FTI Consulting to administrate collapsed recruiter Rubicor
Rubicor Group, one of Australia’s largest staffing and payroll companies, has collapsed. Restructuring consultants from FTI Consulting have been appointed as administrators.
With over 10,000 placements per year, Rubicor Group is one of Australia’s largest recruitment companies. The listed company on the Australian Securities Exchange, has however succumbed to hardship, following months of poor financial performance and unpaid superannuation. The company’s downfall is regarded by many as the fault of poor management, with many of the firm’s top management lacking experience in the industry.
According to Ross Clennett, a recruitment expert who has tracked Rubicor’s downfall over the past months, “the new board took over and made big statements about failings of the previous board and what they would do differently,” however, “these were individuals with no experience in the recruitment industry…. and now they have fallen flat on their face.”
Rubicor Group, which was founded in 2005 and is the parent of 15 specialist brands in the human capital landscape, including IT recruiter Xpand and Gaulter Russell Numero, works for major companies in Australia such as Commonwealth Bank, Google, Goldman Sachs, National Australia Bank, and Telstra, as well as federal government institutions.
It’s not the first time that Rubicor Group has faced trouble. In 2016, three subsidiaries – Rubicor Group, Locher & Associates and Challenge Recruitment – were placed in voluntary administration in July. In collaboration with Jirsch Sutherland, a deal with creditors was agreed one month later, ensuring that the trio of subsidiaries and their 3,000 employees and contractors were successfully brought out of voluntary administration.
At the time, lead administrator Chris Baskerville from Jisrch Sutherland told news outlet SmartCompany: “These companies are great examples of what directors of companies ought to do when they foresee troubled time ahead. That is, recognise there is a problem, seek professional advice, act on that advice and put the interests of the company ahead of their own personal welfare.”
Learning from mistakes
Three years down the line, Rubicor Group hasn’t seemed to learn from its previous faltering. Now, the company’s management is turning to administrators form FTI Consulting to try to save the staffing and contracting group. According to the management, in a statement released in sync with the tapping of FTI Consulting, “the appointment of voluntary administrators will provide the best opportunity to protect the future of the business and the interests of our clients and employees.”
Filings from Rubicor Group for 2017 show that the company posted a $13.6 million net loss for the 2017 financial year on revenues of $190 million. Statements for the 2018 financial year have yet to be filed.
The news did not hit the market as a surprise. Large recruitment companies are facing growing competition from online marketplaces such as LinkedIn and specialised matching platforms. Meanwhile, companies are embracing technology to bolster their own search and contracting processes. “Digital disruption is forcing the broader recruitment industry to adapt,” said Clennett, with those that miss the boat touted to sail into stormy waters.
After failing to lodge its half yearly accounts, Rubicor Group went into a trading halt on 1st March 2019, providing investors a hint of what was to come. The Board then however stated, “this is no reflection of business operations or performance or indeed any irregularities, rather we’re simply delayed.” Shares have since been suspended at just one cent, and Rubicor’s market capitalisation has nosedived to a paltry $2.4 million.
FTI Consulting has been handed the task to save the company from collapse. The firm is one of the more well-known companies specialised in restructuring and crisis management, and boasts a global track record in the field. The firm’s consultants have started their assessment of the company’s assets and are assembling a list of creditors. One thing is for sure: following a number of internal restructurings which have failed since 2016, they will need a Houdini act to bring Rubicor Group back into business.
