With the Report to creditors and details of the proposed DOCA for Reacon Australia and Mail Marketing Works barely a week old, the Federal Court has granted an order to liquidate Reacon Australia, sought by CTRLprint and respected Brisbane printer Printcraft, while MMW's fate will be decided this Friday 16th May at a 2nd meeting of creditors.
Tuesday 13th May 2025 - News just in says that the Federal Court case seeking the winding up and liquidation of Reacon Australia has been granted. Federal Court Registrar Schmidt has ordered that Reacon Australia is to be liquidated and this means no second meeting of creditors and no DOCA for that company, while MMW, although treated jointly with Reacon for administration purposes, is not in liquidation.
The initial winding-up call was heard on April 11th and adjourned until Friday, May 9th.
In a nutshell, Mail Marketing Works Pty Ltd (the company behind mmw3degrees, which is a business name, not a company) is insolvent, with few assets and "should be liquidated," according to the administrator Cathro Partners. However, Innovis Media’s Vikram Gulati was prepared to partially re-capitalise Reacon Australia, transfer employees from MMW and NPH to Reacon with full entitlements and get it back on track again. This noble intention looks like not happening now (unless liquidation is successfully appealed), but at least Reacon employees will be able to get FEG entitlements.
The long and short of it is that the industry is looking at the two companies, in administration, with Liabilities of $9,636,631 ($9.64 million), against assets of $798,765! That is a shocking disparity – so where did the money go? Interestingly, Reacon Group itself, parent company of Reacon Australia, is listed as the largest unsecured creditor, at $782,466.37.
As with so many recent administrations in our industry, the main pain is felt by unsecured suppliers and the ATO, who stood to get as little as 2-10 cents in the dollar. If executed, the DOCA proposed to staff, a 100% repayment of employee entitlements and superannuation – within 60 days of the DOCA’s commencement for both current and former employees. Now, staff both present and past can apply for FEG and get all but unpaid superannuation back.
Mail Marketing Works had no DOCA proposed for it, is insolvent (since February 2023) and it still under VA, until Friday 16th at least, as was National Print Express (formerly Digital Press, acquired in 2020).
Why did it all happen?
Cathro Partners’ 90-page report details the following reasons for the failure of these two companies:
- Under capitalisation/inadequate working capital
- Trading losses
- Poor financial control, including a lack of accurate, reliable financial information and records
- Poor management of accounts receivable
- Poor strategic management of the business
- Inadequate budgeting and financial management
- Inadequate cash flow or high cash use
- Lack of business experience
- Loss of major contracts
- Resignation of key staff members
The rest is a litany of missing funds, mysterious transfers, appalling - if any - bookeeping and not filing tax returns. It is estimated by Cathro that MMW’s ATO debt alone could be in the region of $1.5 million. The ATO’s proven Reacon debt is listed at $587,590.
The most telling comment of all in the Cathro report to creditors is this: “Our investigations have identified that Mr Khan and his spouse, Mrs Khan, may have been misappropriating the funds of MMW.”
How much is ‘ may have’ is not yet identified but, consider this according to Cathro Partner’s investigations of the accounts:
Mail Marketing Works assets at the end of FY 2024 were listed at $11,038,094
Mail Marketing Works assets April 8th, time of admin. appointment were listed at $9,985
Now that the Federal Court has ordered the winding up of Reacon Australia Pty Ltd, subject to any appeal, maybe the industry will finally know where the money went and how much can be recovered!
Many companies connected to the Khans have been involved, including Reacon Holdings, Reacon Group, Reacon Australia, National Mailing & Marketing (Canberra), Riverina Wealth, Mail Marketing Works, Blue Sky Ventures and probably others.
There will be more revelations to come in this sorry saga. It is doubtful that an appeal will be lodged on the Federal Court ruling, given the scathing remarks from the Registrar about the level of debt in these companies. However, there are 28 days from date of the ruling to lodge an appeal.
Footnote by author Andy McCourt
Wide Format Online, for the past month or so, has been the only trade publication to report investigately on what has been going on with Reacon Group, Reacon Australia, Mail Marketing Works and related companies. During this time I have received 3 serious threats from persons, a law firm or organisations involved. I have dealt with all 3 lawfully, with respect and responsibly. I recognise that vexed, complex issues such as company insolvencies in our industry (remember Geon and Blue Star??), can be divisive and emotional - it's everyone's right to protest. Having said that, the truth will always be the final arbiter and our industry's public interest my immutable priority.
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