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ABC Learning

The voluntary administration of ABC Learning Centres created a unique and challenging situation for parents, communities and the child care sector. In managing this situation, the Australian Government placed the interests of parents, their children and ABC Learning employees front and centre in offering stability and help to ensure parents could continue to access child care.

When ABC Learning entered voluntary administration on 6 November 2008, the Government acted swiftly to provide information to parents, staff and the community about the evolving situation and provided funding so that all centres could continue to operate while the ABC Receiver undertook the necessary operational reviews.

The Government established an orderly, logical process for working through the problem with the primary focus on continuity of care for the children involved.

In December, the ABC Receiver, McGrathNicol, confirmed that 720 centres would continue to operate into 2009 and decided to close 55 ABC Learning Centres. The Government worked closely with the Receiver to ensure that children at those centres had alternative child care options close by and that the majority of staff could continue to work at other ABC Learning Centres or, with the assistance of the General Employee Entitlements and Redundancy Scheme (GEERS), receive protection for their employee entitlements.

The Government then acted to keep open the ABC Learning Centres that the ABC Receiver deemed unviable under the ABC business model, now known as ABC2 Group. The Government believed that many of these centres represented an opportunity to gain greater diversity in the child care market.

On 18 December 2008, the New South Wales Supreme Court appointed Stephen Parbery and Daniel Bryant of PPB Corporate Recovery (PPB) as the new Court Appointed Receivers (CAR) over ABC2 Group. PPB, with assistance from the Government, looked at a range of sustainable options for ABC2 Group child care centres, including their transfer back to landlords, sale to new owners or, in some cases where possible, the transfer of children to suitable alternative arrangements.

On 9 December 2009 the Receivers for ABC Learning Limited, McGrathNicol, announced that GoodStart is the preferred purchaser for the majority of the remaining ABC1 child care centres.

GoodStart is a consortium of not-for-profit entities including Social Ventures Australia, Mission Australia, the Brotherhood of St Laurence, and the Benevolent Society. Together, these organisations have committed to providing the highest quality, socially inclusive, accessible and affordable child and early childhood education for Australia’s children.

It is anticipated that sale agreements will be finalised and contracts exchanged in either December 2009 or January 2010. The completion of the sale and the transfer of the centres to their new owner/s is anticipated to be early in the new year.

Latest News

9 December 2009

The Receivers for ABC Learning Limited, McGrathNicol, have announced that GoodStart is the preferred purchaser of the majority of the remaining ABC1 child care centres. GoodStart has been established by four non-profit organisations including Social Ventures Australia, Mission Australia, the Brotherhood of St Laurence, and the Benevolent Society.

Together, these organisations have committed to providing the highest quality, socially inclusive, accessible and affordable education and care programs for Australia’s children.

The Australian Government has agreed to loan GoodStart $15 million to assist its acquisition of the centres.

It is anticipated that sale agreements will be finalised and contracts exchanged in either December 2009 or January 2010. The completion of the sale and the transfer of the centres to their new owner/s is anticipated to be early in the new year.

For more information about the sale of the remaining ABC1 child care centres, please contact the Receiver’s hotline on 1800 222 543 between 9:00am and 6:30pm (AEDT). For regular updates on ABC1 centres, please visit www.childcare.com.au or contact your local centre.

Further information can be found in the Ministers’ media release.

15 September 2009

The future of all ABC2 Group centres has now been resolved. This process was successfully completed in September 2009. The final status of all ABC2 centres can be viewed on the PPB website.

236 have successfully transferred to new operators, including 21 Department of Defence centres.

Regrettably, suitable buyers could not be found for 22 centres, 19 of which have now closed. The final three centres are scheduled to close on 18 September 2009, if no viable offer for their purchase is made. An additional four centres have closed due to circumstances beyond the control of the receiver. Families affected by these closures have been given information to assist them to locate alternative care.

Over 85% of employees in these centres have secured employment with the new operators or in other ABC centres. Those that were unable to secure ongoing employment have been assisted to access their entitlements through the Government funded General Employee Entitlements Scheme.

