Publicis Mojo, which went into liquidation five days out from Christmas last year, owes its creditors more than $16 million, according to a liquidator’s report released on 21 December.
Produced by liquidation practice McDonald Vague, the document says Mojo’s employees are owed more than $200,000, of which only around $64,500 is guaranteed as preferential creditors. Preferential creditors are the first to be paid in a liquidation, and include employees and the IRD (which is owed $88,000). Each employee has a maximum preferential claim of $20,340, any further debts become an unsecured claim.
Unsecured creditors, which include trade partners, suppliers, and contractors are owed around $16 million. According to Jared Booth, senior associate at McDonald Vague, the majority financial loss has been to Mojo’s ultimate shareholder Publicis Group in France, which is owed $15.4 million.
Mojo has around $1.3 million in assets including fixed assets, its own debtors, and money in the bank, leaving a significant shortfall in what it owes.
Creditors might be able to salvage some of what is owed to them through Mojo’s parent company, Publicis Group. According to the liquidator’s report, a clause in Mojo’s accounts says Publicis Group intends to pay debts “when they fall due, for at least one year from the date of approval of the financial statement.”
Booth says he is unable to provide further comment on this clause as the liquidation is still early in its process.
It might be some time before creditor’s find out how much will be paid out to them, the liquidator says the entire process is likely to take six months.
Mojo’s financial woes have been a long time coming. According to the agency’s latest financial statement it lost $486,000 in 2011, with a net revenue of $8.4 million. A story in The NBR points out that the agency failed to turn a profit between 1998 and 2009, including a dismal year in 2007 where Mojo lost $6 million.
Before leaving for the 2012 Christmas break, Mojo announced it would be replaced by a new agency called Joy, to be majority owned by Graeme Wills. Up until 12 months ago, Wills held the chief executive role at Publicis Mojo New Zealand/ Australia. The other director is listed as Andrew Wynne, a director of Razor Media, which is listed as the only shareholder of the new agency.
This new company might not be free and clear of debts created by Mojo. Booth says the directors or owners of Joy may have financial liability to Mojo’s creditors.
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