Stream the ‘largest loser’ as Cerno faces liquidation
Loss adjuster Cerno will be liquidated, with no funds available for unsecured creditors.
The company was bought by claims services provider Stream Group earlier this year, but was placed into voluntary administration after agreement could not be reached with Cerno debt-holders.
Administrator Pilot Partners recommended Cerno be liquidated, and this was confirmed at a creditors’ meeting.
insuranceNEWS.com.au has seen a copy of the administrator’s report, which details Cerno’s declining revenue over a number of years, with significant net losses incurred – the largest being $12.47 million last year.
The report says Stream hoped to turn things around, but this had not been possible, in part due to Cerno’s “poor culture”.
Stream invested $3 million in the company via a share placement offer in April 2013.
Since that time two Cerno restructures have taken place, costing $2.29 million and resulting in a staff reduction from 400 to 100.
Employee claims amount to $1.06 million, secured creditor claims $1.14 million and ordinary unsecured creditor claims $11.11 million.
Under Pilot Partners’ best-case liquidation scenario, employee claims would be paid, there would be $249,806 available for secured creditors and nothing for unsecured creditors.
Stream Chairman Christian Bernecker told insuranceNEWS.com.au his company is the “largest loser”.
“Stream invested more than $13 million and worked hard alongside other Cerno shareholders during the period of our investment,” he said.
“There is no likelihood of any repayment to Stream.
“Stream has already committed to the administrator that if there was to be any payout, Stream will forgo its rights and allow the funds to go to other creditors.”
Asked whether Stream’s investment in Cerno was ill-advised, Mr Bernecker said: “We made the original investment, and subsequent investments, in good faith based on representations and information provided at the time.”
He says the winding-up of Cerno will have no impact on clients or result in further job losses.