ABC2 Group centres were sold to 78 different operators, bringing greater diversity into the Australian child care sector. 34 of these former ABC centres are now operated by not-for-profit organisations.

In the meantime the ABC Receiver, McGrathNicol continues to manage 705 ABC Learning centres which remain with the original receivership. On 31 August 2009, McGrathNicol announced the commencement of a sale process for these centres, with the intention that all centres will have transferred to new ownership by early 2010. Families and employees will be informed of the outcome of this process for their centre.

Specific questions concerning the management and operation of ABC centres should be directed to the receiver’s hotline on 1800 222 543. Regular updates for families and ABC Learning employees will be provided by ABC Learning's receiver on the Childcare Website.

15 May 2009

The Court Appointed Receivers (CAR) for the ABC2 Group, Stephen Parbery and Daniel Bryant of PPB, have today reported that the transfer of ABC2 centres to new operators is continuing. The smooth transition of centres to new operators is now occurring on a daily basis without disrupting the existing care arrangements of families.

It is expected that more than 210 centres will continue with new operators.

The Government is continuing to support these centres while the sales process is completed to ensure continuity of care for children and provide some certainty for parents and employees.

PPB now expects that only around 16 centres will close, down from the expectation, on 15 April 2009, that 19 centres would need to close.

Sufficient alternative long day care places have been found in nearby centres to ensure all of the affected families have had the option of care in their local area.

PPB has continued to explore sustainable options for the eight centres that did not receive acceptable bids as part of the Expression of Interest process and where no alternative child care places had been identified.

Buyers have been found for two of these centres and they will now continue to operate under new owners. A third centre from this group, ABC Boulder in WA recently closed as sufficient alternative places became available in the local area.

The Government is pleased that more than 85 per cent of employees working in ABC2 centres will be retained by the new operators or redeployed to other ABC centres.

PPB is continuing to keep in close contact with parents and staff in centres to update them on progress and is confident that all transfers will be successfully concluded over the next few weeks.

The current status of all ABC2 centres is regularly updated on the PPB website.

15 April 2009

Today the Court Appointed Receivers (CAR) for ABC2 Group, Stephen Parbery and Daniel Bryant of PPB, announced the outcome of the Expression of Interest process for the 241 centres in ABC2 Group.

The vast majority of these centres are to continue with new operators. Operators have been selected for 210 centres. With respect to 193 of these, operators have signed contracts and these are listed at www.ppb.com.au/site/abc. Negotiations for the sale of a further 17 centres are close to finalisation and PPB is confident that these centres will continue to operate.

Regrettably, for 19 services a suitable buyer could not be found. These services will close by 15 May 2009. Sufficient Long Day Care places have been identified in nearby centres to ensure all families have the option to secure alternative care in their local area. Families will be informed of these options in writing.

For a further eight services suitable alternative care is not available in the local area. PPB will continue to investigate possible solutions for these centres over the next month. It is still possible, however, that these centres may have to close in June 2009.

All employees affected by centre closures will be given information relating to their individual circumstances in the near future.

The outcome for each individual ABC2 Group centre is available on the PPB website at www.ppb.com.au/site/abc.

13 March 2009

The Court Appointed Receivers (CAR) for ABC2 Group, Stephen Parbery and Daniel Bryant of PPB, today announced that they have requested that the Australian Government approach the NSW Supreme Court to seek a short continuation of the CAR’s appointment until 15 May 2009. No additional Government funding is required for this extension.

The Government has welcomed the announcement by the CAR and is pleased that the sale and transfer process for the centres under its control is progressing well.

The CAR has commenced exchanging contracts for the sale of the first tranche of 65 centres.

This means that these centres are likely to be transferred to new sustainable operators in the near future, subject to licensing and other normal processes being completed.

PPB is also confident that they can progressively secure new operators for most of the remaining centres in the coming weeks.

Due to the number and complexity of offers received, and multiple stakeholders involved; PPB sought a one-off continuation of their appointment for six weeks.

