The restrictions associated with the pandemic played a part in advertising agency McCorkell and Associates going into voluntary liquidation, according to an initial investigation.
The North Sydney agency founded in 1992 was wound up the week before Christmas, with assets moved to a new company with a similar name.
Left behind in the old company is a string of creditors, including the Australian Tax Office (ATO), and with staff owed wages and superannuation.
Scott Keith McCorkell, CEO and founder, "sold" the business on December 14, 2022, for $29,129.61 to a new company, McCorkell Group, which records show was registered November 24.
McCorkell, the sole director of the new company, has described the move as a “business restructure”.
The new company has 49 staff, 34 in Australia and the rest in Singapore. Their entitlements were transferred from the old company to the new, including annual, long service and sick leave.
These transferred staff were asked to sign a new employment agreement with the new company.
The day after the sale, on December 15, McCorkell and Associates was wound up and Liam Bailey, of insolvency firm O'Brien Palmer, was appointed liquidator.
Bailey sent a letter the same day to 18 staff telling them “your services are no longer required”.
These former employees have yet to be paid entitlements and have been told to make a claim under the Fair Entitlements Guarantee, a scheme of last resort, which will take some months to finalise.
The liquidator estimates outstanding annual leave entitlements owed by the company of about $180,760.08.
Bailey’s initial report shows that 40 listed trade creditors are owed about $1,109,470.98. The report identifies assets at $174,665.71.
Among the creditors: ATO ($644,026.95), outdoor media group JCDecaux ($32,000.11), LinkedIn ($17,277.15), sales and marketing platform Market Resource Partners Ltd ($28,764.09), digital marketers Trade Indy Pty Ltd ($143,709.43), SEEK ($1,017.50), Rakuten Insight ($1,293.54).
Why did the agency fail?
Liquidator Liam Bailey, in his initial report: “The director (Scott Keith McCorkell) has advised that the failure of the company was attributable to a significant downturn in revenue following the state-sanctioned government lockdowns introduced as a response to the COVID-19 pandemic.
“As a result of the lockdowns, the company was not able to generate revenue from its events department, which was one of the largest sources of revenue for the company.
“The director has also attributed the loss to being unable to sustain a significant growth in wages following the cessation of the lockdowns.”
The liquidator’s initial report shows 14 staff owed $193,660.20. There is also an issue with superannuation, reportedly last paid in July. Another four staff are either casuals or offshore.
The biggest amount owed at $148,897.05 is to former managing director Karen Powell.
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