ONE of Western Australia’s largest advertising agencies, The Marketing Mix, has been hit by the collapse of diet group The Metabolism Centre, with the agency’s former holding entity facing liquidation after losing close to $1 million. Carfee Pty Ltd, the
ONE of Western Australia’s largest advertising agencies, The Marketing Mix, has been hit by the collapse of diet group The Metabolism Centre, with the agency’s former holding entity facing liquidation after losing close to $1 million.
Carfee Pty Ltd, the former owner of The Marketing Mix – ranked ninth in WA Business News List of Advertising Agencies in WA – has been forced into administration, owing about $700,000 to 30 creditors.
Both Carfee director Chris McCarthy and administrator Ken Wallman conceded it was likely Carfee would go into liquidation.
Mr McCarthy said creditors had voted against a suggested settlement of 40 cents in the dollar, so Carfee had been put into administration.
However, prior to Carfee going into administration, The Marketing Mix was sold for an undisclosed sum to Kwish Pty Ltd, a company directed by Mr McCarthy’s wife, Cathy.
Mr Wallman said both he and creditors were aware of the sale.
“If I’m appointed liquidator I’ll have another look at the transaction but so far it seems above board,” he said.
Mr Wallman said independent valuations had been conducted on The Marketing Mix business and its furniture and fittings and Kwish had paid that to Carfee.
Kwish has also assumed about $100,000 in debt, largely relating to leases.
Mr McCarthy said the decision to sell the business to his wife’s company had been made to allow the business to continue and provide surety to its remaining staff.
Mr Wallman said Carfee still had the assets of cash at bank, partly due to the sale of The Marketing Mix business, debtors and its claims against The Metabolism Centre and its listed parent, Metabolism Health.
Carfee has claimed a debt of $751,400 from Metabolism Health and about $170,000 from The Metabolism Centre, mainly for print and radio advertising.
Mr Wallman said without the claims against the two Metabolism businesses being fully realised – which appears unlikely – the remaining assets would not be sufficient to fully pay-out creditors.
Ernst & Young partner Brian McMaster, who is the administrator of Metabolism Health, still disputes Mr McCarthy’s claim that the $751,400 debt is attached to the former listed company.
Metabolism Health looks likely to rise again thanks to a deed of company arrangement put together by Ascent Capital.
Under the deed, Ascent will pay about $550,000 to Metabolism Health, with $185,000 of that going to The Metabolism Centre.
The remaining $365,000 will pay out the creditors of Metabolism Health in full, providing the Carfee claim is disallowed.
The chances of The Metabolism Centre creditors mounting a challenge for more money from Metabolism Health seem unlikely.
The Metabolism Centre owes Metabolism Health about $4.4 million and it is understood that debt will be waived unless any further claims are made by The Metabolism Centre liquidator Mark Reilly.
While it is still trading, The Marketing Mix has been savaged by the fallout from the collapse of the Metabolism businesses.
It lost major client Zest Health Clubs in September because it could not pay for media space it had booked for the company, resulting in the advertisements not running.
Mr McCarthy said the business had been unable to pay for the space because of the money it was owed by the Metabolism businesses.
Since September The Marketing Mix’s staff has dropped from 20 to six. It is now focusing on direct marketing.
