to the company’s shareholders. Once the liquidation process is complete, the company ceases to exist.

Liquidation Confirmed After Vote by Creditors

Scott’s Refrigerated Logistics has gone into liquidation after creditors voted in favour of winding up the six interconnected companies that formed the group. The company had recorded monthly losses averaging $8 million from 2021 onwards. In the financial year 2021-2022, the company suffered a loss of $36 million, $87 million in 2022-2023, and $62 million in the current financial year, leading to a net asset deficiency of $92 million by January 2023.

Contractors Remain Unpaid While Employees Eligible for Commonwealth’s Fair Entitlements Guarantee (FEG)

The collapse has left many employees and contractors unpaid, with employees being eligible to claim unpaid wages and leave entitlements through the Commonwealth’s Fair Entitlements Guarantee (FEG), but contractors are considered unsecured creditors.

Reasons Behind Company’s Failure

The administrators at McGrath Nicol cited inflation pressures, intense competition, insufficient investment in the transport fleet, and reliance on external funding as the main reasons for the company’s failure. The administrators also noted an increased reliance on contractors and subcontractor labor, which proved to be more expensive.

Food Safety Concerns Arise Amidst Frozen Produce Offload

Food safety concerns have arisen as suppliers try to offload frozen produce, with concerns that the supply chain is not acting in the way that it should be to ensure proper safety processes.

Industry Reform Urgently Required to Avoid Future Failures

The Transport Workers Union has called for an independent body to set minimum standards for the transport sector. The industry is being squeezed from two directions, with supply chain leaders dictating commercial arrangements while the gig economy lowers pay and conditions even further. The Union believes that reform is needed to prevent future failures and has called for companies and owner-drivers to be paid within 30 days of service provision.

Here are some tips that businesses can follow to avoid liquidation:

  1. Manage cash flow effectively: Cash flow is the lifeblood of any business, and it’s crucial to manage it effectively. Businesses should have a good understanding of their cash inflows and outflows, and should be prepared to take steps to manage any short-term cash flow issues.
  2. Maintain adequate working capital: Working capital is the money a business needs to pay its bills and meet its obligations. Having sufficient working capital is essential to ensure that a business can continue to operate and avoid financial distress.
  3. Control costs: Controlling costs is another important factor in avoiding liquidation. Businesses should regularly review their expenses and take steps to reduce costs where possible, without sacrificing quality or customer service.
  4. Diversify revenue streams: Relying too heavily on a single product or service can leave a business vulnerable to market changes or other disruptions. Diversifying revenue streams can help to mitigate this risk and ensure that a business has multiple sources of income.
  5. Stay up-to-date with financial reporting: Businesses should maintain accurate and up-to-date financial records and reports. This can help business owners to identify potential financial problems early and take steps to address them before they become more serious.
  6. Seek professional advice: Finally, seeking professional advice from financial advisors, financial advisors, accountants or lawyers can help businesses to identify potential financial problems and take steps to avoid liquidation. These professionals can provide valuable guidance and expertise to help businesses navigate challenging financial situations.

Vogue Advisory Group – How we can help with liquidation

Vogue Advisory Group’s team of experienced financial advisors can provide valuable guidance and support to businesses facing company liquidation and bankruptcy. With a deep understanding of the legal and financial implications of these processes, they can help businesses navigate the complexities of liquidation and bankruptcy, and minimize the impact on their stakeholders. From analyzing financial statements and identifying areas for improvement to negotiating with creditors and developing restructuring plans, the financial advisors at Vogue Advisory Group can provide tailored solutions to help businesses overcome financial difficulties and achieve long-term sustainability.