Staff at a plumbing company that went bust owing millions have lifted the lid on the desperate measures they took in the months leading up to the collapse.
Earlier this month, news.com.au revealed that C & S Plumbing Pty Ltd had gone into liquidation.
Simon Nelson of insolvency firm BPS Recovery and Reconstruction is the appointed liquidator of the Victorian-based business, which primarily carried out commercial plumbing works since 2015.
Documents the liquidator submitted to the corporate regulator show that the business had racked up substantial debts of $12.2 million with more than 100 creditors, and that in the four months before the firm went under, the sole director, Shane Arnold, made a number of decisions that has been scrutinised by the liquidator, including paying himself $101,000. Mr Arnold declined to comment to news.com.au.
All 70 employees at the Victorian plumbing firm lost their jobs on the spot while they are also owed $1.9 million in unpaid entitlements, according to documents filed with ASIC.
Ryan*, who worked for C & S Plumbing for a number of years, said he is owed about $10,000 in unpaid superannuation, and also his final week of wages, money he doesn’t expect to get back.
“You’d have to be blind to not see it (the company’s demise) coming,” he told news.com.au.
According to Ryan, in the year before C & S Plumbing finally went under, it was obvious the business was struggling.
“The fuel card (for company cars) would rarely work because it was behind in pay,” he explained.
“We would sometimes have to pay out of our own money and then get reimbursed.
“Guys had to pay for materials, because the accounts were on stop. At the start people said ‘I’m happy to do this to help out’.”
Near the end, however, this dried up as doubts set in regarding whether they would be paid back.
“This went on for 12 months,” Ryan added. “Within the last 12 weeks, there would have been 10 to 15 resignations.”
At its peak C & S Plumbing had 100 staff, but by the time it went into liquidation, this had dwindled to just 70 people.
Another employee, Johnathan*, also a former employee of the company, said he is owed thousands of dollars in unpaid wages.
“When the company went under I was working on a job site not getting paid wages which is a red flag in itself,” he told news.com.au.
“Not one single dollar has been paid of what we are owed and we are still waiting to receive superannuation and weekly wages.”
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Ryan said he and other employees were furious, as they had been left unemployed and out of pocket, while they heard the full extent of the allegations made against their boss before C & S Plumbing went into liquidation.
“The frustrating part for me, and 99 per cent of the employees, is that we lost our jobs on the spot, we had to search for new work, and we’re now seeing our old boss living his life,” he said.
“Those are things we can’t do, we might have been unemployed for a month or two months.”
The liquidator’s statutory report, filed with ASIC and made publicly available, includes allegations that in the months before C & S Plumbing’s demise, the sole director, Shane Arnold, increased his salary and also sold the firm’s assets to another company a family member was involved with, while getting the existing plumbing business to complete work for this other company.
The liquidator has flagged in the report that there are “possible recovery actions” for creditors by pursuing Mr Arnold personally, with allegations of uncommercial transactions.
From late November until the liquidator’s appointment four months later, Mr Arnold “began to receive significantly increased wages”, according to the report.
“This was by way of cashing out outstanding annual leave and RDO balance.
“A review of the pay slips of Mr Arnold … indicate (s) that Mr Arnold received the gross amount of approximately $101,000” in that period of time, the report added.
“These payments would appear to be voidable transactions that are recoverable in the liquidation.”
News.com.au also contacted the liquidator for additional comment.
The report also noted that C & S employees worked 261 hours at a subdivision in a block of land for a company called Arnold Land Development. A family member of Mr Arnold is the director of this company, and they are not accused of any wrongdoing.
According to the liquidator, $456,665 worth of work was carried out at the subdivision, comprised of both hours worked and materials used, though this was never paid to C & S Plumbing.
The liquidator’s office issued a demand for the money to be paid back, but as at the date of the report, lodged in May, had not received a response.
Plant and equipment was also sold to Arnold Land Development, which the liquidator said constituted a “voidable transaction” – which means it was sold for less than it should have been due to the circumstances and can therefore be seized by the liquidator.
Mr Arnold has indicated he plans to declare bankruptcy, according to the report lodged with the corporate regulator.
C & S Plumbing’s collapse passed mostly under the radar, but came to light in the wake of news.com.au revealing two other major Victorian plumbers had gone into liquidation earlier this year amid an industry-wide crisis. CDC Plumbing and Drainage collapsed in February owing $7 million to creditors while Richstone Group liquidated in June with total debts of $22 million.
*Name withheld for privacy reasons
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