Jobs lost as Australia's Kit Digital is placed into administration

By InvestSMART · 7 Jan 2013

By InvestSMART ·
7 Jan 2013

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THE Australian arm of a global tech firm has gone into administration, leaving about 70 workers without jobs. Kit Digital Australia, a subsidiary of New York-based software group Kit Digital, was handed over to administrators on December 20.

PPB Advisory administrators Nicholas Martin, Marcus Ayres and Stephen Longley were appointed to assess the company's finances.

The IT group has done work for the Australian government, NAB, Betfair and Foxtel.

Administrators said the Australian arm was forced to close after its parent company ran into financial difficulty. One former local employee told BusinessDay most staff had not been paid since November 25.

PPB Advisory, which met creditors on Friday, said about 90 workers were initially made redundant, with 15 to 20 jobs saved when contracts were moved to a new entity. It said the financial state of the company was being assessed, and would not reveal how much creditors were owed.

Other local subsidiaries, Idaptive and Hyro Digital, have also been placed in administration. Kit Digital took over Hyro last June.

The US parent company said in December it had dismissed Grant Thornton as the company's independent auditor and was undertaking a restatement of the company's historical financial statements for 2009, 2010 and 2011. The international group's clients include Associated Press, AT&T, BBC, BSkyB, Disney-ABC, Google and News Corp.

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Frequently Asked Questions about this Article…

What happened to Kit Digital Australia and why was it placed into administration?

Kit Digital Australia, the local arm of New York–based software group Kit Digital, was placed into administration on December 20 after its US parent ran into financial difficulty. Administrators from PPB Advisory were appointed to assess the company's finances and manage the fallout.

How many jobs were lost when Kit Digital Australia went into administration?

The article reports that about 70 workers were left without jobs. PPB Advisory later told creditors that roughly 90 workers were initially made redundant, with 15 to 20 jobs preserved when some contracts were moved to a new entity.

Who are the administrators handling Kit Digital Australia’s case?

PPB Advisory appointed administrators Nicholas Martin, Marcus Ayres and Stephen Longley to manage the administration and assess the financial position of the Australian business.

Were Kit Digital Australia employees paid before the administration?

According to a former local employee quoted in the article, most staff had not been paid since November 25, suggesting payroll issues preceded the administration.

Which clients did Kit Digital Australia and the international group work with?

The Australian IT group had done work for the Australian government, NAB, Betfair and Foxtel. The international Kit Digital group’s clients include Associated Press, AT&T, BBC, BSkyB, Disney‑ABC, Google and News Corp.

Are other local Kit Digital subsidiaries affected in Australia?

Yes. Other local subsidiaries, Idaptive and Hyro Digital, were also placed into administration. The article notes Kit Digital had taken over Hyro in June.

What do administrators say about creditors and how much is owed?

PPB Advisory met with creditors and said the financial state of the company was being assessed. The administrators did not reveal how much creditors are owed at the time of the report.

What does the US parent company’s auditor dismissal and financial restatement mean for investors?

The US parent dismissed Grant Thornton as its independent auditor and is undertaking a restatement of historical financial statements for 2009–2011, which signals significant accounting and financial issues. For investors, this is a red flag to monitor administrator updates, restatement results and any official announcements from the parent and its advisers.