The complexity of the Court Appointed Receivership is reflected in the fact that they are dealing with over 180 bidders whose bids relate to leases held by over 100 landlords.

The Government has agreed to continue to fund losses during this period, up to 15 May 2009, drawing from unused funds in the existing $58 million commitment.

PPB has also made it clear that it may not be possible to find suitable operators for all of the centres. If this is the case, the Government will work closely with PPB to ensure that as far as possible, alternative care is available for any families who need it.

The Government is aware that this is an anxious time for the families and employees of these centres.

PPB has undertaken to announce the final outcome for all centres no later than 15 April 2009.

PPB will continue to keep parents and employees regularly informed throughout this process and will be writing to them shortly to update them on progress.

More information can be found on PPB’s website at www.ppb.com.au/site/abc

5 February 2009

ABC2 Group’s Court Appointed Receiver (CAR), PPB Corporate Recovery (PPB), has announced today that 470 parties have submitted non-binding offers for the Government-supported ABC Learning centres.

ABC2 Group comprises the 262 child care centres which were previously under the control of ABC Learning Centre’s Receiver, McGrathNicol, and which were judged unviable under the ABC business model. It also includes 13 centres that were labelled as ABC centres and were previously operated by 123 Operations.

On 14 January, PPB commenced a formal Expression of Interest process under which interested buyers needed to demonstrate that they could provide high quality, long-term child care in a safe environment. As part of this process, interested buyers have been alerted to the requirements they will need to meet in order to secure a license.

By 21 January, PPB had received more than 600 formal expressions of interest from a diverse range of parties.

Interested parties were then provided with more detailed information on the centres and PPB indicated whether they believed the offers met the requirements. A total of 470 non-binding offers were then submitted by 31 January.

The continuing strong interest clearly demonstrates that the market believes that there is a viable future for many of these centres.

PPB will now determine which of the interested parties will be shortlisted, having regard to the selection criteria and their duties as Court Appointed Receiver. Shortlisted parties will be given access to more detailed information on the centres and will be invited to participate in Phase 2 of the process by submitting formal (binding) offers by 25 February 2009.

PPB will also be considering whether there are some circumstances where the best option is to transfer children to nearby centres.

ABC2 Group centres will continue to operate as normal through until 31 March 2009 where necessary. PPB, with assistance from the Government, is aiming to resolve the future of all centres under their control by 31 March 2009.

Further details on the Expressions of Interest process is available at: www.ppb.com.au/site/abc

14 January 2009

On 14 January 2009, the Court Appointed Receivers of the ABC2 Group, Stephen Parbery and Daniel Bryant of PPB Advisory (PPB) announced the commencement of an Expression of Interest (EOI) process for parties interested in obtaining those child care centres which form part of the ABC2 Group child care centres.

ABC2 Group comprises 228 child care centres which were previously under the control of ABC Learning Centre’s Receiver, McGrathNicol, and which were judged unviable under the ABC business model. It also includes 13 centres that were labelled as ABC centres and were previously operated by 123 Operations.

The Australian Government has made up to $34 million available to keep the 241 child care centres open until 31 March 2009.

Newspaper advertisements calling for EOI were placed in all major metropolitan and regional press on14 January.

PPB will be applying rigorous selection criteria against which they will assess all EOIs. Interested buyers must be able to meet appropriate accreditation and licensing requirements and be able to demonstrate that they can provide high quality, long-term childcare in a safe environment.

The criteria will also emphasise greater diversity in long day care provision in Australia by encouraging organisations of different sizes and character and including not-for-profit organisations.

A demonstrated commitment to adopt leading-practice employment approaches, as indicated by preparedness to take on accrued employee entitlements of former ABC employees will also be seen as desirable as part of the short-listing process.

PPB will work quickly to establish the best way forward for each individual centre and will keep parents, staff and centre directors informed of developments.

Expressions of interests must be lodged by 21 January 2009 via email to abc2.expressionsofinterest@ppb.com.au.

Parties who have previously expressed interest to either McGrathNicol or PPB are not required to respond again. PPB will be in contact to advise on the next step of the process.

