Bayswater company Bradys Building Products is looking to expand after achieving a rare feat – emerging successfully from voluntary administration.
Bayswater company Bradys Building Products is looking to expand after achieving a rare feat – emerging successfully from voluntary administration.
Bradys went into administration in 2001 with total debts of about $3.4 million and since then its secured creditor (BankWest) has been paid in full, while unsecured creditors received 84 cents in the dollar.
Managing director Barry Nunn, who came out of retirement to lead the rescue, said the company was now able to focus on growth opportunities.
KordaMentha partner Louis Nilant, who administered the company with colleague Oren Zohar, said Bradys provided a textbook case of a successful administration.
“These things are never easy but with management’s enormous efforts it was successful,” Mr Nilant said.
“It’s relatively rare to come out as good as this. Often it’s woefully too late to do something constructive.”
Mr Nunn said the three-year period of administration and deed of company arrangement was extremely difficult, with acute pressure on the company’s cash flow.
“It was very tough throughout to maintain cash flow and build the business,” Mr Nunn said.
The company’s problems were compounded by constant rumours it was about to shut down, he said.
An added and unexpected hurdle was a retrospective payroll tax claim for $166,873, after the Office of State Revenue decided that contractors working for Bradys should be treated as employees.
This led to a nine-month extension of the deed of company arrangement, while a discounted settlement was negotiated with state revenue.
Bradys is now a very lean operation compared to the business of old.
It has sold surplus properties and leased back the land it needs, reduced the scale of its core plasterboard manufacturing business and slashed operating overheads.
As a result, local staff numbers have fallen from 75 in 2000 to 22 presently.
Mr Nunn said another big change was much tighter control over the collection of debts.
One of the main reasons for Bradys falling into administration was the large number of unpaid bills from its Asian business, following the Asian economic crisis.
A second major reason was the need to spend about $2 million on reparations after an additive in its plaster glass product proved to be defective.
Mr Nunn said Bradys eventually negotiated a commercial settlement with the supplier of the additive.
During the administration, Mr Nunn said Bradys obtained a “modest” capital injection from shareholders to boost its finances.
He said KordaMentha deferred the receipt of fees to help Bradys cope with tight cash flow but had since been fully paid. Mr Nunn said Bradys would remain focused on manufacturing activities, keeping clear of low margin installation work.
Its 51 per cent owned subsidiaries in Malaysia and Singapore have continued to trade throughout the administration but now use letters of credit to minimise credit risk.
