Originally Posted by
Sunfish
Full employee entitlements plus lsl and redundancy was estimated at 440 million. Virgin had 1.4 billion in cash and receivables at that point.
What 'point' are you talking about, Sunfish? At the point that the business entered voluntary administration Virgin had $541.4 million in cash and term deposits but those funds were frozen by financiers. Deloitte had to borrow money to pay wages during the first two weeks of the administration.
If you want to point the finger at someone for blowing through the reserves you would hope marked the threshold for entering voluntary administration (namely, sufficient unrestricted cash to pay staff wages and entitlements), then take aim at management. They determined when the administrator would be called in.
It is now apparent that management was essentially flying blind when it came to the business's actual finances and financial performance. On the day that the administrator has determined the business probably slipped into insolvency, Virgin's CEO was telling the market that
'We are well positioned to weather this storm.' Clueless would be one way to describe that.
The administrator was placed in the invidious position of having to quickly make a determination whether to continue trading - which meant using whatever cash they could free up to continue running the business cognisant that doing so would mean less to nothing in the kitty for employee entitlements in the event of liquidation - or cease trading and liquidate the business then and there. The reason that Deloitte found themselves in that position was not of their making, it was because management had left it a month too late before biting the bullet and entering voluntary administration. And I seem to recall that belated decision being called 'courageous' by someone at the time.