The Government will continue to work closely with PPB to ensure the outcome of the EOI process delivers a high quality and sustainable child care service for Australian families, with a market structure that is characterised by choice and diversity.

Further information on the EOI process including a detailed Fact Sheet can be found on www.childcare.com.au and www.ppb.com.au/site/abc. The Facts Sheet includes information on the expected EOI timelines.

18 December 2008

On 18 December 2008, the New South Wales Supreme Court appointed Stephen Parbery and Daniel Bryant of PPB Corporate Recovery (PPB) as the new Court Appointed Receivers over:

• 228 childcare centres previously under the control of ABC Learning Centres Receiver, McGrath Nicol; and
• 21 centres owned and leased by the Department of Defence. These centres will continue to operate with Government support while new management arrangements are determined.

The Australian Government sought this appointment following ABC Learning’s Receiver, McGrath Nicol’s announcement of the findings of its operational review last week.

McGrath Nicol will transfer the 249 childcare centres to the control of a fully owned subsidiary to be known as ABC2 Group effective from January 1 2009.

In addition, a further application is expected to be made by the Australian Government to have the 13 ABC Learning branded child care centres, owned by 123 Operations, transferred to be under the control of this Receivership. These 13 centres were included in the group of centres identified as unviable in McGrath Nicol’s announcement of 10 December.

The childcare centres in the ABC2 Group will continue to operate with financial assistance from the Australian Government into the New Year and, if necessary, until 31 March 2009.

PPB will now look at a range of sustainable options for ABC2 Group childcare centres, including their sale to new owners or, in some cases, the transfer of children to suitable alternative arrangements.

This will include reviewing all submissions from parties who have expressed an interest to date in ABC Learning’s childcare centres.

In the New Year, PPB will initiate a second round of expressions of interest to gain a better understanding of the centres. This will give the opportunity, if necessary, to provide additional information and seek new EOI submissions.

10 December 2008

On 26 November 2008, ABC Learning’s Receiver identified that 656 ABC Learning centres would continue to operate in 2009, and that 386 ABC Learning centres would remain under review.

The Receiver has now identified 64 additional centres that will remain a part of the ABC business.

It is now up to the Receiver to determine the way forward for the 720 profitable centres.

The Receiver also announced that 55 ABC centres are to close from 1 January 2009. Parents are being offered places in nearby profitable ABC centres or, in a small number of cases, centres run by other providers with available places.

Of the remaining centres:

• 21 centres owned and leased by the Defence Department will continue to operate with Government support while new management arrangements are settled
• 5 centres are not owned by ABC Learning but by CFK (4) and Neighbourhood Early Learning Centres (1). These should not have been included in earlier listings, and
• 241 centres are considered unviable under the Receiver’s ABC Learning business model.

Under the Corporations Act 2001, Section 420A, the Receiver has an obligation to maintain the value of the assets. This means that, under normal circumstances, the 241 unviable centres would be closed.

It is unacceptable to the Government for this large number of centres to close at short notice without suitable alternative options being identified for all of the children in those centres.

These 241 centres could be viable under different management and represent an opportunity to achieve greater diversity in the child care market. Therefore, the Australian Government will be making an application to the NSW Supreme Court for a Court Appointed Receiver to be installed to work closely with the Government, landlords, staff and parents to ensure continuity of care for children in these centres.

To support this process, the Australian Government will provide up to $34 million of additional funds to keep these 241 centres open into the New Year and, if suitable alternative arrangements cannot be made, through until 31 March 2009.

This will give those parents further security while the Government and key stakeholders move into phase two of finding a sustainable child care solution for working parents impacted by the collapse of ABC Learning.

A summary of the status of the ABC Learning child care centres is set out in the following table:

The Receiver has provided a full list of ABC Learning centres, and their status, on ABC Learning’s web site - www.childcare.com.au.

