Popular childcare chain collapses owing almost $20m
A popular chain of childcare centres that once operated multiple facilities across Adelaide has gone into liquidation owing almost $20m to creditors.
Precious Cargo’s seven childcare centres were placed into liquidation on Tuesday after its sale to Mayfield Childcare for $4.8m failed to clear its debts.
Adelaide-based business advisory firm Heard Phillips Lieberenz has since been appointed to handle the winding down of the company.
Director Andrew Heard said changes to workplace habits could be partly to blame for Precious Cargo’s decline in occupancy.
“There is no doubt with people working from home their need for childcare probably reduced during that time,” he said.
Camera IconPrecious Cargo childcare in Adelaide has collapsed. Facebook Credit: ,NewsWire
Mr Heard said occupancy levels at Precious Cargo hovered about 61 per cent when the company went into administration.
At the time, the company was “encumbered by a reasonable amount of debt it couldn’t service”, and demands by the ATO were expiring.
As a result, Precious Cargo first was put into voluntary administration in June 2024 before being sold to Mayfield Childcare in August.
The company was given a five-week extension of the administration period by a court so that all of the centres could be sold.
Despite the sale, Mr Heard said it wasn’t enough to get past the secured and priority creditors, so there was not a surplus for ordinary, unsecured creditors.
As a result, he said the company was still owing about $19m, $14m of which was intercompany debt and not to suppliers.
Camera IconThe centres were sold to Mayfield Childcare for $4.8m. Facebook Credit: ,NewsWire
The rest of the owed monies included $1.2m to trade creditors, about $2m in outstanding tax, $1.2m for a private loan as well as “some payroll”.
Precious Cargo was founded in 2006 by Cheryl Higrov and followed the Montessori method of teaching.
Mr Heard said the sale was an opportunity to grow the business.
“They have been quite profitable in the past,” he said.
“So, getting the occupancy level levels back up to where they once more should see the business barrel along well in future.”
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