Perth recruitment business GO2 Group has received a $3 million loan to continue its operations and potentially avoid layoffs after entering into voluntary administration.
Perth recruitment business GO2 Group has received a $3 million loan to continue its operations and potentially avoid layoffs after entering into voluntary administration.
In a decision delivered yesterday, Supreme Court Justice Michael Lundberg found it was necessary for GO2 administrators to enter into the loan agreement to avoid hundreds of staff being laid off.
The group employs 972 employees, with about 300 being full or part time staff, according to the Supreme Court of WA decision.
GO2 Group directors called in voluntary administrators on Monday, citing ongoing liabilities to Australian Taxation Office and a payment dispute with a client.
The group comprises GO2 Recruitment, The GO2 People, Skill Hire training and apprenticeships, NARA Training and Assessing, and Hunter Executive Search Consultants.
McGrathNicol partners Rob Brauer and Rob Kirman, who were appointed as administrators, submitted an urgent application to the Supreme Court of Western Australia on Monday.
The administrators said they have entered into a loan facility agreement with IntoWork Australia, ensuring funds were available to maintain trading operations across GO2 Group.
The court decision yesterday revealed Intowork Australia will provide a $3 million unsecured loan facility to pay costs associated with continued trading of the business of the companies during the voluntary administration period.
The loan would also be used to fund the administrators’ costs and pay pre-appointment debts the administrators deem necessary to keep the companies running.
Justice Lundberg said entering into the loan agreement was in the best interests of the group and its creditors.
"The group is facing substantial and imminent cash flow difficulties. The principal costs of the business are the costs of employees," he said in the court decision.
"If the administrators are unable to drawdown on the facility, they would have no option but to take steps urgently to reduce the costs of trading the companies, or to cease trading altogether."
Justice Lundberg said with the funding in place, there was a realistic prospect of a successful restructure of the company.
In an ASX announcement on Monday, GO2 cited legacy ATO liabilities as one of the reasons to call in voluntary administrators.
GO2 discovered it failed to pay superannuation in its entities on time and estimated a $3.1 million liability payment in January 2022.
The company sought to raise $3.25 million via a rights issue offer towards its ATO liabilities in November.
GO2 shares had been in a trading halt since last week when it announced on the ASX that it was considering options against client Advanced Traffic Management.
The company said ATM owed a material sum but a winding up order has been lodged against ATM in early April, with the matter due to be heard in court later this month.