5 December 2008

ABC Learning’s Receiver, Chris Honey of McGrath Nicol, has made a further announcement today about the future of ABC Learning. Please follow this link to read the complete announcement - www.childcare.com.au

26 November 2008

ABC Learning’s Receiver, Mr Chris Honey of McGrath Nicol, has written to ABC parents and staff today confirming that a majority of the Group’s childcare centres will continue operating in 2009.

The Receiver has identified that 656 ABC Learning centres will continue to trade as normal in 2009. This is a welcome development for thousands of parents and ABC Learning staff around the country.

This represents almost two thirds of all ABC Centres, which provide care for 80,000 Australian children, or more than 70% of children in ABC Learning centres.

The Government will continue to work closely with the Receiver to ensure continuity of care for children at the ABC Learning centres that remain under review.

Our first priority is to ensure the children at those ABC centres continue to have access to stable, quality care. We understand that parents and employees at these centres need clarity about their situation as quickly as possible.

ABC Learning’s Receiver, McGrath Nicol, expects a proportion of these centres will stay open but needs more time to examine the centres in more detail so that the correct decision is made on their future.

The Receiver says he expects to make a further announcement in respect of these centres in a week’s time. It is important that parents remember that all ABC Learning centres will continue to operate at least until 31 December and a large majority will remain open in 2009.

The Receiver has provided a full list of ABC Learning centres, and their status, on ABC Learning’s web site - www.childcare.com.au. 

19 November 2008

The operator of up to 43 childcare centres in NSW, CFK Childcare Centres Ltd, has gone into voluntary administration.

The CFK board appointed BDO Kendalls as voluntary administrators on Tuesday 18 November.

The CFK board said it would work with the administrator with a view to keeping open as many centres as possible.

CFK hopes expressions of interest in some if its centres will result in some being bought by third parties.

The Administrator has advised that CFK centres are open.

Parents are advised to contact their local centre for further information.

Please note: CFK Childcare Centres Limited should not be confused with the Creche and Kindergarten Association of Queensland (more commonly known as C&K). A media release from C&K further clarifies the current position of C&K.

11 November 2008

ABC Learning’s Receiver, McGrathNicol, has commenced an Expression of Interest process encouraging parties to register their interest in the future of ABC Learning centres.

The Receiver is collating all expressions of interest to ensure they have the best available range of options for considering the future operation of ABC Learning centres.

Expressions of interest should be forwarded to Marco Poelzl at the receiver: mpoelzl@mcgrathnicol.com

For guidance about the Expression of Interest process, please contact the receiver’s hotline on 1800 222 543, this hotline will operate between 9:00 and 6:30pm (AEDT).

7 November 2008

The Australian Government has the interests of parents, their children and ABC Learning employees front and centre in wishing to offer immediate stability and help ensure continuity of service.

That’s why the Australian Government has committed up to $22m conditional funding to ensure that all ABC Learning child care centres remain open and providing care until 31 December 2008.

The $22m represents the possible costs of supporting the continued operation of unprofitable ABC centres for two months and will allow the receivers to go through in an orderly transition phase. This represents around 40% of ABC centres.

The receiver will continue to work closely with the Australian Government to undertake a thorough review of ABC Learning’s operations and work out a way forward for 2009.

By mid December, it is envisaged that the Australian Government will be in a position to make a further announcement about the future of ABC Learning child care centres.

6 November 2008

The Australian Government has welcomed the receivers of ABC Learning Centres, McGrath Nicol, commitment to keeping the child care centres open and that they would continue to operate as usual.

The Government has been in discussions with creditors, particularly the banking syndicate of international and Australian banks who have appointed the receiver, to support continuity of service delivery to provide some comfort to parents and employees.

This is a unique situation because ABC Learning is the largest private child care provider in the country with approximately 120,000 children attending around 1,100 child care centres that employ more than 16,000 people.

The Child Care Industry Taskforce, in the Department of Education, Employment and Workplace Relations, is working closely with the administrator, Ferrier Hodgson, and the receiver, McGrath Nicol.

The Australian Government continues to support families to access child care by providing subsidies through the Child Care Benefit and the Child Care Tax Rebate.