Scott's Refrigerated Logistics collapsed into liquidation, losing $8M a month

Scott's Refrigerated Logistics, an Australian refrigerated-transport group with about 1,500 employees and depots in regional towns including Wodonga, entered liquidation on 3 April 2023 after creditors voted to wind up all six of its intertwined companies. McGrath Nicol administrator Shaun Fraser said it was the only viable path. Creditors heard that the group had been recording monthly losses of $8 million on average from 2021 onwards and that by January 2023 its balance sheet showed a deficiency of net assets of $92 million.

Administrators attributed the failure partly to the group's increased reliance on contractors and subcontracted labour, which was more expensive, as well as insufficient investment in its transport fleet, insufficient cash flow and reliance on external funding to support operating losses. Intense competition, substantial overheads and an inability to pass inflation on to customers also played a part. Receivers from Korda Mentha had tried to sell the business but found no buyer and were selling packages of assets.

Employee claims were estimated at more than $35 million, and employees could claim unpaid wages and leave through the federal Fair Entitlements Guarantee. Contractors, as unsecured creditors, were not covered. The Transport Workers Union said some were owed up to $200,000 and 'may not see a cent', and warned about frozen produce being moved without proper safety processes after the collapse.

About 1,500 employees, over $35M of employee claims, a $92M net asset deficiency by January 2023, and contractors owed up to $200,000 each.

The group relied more heavily on contractors and subcontractor labour, which administrators said was more expensive.

It under-invested in its transport fleet and lacked cash flow, relying on external funding to cover operating losses.

Substantial overheads and intense competition left it unable to pass inflation on to customers.

Losses of around $8M a month continued from 2021 with no buyer found for the business.

Swapping staff for contractors can cost more, not less; without fleet investment and cash flow, a business that can't pass on inflation burns its cash.

McGrath Nicol was appointed liquidator and was verifying employees' Fair Entitlements Guarantee claims; Korda Mentha was selling asset packages. The Transport Workers Union called for an independent body to set transport-sector standards including 30-day payment.