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Co-working and flexible workspace services provider Victory Offices (ASX: VOL) has today entered into voluntary administration, citing the impact of COVID-19 on its operations as the reason behind its downfall.
However, the company maintains it is currently solvent, but notes it is likely to become insolvent at some future point in time - hence the appointment of DV Recovery Management (DVRM) as voluntary administrators.
In an ASX statement, Victory Offices says it is looking to recapitalise the business to ensure it can emerge from the period of voluntary administration in a stronger financial position.
The company’s board of directors has appointed Danny Vrkic and Daniel O’Brien from DVRM as administrators, who have assumed control of the company and are to work with the board during the period to ‘maximise the outcome for all stakeholders’.
DVRM has been approached for comment regarding the company’s appointment.
“The decision comes as the company navigates through a challenging period where occupancy levels are increasing however higher overhead coasts such as rental costs, competition and managing on-going legal disputes with landlords has necessitated the board to make this decision,” Victory Offices says.
In addition to the appointment of voluntary administrators, Victory Offices has requested that all trading in the company’s shares on the ASX remain suspended during the administration period.
The appointment of DVRM comes after a difficult period for Victory Offices which has struggled to convince tenants to return to its co-working and office spaces post-pandemic.
That resulted in Victory making a complete exit from co-working in the Sydney CBD where it previously had six office spaces, followed by the closure of three more office locations in Melbourne.
The firm was also locked out from three offices in Melbourne and Sydney in July 2021 over allegations of unpaid rent, as well as outgoings and cleaning contributions.
Further, Victory is facing an application to wind up the company launched by creditors allegedly owed about $3.5 million in overdue debts.
As per court documents obtained by Business News Australia, Victory Offices owes two creditors $3.5 million in total - at least $985,269 of which is unpaid rent and associated interest which was due and payable to retirement village operator Zig Inge Group at least since 16 May 2022. The remaining $2.5 million is owed to Maia Financial - a subsidiary of KKR & Co and HPS.
Victory Offices is due to attend a Supreme Court hearing this coming Friday with respect to the winding up application.
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