An Australian co-working space provider, that was listed on the stock exchange valued at $80 million just three years ago, has fallen into voluntary administration and faces court action from creditors who are allegedly owed $3.5 million in outstanding debts.
Back in 2019, the company called Victory Offices boasted 21 hubs and 500 co-working desks and had eight new spaces in the pipeline, but on Wednesday it announced it had gone into voluntary administration.
It comes as the company was locked out from three offices in Melbourne and Sydney in July 2021 over allegations of unpaid rent.
The company has now completely exited from co-working in the Sydney CBD where it previously had six office spaces and has also closed three hubs in Melbourne.
In a statement to the ASX, Victory Offices said it was seeking to “recover from the effects of the Covid-19 pandemic” by recapitalising the business and ensuring it can emerge in a stronger financial position.
“The board resolved that, while it is of the view that the company is currently solvent, the company is likely to become insolvent at some future point in time and, hence, that administrators should be appointed to the company,” it said.
“The decision comes as the company navigates through a challenging period where occupancy levels are increasing however higher overhead costs such as rental costs, competition and managing ongoing legal disputes with landlords has necessitated the board to make this decision.”
Danny Vrkic and Daniel O’Brien of DV Recovery Management have been appointed as voluntary administrators.
Mr Vrkic declined to comment to news.com.au as the firm had only just been appointed.
Victory Offices is facing an application to wind up the company launched by creditors allegedly owed about $3.5 million in overdue debts, which is due to be heard in the Supreme Court on Friday, including $985,269 in unpaid rent and associated interest, Business News Australia reported.
The company’s most recent financial report revealed it was “currently subject to legal proceedings of a winding up application brought on by a landlord of a closed location’’.
“The company has engaged lawyers and is rigorously opposing the application,” it read.
Victory Offices had just $24,000 in the bank account at the end of its last quarter and in September this year, it posted a $50.1 million loss.
Its results showed the company’s assets of $1.45 million were overshadowed by its current liabilities of $22.2 million.
When Victory Offices launched on the ASX in 2019 its initial public offering came in at $2 a share, but their value has since plummeted to just 4c before this week’s trading halt, meaning the operator is now worth about $6.6 million.
Victory Offices had been pummelled by the pandemic as lockdowns choked off demand for its co-working spaces, which were previously in prestigious locations such as Barangaroo and Melbourne’s Collins St.
Other start-ups have also fallen over this year, with the tech sector particularly impacted.
Melbourne e-sports company Order also went under after raising $5.3 million in funding last year, blaming the pandemic and cashflow issues for its demise.
Other failed businesses include grocery delivery service Send, which went into liquidation at the end of May, after the company spent $11 million in eight months to stay afloat.
Meanwhile, Australia’s first ever neobank founded in 2017, Volt Bank, went under with 140 staff losing their jobs, while 6000 customers were told to urgently withdraw their funds.