Our client is a Registered Training Organisation (RTO) that operates as a First Aid Training Institute.

It provides training in First Aid, Asthma & Anaphylaxis, CPR, Childcare First Aid, Low Voltage Rescue, Advanced First Aid, and Advanced Resuscitation throughout the Sunshine Coast and Southeast Queensland.

The company was bought in November 2021. After reviewing internal processes, it was found that substantial work was required to make the business profitable.

The Directors heavily invested in software, systems, equipment, and other resources to elevate the business to the necessary level, which greatly affected the company’s cash flow.

Debt

Total debt within this SBR was approx $177,589 owing to the creditors, with the largest of which was  the ATO.

Background

Following Government restrictions imposed before and after COVID-19, the business faced increased operating costs and difficulties conducting face-to-face training courses due to social distancing requirements.

Additionally, participants were hesitant to attend face-to-face training even after these requirements were lifted. These factors led to the cancellation of training courses, resulting in either refunds or rescheduling of bookings, which ultimately caused a significant decrease in income.

The Directors observed that instead of booking training courses weeks in advance, attendees waited until just a few days before the course to reserve their spots. This often resulted in the cancellation of training courses due to low attendance.

The Directors also sought to expand operations to Tasmania but encountered challenges because of the current offerings in the state.

Proposal

The proposal provided for an upfront payment of $24,000, which the directors personally contributed in equal parts. Creditors voted to accept the restructuring proposal, which resulted in a 13.24/$ return.

Outcome

The business has continued to trade profitably and has taken various steps to improve its position moving forward and to ensure ongoing profitability, including:

• Reviewing operating costs which included ceasing to operate in Tasmania and termination of the Toowoomba lease and operations in Toowoomba.
• A  50% reduction in staff labour costs.
• Increases marketing of the business and course offerings.
• Conducted a detailed analysis of operating expenditure in order to achieve further costs savings, therefore reducing overheads.