Court order sinks training company after staff left jobless
A COMPANY set up before the collapse of another, which left hundreds of staff jobless days before Christmas, has been wound up after a Federal Court order.
SC Operations (Aust) Pty Ltd, was placed in liquidation, with Bradley Hellen of Pilot Partners appointed on October 18 to wind the company up.
The Federal Court decision came after an application to wind the company up was made by the Deputy Commissioner of Taxation.
SC Operations had been set up in November, 2016, by director James 'Jim' Spong, of Smart City Vocational College, a now-defunct registered training organisation whose network spanned 17 campuses around the country.
SC Operations had been registered shortly before the collapse of SmartCity's administrative company, SC Admin, which was wound up on December 16, 2016, with just $223 in the bank.
The SC Admin collapse left more than 300 staff around the country unsure of their future.
Evidence given at a recent public examination into the collapse of SC Admin by former executives of the company told of how SC Operations had been established, in a bid to keep the SmartCity college operating.
Mr Spong said the decision had been made to prioritise the students, and keep the college running.
Former chief financial officer Graham Shaun Thomas, whose role had been looking after cash flow and statutory obligations, said at the examination that he understood the purpose of setting up a new entity had been to "unload liability".
"Well, there would be no point ditching it (SC Admin) if you're going to pay them (creditors), because the whole purpose of setting up a new entity is to unload liability," he said.
Former SmartCity CEO Glenn Spong said the result of the termination of the service agreement with SC Admin and SmartCity had been that the college had been able to keep training students for another three months.
SC Admin was wound up owing about $2.6 million to staff in annual leave and other entitlements, which was eventually covered by the Federal Government's Fair Entitlements Guarantee.
SmartCity was paid $1.12 million in 2013 by the Federal Government in VET FEE-HELP student loan payments.
That income shot up dramatically in the next two years.
SmartCity earned $38.8 million in 2014 and $40.7 million in 2015 in public funding through the system.
SmartCity had operated in Armadale (WA), Bundaberg, Cairns, Caloundra, Elizabeth (SA), Fairfield (NSW), Gympie, Hervey Bay, Hobart, Inala, Ipswich, Launceston, Maroochydore, North Lakes, Rockhampton, Toowoomba and Townsville.