Collar had $28k in the bank and debts of $28 million when it went under

The sixth report to the creditors of Collar Talent Group has revealed the extent of the hopeless financial position the company was in at the time of liquidation and the liquidators’ assessment of the negligence and incompetence of the company’s CEO and sole director, Ephram Stephenson.

Collar entered liquidation on 28 February 2025, having traded under a Deed of Company Arrangement (DOCA) since 12 July 2024, and on 28 May 2025 the company’s liquidators David Ingram and David Ross circulated their most recent report.

The liquidators noted that the DOCA was terminated on 28 February 2025, due to the company’s failure to meet ongoing obligations, including monthly contributions, trading shortfalls, employee entitlements, and superannuation liabilities.

Specifically, the company had a $2.17 m shortfall in its DOCA obligations as of 11 February 2025, which was just over one-third of its total DOCA obligations outstanding as at that date.

Stephenson initially indicated to the administrators his intention to rectify the DOCA defaults through a proposed sale of company shares, which would have resulted in all outstanding contributions being paid in full. However, after prolonged negotiations with various prospective purchasers, not identified in the report, no sale eventuated.

The key contributing factors in the company’s failure were identified as:

• Inadequate working capital due to rapid expansion without sufficient funding.
• Rising operating expenses from increased staffing, facilities, and technology investment.
• High financing costs from invoice factoring and ATO payment arrangements.
• Loss of three major clients in early 2023.
• Reduced profit margins due to aggressive pricing.
• Internal systems and processes did not scale effectively with growth adding costs and inefficiencies.
• Under-capitalisation, insufficient cash flow, poor strategic management, and sustained trading losses.

The liquidators added, “We believe the negative publicity hindered the Company’s ability to restructure effectively under the DOCA and was a key factor in the Company’s inability to comply with the terms of the DOCA.”

The headline result is that the company has a net shortfall of just over $28 million, made up as follows:

• Total estimated assets of $2,183,543 comprising cash at bank: $28,800; sale of business proceeds: $2.15 m; and debtors, loans, and prepayments TBC.

• Total estimated liabilities of $30,452,249, comprising employee entitlements of $4.24 m; ordinary unsecured creditors of $26.1 m, and related party unsecured creditors of $104,111.

The business and assets were sold to Collar Care Group Pty Limited (part of Mass Resources Group) for an estimated purchase price of $2.4 m on February 7, 2025, prior to the liquidators’ appointment. Twenty-six existing staff employees accepted offers of employment from MRG.

The final purchase price, after adjustments, was $2,153,743 with $1,608,640 received, and $545,102 from the third period currently under review for release. The liquidators report the sale appears commercial, conducted in good faith, and in creditors’ best interest despite no formal valuation.

Employee entitlements total $4.24 m, including superannuation ($2.96 m, covering pre-VA and DOCA period liabilities); wages ($148k), leave entitlements ($370k); payment in lieu of notice ($490k); and redundancy ($271k).

Of Collar’s former employees, former head of commercial, Alfred Wilkinson ($103k), former NSW state director, Corin Leckie ($72k) former managing director Rachel Jones ($62k), former CFO Peter Brown ($49k) and former director of payroll, Trevor Marron ($44k) are the five most out-of-pocket with 75% of the 124 former Collar employees owed under $10k each.

The major unsecured creditors are the ATO ($22.17 m for unpaid GST and PAYG), various state revenue offices ($1.46 m) and 110 trade creditors ($2.48 m).

Of the trade creditors, CGU Insurance ($308K), SEEK ($303k) and footwear and apparel retailer Accent Group (224k) are the largest unsecured creditors.

None of the company’s unsecured creditors are likely to see a cent of what they are owed.

The report addresses potential offences committed by the company’s sole director, Ephram Stephenson.

The liquidators with respect to potential offences under the Corporations Act (Sections 588G, 180, 181), “It is our view that the Director has breached the above offences due to, inter alia, the following:

• failing to make sufficient provision to meet statutory liabilities due to the ATO;
• failure to lodge and satisfy liabilities with respect to statutory returns ie) tax returns, business activity statements etc
• poor strategic management of business, including non-compliance with taxation obligations and failing to monitor and control expenses as the business grew and failed to adequate quote customer contracts
• failing to comply with the terms of the DOCA, including defaults on required contributions and statutory liabilities during the DOCA period;
• failing to appropriately manage the affairs of the Company while it was subject to the DOCA, including overseeing financial obligations and ensuring commitments under the DOCA were fulfilled;
• entering into potential uncommercial transactions/unreasonable director-related transactions (subject to further investigations);
• the company failing to pay its liabilities as and when they fell due; and
• failing to cease trading at an earlier date.

A full report to ASIC is pending.

Preliminary review indicates the company may have traded while insolvent from December 2022, with a potential claim of c. $22 million, likely to increase, for which the Director may be personally liable.

The liquidators also note that preliminary investigations suggest cash drawings and use of company funds for personal items by the Director might be voidable.

Unfortunately, the liquidators paint a pessimistic picture of the likelihood of Stephenson’s asset pool satisfying any claims that may be made against him, noting that the “Director holds limited assets (joint owner of one property with a mortgage, no other private company shares) and has provided a declaration indicating limited capacity to satisfy potential judgments. An updated declaration will be requested,” with creditors “invited to fund recovery actions or purchase the rights to sue for voidable transactions or insolvent trading.”

A first priority dividend was declared and paid in respect to wages and superannuation at a rate of circa 70 cents in the dollar (totalling $2,417,312) to the ATO on 16 December 2024, which the liquidators noted, “have subsequently been distributed to the respective employees by the ATO.”

A second priority dividend for unpaid wages and superannuation was scheduled for July 8, 2025, and it is not known what dividend was declared.

The liquidators noted action items outstanding include, collecting remaining sale agreement proceeds and company debtors; finalisation of investigations into voidable transactions and insolvent trading and preparing and lodging a Section 533(1) investigation report with ASIC.

What seems inevitable is that very few people owed money by Collar will see even a fraction of what’s owed to them and everybody else will receive nothing.

It’s a devastating outcome for hundreds of people who put their faith and trust in Ephram Stephenson and got badly burned.

Related blogs

Stephenson tries, and fails, to take full responsibility for Collar’s demise

Stephenson publicly re-emerges from the ashes of Collar Group’s collapse

Stephenson retakes control of Collar but history is not on his side

Collar creditors stuck between a rock and a hard place