What’s happening at Star Entertainment? Voluntary administration? Can the company recover?

At the end of last week, we covered the ongoing issues at Australian casino giant Star Entertainment. A trading hold was put into place, meaning shares could not be bought or sold as the company failed to produce its half-year results to the ASX (Australian Securities Exchange).

Despite hopes of several offers of liquidity “that day”, by Monday, Star issued a note to the ASX saying it was “unlikely to be in a position to lodge its results until it has secured a refinancing commitment that would enable The Star to refinance all of the Group’s existing corporate debt, as well as to provide additional liquidity”

Can Star continue to operate indefinitely?

Australian financial law forbids companies to continue to operate while insolvent, so does this mean that Star is in fact solvent and can continue to trade? According to an interview with ABC, Jason Harris, professor of corporate law at the University of Sydney, believes that it is like Star is actually already insolvent but using “Safe harbor” rules to continue to operate.

Safe harbor gives company directors the opportunity to take steps to correct the issue while continuing to operate, more or less as normal.

“”You don’t have to tell anyone you’re enacting safe harbour, which has been criticised,” Professor Harris said.

“But if we did have a disclosure regime, all suppliers would hold supply and employees would quit, so it needs to be confidential.”

Will Star Entertainment’s employees get paid?

Star Entertainment boasts over 8,000 staff on its website but payday looms this week alongside all of the uncertainty. Will Star be able to pay them all under the current restrictions?

Andrew Jones of the United Workers Untion told Rado National Breakfast that staff are due to be paid on Wednesday (5th Match) saying, “Star put out a notice to staff on Friday assuring staff that they’ll be paid this week, but that’s yet to be seen, obviously, hey’re not highly paid people — they’re struggling with the cost of living as everyone else is and they can’t afford to take a pay cut.

“The situation for Star workers in terms of this current financial crisis dates back to September of last year, but for many Star workers, they’ve been dealing with Star’s uncertainty for two to three years.“

Will Star Entertainment be broken up?

Australia’s ABC news believes it is a possibility with independent administrators needing to be appointed if the company enterss voluntary administration. At that point the administers could search for buyers for the individual assets such as the hotel group, if a rescue package for the company as a whole cannot be sourced.

The post What’s happening at Star Entertainment? Voluntary administration? Can the company recover? appeared first on ReadWrite.